Green Economy Transition in Europe: Balancing Trade Competitiveness and Carbon Emission Reduction

As the world transitions to renewable energy using different policies to ensure compliance, there is a need to understand how these affect several aspects of the economy. This research explored green economy transition in Europe and its impact on trade competitiveness and carbon emission reduction. The Panel ARDL and cointegration was used to analyse the data from different Europian countries from 1991 to 2023. The green transition strategy was capured using carbon pricing. The relevant data was obtained from the World Bank Group. The result revealed that carbon pricing had a negative and significant impact on reducing carbon emissions, while energy consumption and industrial output had a positive and significant impact on carbon emissions. Carbon pricing was also discovered to have a positive relationship with trade balance, which suggests that carbon pricing may not necessarily affect trade balance negatively in the selected countries. The study recommends priotisation of policies that encourage investments in clean energy infrastructure and innovation.