Exponential economic growth of Hungary: Analysis of the impact of economic growth and renewable energy on carbon emissions

Hungary is aiming to increase its economic growth by establishing robust economic relations with China. China is also investing heavily in Hungary in areas such as technology, infrastructure, and energy. On one side, economic development is desirable for uplifting the living standards of the common masses, but at the same time, it also carries out very serious and injurious impacts on the environment of any country. In this article, we have analyzed the impact of economic growth on the carbon emissions of Hungary. We took annual time series data for the dependent variable (carbon emissions — CO2) and explanatory variables (gross domestic product — GDP, renewable energy — REW) from the World Development Indicators (WDI) for the period ranging from 1990 to 2020. This study applies the autoregressive distributed lag (ARDL) Bounds testing approach to annual data from 1990–2020 to examine the long-run relationship between economic growth, renewable energy, and carbon emissions in Hungary. Results confirm a significant negative impact of renewable energy on carbon emissions, while GDP’s impact is positive but insignificant. Furthermore, renewable energy is also unidirectionally granger-causing CO2. The study contributes to understanding Hungary’s sustainability pathway and recommends policy measures for enhancing renewable energy integration.