Towards a sustainable environment: Examining the spatial VARIATIONS of renewable energy, environmental pollution, and economic growth in Europe

This study reexamines the spillover effects of CO2, the marginal impacts of renewable energy, and economic growth in 29 countries in Europe using the spatial panel econometric analysis from 2000 to 2020. The study first employed the pooled OLS, random effects, and fixed effects from the non-spatial to ascertain the possibility of spillover effects. The Wald and likelihood ratio tests both showed that the spatial Durbin model (SDM) was the best model for the study. The results obtained revealed that increasing the usage of renewable energy in a focal country results in a reduction in CO2 emissions in the focal country and that of neighboring countries. The results also lend credence to the idea that CO2 emissions from one region can travel to neighboring countries and distant trading partners. The findings revealed that cooperation is the best strategy for effectively reducing environmental challenges and that regulatory authorities must take action to reduce CO2 emissions from both the target country and from other neighboring countries to achieve sustainable growth. All things considered, it makes sense for national economies to work together with their neighbors to protect the environment and establish a common regulatory framework for effective carbon emission mitigation. •The Wald and likelihood tests revealed that the spatial Durbin model was the best model.•The Hausman test preferred the fixed effects model to the random effects model.•Feedback of 11.32% of the direct effect of renewable to that of the SDM fixed effect was felt.•A 1 % percent increase in renewable energy decreases CO2 emissions by 0.196% across Europe.