The Dynamic Interplay Between the Renewable Kuznets Curve (RKC) and Environmental Kuznets Curve (EKC) Hypotheses: Fresh Evidence from the European Union Countries

Abstract The paper explores the interplay between the Environmental Kuznets Curve (EKC) (U-inverted shaped) and the Renewable Kuznets Curve (RKC) (U-shaped) in the European Union case; the validation of both hypotheses being investigated. The methodology consists of a panel data approach with the Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) models to estimate the polynomial regressions using the Greenhouse Gas (GHG) emissions as dependent variable and renewable energy, respectively. Based on data from 26 European Union countries for the period 1990 to 2022, the quadratic dependencies of Greenhouse Gas emissions and Renewable Energy on the Gross Domestic Product (GDP) per capita are validated, meaning that both, the Environmental and Renewable Kuznets hypotheses are confirmed. The value of GDP per capita corresponding to the threshold of renewable energy consumption predicts the value for which the increasing trend of greenhouse gas emissions is inversed. In the Central and Eastern European Union (CEE) countries, the threshold of renewable energy use is earlier attained (meaning at a lower level of GDP per capita) than in the Western European Union countries and the distance between the two threshold points is longer. Policy implications regarding the use of renewable energy and environmental protection are also included.