The Determinants of Greenhouse Gas Emissions (GHE) in European Economies

The European Commission targets to achieve zero gas emissions by 2050. However, there is no single element or policy that allows us to achieve this target. Greenhouse emissions (GHE) are largely influenced by economic dynamics and energy use, as well as strategic positioning of businesses and technological advancement in renewable energy consumption. Against this background, our research aims to analyze the influence of foreign direct investment, renewable energy and economic growth on greenhouse gas emissions and how important and statistically significant these influences are. The paper analyses the determinants of the decrease in gas emissions in European economies over the period 1990-2023. In a quantitative panel data analysis, we examined the impact of renewable energy, labor force, gross domestic product growth per capita, and foreign investment inflows on greenhouse gas emissions. The Pooled Ordinary Least Squares method, with fixed and random effects, was used in our empirical analysis. The study's findings suggest that economic growth continues to be a significant contributor to emissions. The use of green energies influences the decrease of greenhouse gas emissions. More precisely, 1% increase in the use of green energy results in a 0.19% annual reduction in greenhouse gas emissions. To better understand the results reported for the group of EU countries, gas emissions in Romania are analyzed as a case study. In 2023, Romania was one of the top EU members in terms of renewable energy integration and used more than 33% green sources in its total energy consumption.