The effects of the energy production and consumption mix, and of environmental policies on renewable resources, on CO2 emissions for the EU-15 economies
Department of Economics, University of the Peloponnese
The results of our study clearly show that the regulatory framework for promoting renewable energy sources (RES) is a significant factor contributing to the reduction of greenhouse gas emissions. We have constructed a new variable, using qualitative data from the national and European directives on RES promoting policies, and we find that the average emissions were significantly reduced by the implementation of such policies throughout the E.U. This emission reduction is more prevalent and stronger when one considers natural gas and coal in the energy mix but not so in petroleum. Our results remain intact when we control, beyond the RES regulation, for the energy mix and different kinds of energy consumption.
Moreover, and related to the efficacy of these policies, we find that the implementation of such RES-promoting regulations has lead to a process of significant convergence in the (scaled by population and/or economic activity) emissions. Our analysis also indicates that there can be additional social benefits if regulation is coupled with market-based measures in promoting increases in RES installed capacity. Specifically, we find that – after controlling for regulation – increased economic freedom & investment freedom, decreased bureaucracy and fewer procedures in starting a business, all coupled with stricter enforcement of the rules of the regulatory framework, lead to a significant increase in average RES installed capacity. In the context of policy-related proposals, our results indicate the need for a systematic interaction between the regulatory framework and market-based initiatives. In such a way the environmental and social utility of RES promotion will be greatly enhanced and will strongly contribute to the European effort for a permanent switch to a process of sustainable development.
Dimitrios Thomakos, Professor, Department of Economics, University of the Peloponnese
Thomas Alexopoulos, PhD candidate, Department of Economics, University of the Peloponnese
Dionysia Tzavara, Programme Director, Management Programmes, University of Roehampton