Do innovation and renewable energy transition play their role in environmental sustainability in Western Europe?

Abstract

AbstractWestern European economies are among the top innovative countries in the globe and show a remarkable commitment to environmental sustainability through innovations and renewable energy targets. Particularly, renewable energy transition (RET) may shift Western European economies from unclean to clean energy sources and could reduce pollution. Therefore, we analyze the impact of RET and patents on CO2 emissions in 25 Western Europe countries using a period 1995–2020 and cross-sectional dependence techniques. Moreover, the impact of economic growth is also analyzed to examine the Environmental Kuznets Curve (EKC). The results suggest the presence of EKC with a turning point at GDP per capita of 50,287 dollars and Denmark, Iceland, Sweden, Ireland, Norway, Luxembourg, and Switzerland are found at the second stage of the EKC in the long run. Moreover, RET reduces CO2 emissions in the long and short run, Thus, RET helps to achieve environmental sustainability by reducing CO2 emissions in Western European economies. However, patents have negative effects in the long run but do not affect emissions in the short run. Thus, innovation helps to sustain an environment in the long run.