Clean energy in the European Union: Transition or evolution?

Abstract

In this paper, we analyse two phenomena. First, the relationship between greenhouse gases emission and effectiveness of the European Union energy policies and second the transition from the fossil fuels to renewable energy sources. We run two-step data analysis concerning 25 European Union member states in the period from 1990 to 2018. We use information on greenhouse gases emission, introduction of new energy policies, source of energy supplied and merge it with macroeconomic data on the countries’ structural characteristics. We assess their long-run relationship and direction of causality using panel cointegration tests and dynamic panel data models. We identify a statistically significant effect of energy supply source, energy policy introduction and greenhouse gases emission. However, we were not able to confirm that European Union energy sector is in transition. Thus, obtained results confirm that the EU energy policies are effective however not sufficient enough in decreasing use of fossil fuels to call it a transition towards renewables.