How Did the Transition from Fossil Fuels to Renewable Energy in European Union Countries Affect Carbon Emissions? A Study Using Panel Data Analysis Method

Abstract

This study examines the impact of fossil fuel and renewable energy consumption on carbon emissions (CO₂) in European Union (EU) countries by employing panel cointegration and coefficient estimation methods over the period 1990–2021. The empirical findings reveal that a 1% increase in renewable energy consumption reduces carbon emissions by 0.30%, whereas a 1% increase in fossil fuel consumption increases emissions by 1.61%. Furthermore, a 1% increase in the fossil-to-renewable energy consumption ratio leads to a 0.25% rise in carbon emissions, indicating that the structure of energy consumption is a critical determinant of environmental outcomes. The results are consistent with theoretical expectations and provide strong evidence supporting the effectiveness of the European Union’s energy transition policies. Country-level findings indicate that the impact of renewable energy consumption on carbon emissions is significant in all countries except Slovenia, while fossil fuel consumption is insignificant in Austria, Slovenia, and Croatia. In contrast, the fossil-to-renewable energy ratio has a positive and statistically significant effect on carbon emissions across all countries. These findings highlight that not only the level but also the composition of energy consumption plays a decisive role in shaping carbon emissions. The study contributes to the literature by incorporating the fossil-renewable energy ratio into the analysis, offering a more comprehensive perspective on energy transition dynamics. From a policy perspective, the results suggest that increasing renewable energy investments, reducing fossil fuel dependency, and implementing effective policy instruments such as carbon pricing and subsidy reforms are essential for achieving sustainable environmental outcomes.

Keywords

• Fossil Fuel Consumption
• Renewable Energy Consumption
• Carbon Emissions
• Panel Data Analysis

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