Environmentalism in the EU-28 context: the impact of governance quality on environmental energy efficiency

Environmental policies are a significant cornerstone of a developed economy, but the question that arises is whether such policies lead to a sustainable growth path. It is clear that the energy sector plays a pivotal role in environmental policies, and although the current literature has focused on examining the link between energy consumption and economic growth through an abundance of studies, it does not explicitly consider the role of institutional or governance quality variables in the process. Both globalization and democracy are important drivers of sustainability, while environmentalism is essential for the objective of gaining a “better world.” Governance quality is expected to be the key, not only for economic purposes but also for the efficiency of environmental policies. To that end, the analysis in this paper explores the link between governance quality and energy efficiency for the EU-28 countries, spanning the period 1995 to 2014. The findings document that there is a nexus between energy efficiency and income they move together: the most efficient countries are in the group with higher GDP per capita. Furthermore, the results show that governance quality is an important driver of energy efficiency and, hence, of environmental policies.