Renewable Energy 186 (2022) 547e561

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Renewable Energy
journal homepage: www.elsevier.com/locate/renene

Renewable energy, urban primacy, foreign direct investment, and

value-added in European regions
Devesh Singh
Kaposvar University, Guba Sandor, Utca -40, Somogy County, 7400, Hungary

a r t i c l e i n f o a b s t r a c t

Article history: This study examines the relation among renewable energy consumption, urban primacy, net FDI inflow,
Received 9 July 2021 and value-added in manufacturing, construction and mining, services, and agriculture sectors from 2000
Received in revised form to 2019 in four-panel of European regions, Western Europe (WE), Eastern Europe (EE), Northern Europe
4 January 2022
(NE), and Southern Europe (SE). This research uses the 3SLS simultaneous equation estimation as the
Accepted 7 January 2022
main methodology and the panel data cointegration test to check the stationarity. The results show the
Available online 12 January 2022
causality among the renewable energy consumption and agriculture sectors is positive in NE and SE
region and negative in EE and WE region. Construction and mining sectors have no causality in SE and EE
Keywords:
Gross value added
regions, and, bidirectional causality in NE and WE regions with renewable energy. Finally, the service
FDI sector and agriculture sector have bidirectional causality with renewable energy consumption in EE, WE,
Urban primacy NE, and SE regions.
Renewable energy © 2022 Elsevier Ltd. All rights reserved.

1. Introduction (population growth, consumer preferences, life style, governance,

It has been argued by the policymakers, academicians, econo-
mists, and environmentalists whether, and to what extent the
countries depend on oil and natural gas resources. History showed
the jeopardized situation in 1970 due to dependence on nonre-
newable resources of energy. Another issue with the nonrenewable
resources is an alarming concern of global warming to the world so,
the United Nations adopted the resolution of renewable resources
of energy to promote sustainable development which has the
greatest positive impact on the global energy supply [1].
Scientific communities acknowledge that the study of renew-
able energy in urban primacy is critically important for the welfare
of the growing population of urban regions and to achieve a sus-
tainable city's goal. The topic of renewable energy is well discussed
throughout the world, and more coherently in industrialized
countries due to the importance of its role in mitigating the climate
change effect [2]. However, according to Ref. [3] there is a lack of
coordination in the topic and to make the future urban energy
system more sustainable, so, future research should be focused on
the environmental drivers (climate conditions, resource availabil-
ity), economic drivers (income, commodity production), techno-
logical drivers (technology use and availability) and social drivers
E-mail address: Dev.singh.ece@gmail.com.
actors' interest).
The industrial structure and distribution of value-added across
industrial sectors in the EU are characterized as, services industries
account 71% of total value-added, manufacturing industries ac-
count 18.3%, utilities and construction account 7.7%, agriculture,
and fishing account 2.2%, and mining industry account least value-
added 0.8% [4]. Although the manufacturing sector added less than
one-fifth of industrial value-added, within all four industrial sec-
tors, manufacturing sector account largest share of annual indus-
trial energy consumption, generally followed by the mining,
construction, and agriculture sector. The European country's main
source of energy is fossil fuel whose supply is limited, their trans-
port and extraction cause land, air, and water pollution, and, in-
creases the global warming risk. While renewable energy is less
risky to the environment and limitless abundant in nature. It has
been acknowledged that the European Union (EU) states still did
not achieve the targets set of the share of renewable energy in gross
final energy consumption, industrial cooperation joint support
schemes or joint projects among the different sectors should be
intensified to achieve the production of renewable energy target
[5]. Although, EU-28 had been achieved some progress in curbing
the use of non-renewable resources. Furthermore, achieving the
final goals requires regular and updated investigation and effort [6].
Therefore, the renewable energy issue is a prominent topic be-
tween researchers, academicians, policymakers, environmentalist,

