Can EU-27 achieve the decarbonization target in the energy sector? A scenario analysis based on extended STIRPAT model

In response to growing global climate concerns, the European Union (EU) has set ambitious goals to achieve a 55% reduction in carbon emissions by 2030 and carbon neutrality by 2050. However, uncertainties associated with geopolitical risks, economic fluctuations, and the pace of technological transition pose significant challenges to this goal. This study employs an extended STIRPAT model with ridge regression to analyze the key determinants of energy-related carbon emissions in the EU-27 from 1996 to 2023. In contrast to studies that primarily focus on economic and technological factors, this study incorporates geopolitical risk and energy transition into the analytical framework, addressing an underexplored aspect of the literature. Four future scenarios—baseline scenario, policy-driven decarbonization, market-driven decarbonization, and comprehensive low-carbon transition—are used to evaluate the potential trajectories of carbon emissions in the EU’s energy sector. The results reveal that GDP and unemployment are significantly and positively associated with emissions, while R&D expenditure has a significant negative association. Nonetheless, even in the most favorable scenario, complete carbon neutrality in the energy sector by 2050 remains challenging. These findings highlight the need for an integrated approach, combining policy innovation, market-driven incentives, and favorable geopolitical conditions. The study offers valuable policy insights for EU member states and serves as a reference for other regions pursuing low-carbon transitions amid global uncertainties.