The path to renewable energy consumption in the European Union through drivers and barriers: A panel vector autoregressive approach

Renewable energy consumption brings sustainable economic growth and pollution reduction. Despite the worldwide increase in renewable energy consumption, global energy-related carbon dioxide emissions are rising and there are still considerable differences in the share of renewable energy consumption in national energy portfolios. These concerns require further effort at the policy level, especially by countries that make extensive use of energy imports. These countries could improve their lack of energy independence by using renewable energy sources and leveraging a few factors to facilitate their transition. This study aims to investigate renewable energy consumption drivers, focusing on the role of socio-technical (rather than economic) aspects such as policy stringency, lobbying, public awareness, and education. We employ a panel vector autoregressive model in first differences to test the complex dynamic relationships among renewable energy consumption, policy stringency, lobbying, public awareness, and education, controlling for variables such as per capita income and import levels, for 12 European Union net energy importing countries. Results show that the positive income effect prevails in the influence of the level of carbon dioxide emissions (negative) on renewable energy consumption, despite the latter being more significant in countries with higher levels of education. Increasing energy needs push traditional sources towards complementarity with renewable energy consumption, implying a positive lobbying effect. Public awareness is not enough to facilitate the transition to renewable energy consumption. By contrast, policy stringency has positive direct and indirect effects on renewable energy consumption, suggesting that the approach adopted by the European Commission in the recent Green Deal is a step in the right direction. Moreover, as shown, policymakers are able, through renewable energy consumption, to generate a decrease in carbon dioxide emissions and electricity production from oil, gas, coal, and nuclear sources in the first instance, but also in net energy imports, even if at a later stage.