https://doi.org/10.1016/j.renene.2022.01.025
0960-1481/© 2022 Elsevier Ltd. All rights reserved.
D. Singh
and civil servants, and continuous updated research and policy
suggestion is important to achieve the sustainability goal.
Drawing inspiration from the above empirical literature, this
study, focusing on European countries and attempt to fill the
literature gap by answering the following question i) First, how
urban primacy, FDI, four sectors of value-added (agriculture sector,
mining, and construction sector, manufacturing sector, and service
sector) relate with the renewable energy consumption in the
Eastern Europe (EE), Southern Europe (SE), Northern Europe (NE),
and Western Europe (WE) regions? ii) Second, does unbalanced
urbanization influence renewable energy consumption? Although
the topic of renewable energy consumption is vastly discussed in
prior literature, research on the effects of urban primacy and value-
added of all four sectors is underrepresented. Therefore, to the best
of the authors' knowledge, this is one of the first studies that
simultaneously investigate urban primacy, value-added of all four
sectors in single research for the EE, SE, WE, and NE regions.
Further, the novelty of this research is noticed through addressing
the following issue. First, whether the country's population lives in
a primacy leads to promoting renewable energy. Second, find and
discuss the role of different industrial sectors in renewable energy
over the year 2000e2019 in European regions. To do this author
considered a homogeneous panel of countries based on their sim-
ilarity in basic economic structure and geographical proximity, the
bifurcation of four groups is according to the [7]. The findings of this
study are immensely important to the design of the European
Union environmental policy to achieve the goal of sustainable
development.
This paper is divided into five sections. Section 2, presents a
brief literature review about renewable energy and urban primacy,
renewable energy and FDI inflow, and, renewable energy and
value-added in different sectors. Section 3, contains material,
methods, and variable discerptions. Section 4, presents results and
discussion. Section 5, present the conclusion, policy recommen-
dations, limitation, and recommendation for future research.
2. Brief literature review
Immense studies had been empirically discussed and inten-
sively analyzed the factors related to renewable energy. These
factors include economic growth, FDI, trade, CO2 emission,
renewable and non-renewable energy consumption, urbanization,
financial development, tourism, and transportation in different
geographical areas, countries over different periods and use the
various empirical methodology [2,6,8e14]. We identify three as-
pects of the literature that address the nexus among renewable
energy and urban primacy, renewable energy and FDI inflow, and
renewable energy and sectoral value-added.
2.1. Recent research on renewable energy and urban primacy
The number of inhabitants in the world is continuously
increasing and it is doubled since 1960, this population will reach
nine billion by 2050. Many cities have a target to adopt 100%
renewable energy models such as Munich and Copenhagen will
produce their 100% electricity from renewable sources and become
carbon-neutral cities by 2025. The energy produced from wind,
biomass (remains of corps residuals, agriculture and livestock
waste, urban or industrial residuals, and wastewater), and solar is
the main source of renewable energy that is used in cities for
electricity generation [15]. The renewable source such as solar
energy is an effective, environmentally friendly, and prominent
source of energy in growing urbanization, and continuous up-
gradation of technology in the growing production of photovol-
taic equipment and thermal solar collector helping to achieve the
548
Renewable Energy 186 (2022) 547e561
sustainable development goal, without hindering normal activity. It
is speculated that the global generation of solar energy will reach
337 GW in 2030, and 1089 GW in 2050 [16].
[2] analyze the importance of renewable energy in urban areas
through bibliometric techniques using the Scopus Elsevier database
from 1977 to 2017. The results show that China, India, the United
States, the United Kingdom, Germany, and Italy are the main
researched countries. The scientific community acclaims that for
the growing urban population renewable energy generation is a
vital component. The same consciousness reflected through the
policy creations to mitigate the climate change effect and welfare of
a growing urban population. So, it is recommended to promote the
use of renewable energy and further research in urban areas for the
betterment of sustainable urban development.
[17] estimated the urban primacy and urbanization factors from
2005 to 2017 by the fixed Tobit model and stochastic model,
exploring how the varied urbanization affects the renewable en-
ergy produced by the water source. The result shows that the effect
of urbanization and urban primacy on renewable sources of energy
can be positive or negative is depending on the stages of urbani-
zation development and the sources of energy. Further, they also
show that the other important factors such as technology innova-
tion, FDI, and industrial structure are positively affecting the
renewable source of water energy in industrial utilization, while
environmental regulation has an insignificant effect in China's
provinces.
Although renewable energy is important for sustainable urban
development, it has been challenging to energize the cities, due to
limited technology advancement. Ref. [18] discussed the future of
renewable energy in urbanization through a comparative study
using the case of Hongkong and Vancouver. The result indicated
that the ancient hydrocarbon energy was limited to energize the
cities and urban areas. So new technology for renewable energy is
important to increase the efficiency of renewable energy produc-
tion, but it covers only a frictional number of populations and, at
present, it appears that no realistic possibility to replacement of
fossil fuel with renewable energy sources in the majority of cities.
Substantial studies discussed the relationship between renew-
able energy with urbanization, urban areas, and cities. Although the
unbalanced urbanization directly related to environmental pollu-
tion [19]. According to the author's knowledge, no study discusses
exactly the relation between renewable energy and urban primacy,
however, there is a clear difference between the process of ur-
banization and urban primacy. The urban primacy is meant to be
the result of unbalanced urbanization in the country [17]. While,
according to Ref. [20] urban primacy is the ratio of the largest city
population to the urban population.
Therefore, overall, in the scientific community still there is less
information and the existence of a policy gap about urban primacy
and renewable energy which can vouch for renewable energy in
the welfare of growing urbanization. Thus, it is a need to investigate
renewable energy in urban primacy for the betterment of sus-
tainable urban development and this study fills this literature gap.
2.2. Renewable energy and FDI
The relation between renewable energy and FDI has been dis-
cussed by the researchers in substantial amounts. Ref. [21] inves-
tigated the contribution of FDI inflow determinants in renewables
and nonrenewable energy, throughout 1990 to 2018 using fully
modified ordinary least squares (F.M.O.L.S.), Augmented Mean
Group estimator (AMG), dynamics ordinary least squares (D.O.L.S.),
Common Correlated Effects Mean Group Estimator (CCEMG) and
Cross-sectional Autoregressive Distributed Lag Estimators (CS-
ARDL) methods in BRICS (Brazil, Russia, India, China, and South
D. Singh
Africa) countries from 1990 to 2018. The results showed that in the
long run FDI inflow impacts both renewable and nonrenewable
energy positively, however, the magnitude of this impact is higher
for the case of renewable energy. The recommendation suggests
that stable and long-term policy in building renewable infrastruc-
ture which ultimately enhances sustainable growth is necessary.
[22] investigated the impact of finance, FDI inflow, and tech-
nological innovation on renewable and nonrenewable energy on 69
border road imitative (BRI) participation countries from 2000 to
2014 using the Generalized Method of Moments (GMM). The re-
sults showed that FDI, technological innovation, and economic
growth negatively influence renewable energy while financial
development has a positive impact. So, the results recommended
the promotion of financial development in BRI countries.
[23] analyzes the relation between FDI inflow and renewable
energy production in BRICS and Turkey, using panel autoregressive
distributed lag test and Pedroni co-integration test from 1996 to
2015. The result supported the long-run relation between FDI
inflow and renewable energy production and showed that in long
run FDI negatively influences renewable energy production.
Therefore, the policymakers have to promote incentive policies to
channel from nonrenewable energy sources to renewable energy
sources.
[24] presented the dynamic relation between FDI, renewable
energy, carbon emission, and economic growth from 1979 to 2017
using Morlet Wavelet analysis for China. They found the connection
among the variables and robust lead and lag linkage. According to
an economic point of view wavelets analysis confirm that the
renewable energy and FDI inflow helps to enhance the economic
condition, also, FDI inflow enhances the environmental degrada-
tion in long run. Thus, it is necessary to improve the utilization
mechanisms and production of renewable energy, improvement of
market structures, and policy support in various regions and
sectors.
[25] investigated the role of FDI inflow and renewable energy in
mitigating climate change through governance support. They used
the dynamic heterogeneous estimation technique in 47 Sub-
Saharan African countries from 1990 to 2017. Their empirical re-
sults reveal that renewable energy and greenhouse gasses have
inverse relation, and climate change and FDI inflow confirmed the
pollution haven hypothesis. The FDI inflow and governance are
directly proportional while renewable energy is indirectly propor-
tional to FDI inflow.
Given this discussion, we anticipate that in the short run FDI
inflow uses nonrenewable energy sources and has a negative
impact while in the long run FDI inflow has a positive impact on
renewable energy uses. This study is the continuation of previous
studies and fills the literature gap by investigating the renewable
energy consumption and FDI inflow with the updated period and
new bifurcation of European countries panel groups.
2.3. Renewable energy and value-added in different sectors
The impact of value-added on renewable energy consumption
has also been investigated vastly [9]. investigated the impact of
renewable energy (case of wind energy) on the value-added and
employment of Germany's municipal for the year 2011 using
qualitative methods. They analyze the three stages such as
manufacturing, planning and installation, operation and mainte-
nance, and system operator of wind energy value chain. The result
indicated that the manufacturing stage contributed the highest in
municipal value-added and local employment. Therefore, renew-
able energy can help the communities in restructuring the energy
system in a region and create a decentralized energy supply.
A recent study by Ref. [6] explored the linkage between
549
Renewable Energy 186 (2022) 547e561
renewable energy consumption, value-added (services value-
added and manufacturing value-added), and Co2 emission from
1990 to 2015 in 102 countries classified by five income levels: high-
income countries, lower-middle-income, upper-middle-income,
lower-middle-income and lower-income countries using Granger
causality and GMM estimation. The result indicated that renewable
energy consumption has been negatively impacting industrial and
services value-added in lower-middle-income and higher middle-
income countries in respective comparison to upper-middle-
income countries. While overall impact on global panel renew-
able energy consumption contributes positively to both service and
industrial values added. They recommended that subsidizing and
encouraging business may help the government to promote
pollution-free economic development.
[14] examines the FDI investment in services, manufacturing,
mining, and financial sector, and its impact on renewable energy
consumption from 1985 to 2012 in 74 countries group based on
income, and using BlundelleBond dynamic panel estimation. The
estimates indicate that the renewable energy consumption sectoral
FDI and its magnitude vary according to industrial sectors. Overall,
the FDI finding shows the FDI halo effect, reduces the usage of
nonrenewable energy consumption. The upper-middle-income
countries' economic growth is an important driver of nonrenew-
able energy consumption.
[26] analyzed the dynamic linkage between renewable and
nonrenewable energy consumption, agriculture value-added, and
per capita Co2 emission for the period 1990e2014 in seven Euro-
pean countries using OLS, FMOLS, and DOLS methods. As result,
they noticed a positive relationship between renewable energy
consumption, agriculture value-added, Co2 emission, and eco-
nomic growth in the long run. In policy implication, they recom-
mended that government should have to support and encourage
the investment to improve the infrastructure for renewable energy,
biogas, and small power station that can solve the problem of
electricity and heat. Additionally, investment subsidies and tax
benefits stimulate the use of renewable energy sources in
agriculture.
Empirical literature shows that the relationship between
renewable energy and value-added is varied, depending on the
sectors and regions. Further from the literature review author
observed that literature of linkage between renewable energy and
value-added are dissociated. So, there is a lack of homogeneity,
there is a need to fill this gap by collectively studying all four sectors
(service, mining and construction, and manufacturing) value-
added with renewable energy.
Overall, in the course of the literature review, the author found
the following literature gap. First, no study has been conducted
focusing on renewable energy consumption and urban primacy in
the author's knowledge. Second, however, the sectoral study of GVA
is important for the EU sustainable development goal, little atten-
tion has been paid to how the sectoral GVA is related to renewable
energy consumption. Further, previous studies have limitations
such as the regions sample homogeneity, especially for the Euro-
pean region. European regions differ in many aspects that have an
impact on the environment for example EE group of countries in
terms of their legal, institutional, political, and economic environ-
ment or framework different from the WE group of countries. This
study fills this gap and investigates, the causation between
renewable energy consumption and GVA output of mining and
construction, agriculture, services, and manufacturing sectors.
Further, the empirical literature shows that the previous studies
conducted on the relation of renewable energy consumption and
value-added are dissociated, and the construction and mining
sector is not properly represented with renewable energy con-
sumption in industrial sector study. Therefore, those studies cannot
D. Singh
provide efficient policy-oriented and objective-based results and a
gap exists in terms of policy guidelines for reindustrialization in
European regions. Thus, this study has been conducted to fill this
literature gap by focusing on renewable energy consumption, ur-
ban primacy, FDI inflow, and value-added of the service sector
(SVA), agriculture value-added (AVA), manufacturing value added
(MVA), and construction and mining value added (CMVA).
3. Material and methods
3.1. Data and variable description
The empirical estimation of this study uses panel data of Euro-
pean regions EE, SE, WE, and NE regions spanning of 2000e2019
from World Bank's World Development Indicator (WDI) open-
source database. The countries considered for this empirical study
are reported in Table 1. The four-panel groups used in this article
are characterized by a similar economic structure, similar trans-
formation of external factors, and similar economic development
[7,27,28]. In this study, the author employs the four-panel groups of
the European region using FDI (net inflows in % of GDP), renewable
energy (in % of total final energy consumption), urban primacy
index which is the ratio of the largest city population to the
country's urban population, and industrial value-added of the
agriculture sector, mining and construction sector, manufacturing
sector and service sector in terms of % of GDP are the main
variables.
3.2. Methodology and modeling
This article aims to find the linkage among the variables
renewable energy, urban primacy, net inflow of FDI, and value-
added of the four sectors (manufacturing, mining and construc-
tion, services, and agriculture and fishing). The methodology of this
study is close to the [6]. This research uses the 3SLS simultaneous
equation approach because of its merits over the OLS and 2SLS
regression. The 3SLS approach estimates all parameters in the
equation at once and allows correlation between the error terms
across the various equations in the equations to be analyze.
Therefore, considering the internal correlation among the error
terms and explanatory variables in the specific equation, the
simultaneous equation can be biased if it is estimated through the
OLS regression. So, the 3SLS method is more robust and it addresses
the correlation between error and endogeneity, this method is
time-tested and used by various researchers [29e32]. The endo-
geneity problem is solved by using a set of instrumental variables. It
could be obvious that the endogeneity between the GVA could
occur so, while we considered one GVA for a single sector the other
three GVA are considered as endogenous variables. All other right-
hand-side variables are considered explanatory instrumental and
exogenous to the system. The basic specification for renewable
energy consumption is described by their exogenous variables and
present through the following expression [30,31].
REl_ ¼ f ðFDIl_; UP l_; GDPPC l;_ Ll_; T l_; I l_; GVAl_ Þ
Table 1
List of the selected countries of the empirical analysis.
Panel
Northern Europe
Southern Europe
Western Europe
Eastern Europe
Renewable Energy 186 (2022) 547e561
In this study urban primacy (UP) is defined as the ratio of the
largest city population in a country divided by the urban population
of the country [20]. Therefore, the urban primacy of this study is:
LPU it
UP it ¼ (2)
TUP it
Where UPit stands the urban primacy index; LPU is the population
in the largest city; TUP indicates the urban population in a country;
i and t describe the country and time indices.
Further, equation (1) parameters are described as REi is
renewable energy consumption in the percentage of total final
energy consumption; FDI is a net inflow of foreign investment in
the percentage of GDP; UP is Urban primacy index; GDPPC is the
GDP per capita growth in annual percentage terms; I is inflation in
terms of consumer prices in annual percentage; L is labor force
participation rate in percentage of the group ages 15e64; T is in-
ternational trade in the percentage of GDP; GVAs is the gross value
added of four sectors (SVA, MVA, AVA, and CMVA), where SVA is
services value added in terms of percentage of GDP; MVA is
manufacturing value added in terms of percentage of GDP; AVA is
agriculture, forestry, and fishing, value-added in terms of percent-
age of GDP; and CMVA is construction and mining, value-added in
terms of percentage of GDP.
The log liner form of equation (1) is written as:
ln(RE)i ¼ b0 þ b1 ln(FDI)i þ b2 ln(UP)i þ b3 ln(GDPPC)i þ b4
ln(L)i þ b5 ln(T)i þ b6 ln(I)i þ b7 ln(GVAs)i þ εi (3)
Since this empirical study considers panel data, Eq. (3) can be
written in time frame form as follows:
ln(RE)it ¼ b0 þ b1 ln(FDI)it þ b2 ln(UP)it þ b3 ln(GDPPC)it þ b4
ln(L)it þ b5 ln(T)it þ b6 ln(I)it þ b7 ln(GVAs)it þ εi (4)
Where i ¼ 1, …,n denotes country and the total sample countries in
this study is 24; t ¼ 1, …,t denotes time series of the selected period
from 2000 to 2019; ln is the natural logarithmic of country's urban
primacy (UP), renewable energy consumption (RE), net FDI inflow
(FDI), GDP per capita (GDPPC), labor force participation rate (L),
trade (T), inflation (I), and value-added of different sectors (GVAs).
The four ways linkage among renewable energy consumption,
urban primacy, FDI inflow and values added are explained by the
following simultaneous equations [6]:
ln(RE)it ¼ b0 þ b1 ln(FDI)it þ b2 ln(UP)it þ b3 ln(GDPPC)it þ b4
ln(L)it þ b5 ln(T)it þ b6 ln(I)it þ b7 ln(GVAs)it þ εi (5)
ln(FDI)it ¼ a0 þ a 1 ln(RE)it þ a2 ln(UP)it þ a3 ln(GDPPC)it þ a4
ln(L)it þ a5 ln(T)it þ a6 ln(I)it þ a7 ln(GVAs)it þ εi (6)
ln(UP)it ¼ m0 þ m1 ln(FDI)it þ m2 ln(RE)it þ m3 ln(GDPPC)it þ m4
(1)
ln(L)it þ m5 ln(T)it þ m6 ln(I)it þ m7 ln(GVAs)it þ εi (7)
Countries
Denmark, Finland, Ireland, Norway, Sweden, United
Kingdom
Greece, Italy, Portugal, Slovenia, Spain, Albania
Austria, Belgium, France, Germany, Netherland, Switzerland
Czech Republic, Hungary, Poland, Romania, Ukraine, Slovak Republic
550
D. Singh Renewable Energy 186 (2022) 547e561

