Effects of Energy Economic Variables on the Economic Growth of the European Union (2010–2019)

Abstract

The economic downturn caused by the financial crisis of 2008–2009 and the intensifying global climate policy trends forced changes in the energy management of the European Union. The study examined how the most relevant energy economic variables affected the economic growth of the E.U. between 2010–2019. The study used the PSL-PM methodology to explore the relationship between G.D.P. (dependent variable) and energy consumption, greenhouse gas emissions, the average energy price, and renewable energy use (independent variables). The main findings are: G.D.P. growth is negatively correlated with CO2 emissions, showing that the E.U. economy is still highly dependent on fossil fuels; the increase in the proportion of renewable energy consumption contributed to the growth of the E.U.’s G.D.P.; CO2 emissions, energy consumption, and the average energy price are more critical in E.U. member states with a lower G.D.P.; renewable energy use and energy balance are essential in countries where more emphasis is placed on replacing traditional energy sources and reducing energy dependence; there is a strong positive correlation between G.D.P. and renewable energy use, indicating that this type of energy use effectively supports E.U. economic growth. The results of the multicollinearity test show that there is also a strong linear dependence between the independent energy economic variables. One of the significances of the study is that the presented and analyzed variables and the relationships between them can contribute to optimizing the E.U.’s currently critical energy management and economic growth.

Keywords

• economic growth
• energy economics
• independent energy variables
• PLS-PM analysis