Environmental Taxes, Renewable Energy and Ecological Footprint in the European Union: Panel Data and Causality Analysis

This study analyzes the impact of environmental taxes on environmental pollution using panel data analysis. The period between 1995 and 2021 is the basis for the European Union countries. Ecological footprint is used as the dependent variable in the study. Environmental tax is the independent variable, and economic growth, population and renewable energy consumption variables are used as control variables. In order to see the effect of the environmental tax on the ecological footprint alone, the main research topic is elaborated econometrically in a hierarchical manner with the help of four models, including the economic growth, population and renewable energy consumption series in the model. Since autocorrelation and heteroscedasticity problems are encountered in the panel data model, the Panel Feasible Generalized Least Square (FGLS-1986)Fixed Effects estimator, which considers these problems and reports healthier results by allowing them to be eliminated, was applied. According to the FGLS estimator results, environmental tax is found to reduce the ecological footprint in all four models. According to the results of Emirmahmutoğlu and Köse (2011) causality test, which is among the recent causality tests, both for the overall panel and for the cross-sectional results (Denmark, Croatia, Italy, Latvia, Malta, Slovakia and Greece), environmental tax is the cause of ecological footprint.