The Impact of Natural Gas, Oil, and Renewables Consumption on Carbon Dioxide Emissions: European Evidence

Natural gas has returned to prominence in the agenda of European countries since the beginning of the invasion of Ukraine by Russia in 2022. However, natural gas is a fossil source with severe environmental implications. This paper aims to verify the impact of natural gas on carbon dioxide (CO2) emissions for a European panel from 1993 to 2018 for sixteen countries. An Autoregressive Distributed Lag (ARDL) model in the form of an unrestricted error correction model was used to identify the short-run impacts, the long-run elasticities, and the speed of adjustment of the model. The results indicate that in the short-run, natural gas has a negligible impact on CO2 emissions when faced with oil consumption (6.7 times less), whereas the consumption of renewables and hydroelectric energy proved to be able to decrease the CO2 emissions both in the short- and long-run. The elasticity of oil consumption is lower than the unit, indicating that efficiency gains have been achieved during the process of the energy transition to clean energy sources. If economies use non-renewable energy, governments must continue to prefer natural gas to oil. Renewables and hydroelectric consumption must be used to revert the path of CO2 emissions. Given the unstable scenario that has been caused by the War in Eastern Europe, politicians should focus on accelerating the transition from fossil to renewable energies.