From Transition Risks to the Relationship between Carbon Emissions, Economic Growth, and Renewable Energy

Elisa Di Febo (), Eliana Angelini and Tu Le ()
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Elisa Di Febo: Department of Economic Studies, University of “G. d’Annunzio” of Chieti-Pescara, 65127 Pescara, Italy
Eliana Angelini: Department of Economic Studies, University of “G. d’Annunzio” of Chieti-Pescara, 65127 Pescara, Italy
Tu Le: Faculty of Finance & Banking, University of Economics and Law, Ho Chi Minh City 700000, Vietnam

Risks, 2023, vol. 11, issue 12, 1-15

Abstract: Currently, energy consumption has increased exponentially. Using fossil fuels to produce energy generates high shares of carbon dioxide emissions and greenhouse gases. Moreover, financial authorities at the global and European levels have recognized that climate change poses new risks for individual financial institutions and financial stability. The analysis contributes to the literature in two critical ways. First, the research attempts to develop a map of the transition risk of the EU. In detail, it defines an indicator that will identify the transition risk the EU bears. Second, it analyzes any relationships between the CO 2 emissions, economic growth, and the renewable energy of each European country from 1995 to 2020, highlighting the short and long-run relationships. The methodology used is the ARDL. The results show the long-run relationship between GDP, renewable energy consumption, and CO 2 emissions is evident. Indeed, economic growth may increase environmental pollution in Europe, while an increase in using renewable energy may reduce CO 2 emissions. Therefore, this implies the trade-off between economic development and CO 2 emissions. Furthermore, the results indicate the difference in the short-run relationship across countries. However, the results demonstrate that the choice of the European Union to increase the use of renewable energies is more than fair.

Keywords: CO 2 emissions; transition risks; economic growth; renewable energy; climate change; Europe (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2023
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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