The link between economic growth, energy intensity, environmental taxes, trade openness, and environmental quality: Evidence for selected European OECD countries

This study investigates how economic growth, energy intensity, environmental taxes, and trade openness impact environmental quality. The empirical analysis employs first- and second-generation panel data estimators that account for heterogeneity across sections and dependence issues. The empirical results highlight that economic growth and energy intensity, mainly from traditional industries, negatively affect environmental quality. On the contrary, environmental taxes positively affect the load capacity factor, reflecting their success in countries with low environmental quality. There is also potential for beneficial implications of trade openness on the load capacity factor, but further research is necessary to determine their significance. Furthermore, asymmetric effects have been found to indicate that decoupling is more effective in countries with higher load capacity. Policymakers should capitalize on these findings to balance economic progress with environmental protection.