ln(GVAs)it ¼ g 0 þ g 1 ln(FDI)it þ g2 ln(UP)it þ g3 ln(GDPPC)it þ g4
ln(L)it þ g5 ln(T)it þ g6 ln(I)it þ g7 ln(RE)it þ εi (8)
Equations (5)e(8) is the common equation for gross value
added, where the term GVA depends on the four value-added
sectors. So, by changing the GVAs value from AVA, CMVA, MVA,
and SVA one by one in equations (5)e(8), simultaneous equation of
each sector can be obtained.
4. Results and discussion
The author performs the descriptive statics of all variables used
in this research, present in Table 2 and correlation among the
variables in Fig. 1. From Table 2 the aggregative tendencies of the
observations are shown by the mean. The quartiles in descriptive
statics represent the location of an ordered data set. The first
quartile and third quartile show the data set in 25 percentile (data
set of lower 25%) and 75 percentiles (data set of lower 75%). The
correlation matrix in Fig. 1 shows the degree of linear association
among the variables. Although the correlation test does not show
causation or impact, it gives preliminary evidence of the linear
bivariate co-movements of the variables. The correlation matrix
reveals renewable energy consumption has a 0.304, negative
correlation with FDI inflow and a 0.398 positive correlation be-
tween urban primacy. The correlation between renewable energy
consumption and different sectors varies, it is positive with the
construction and mining sector, and agriculture sector, while it is
negative with the services and manufacturing sector. It is noted
from the correlation matrix that the, highest correlation is 0.668
between service and manufacturing value-added. Overall, the cor-
relation exists on account by chance of coincidence in the sample
variables not present in the entire population.
Testing the stationarity of the variable through the unit root test
is the important condition before performing the simultaneous
equation models. The panel unit root test is the most powerful tool
to check the stationarity of the panel data structure because it is
more robust compared to other unit root tests for the time series.
The author used more than one-panel unit root test because of the
statical limitation of each test. Among the many panel unit root
tests LevineLineChu (LLC) and ImePesaraneShin (IPS) are the
most popular [33,34]. The alternative hypothesis of the unit root
test assumption is that there is no unit root exists in the series and
the variables are stationary while, the null hypothesis assumption
is that there is a unit root and the variables are nonstationary.
Table 3 (a) and (b) depict the panel unit root test result. It has been
observed that all variables in Table 3 (a) and (b) reject the null
hypothesis, accept the alternate hypothesis. Which implies that all
variables are significant and stationary at the first difference.
Table 4 (a), (b), (c), and (d) shows the model accuracy and model
performance. Coefficient of Determination (R2) and Root Mean
Square Error (RMSE) are the most widely used methods to deter-
mine the performance of models. The low RMSE value presents the
occurrence of error and indicates the accuracy of the model, low
value of RMSE implies a better model. The R2 is indicating the
model fitted along the regression line and, the high R2 value pre-
sents better model performance. The Chi-square value indicates the
significance of relationships among the dependent variables, here
the null hypothesis is no relation between the dependent variables.
In model summary tables all models are significant with p < 0.5, so
the null hypothesis is rejected and accepts the alternate hypothesis.
It implies the existence of relationships among the variable's
renewable energy, urban primacy, FDI inflow, and value-added is
significant, we can proceed with models.
Since our main focus in this study is renewable energy con-
sumption, so endogenous variable renewable energy consumption
relation is emphasized w.r.t other variables urban primacy, sectoral
value-added, and net FDI inflow, therefore the author elaborated
the results in terms of renewable energy.
Energy use and productivity in the agriculture sector are directly
related, and growing productivity in the agriculture sector required
an increasing amount of energy. Regards of the system of simul-
taneous equation for AVA from Table 5, the renewable energy
estimation result shows that the agriculture value added has a 0.1%
significant relation in all four regions. Every 0.1% increase of AVA,
renewable energy consumption decreases by 0.67% in EE, and 1.10%
decrement in WE while in the case of NE and SE it increases by
1.884% and 0.389% respectively. Therefore, agriculture productivity
has positive causality with renewable energy consumption in NE
and SE regions and negative causality in EE and WE region. It im-
plies that still, EE and WE regions agriculture productivity have a
dependency on fossil fuel. The finding is similar to the [26,35]. The
FDI inflow negatively interrelates with renewable energy con-
sumption in all four European panel groups because, in the
beginning, the company needs the energy for production and
choose the nonrenewable source of energy such as fossil fuel,
however, for the long term this relation can be positive, a well-
established company likely to rely on sustainable and renewable
source of energy [36]. Further, the urban primacy and, renewable
energy consumption, have bidirectional positive relationships in
EE, and WE regions and negative in the SE region, this result is
similar to Ref. [37]. The process of urbanization leads to increases in
the overall energy consumption and depends on the region. It is

