Ecological and economic determinants of energy efficiency in European countries

Abstract

Since economic development is often associated with an increase in greenhouse gas emissions, it is especially important to answer the question of whether it is possible to achieve sustainable economic development and improve energy efficiency at the same time, which implies a reduction in greenhouse gas emissions. The purpose of this study was to build models that can help find the environmental and economic determinants of energy efficiency in European countries. An ecological and economic determinants of energy efficiency indicators of 38 European countries were found based on panel regression models. The models were built based on statistical data characterizing the level of their economic development and consumption of diverse types of energy for 1995-2021. To obtain the necessary approximations of energy efficiency indicators, one of three types of models was used: the random effects method, the fixed effects method, or the pooled model. For this, appropriate statistical tests were used. As a result, it was found that the factors that have a statistically significant impact on the energy intensity of GDP in European countries include the intensity of carbon dioxide emissions, unemployment rate, primary energy consumption per capita, and gross electricity production per capita. The findings showed that determinants of primary energy consumption were domestic consumption of solid fossil fuels per capita, domestic natural gas consumption per capita, and primary energy consumption per capita. The study results generally confirm the modern-day thesis that economic development can be achieved while reducing greenhouse gas emissions. The monitoring of factors that have a statistically significant impact on the indicators under consideration can become an essential element of the modern energy efficiency management system of the national economies of European countries