Economic Growth and Environmental Sustainability in Romania: The Role of Renewable Energy and Carbon Emissions

Carbon emissions constitute one of the most urgent environmental challenges of the 21st century. This study investigates the relationship between economic growth and carbon emissions in Romania, an emerging economy in Eastern Europe. Drawing on annual time series data from 1991 to 2024, the analysis explores how carbon emissions are influenced by key factors such as GDP growth and renewable energy consumption. To examine the long-term interactions among these variables, the Autoregressive Distributed Lag (ARDL) Bounds testing approach for co-integration was employed. The empirical results reveal a significant long-run relationship among the variables. Specifically, economic growth exerts a statistically significant positive impact on carbon emissions, highlighting the environmental cost of Romania’s economic expansion. In contrast, renewable energy consumption demonstrates a statistically significant negative impact on carbon emissions, which shows that with the increase in the renewable energy consumption the carbon emissions would decrease considerably in Romania. This study contributes to the literature by providing one of the few country-specific ARDL co-integration analyses of Romania over the post-transition period (1992–2024), simultaneously examining the long-run effects of economic growth and renewable energy consumption on carbon emissions to generate evidence tailored to Romania’s sustainable development pathway. These findings carry important policy implications like achieving a sustainable balance between economic development and environmental protection. It is imperative to enhance investment in and the adoption of renewable energy technologies; also there is need of decarbonizing transport through using green transport or reducing fossil fuel use in residential heating in Romania.