Evaluating a pathway for environmental sustainability: The role of competitive industrial performance and renewable energy consumption in European countries

Abstract With the efforts of the United Nations, environmental sustainability is becoming the subject of countries. Policymakers and researchers closely follow the environmental dimensions of Sustainable Development Goals. This study offers a new perspective for the European Union economies by directly targeting SDG 9 and considers environmental sustainability policies in selecting variables. To be more precise, this study probes the effects of economic growth, trade openness, renewable energy, human capital, and competitive industrial performance on the load capacity factor for EU countries over the period of 1995–2018. This study uses the CUP‐FM and CUP‐BC approaches due to cross‐sectional dependence and heterogeneity. In addition, the study does not ignore possible structural breaks. As a result of the empirical analysis, while economic growth, trade openness, and competitiveness worsen environmental quality, renewable energy and human capital contribute to environmental sustainability. Based on the panel data results, EU economies still rely on fossil fuels to maintain competitiveness in the industry. The EU, which has 2030 and 2050 targets, can eliminate the disadvantages of competitiveness by expanding the environmental quality‐enhancing feature of renewable energy and human capital. Moreover, this study provides SDG‐oriented policy recommendations for EU countries.

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