The effects of urbanization and renewable energy on CO2 emissions: A panel data

Abstract: As the largest developing country in the world, with rapid economic growth, Europe has experienced fast-paced urbanization development over the past three decades. A better understanding of the relationship between urbanization, economic growth and energy consumption is important for Europe’s future sustainable development. This paper empirically investigates the long-run relationships and causal relationships between urbanization, renewable energy consumption, economic growth and CO2 emissions in EU countries. DOLS and FMOLS approaches are used for the period 1992–2014 into consideration. Granger causality results show that there is a unidirectional relationship from CO2 emissions to urbanization, and there is no causality between renewable energy consumption and CO2 emissions. The results have important implications for EU policymakers on the path towards a sustainable society. Theories of ecological modernization and urban environmental transition recognize that urbanization can have negative impacts on the natural environment with the net effect being hard in EU countries.