Asymmetric Impacts of Renewable Energy on Human Development: Exploring the Role of Carbon Emissions, Economic Growth, and Urbanization in European Union Countries

Human development is one of the critical and standard criteria in evaluating countries’ development levels. Although the impact of renewable energy consumption on the human development index (HDI) has been investigated in previous research, the results are contradictory. In addition, there are no studies that examine the asymmetric role of renewable energy, carbon emissions, economic growth, and urbanization on human development in European Union countries. Therefore, this research seeks to fill this gap. In doing so, this study employed a novel method of moments quantile regression (MMQR) using annual data from 2000 to 2019. The preliminary results reject the assumption of data normality; therefore, it is necessary to use MMQR, which can deal with structural changes and non-normality of data. The empirical findings indicate that renewable energy consumption promotes the human development index in all quantiles except the 0.9 quantile, and it decreases in higher quantiles. Furthermore, economic growth is the strongest influencing variable, and in higher quantiles, the impact of economic growth on HDI increases. Also, urbanization positively and significantly improves HDI in all quantiles (0.1–0.9), although the impact of carbon emissions on human development in all quantiles except 0.9 quantile is negative and significant. The results of this study suggest insights for policymakers to improve human development by investing more in the development of renewable energy, facilitating higher quality infrastructure and services such as education, and health services.