Environmental impact of technological innovation under energy transition in Europe: Do energy exporters play a significant role?

Abstract

The transition towards a sustainable energy system is critical in mitigating climate change and reducing the environmental impact of energy production and consumption. Technological innovation is pivotal in enabling this transition, offering solutions that can enhance energy efficiency, harness renewable sources, and minimize emissions. This study employed a dataset of 29 countries from 1995 to 2022 to investigate how technological innovation and renewable energy consumption influence environmental pollution. The study further classified the countries as energy importers and exporters to account for heterogeneity. To address potential endogeneity concerns, the study utilized the system-generalized method of moments (sys-GMM) as the primary estimator, with the Driscoll-Kraay estimator complementing a robust test. From the main European panel, technological innovation and renewable energy consumption significantly enhance the quality of the environment. Additionally, the interaction effect between technological innovation and trade openness improves the quality of the environment. Likewise, among energy importers and exporters in Europe, technological innovation and renewable energy consumption significantly enhance the quality of the environment. This study presents intriguing findings that warrant the attention of policymakers, as it sheds light on notable benefits of technical innovation and contributes considerably to the ongoing debate around energy transition and environmental sustainability.