The green Dilemma: Energy efficiency, renewables and economic challenges in Eastern Europe

This study analyzes the factors influencing energy efficiency (EE) in four Eastern European countries: Bulgaria, Poland, Romania, and Hungary, highlighting the green dilemma, a challenge of balancing energy efficiency improvements with economic development. Using a panel data regression approach, the research explores the impact of variables such as energy consumption, the share of renewable energy, and investments in energy efficiency on EE. Four econometric models were employed, with the Two-Stage Least Squares (TSLS) approach ultimately selected as the most appropriate, following Hausman and Sargan tests that confirmed the reliability and validity of the instrumental variables used. The results highlight significant relationships between investments in renewable energy and EE, especially in the context of the ongoing adaptation of these countries to market-based economies and integration into the European Union. The study provides insights into how targeted investments, the adoption of technologies, and policy reforms can improve EE, thus contributing to the sustainable objectives of the green economy.