Analyzing the effects of energy productivity: the case of European Union countries

The surge in fossil fuel consumption, culminating in global warming and climate change, compels nations to implement protective measures. Consequently, the concepts of "sustainable growth" and the "green economy" have gained prominence in response to heightened environmental consciousness. In light of these imperatives, nations have embarked on the formulation of sustainable and environmentally conscious policies, with the dual objective of safeguarding the environment and fostering economic growth. These factors have collectively contributed to the growing significance of energy policies within European nations, spurring a burgeoning momentum in research areas pertaining to energy efficiency and energy productivity. While extant literature has demonstrated the positive environmental impact of energy productivity, there exists a paucity of research pertaining to its economic implications. Energy productivity, defined as achieving equivalent or greater output with reduced energy consumption, bears the potential to influence economic output, thereby exerting cascading effects on various facets of the economy, including growth and exports. The principal aim of this study is to highlight that the augmentation of energy productivity can yield not only environmental advantages but also economic benefits. To achieve this objective, we conduct econometric analyses on panel data spanning the years 2000 to 2020 across the 27 member states of the European Union. Specifically, we explore the effects of energy productivity on diverse economic parameters, encompassing economic growth, high technology exports, medium and high technology exports, total exports, and trade volume. Employing the Driscoll-Kraay standard errors estimator, our findings evince that energy productivity exerts statistically significant and positive influences on economic growth, medium and high technology exports, total exports, and trade volume.