The Impact of Technology, Energy and Social Protection on CO2 Emissions in European Union Countries: A Spatial Econometric Analysis Applying the SARAR Model

Climate change is often seen as the most global and complex problem that has emerged in the development of humanity so far. Rising temperatures, changing precipitation and more frequent extreme climate events affect all countries regardless of their geographical location and level of development, determining national production potential and the quality of life of the population. Starting from these challenges, this paper analyzes the contribution of key socio-economic determinants of climate change, which are quantified through CO2 emissions, in eighteen European Union countries, with a special emphasis on the spatial spillovers of these impacts between countries (the period 2014–2023). The research results indicate that climate change in a country does not depend exclusively on “domestic” factors, but is also exposed to spillovers from neighboring countries, which confirms the existence of spatial dependence. By applying the econometric model SARAR, public expenditure on research, development and demonstration of energy technologies, electricity prices for households, and social protection expenditures were identified as key and statistically significant predictors of CO2 emissions, where the estimated effects are conditioned by the specification of the spatial weight matrix and the choice of fixed or random effects. The research findings highlight the role of public expenditure for R&D in the field of energy that has a significant negative impact on CO2 emissions. In addition to direct emission reductions within the observed country, the model confirms the existence of a strong indirect (regional) spillover effect. This proves that investments in clean energy technologies effectively decrease pollution in neighboring geographical areas.