Thresholds of Sustainability: Analyzing the Interplay Between Carbon Dioxide Emissions, Economic Growth, and Urbanization in the European Union

This study addresses the pressing issue of climate change and the drivers behind it by exploring the relationship between carbon dioxide (CO2) emissions and various economic indicators within the context of 22 European countries from 1992 to 2019. Using threshold models, this research aims to uncover nonlinear dynamics often overlooked in linear analyses, shedding light on critical thresholds that affect CO2 emissions. The economic indicators encompass gross domestic product (GDP), energy consumption, renewable energy, nuclear energy, urban population, and energy import dependency. The findings of this study reveal significant threshold effects associated with GDP and urbanization. Notably, as GDP per capita crosses the threshold of $37,000, the effectiveness of renewable energy sources in reducing CO2 emissions diminishes, challenging the assumption of a linear relationship between economic growth and environmental protection. Similarly, exceeding an urban threshold of 82.626% leads to a reduced impact of renewables on CO2 reduction, highlighting the intricate interplay between urban dynamics and emissions mitigation. Furthermore, the analysis indicates that beyond the identified GDP threshold, the influence of energy consumption on CO2 emissions escalation is curtailed. These insights underscore the importance of transitioning to cleaner energy sources and adopting energy-efficient technologies, as well as focusing on sustainable urbanization. Such policies can help reconcile economic development with environmental sustainability and contribute to the global effort to combat climate change.