Table 2
Descriptive statics.

lnUP lnT lnL logAVA lnFDI lnGDPPC

Min. 2.916 Min. 3.816 Min. 4.084 Min. 0.590 Min. 0.7897 Min. 6.216
1st Qu. 1.937 1st Qu. 4.174 1st Qu. 4.204 1st Qu. 0.227 1st 2.523 1st 1.665
Median 1.707 Median 4.435 Median 4.274 Median 0.667 Median 3.651 Median 2.235
Mean 1.708 Mean 4.488 Mean 4.270 Mean 0.750 Mean 2.979 Mean 2.051
3rdQu. 1.354 3rdQu. 4.776 3rd 4.338 3rdQu 1.070 3rdQu 3.960 3rdQu. 2.714
Max. 0.739 Max. 5.477 Max. 4.433 Max. 3.199 Max. 4.841 Max. 3.526

logCMVA lnSVA lnMVA lnRE lnI

Min. 2.616 Min. 3.677 Min. 1.403 Min. 0.159 Min. 0.787
1st Qu. 3.047 1st Qu. 4.018 1st Qu. 2.433 1st Qu.: 1.985 1st 1.379
Median 3.223 Median 4.126 Median 2.709 Median 2.594 Median 2.296
Mean 3.205 Mean 4.098 Mean 2.646 Mean 2.522 Mean 1.952
3rdQu. 3.358 3rdQu 4.197 3rdQu 2.935 3rdQu 3.243 3rd 2.498
Max. 3.696 Max. 4.271 Max. 3.543 Max. 4.312 Max. 3.926

Source: author, Note: UP ¼ urban primacy, T ¼ trade, AVA ¼ agriculture value added, FDI ¼ net inflow of foreign direct investment, GDPPC ¼ gross domestic product per capita,
CMVA ¼ construction and mining value added, SVA ¼ services value added, MVA ¼ manufacturing value added, RE ¼ renewable energy consumption and I ¼ inflation

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D. Singh Renewable Energy 186 (2022) 547e561

Figure-1. Correlation matrix.

Source: author, Note: UP ¼ urban primacy, T ¼ trade, AVA ¼ agriculture value added, FDI ¼ net inflow of foreign direct investment, GDPPC ¼ gross domestic product per capita,
CMVA ¼ construction and mining value added, SVA ¼ services value added, MVA ¼ manufacturing value added, RE ¼ renewable energy consumption and I ¼ inflation, *p < 0.05,
**p < 0.01, ***p < 0.001.

Table 3 (a)
Panel unit root tests results, LevineLineChu (LLC) at the first difference I (1).

