Energy Transition and Carbon Intensity in the EU : The Role of Structural Conditions

The role of the energy transition in shaping emission outcomes remains an important policy issue in the European Union (EU). The current study examines the structural determinants of carbon intensity in the EU from 2015 to 2023. To this end, the present study integrates two‐way fixed effects models with Driscoll‐Kraay robust inference. Also, interaction models and quantile regression are used to further investigate the data. Later, robustness tests, including leave‐one‐country‐out and bandwidth‐sensitivity tests, are applied. The results show significant heterogeneity in the effectiveness of the energy transition across the EU. Although renewable energy use is generally associated with lower carbon intensity, this association varies across EU countries' energy structures. Specifically, this study shows that higher energy intensity reduces the effectiveness of renewables in reducing carbon intensity in the EU. The quantile regression results show that energy demand plays a more prominent role in member states classified in the higher‐carbon‐intensity group, such that an increase in final energy demand is associated with an even greater increase in carbon intensity. The results also show significant variation in carbon intensity among member states, and confirm that the energy transition in the EU is not uniform across them. Moreover, results indicate that the deployment of renewable energy alone is not consistently associated with lower carbon intensity across all structural conditions. The findings should be interpreted as conditional associations rather than causal effects.