Economic and Technological Efficiency of Renewable Energy Technologies Implementation

Recent trends prove that energy production is shifting from traditional fossil fuel combustion technologies to renewable energy-based technologies. To estimate the economic efficiency of renewable energy technology implementation, the data for the EU-27 member states during the 2012-2021 period were collected; additionally, technological efficiency was analyzed based on a critical literature review. Breusch and Pagan Lagrangian multiplier tests were employed to select the most suitable econometric model. The results suggest that an increase in the share of renewable energy sources by one percentage point (1) decreased CO2 emissions by 0.137 metric tons per capita (technological efficiency) and (2) decreased greenhouse gases by 13 g per EUR, in terms of GDP (economic efficiency). Regarding the Kyoto Protocol implementation, it was found for EU-27 that an increase in the share of renewable energy sources by one percentage point was related to a decrease of one percentage point in the greenhouse gases index. GDP per capita appeared to be an insignificant driver for reductions in per capita CO2 emissions, while it proved to be important for economic efficiency models. Thus, increasing GDP per capita by 1000 USD reduces greenhouse gases by 7.1 g per EUR of GDP in EU-27. This paper also confirmed that a unit of electricity (1 kWh) generated by traditional energy plants is seven to nineteen times more environmentally costly than renewable energy generation. This paper thus concludes that digital transformations and additive manufacturing brought about the significant dematerialization of industrial production and the promotion of renewable energy on industrial and household levels.