Energy efficiency, human development, and renewables as drivers of the load capacity factor: New evidence from Bucharest Nine (B-9) countries
Energy efficiency, human development, and renewables as drivers of the load capacity factor: New evidence from Bucharest Nine (B-9) countries

Summary/Abstract: Research background: Many studies on the effects of economic activities on the environment indicate that our world has exceeded many critical thresholds, and that the biosphere's future is at risk. In addition, the ability of our planet to renew its natural resources and heal itself keeps our hopes for our future alive. Purpose of the article: The impacts of economic activities on environmental quality are typically measured according to the Environmental Kuznets Curve Hypothesis. However, a new variable called the load capacity factor (LCF) is used to comprehensively assess these impacts. Therefore, this study investigates the impact of economic activities on environmental sustainability through the load capacity factor (LCF), a comprehensive indicator calculated as the ratio of biocapacity to ecological footprint for the Bucharest Nine (B-9) countries (Bulgaria, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, and Slovakia), using annual data for 2001-2022. Methods: The research employed feasible generalized least squares (FGLS) and panel-corrected standard errors (PCSE) to reveal the long-run relationship between variables such as economic growth, energy efficiency, human development, and renewable energy (REN) consumption. Findings & value added: Our empirical findings reveal that economic growth and energy efficiency reduce the LCF, indicating increased environmental degradation. Conversely, human development and renewable energy consumption have positive impacts on LCF. Additionally, our results confirm the load capacity curve (LCC) hypothesis, suggesting a U-shaped relationship between income level and LCF. Our results suggest that policymakers and administrators in the B-9 countries must take concrete steps to support human development, ensure inclusive economic growth, and improve renewable energy policies. Since energy efficiency alone cannot provide the necessary savings, it is recommended that efficiency improvement policies be supported by energy-saving practices.

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