EE NE SE WE

Variables Intercept Intercept and Trend Intercept Intercept and Trend Intercept Intercept and Trend Intercept Intercept and Trend

UP 3.437*** 2.539*** 2.791*** 2.015* 5.522*** 2.997*** 3.778*** 3.199***

FDI 6.145*** 4.774*** 2.245** 2.842** 5.545*** 4.193*** 1.591* 4.643***
RE 2.217** 1.379* 2.506*** 3.604*** 6.498*** 5.323*** 2.403*** 2.272**
AVA 5.157*** 3.729*** 6.157*** 5.803*** 1.622** 4.361*** 8.425*** 7.526***
CMVA 6.396*** 5.877*** 4.521*** 3.731*** 2.619*** 2.044** 5.351*** 5.292***
MVA 5.189*** 4.053*** 3.347*** 3.959*** 3.099*** 3.401*** 5.161*** 4.789***
SVA 6.292*** 6.023*** 5.102*** 4.317*** 3.191*** 2.826*** 5.487*** 5.320***
GDPPC 7.850*** 6.052*** 7.618*** 5.927*** 6.547*** 4.983*** 8.912*** 7.038***
Inflation 7.247*** 5.761*** 7.629*** 5.934*** 10.43*** 8.772*** 7.737*** 6.097***
Labor 2.858*** 0.9098* 2.506*** 1.793* 2.823*** 2.165** 4.693*** 3.567***
Trade 6.068*** 5.725*** 4.947*** 3.512*** 6.287*** 5.065*** 6.263*** 5.125***

*p < 0.05, **p < 0.01, ***p < 0.001.

noted that the commercial energy consumption and residential
energy consumption during the process of urbanization can be
different and energy efficiency has a greater correlation in high-
income countries [38].
Table 6 shows the outcome for CMVA, mining has a significant
role in renewable energy production because of the dependency of
green technology equipment on metal and minerals, such as solar
power plant relies on copper, aluminum, and cadmium to manu-
facture the photovoltaic panels. The results demonstrate that the
mining and construction sector in EE and SE region is insignificant
for renewable energy consumption. However, it is positively sig-
nificant in WE and NE regions, the result is different than the
previous literature which shows the mining industry impacts
renewable energy. The reason for the positive relation is because

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Table 3 (b)
Panel unit root tests results, ImePesaraneShin (IPS) at the first difference I (1).

EE NE SE WE

Variables Intercept Intercept and Trend Intercept Intercept and Trend Intercept Intercept and Trend Intercept Intercept and Trend

UP 3.458*** 4.7666*** 2.111*** 3.842*** 4.777*** 1.911** 3.573*** 2.175**

FDI 7.098*** 5.641*** 5.157*** 3.327*** 4.374*** 5.900*** 5.246*** 3.718***
RE 3.17*** 4.4877*** 3.789*** 2.781*** 4.474*** 6.037*** 2.418*** 1.843**
AVA 5.393*** 3.629*** 5.327*** 4.795*** 4.582*** 6.370*** 7.952*** 7.451***
CMVA 5.408*** 4.479*** 4.104*** 3.009*** 2.624*** 2.491*** 5.311*** 4.484***
MVA 5.159*** 3.682*** 3.193*** 2.743*** 3.134*** 2.654*** 4.682*** 3.677***
SVA 5.902*** 4.791*** 4.483*** 3.298*** 2.0628** 2.576*** 5.222*** 4.397***
GDPPC 7.692*** 5.949*** 7.057*** 5.257*** 4.720*** 6.291*** 8.443*** 6.602***
Inflation 5.887*** 4.178*** 7.065*** 5.304*** 6.635*** 8.326*** 7.516*** 5.852***
Labor 2.744*** 1.687* 2.203*** 3.189*** 1.812** 2.651*** 5.217*** 3.719***
Trade 5.901*** 4.824*** 4.283*** 2.669*** 3.884*** 5.341*** 5.695*** 4.069***

*p < 0.05, **p < 0.01, ***p < 0.001.

Table 4
Model summary and performance -.

Table 4 (a) model summary and performance of agriculture value added, AVA

Eastern Europe Western Europe Norther Europe Southern Europe

RMSE R2 Chai2 P RMSE R2 Chai2 P RMSE R2 Chai2 P RMSE R2 Chai2 P

ln RE 0.53 0.49 379.89 0.00 0.44 0.74 869.56 0.00 0.70 0.67 413.31 0.00 0.28 0.79 480.67 0.00
ln UP 0.29 0.52 333.47 0.00 0.39 0.64 626.34 0.00 0.13 0.81 533.24 0.00 0.43 0.42 153.53 0.00
ln FDI 0.20 0.02 17.87 0.01 0.48 0.04 17.75 0.01 0.42 0.19 33.68 0.00 0.05 0.56 177.72 0.00
ln AVA 0.44 0.46 165.39 0.00 0.31 0.35 194.76 0.00 0.31 0.48 293.49 0.00 0.54 0.58 315.75 0.00
Table 4 (b) model summary and performance of service value added, SVA

ln RE 0.53 0.48 347.22 0.00 0.47 0.70 770.46 0.00 0.77 0.60 280.64 0.00 0.25 0.82 619.39 0.00
ln UP 0.29 0.52 368.24 0.00 0.41 0.60 555.13 0.00 0.12 0.85 833.04 0.00 0.43 0.41 83.91 0.00
ln FDI 0.20 0.02 10.28 0.04 0.48 0.02 37.72 0.00 0.42 0.18 47.99 0.00 0.05 0.59 217.07 0.00
ln SVA 0.06 0.38 123.06 0.00 0.05 0.23 139.57 0.00 0.07 0.52 384.36 0.00 0.08 0.73 501.44 0.00
Table 4 (c) model summary and performance of manufacturing value added, MVA

ln RE 0.51 0.51 185.93 0.00 0.48 0.68 643.43 0.00 0.91 0.45 190.07 0.00 0.27 0.80 574.23 0.00
ln FDI 0.23 0.69 507.36 0.00 0.42 0.57 454.92 0.00 0.14 0.78 605.38 0.00 0.40 0.49 208.30 0.00
ln UP 0.20 0.04 20.48 0.00 0.48 0.03 27.66 0.00 0.42 0.18 37.53 0.00 0.05 0.54 135.12 0.00
ln MVA 0.12 0.57 289.01 0.00 0.23 0.13 58.36 0.00 0.27 0.54 198.48 0.00 0.27 0.54 313.61 0.00
Table 4 (d) model summary and performance of construction and mining value added, CMVA

ln RE 0.53 0.48 272.60 0.00 0.49 0.68 639.18 0.00 0.81 0.56 242.22 0.00 0.29 0.76 321.81 0.00
ln FDI 0.29 0.53 323.40 0.00 0.42 0.57 427.62 0.00 0.13 0.82 608.05 0.00 0.37 0.57 241.67 0.00
ln UP 0.20 0.03 17.37 0.02 0.48 0.02 39.59 0.00 0.42 0.18 50.17 0.00 0.05 0.61 230.04 0.00
ln CMVA 0.10 0.27 67.79 0.00 0.14 0.16 67.38 0.00 0.17 0.38 209.81 0.00 0.11 0.58 339.49 0.00

*p < 0.05, **p < 0.01, ***p < 0.001.

these regions have introduced modern technologically advanced
small-scale mining (SSM). The recent studies by Ref. [39] presented
that the European countries extracting the minerals from SSM
operations which is less hazardous to the environment and enough
efficient to extract the resources. Similarly [12], show that the
mining sector in Europe passing through structural changes and
shifting to renewable energy to reduce the environmental impact
in Europe. Therefore, the result of this study shows that every 0.1%
increase of construction and mining value-added in it supports the
renewable energy consumption of 1.677% in WE and 3.005% in the
NE region. Further, if we consider the urban primacy as the
endogenous variable then simultaneous equation models show the
renewable energy influences the urban primacy positively in EE
and WE countries. Every 0.1% renewable energy consumption in-
creases the urban primacy 0.46% for EE region and 0.85% in WE
regions while the SE and NE regions have an insignificant relation
from renewable energy consumption to urban primacy. Therefore,
the contribution of renewable energy in urban primacy is differed
and depends on the country. According to Ref. [37] developing
nations where urbanization is in a growing phase this relation is
negative while for the developed countries where the urbanization
level is matured it supported renewable energy.
Results presented in Table 7 demonstrate that MVA is 0.1%
positively significant in WE and NE regions. It implies every 0.1%
rise in manufacturing value-added renewable energy consumption
increases 1.077% in WE and 3.005% increase in the NE region,
however, this effect is 0.821% in the SE region and insignificant
negative in the EE region, this result is consistent with the [6,40]. It
means the manufacturing industry of WE and NE successfully
adopted renewable energy sources. Similarly [41], found that
renewable energy consumption has a positive impact on the value
addition of the manufacturing industry in G7 developed countries
[42]. show that renewable energy consumption has a positive
impact on manufacturing industries' economic output in OECD
countries. Further in Table 7, a system of equation for urban pri-
macy as the dependent variable, renewable energy has a significant
and positive influence in all four European regions. Every 0.1%
increment of renewable energy consumption urban primacy rise
0.26%, 0.85%, 0.10% and 0.84% in EE, WE, NE and SE respectively.
This increment in usage of renewable energy in urban areas is
possible due to the upgraded technologies such as biomass and
photovoltaic system are energy efficient sources in urban areas.

