Accelerating the renewable energy transition in the EU: the role of smart technologies and ESG investments

This study explores how smart technologies and Environmental, Social, and Governance (ESG) investments influence the renewable energy transition in developed EU countries. Employing the VECM (Vector Error Correction Model) and FMOLS (Fully Modified Ordinary Least Squares) models, we analyze data from ten EU nations between 2000 and 2021. Results show that in the long-term adoption of smart technologies, particularly artificial intelligence, substantially accelerates the energy transition. There is unidirectional Granger causality from renewable development to smart technology, indicating that renewable energy growth helps predict future use of smart technology. However, no such relationship exists between ESG investment and renewable energy development. These findings suggest that renewable energy and smart technologies reinforce each other and should be jointly prioritized in policy.