Industrialization,natural resource rent,and energy intensity: Drivers of environmental degradation in the EU's path to sustainable development

Abstract

The aim of this study is to analyze the environmental impacts of industrialization, natural resource rent and energy intensity in the 27 EU Member States over the period 2000–2021 and to assess the impact of these factors on CO₂ emissions in the context of the Sustainable Development Goals (SDG 13 (Climate Action), SDG 12 (Responsible Consumption and Production), and SDG 7 (Affordable and Clean Energy). For this purpose, marginal and dynamic relationships between variables are empirically investigated using Kernel-Based Regularized Least Squares (KRLS), nonparametric Simultaneous Quantile Regression (SQREG), and (GMM). The results of the study indicate that industrialization increases carbon intensity through energy intensity in EU countries with medium and high carbon intensity. Natural resource rent is found to be significantly detrimental to the environment at all quantiles. In EU countries, the majority of which are developed countries, economic growth and urbanization have been shown to reduce carbon intensity and support a green environment. On the other hand, renewable energy has been found to improve the environment at all quantiles. For the EU to accelerate its green transformation, policymakers must prioritize energy security. It must also integrate renewable energy into industry and natural resource extraction and reduce fossil fuel use.