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 D. Singh

Table 5
Estimation results for agricultural value added, AVA.

Model 1 Model 2 Model 3 Model 4

Variables EE WE NE SE

ln UP 1.611*** 0.145* 0.668*** 1.083*** 0.349** 0.637*** 0.323 0.006 0.864*** 0.266*** 0.058*** 0.796***
(16.10) (2.20) (4.95) (23.87) (2.95) (10.66) (0.74) (-0.02) (4.72) (-4.23) (-5.21) (7.40)

ln RE 0.521*** 0.113** 0.520*** 0.886*** 0.407*** 0.602*** 0.013 0.136* 0.367*** 0.619*** 0.007 1.342***
(16.10) (-3.05) (-7.26) (23.87) (-3.89) (-11.78) (0.74) (-2.43) (13.91) (-4.23) (-0.39) (8.97)

ln FDI 0.275* 0.665** 0.585** 0.200** 0.285*** 0.0792 0.001 0.350* 0.0642 4.067*** 0.211 5.046***
(2.20) (-3.05) (-3.06) (2.95) (-3.89) (-1.41) (-0.02) (-2.43) (1.00) (-5.21) (-0.39) (5.44)

ln AVA 0.280*** 0.675*** 0.129** 0.958*** 1.107*** 0.208 0.177*** 1.884*** 0.128 0.537*** 0.389*** 0.0491***
(4.95) (-7.26) (-3.06) (10.66) (-11.78) (-1.41) (4.72) (13.91) (1.00) (7.40) (8.97) (5.44)

554
ln GDPPC 0.069 0.111 0.001 0.019 0.012 0.021 0.013 0.026 0.088 0.118 0.224 0.159 0.065 0.041 0.004 0.065
(1.05) (-0.95) (-0.01) (-0.18) (-0.13) (0.20) (0.10) (0.33) (-2.25) (-0.59) (1.82) (1.82) (-1.15) (-1.11) (0.57) (-1.15)

ln I 0.132** 0.204** 0.003 0.106 0.484*** 0.536*** 0.0233 0.484*** 0.125 2.289*** 0.446 0.778*** 0.628 1.826*** 0.269** 0.628
(3.28) (-2.97) (-0.09) (1.71) (-3.75) (3.73) (0.13) (4.81) (1.17) (-4.51) (-1.32) (3.40) (0.72) (-3.33) (2.65) (0.72)

ln T 1.024*** 1.816*** 0.171* 1.113*** 0.972*** 1.097*** 0.247 0.790*** 0.582*** 0.200 0.252 0.626*** 3.131*** 2.381*** 0.289*** 3.131***
(11.69) (-11.15) (-1.97) (-6.56) (9.11) (-9.79) (-1.45) (-9.12) (15.15) (0.62) (1.23) (-4.61) (6.07) (8.60) (4.60) (6.07)

ln L 2.222*** 3.174*** 0.441 0.291 6.859*** 7.588*** 2.082* 4.744*** 2.700*** 19.09*** 0.461 4.645*** 5.300*** 2.648*** 0.314** 5.300***
(-4.32) (3.40) (-1.09) (-0.34) (-12.83) (13.23) (2.04) (8.75) (-5.22) (8.68) (-0.25) (-4.00) (6.75) (4.76) (2.97) (6.75)

Const. 0.460 4.737 7.356*** 12.427*** 20.86*** 22.74*** 2.451 14.42*** 7.480** 74.02*** 4.622 20.97*** 32.44*** 17.23*** 1.960*** 38.96***
(-0.20) (1.18) (4.75) (3.67) (9.10) (-9.01) (-0.64) (-6.74) (3.29) (-7.84) (0.62) (4.32) (-9.98) (-7.04) (-3.99) (9.15)

Source: author, t statistics in parentheses, *p < 0.05, **p < 0.01, ***p < 0.001.
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 D. Singh

Table 6
Estimation results for construction and mining value-added, CMVA.

Model 1 Model 2 Model 3 Model 4

Variables EE WE NE SE

ln UP 1.629*** 0.0377 0.115*** 1.050*** 0.399*** 0.122*** 0.795 0.357 0.701*** 0.057 0.046*** 0.239***
(14.43) (0.57) (3.61) (20.06) (3.85) (-3.98) (1.51) (-1.22) (7.14) (0.68) (3.72) (-11.64)

ln RE 0.464*** 0.0702* 0.001 0.858*** 0.498*** 0.164*** 0.021 0.196*** 0.130*** 0.081 0.037* 0.037
(14.43) (-2.00) (-0.01) (20.06) (-5.51) (6.31) (1.51) (-4.18) (8.34) (0.68) (2.48) (1.10)

ln FDI 0.071 0.467* 0.143** 0.292*** 0.446*** 0.106*** 0.034 0.692*** 0.125*** 2.790*** 1.584* 1.519***
(0.57) (-2.00) (3.18) (3.85) (-5.51) (4.03) (-1.22) (-4.18) (3.57) (3.72) (2.48) (8.31)

ln CMVA 0.854*** 0.006 0.562** 1.013*** 1.677*** 1.204*** 0.441*** 3.005*** 0.813*** 2.887*** 0.316 0.302***
(3.61) (-0.01) (3.18) (-3.98) (6.31) (4.03) (7.14) (8.34) (3.57) (-11.64) (1.10) (8.31)

555
ln GDPPC 0.0251 0.143 0.0342 0.0573* 0.049 0.056 0.020 0.021 0.102** 0.088 0.136 0.115* 0.122* 0.038 0.009 1.519***
(0.37) (-1.12) (-0.69) (2.34) (0.47) (20.06) (-0.16) (0.58) (-2.68) (-0.38) (1.10) (2.40) (2.33) (-0.84) (-1.36) (8.31)

ln I 0.208*** 0.422*** 0.0202 0.0119 0.024 0.105 0.155 0.0742 0.112 2.282*** 0.580 0.287* 4.693*** 2.259** 0.114 0.0444**
(5.60) (-6.43) (-0.69) (-0.80) (0.17) (-0.69) (-0.95) (1.56) (1.11) (-3.87) (-1.78) (2.28) (6.01) (-3.15) (-1.04) (3.10)

ln T 0.979*** 1.534*** 0.0427 0.198*** 0.559*** 0.614*** 0.188 0.065 0.529*** 0.332 0.374 0.351*** 0.230 2.559*** 0.161** 1.289***
(11.35) (-8.33) (0.50) (-4.90) (5.03) (20.06) (-1.34) (1.56) (14.17) (-0.90) (1.88) (-4.79) (0.48) (8.36) (2.76) (6.02)

ln L 3.569*** 4.800*** 0.921* 1.164*** 5.422*** 5.541*** 1.556 0.169 2.620*** 22.67*** 0.539 1.287* 2.539*** 0.459 0.193* 0.303*
(-6.67) (4.50) (-2.11) (5.75) (-8.85) (8.15) (1.72) (-0.64) (-5.38) (9.02) (0.31) (-1.98) (4.34) (-0.87) (-2.43) (-2.21)

Const. 3.835 4.598 6.123*** 1.074 18.83*** 20.05*** 3.663 2.413* 6.129** 94.81*** 2.659 9.703*** 11.51*** 6.130* 0.242 1.635
(1.78) (-1.13) (4.14) (-1.34) (7.40) (-7.11) (-1.04) (2.33) (2.78) (-8.80) (-0.36) (3.57) (-4.22) (-2.41) (0.60) (-1.89)

Source: author, t statistics in parentheses, *p < 0.05, **p < 0.01, ***p < 0.001
Renewable Energy 186 (2022) 547e561
 D. Singh

Table 7
Estimation results for manufacturing value-added, MVA.

