Renewable Energy Transitions in the EU: A Comparative Panel Data Perspective

Abstract

Considering the contemporary, rapidly evolving society, renewable energy emerges as a key element in advancing both environmental resilience and energy independence. The current study aims to undertake a comparative analysis of the renewable energy adoption between the Old Member States (OMSs) and New Member States (NMSs) of the European Union (EU). This study focuses on regional heterogeneity as well as the role of economic, social, and environmental determinants in shaping effective energy transition policies. This study uses advanced long-term panel estimates such as Dynamic Ordinary Least Squares (DOLS), Fully Modified Least Squares (FMOLS) and Canonical Cointegration Regression (CCR) on a dataset covering the 2010–2023 period. Moreover, this study utilizes quantile regression methods such as Quantile Regression (QREG) and Method of Moments Quantile Regression (MMQR). Finally, this study employs the Dumitrescu–Hurlin test to assess panel causality. The empirical findings reveal notable discrepancies between the two samples when it comes to fossil fuel reliance, income inequality, financial and economic development, the existing level of greenhouse gas emissions, and green finances influencing renewable energy adoption. In the OMS region, a 1% increase in GHG and income inequality reduces the adoption of renewable energy by 0.80–1.14% and 0.61–0.67%, respectively, while a 1% increase in GDP increases the adoption of renewable energy by 0.72–0.92%. In the NMS region, GHG inhibits renewable energy transition by 0.27–0.30%, while fossil fuel energy share, income inequality, green finance, GDP and financial development do not have a significant effect. These results highlight economic development as the key to renewable energy transition in OMSs, while in NMSs, GHG and financial development are key levers. This research seeks to support the developing and restructuring of the existing green framework to enhance its overall effectiveness.