Policy Implications and Risk Mitigation of Greenhouse Gas Management in the Renewable Energy Sector

Bogdan Firtescu, Laurentiu Droj, Adrian Florea () and Bogdan-Florin Filip
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Bogdan Firtescu: Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, 700506 Iași, Romania
Laurentiu Droj: Faculty of Economic Sciences, University of Oradea, 410087 Oradea, Romania
Adrian Florea: Faculty of Economic Sciences, University of Oradea, 410087 Oradea, Romania
Bogdan-Florin Filip: Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, 700506 Iași, Romania

Risks, 2025, vol. 13, issue 12, 1-16

Abstract: The transition toward renewable energy systems offers significant opportunities to reduce greenhouse gas (GHG) emissions, while also introducing new challenges in risk management and policy design. This study examines the long-term effects of renewable energy consumption, the risk factors associated with environmental taxation, and public expenditure on greenhouse gas (GHG) emissions across 27 European Union countries over a period of 22 years. Using panel data techniques—specifically the Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) estimators—the analysis identifies robust cointegrating relationships among environmental, fiscal, and energy variables. The joint null hypothesis (H 0 ) states that renewable energy consumption, environmental taxation, and public environmental expenditure do not exert a statistically significant negative long-run effect on greenhouse gas (GHG) emissions in the European Union (i.e., none of these variables contributes to reducing GHG emissions in the long run). The findings show that renewable energy consumption and environmental taxes significantly and negatively affect GHG emissions, confirming their effectiveness as instruments for emission risk mitigation. Pollution taxes display the strongest elasticity among fiscal measures, indicating their pivotal role in carbon reduction strategies. Furthermore, public expenditure, particularly in waste management, meaningfully contributes to long-term emission reductions. These results highlight that a cohesive policy framework combining renewable energy development, targeted taxation, and strategic public investment can effectively minimize the environmental and economic risks associated with decarbonization. The study provides valuable empirical evidence for policymakers and risk analysts, underscoring the importance of integrated fiscal and energy policies in achieving sustainable climate risk management across the European Union

Keywords: greenhouse gas emissions; renewable energy; environmental taxation; public environmental expenditures; cointegration analysis (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:gam:jrisks:v:13:y:2025:i:12:p:250-:d:1816098

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