Model 1 Model 2 Model 3 Model 4

Variables EE WE NE SE

ln UP 1.396*** 0.116 0.404*** 1.073*** 0.385*** 0.232*** 4.353*** 0.281 1.081*** 0.374*** 0.0379** 0.523***
(8.55) (-1.43) (12.71) (20.73) (3.63) (-4.84) (8.68) (0.98) (-6.49) (-6.15) (-2.91) (-9.97)

ln RE 0.262*** 0.072* 0.001 0.859*** 0.454*** 0.261*** 0.106*** 0.136** 0.100*** 0.842*** 0.0405* 0.820***
(8.55) (-2.07) (-0.03) (20.73) (-4.93) (6.34) (8.68) (-3.10) (3.59) (-6.15) (2.06) (-11.06)

ln FDI 0.145 0.482* 0.190*** 0.271*** 0.400*** 0.103* 0.0285 0.567** 0.070 2.104** 0.997* 0.453
(-1.43) (-2.07) (3.65) (3.63) (-4.93) (2.46) (0.98) (-3.10) (1.22) (-2.91) (2.06) (-0.92)

ln MVA 1.459*** 0.010 0.549*** 0.766*** 1.077*** 0.481* 0.441*** 3.005*** 0.813*** 1.181*** 0.821*** 0.018
(12.71) (-0.03) (3.65) (-4.84) (6.34) (2.46) (7.14) (8.30) (3.57) (-9.97) (-11.06) (-0.92)

556
ln GDPPC 0.074 0.130 0.044 0.076** 0.084 0.100 0.031 0.077 0.0255 0.218 0.226 0.087 0.001 0.003 0.009 0.01
(-1.34) (-1.02) (-0.88) (2.67) (0.79) (-0.85) (-0.24) (1.32) (-0.65) (0.86) (1.84) (1.11) (-0.01) (-0.07) (1.33) (0.28)

ln I 0.151*** 0.418*** 0.012 0.028 0.040 0.0073 0.074 0.003 0.234* 1.898** 0.380 0.011 0.534 1.437** 0.420*** 0.617
(4.96) (-6.34) (-0.42) (-1.68) (-0.30) (0.05) (-0.46) (0.04) (2.29) (-2.92) (-1.16) (-0.05) (0.67) (-2.77) (4.13) (-1.16)

ln T 0.765*** 1.376*** 0.0687 0.257*** 0.548*** 0.610*** 0.171 0.105 0.690*** 2.569*** 0.003 1.118*** 3.110*** 2.146*** 0.238*** 2.020***
(11.36) (-7.45) (0.81) (-5.84) (4.96) (-5.09) (-1.20) (1.60) (15.73) (-5.80) (-0.01) (9.17) (6.49) (8.22) (3.58) (6.20)

ln L 3.728*** 4.259*** 1.187** 1.724*** 5.468*** 5.877*** 1.797* 0.670 5.330*** 33.35*** 0.918 7.659*** 4.514*** 2.382*** 0.00131 3.067***
(-9.10) (3.86) (-2.63) (7.52) (-9.13) (8.84) (1.97) (-1.60) (-10.99) (11.29) (0.48) (-6.91) (6.82) (4.88) (-0.01) (7.05)

Const. 5.832*** 3.495 7.138*** 3.264*** 18.08*** 19.36*** 2.518 3.524* 18.40*** 121.0*** 0.393 28.60*** 26.76*** 14.39*** 0.553 16.46***
(3.34) (-0.84) (4.77) (-3.53) (7.15) (-6.84) (-0.71) (2.16) (8.42) (-9.47) (-0.05) (6.25) (-9.62) (-6.59) (-1.13) (-7.69)

