Impact of energy taxes and eco-innovation on sustainable energy markets

Guaranteeing sustainable energy is crucial to meet the rising energy needs driven by population growth. In this study, the correlation and trend between the share of renewable energy usage, a key indicator of energy sustainability, the energy tax factor, and eco-innovations, assessed through the ratio of patents in environmental technologies and the proportion of total national spending on R&D relative to GDP, have been examined using a regression model from 2004 to 2022 across four regions of the European Union: North, West, East, and South. This is to determine the impact of various solutions and policies on energy sustainability, given its increasing importance in recent years. The findings indicate that Sweden, located in Northern Europe, possesses the highest proportion of renewable energy at an average of 50.29 percent. In contrast, Malta, situated in Southern Europe, has the lowest share, averaging at 4.59 percent. The factors of energy taxation, environmental patents, and research and development exhibit the strongest positive correlations with the energy sustainability index in Belgium, with correlations of 0.90, 0.64, and 0.97, respectively. Among the regression models presented for all EU countries, the models presented in the Czech Republic in Eastern Europe and Belgium and Germany in Western Europe have the lowest error with RMSE of 0.394, 0.467 and 0.540 percent, respectively, which is due to the high correlation between their data. Lastly, it can be said that the current study's methodology can be applied to other nations as well. • This research analyzes the links between energy sustainability, energy taxes, environmental technology patents, and R&D spending in EU countries from 2004 to 2022. • The primary breakthrough of this study is the comprehensive assessment across all EU countries, which, for the first time, connects those indicators. • Energy taxation and R&D expenditures exhibit significant positive associations with the proportion of renewable energy across multiple EU member states. • Czech Republic, Belgium, and Germany achieved the most accurate regression models with lowest RMSE.