Impact of disaggregated level clean electricity on CO 2 emissions: Evidence from EU-5 countries by bivariate and multivariate QQ approaches

Abstract

Considering the energy crisis in Europe and searching for alternatives, this study investigates the impact of clean electricity generation (EG) types on the environment. So, the study focuses on EU-5 countries (Germany-DEU, Spain-ESP, France-FRA, United Kingdom-GBR, and Italy-ITA), uses CO₂ emissions as environmental indicator, and considers clean EG types as explanatory variables by controlling geopolitical risk. Accordingly, the study uses data from 2^nd January 2019 to 29^th February 2024 and applies bivariate and multivariate quantile-on-quantile regression (BQQ & MQQ) and Granger causality-in-quantiles (GCQ) as the fundamental approaches, while quantile regression (QR) is performed for the consistency check. The outcomes reveal that (i) hydro EG increases CO₂ emissions across countries excluding DEU at lower and middle quantiles; (ii) solar EG curbs CO₂ emissions at middle quantiles in DEU, higher quantiles in ESP and FRA, and middle and higher quantiles in ITA; (iii) wind EG has an almost decreasing impact across quantiles excluding higher quantiles in DEU and FRA; (iv) clean EG types are almost causally impactful on CO₂ emissions across quantiles; (v) geopolitical risk decreases the power of the impact of clean EG alternatives on CO₂ emissions, but does not change them in a reverse way. To sum up, the impact of clean EG types on CO₂ emissions in EU-5 countries varies across EG types, quantiles, and countries. Thus, the study suggests that wind EG is highly beneficial for all EU-5 countries, while there is also room for growth to benefit from hydro and solar EG for some countries.