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The influence of economic growth, urbanization, trade openness, financial development, and renewable energy on pollution in Europe

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  • Usama Al-Mulali
  • Ilhan Ozturk
  • Hooi Lean

Abstract

This study investigates the influence of disaggregated renewable electricity production by source on CO 2 emission in 23 selected European countries for the period of 1990–2013. Panel data techniques were used in examining the relationships. The Pedroni cointegration results indicated that CO 2 emission, GDP growth, urbanization, financial development, and renewable electricity production by source were cointegrated. Moreover, the fully modified ordinary least-square results revealed that GDP growth, urbanization, and financial development increase CO 2 emission in the long run, while trade openness reduces it. Furthermore, renewable electricity generated from combustible renewables and waste, hydroelectricity, and nuclear power have a negative long-run effect on CO 2 emission, while renewable electricity generated from solar power and wind power is insignificant. The VECM Granger causality also revealed that GDP growth is the only variable that has causal effects on CO 2 emission in all the investigated models, while the rest of the variables have causal effects on CO 2 emission in only a few models. A number of policy recommendations were provided for the European countries. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Usama Al-Mulali & Ilhan Ozturk & Hooi Lean, 2015. "The influence of economic growth, urbanization, trade openness, financial development, and renewable energy on pollution in Europe," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 79(1), pages 621-644, October.
    • Handle: RePEc:spr:nathaz:v:79:y:2015:i:1:p:621-644
    DOI: 10.1007/s11069-015-1865-9
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