The Role of Renewable Energy and Human Capital in Reducing Environmental Degradation in Europe and Central Asia: Panel Quantile Regression and GMM Approach

Abstract

Environmental sustainability concerns are growing worldwide. Reducing carbon dioxide (CO2) emissions is crucial to combating global warming and reaching sustainable global economic development. Many recent studies have focused on key indicators of CO2 emissions, but less consideration has been given to associated factors such as renewable energy and human capital. This article applies the two-step system FOD-GMM (Forward-Orthogonal Deviations-Generalized Method of Moments) to estimate the role of renewable energy and human capital in reducing environmental degradation in Europe and Central Asia. The results reveal that renewable energy consumption and human capital have a significant negative impact on CO2 emissions in the EU and Central Asian countries, government efficiency has a positive effect on CO2 emissions, and economic development has a neutral effect, confirming the strong role of renewable energy and human capital in reducing CO2 emissions in EU and Central Asian countries. The role of human capital and renewable energy in promoting CO2 reduction should be fully utilized. Policymakers should develop infrastructure for renewable energy and education to support the decrease in CO2 emissions in Europe and Central Asia.