CO₂ emissions and growth : exploring the nexus between renewable energies, economic activity, and technology

This study examined the relationships between gross domestic product (GDP), renewable and non-renewable energy consumption, innovation, and carbon dioxide (CO2) emissions over the period 1995–2015 in Germany, Finland, and Denmark. We employed the ARDL bounds tests to analyze the long-run relationships between the variables of interest. The empirical results show that energy use is an important factor in economic growth in Germany and Finland. Nonetheless, this factor is not significant in Denmark. Moreover, the increase of renewable energy consumption increases economic growth in the northern European countries. Our results also show economic growth significantly increases CO2 emissions only in the case of Germany. Moreover, energy use degrades the environment by increasing the level of CO2 emissions in Germany and Denmark. This effect is not significant in Finland. Furthermore, the findings are unanimous for the effect of non-renewable energy use on environmental degradation in the three countries. Nevertheless, renewable energy consumption and innovation significantly decrease pollution and play an important role in reducing the level of CO2 emissions in the north European countries.