Could quality of governance influence pollution? Evidence from the revised Environmental Kuznets Curve in Central and Eastern European countries

Considering the necessity of increasing the renewable energy consumption stated in the European Green Deal (European Commission policy initiatives envisaging European Union (EU) to become climate neutral by 2050), the aim of this paper is to validate the so-called Environmental Kuznets curve (EKC) and the revised (or renewable energy) Kuznets curve (RKC) in ten Central and Eastern European (CEE) countries (represented by Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia) in the period from 1990 until 2019. Conditioned by data availability, the impact of governance in these countries on greenhouse gas (GHG) emissions is assessed in the period 2002–2019. The results based on the panel autoregressive distributed lag (ARDL) models indicated the contribution of renewable energy consumption in reducing pollution and the role of labour productivity in enhancing GHG emissions in the long run. Moreover, our findings demonstrated that domestic credit to private sector reduced pollution in the long run only in the period of 2002–2019. In addition, such factors as the rule of law, regulatory quality and control of corruption were the governance dimensions that contributed to the environmental quality in the long run. The empirical results of our study might be helpful in supporting the environmental and economic policies in the EU countries for achieving their sustainable development and the European Green Deal objectives.