The relationship between renewable energy sources and sustainable growth: The case of EU (1995-2020)

The heavy reliance of national economies on energy-intensive activities leads to the rapid depletion of resources, contributing not only to the exhaustion of fossil fuels but also to climate change. The consumption of fossil fuels causes not only an energy crisis but also an ecological crisis. As a result of the use of these resources, the accumulation of CO2 and greenhouse gases in the atmosphere leads to global warming. For this reason, the need for renewable energy sources is inevitable for a sustainable future. The most important impact of renewable energy use is that it reduces the emission of CO2 and greenhouse gases into the atmosphere, ensuring energy consumption while protecting the environment. The sustainability of the environment is crucial for maintaining growth and development. It is impossible for countries to achieve their growth targets without energy use. However, the environmental pollution resulting from the use of non-renewable energy sources for the sake of economic and sustainable growth cannot be ignored. As countries grow, their energy demand also increases. Therefore, having sufficient energy resources is highly important. The aim of this study is to examine the relationship between renewable energy and sustainable growth during the period from 1995 to 2020. The study uses data on variables such as per capita gross domestic product (GDP), energy efficiency, the share of energy from renewable energy sources, the share of R&D expenditures in GDP, and net greenhouse gas emissions. The analysis is conducted using panel data analysis for 27 European Union (EU) countries. The econometric tests applied in this study include cross-sectional dependence tests, Pesaran and Yamagata (2008) homogeneity tests, Pesaran CIPS and Pesaran CADF unit root tests, and the Panel CS ARDL model. According to the model estimation results, energy efficiency and net greenhouse gas emissions have a statistically significant and positive impact on per capita GDP in both the short and long term. A 1% increase in these variables leads to an increase in per capita GDP. However, the share of energy from renewable sources and the share of R&D expenditures in GDP do not have a statistically significant impact on per capita GDP in either the short or long term. The error correction term indicates that short-term imbalances are quickly resolved and the system returns to long-term equilibrium. Keywords: Renewable energy, Sustainable growth, Panel data analysis, EU countries