Strategies for the European Green Transition: Dynamic Interactions between Foreign Direct Investment, Renewable Energy, and Environmental Quality
Dimitris Anthimosa, Dimitris Baliosb, Stefanos Tantosa[1]
aUniversity of West Attica
bNational and Kapodistrian University of Athens
Abstract
This study examines the dynamic interplay between economic growth, energy consumption, renewable energy, foreign direct investment, and carbon emissions across 21 developed European economies (1990–2021). Utilizing the Pooled Mean Group framework, we evaluate long-run equilibrium relationships and short-run adjustment dynamics. Our findings confirm a stable long-run relationship where renewable energy and FDI act as key mitigation tools, supporting the Pollution Halo hypothesis and suggesting that sustainable investment structures are essential for the European green transition. Furthermore, the results provide robust evidence of structural environmental decoupling, implying that developed European economies have successfully detached economic expansion from carbon emission growth. Overall, the study offers empirical insights into the combined impacts of renewable energy integration and technological modernization, providing a policy-oriented roadmap for achieving climate neutrality within the European Union.
Keywords: economic growth, environment performance, energy consumption, CO2 emissions, sustainable development.
JEL classification: O44, Q56, O57, O11
Dimitris Anthimos
Phd Candidate
Department of Accounting and Finance, University of West Attica
P.C.12244, Athens, Greece
E-mail: danthimos@uniwa.gr
Professor Dimitris Balios
Department of Economics, National and Kapodistrian University of Athens
Sofokleous & Aristidou str.
P.C.10559, Athens, Greece
E-mail: dbalios@econ.uoa.gr
Assistant Professor Stefanos Tantos
Department of Accounting and Finance, University of West Attica
P.C.12244, Athens, Greece
E-mail: stantos@uniwa.gr
[1]Corresponding author