Environmental Kuznets Curve in France and Germany: Role of Renewable and Nonrenewable Energy

Abstract

This paper aims to quantify the relation between real GDP, CO2 emissions, renewable and nonrenewable energy consumption, tourism development and labor force for France and Germany as these two countries are pioneer countries pushing Paris agreement within and outside the European Union. The time spans have been used for the period of 1995–2015 according to data availability. In the presence of cross-sectional dependency, several first and second-generation unit root tests confirm the unit root problem while Pedroni and Westernlund confirm the cointegration. Results reveal an inverted U-shape relation between CO2 emissions and real GDP in long run confirming the validity of environmental Kuznets curve for the group of France and Germany. Results declare that renewable energy significantly reduces carbon emissions while nonrenewable energy consumption adds to carbon emissions. Tourism sector was found helpful in carbon reduction that appeals to attract more tourists for the development of sustainable tourism industry by taking energy conservation and emissions reduction in relevant industries in the full consideration.