Source: author, t statistics in parentheses, *p < 0.05, **p < 0.01, ***p < 0.001
Renewable Energy 186 (2022) 547e561
D. Singh
Many cities such as Copenhagen and Munich are keen to achieve
the target of 100% electricity production from renewable sources
and achieve the sustainable energy production target by the year
2025 [43]. Furthermore, the equation of FDI inflow, renewable
energy is negatively significant with FDI inflow in EE, WE, and NE
panel groups. The negative relation is consistent with [44]. While
there is a positive significant relation in the SE region, therefore the
results for FDI inflow and renewable energy are not homogeneous.
Similarly in addition the study by Ref. [45] notified that FDI inflow
and energy consumption relation literature are inconclusive.
The findings of Table 8 show that SVA is negatively significant
with the renewable energy consumption in WE, SE, and NE region
and, positively significant with EE region. A 0.1% increase in SVA
leads to a 7.06% decline in renewable energy consumption in WE,
an 8.44% decline in NE, 2.68% decline in SE, and a 4.23% increase in
EE countries. This positive and negative relation of renewable en-
ergy consumption and service sector result is similar to Ref. [6]. The
negative significance of service sectors with renewable energy
consumption indicates that the services sector economy in WE, NE,
and SE is still dependent on the energy produced by fossil fuel
energy [41]. There are two possibilities for the negative relation:
First [46], reported that each euro invested in the renewable energy
sector, produced 31%e41% less value-added in the Italian economy
compared to the traditional source of energy productions, so there
can be the production issue. The second possibility is that service
sector organizations are inefficient to develop technologies that
consume renewable energy. Further [47], explained that, however,
the feed-in-tariff in the renewable energy production sector ben-
efits the overall economy, but the benefits of feed-in-tariff are not
equally divided in various sectors, this effect is negative in the
services sector. So, it resulted the less renewable energy consumed
by the services sector. Further, the FDI inflow shows 5%, 0.1%, 0.1%,
and 1% significant and negative effects in EE, WE, NE, and SE
respectively on renewable energy consumption. This result is
aligned with [48] which shows that the significant and negative
relation between FDI inflow and energy intensity, and, the FDI
inflow has a significant negative spatial spillover impact on
renewable energy consumption.
The direction of causality among renewable energy, urban pri-
macy, and FDI inflow with different sectors is depicted in Figs. 2 and
3. Where arrows end indicating the direction of the causality.
5. Conclusion
This study aims to examine the causality nexus among renew-
able energy consumption, urban primacy, net FDI inflow along with
GVA of service sector, manufacturing sector, agriculture sector, and
mining and construction sectors. This research uses the data of
four-panel group EE, WE, NE, and SE European regions from 2000 to
2019, from WDI opensource database and transformed into loga-
rithm form to normalize the data. In empirical estimation, the
author used the robust LLC and IPS techniques for all variables. The
LLC and IPS shows of all variables have the first difference statio-
narity. The 3SLS simultaneous equation is applied to present the
causality among the variables. Overall, this study finds that the
causality of renewable energy consumption, urban primacy, and
FDI inflow varies with the sectors and the European regions.
The economic output of the manufacturing industry from NE
and WE European regions positively influence renewable energy
consumption and the results show the positive bidirectional cau-
sality. The manufacturing industries in these two regions success-
fully adopted renewable energy sources while the EE and SE
557
Renewable Energy 186 (2022) 547e561
regions need improvement. It implies that the EE and SE regions are
heavily dependent on fossil fuel energy, countries in these regions
urgent need for modernization of the energy sector. The
manufacturing sector of the WE and NE region is growing sus-
tainably; however, the SE and EE regions need to be focused on
their manufacturing sector and directed towards sustainable
sources of energy.
Further, the causality between the renewable energy con-
sumption and agriculture sectors has a positive interrelation in NE
and SE regions and negative in EE and WE regions. Thus, any
variation in agricultural value-added has an impact on renewable
energy consumption. The agriculture sector in EE and WE are
depending on fossil fuel energy consumption for the agriculture
value addition.
Service sector value addition has bidirectional causality with
renewable energy consumption in EE, WE, NE, and SE regions. This
bidirectional causality is positive in the EE region, and, negative in
the WE, SE, and NE regions. Service industries such as wholesale
and retail, hotel and restaurant, financial, education, and health
care services are majorly dependent on the energy produced by the
fossil fuel therefore, WE, SE, and NE regions have to adopt the
absorptive capacity to consume renewable energy. Technological
advancement can play a critical role in increasing the absorptive
capacity. Further, the technology which produces renewable energy
such as solar panels also be promoted in urban areas service
centers.
Construction and mining sectors have no causality in SE and EE
regions, and, bidirectional causality in NE and WE regions. One side
of the literature argues that construction and mining have a
negative effect on sustainability because of biodiversity loss, water
shortages, soil degradation, global warming, and damage to the
ecosystem, however, mining has a significant contribution to
renewable energy production because green technology equip-
ment depends on the metals such as copper, aluminum and cad-
mium. Therefore, the solution to this problem is the adaptation of
SSM technology.
Author observed that the technologically superior
manufacturing-oriented economies in European regions such as
WE and NE are growing sustainably because the maximum share of
renewable energy is consumed in these regions by the
manufacturing sector while the service sector is the point of
concern to achieve sustainable development goals. Therefore, the
government should have equally focus on both manufacturing and
services sectors. Government not just focuses only to generate
renewable energy to meet the increasing energy demand, also on
replacing non-renewable energy sources such as coal and fossil
fuel. The result of this study's renewable energy consumption with
different industrial sector use as to understand, which industrial
sectors of the countries are going in the right direction in the path
of sustainability and growing sustainably.
Along with the merits, this research has several limitations
which can be overcome in future research. This research is limited
to the time of 20 years therefore further research has to use the
larger panel data. Future studies may investigate the effect of
renewable energy consumption at the individual country level.
Discloser statements
There is no potential conflict of interest is reported by the
author.
 D. Singh

Table 8
Estimation results for services value-added, SVA.

Model 1 Model 2 Model 3 Model 4

Variables EE WE NE SE

ln UP 1.704*** 0.126 0.111*** 1.086*** 0.490*** 0.082*** 1.261* 0.602 0.424*** 0.075 0.0359*** 0.030
(16.57) (1.87) (-5.88) (22.56) (4.46) (8.78) (-2.24) (-1.83) (-12.01) (-1.35) (-3.46) (-1.75)

ln RE 0.507*** 0.086* 0.061*** 0.873*** 0.541*** 0.078*** 0.030* 0.205*** 0.060*** 0.240 0.056** 0.261***
(16.57) (-2.37) (5.93) (22.56) (-5.66) (-9.86) (-2.24) (-4.16) (-10.29) (-1.35) (-3.04) (-12.04)

ln FDI 0.229 0.529* 0.042 0.314*** 0.431*** 0.033*** 0.046 0.656*** 0.045*** 3.131*** 1.539** 1.057***
(1.87) (-2.37) (1.58) (4.46) (-5.66) (-4.01) (-1.83) (-4.16) (-3.32) (-3.46) (-3.04) (-7.76)

ln SVA 2.293*** 4.235*** 0.485 5.889*** 7.062*** 3.785*** 1.420*** 8.444*** 1.972*** 0.997 2.687*** 0.398***
(-5.88) (5.93) (1.58) (8.78) (-9.86) (-4.01) (-12.01) (-10.29) (-3.32) (-1.75) (-12.04) (-7.76)

558
ln GDPPC 0.004 0.011 0.014 0.028 0.016 0.009 0.008 0.000 0.110** 0.265 0.123 0.0563** 0.072 0.064 0.003 0.019
(-0.06) (0.09) (0.29) (-1.94) (0.16) (-0.09) (0.07) (0.02) (-3.28) (-1.18) (0.98) (-3.05) (-1.17) (-1.88) (-0.40) (-1.77)

ln I 0.112** 0.229** 0.011 0.020* 0.406** 0.516*** 0.350* 0.074*** 0.0684 2.458*** 0.655* 0.155** 1.470 2.824*** 0.0179 0.755***
(2.78) (-3.22) (-0.36) (-2.28) (2.94) (-3.41) (-2.00) (-4.88) (-0.75) (-4.36) (-1.96) (-3.20) (1.44) (-5.51) (-0.17) (-4.77)

ln T 1.034*** 1.839*** 0.118 0.161*** 0.448*** 0.494*** 0.168 0.027* 0.550*** 0.926* 0.550* 0.240*** 2.742*** 2.100*** 0.318*** 0.596***
(12.12) (-10.82) (-1.34) (6.77) (4.27) (-4.32) (-1.19) (-2.02) (16.74) (2.44) (2.56) (8.84) (4.87) (8.17) (5.33) (6.17)

ln L 2.782*** 4.830*** 0.255 0.285* 6.178*** 6.862*** 2.885** 0.520*** 1.758*** 16.73*** 0.195 0.193 3.345*** 2.563*** 0.375*** 0.950***
(-5.64) (5.18) (-0.63) (-2.38) (-11.19) (11.39) (3.08) (6.27) (-4.05) (6.69) (-0.11) (0.79) (3.69) (5.28) (3.86) (7.22)

Const. 11.83*** 20.57*** 4.096* 4.027*** 5.789 8.998* 10.62* 2.629*** 10.19*** 32.51** 10.35 2.391* 20.46*** 1.708 0.200 0.015
(4.59) (-4.32) (2.11) (8.49) (-1.58) (2.23) (2.26) (8.08) (5.55) (-2.73) (1.41) (2.32) (-6.36) (-0.81) (-0.49) (0.02)

Source: author, t statistics in parentheses, *p < 0.05, **p < 0.01, ***p < 0.001
Renewable Energy 186 (2022) 547e561
D. Singh Renewable Energy 186 (2022) 547e561

Fig. 2. Causality summary.

Funding agency Consent to participate

Not Applicable. Not applicable.

Ethical approval Consent to publish

Not applicable. Not applicable.

559
D. Singh Renewable Energy 186 (2022) 547e561

Fig. 3. Causality summary.

Authors contributions Formal analysis, Investigation, Resources, Data curation, Writing e

original draft, Visualization.
Not applicable Sole Author.

Availability of data and materials Declaration of competing interest

World Bank data open-source data. The author declare that he has no known competing financial
interests or personal relationships that could have appeared to
CRediT authorship contribution statement influence the work reported in this paper.

Devesh Singh: Conceptualization, Methodology, Validation,

560
D. Singh Renewable Energy 186 (2022) 547e561

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