Europe reaffirmed its commitment to become world first climate-neutral continent by 2050. Eastern European countries should pursue these renewable sources as a policy priority in order to cope with this target. In Eastern Europe, the transition to renewable energy sources was slow. Adopting tight regulations in this region in order to comply with the environmental European requirements benefited of important exemptions in time. In this study, we aim to investigate the existence of the Environmental Kuznets Curve in Romania and its shape during 1990-2019, based on an ARDL model with short-run and long-run estimations, considering total energy consumption, renewable energy share, FDI and trade openness. Findings suggest a U-shaped curve, a positive linkage between total energy consumption or FDI and CO2 emissions/capita in the long-run, a negative relation between renewable energy share of total energy mix and emissions, and a negative relation between trade openness and CO2 emissions/capita. Based on these findings, some policy recommendations can be designed to stimulate the renewable energy usage and trade openness in Romania for decreasing CO2 emissions. Read more
Keywords:
EKC, FDI, renewable energy, total energy consumption, trade openness
JEL:
F21, F43, F18, Q50