This article reflects on the necessity of employing renewable energy sources in the
modern era to mitigate the negative environmental impact caused by traditional energy
sources and address environmental pollution. Through research conducted in Azerbaijan
and Hungary, it analyses the influence of economic growth on the ecological environment
and renewable energy production. Due to limitations in the general dataset, the study
considers the period of 1997–2022 for CO2 emissions causing environmental pollution,
2007–2022 for renewable energy production in Azerbaijan, and 2000–2021 for the same
in Hungary. Information regarding wind and solar energy in Azerbaijan has been available
since 2013. Temporal sequences have been utilised in the research, employing Augmented
Dickey–Fuller and Phillips–Perron (PP) unit root tests to examine the stationarity
of the time series. An Autoregressive Distributed Lag (ARDL) model has been constructed,
and the credibility of the model has been verified using Fully Modified Ordinary Least
Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), and Canonical Cointegrating
Regression (CCR) models. The findings reveal that in Azerbaijan, the long-term impact
of economic growth on hydro-energy has been negative, while dependence on biomass
and waste has been insignificant but positive. The influence on wind and solar energy
production has also been negative and insignificant, akin to hydro-energy production.
However, energy supply from renewable sources has been positively affected by the
aggregate indicator of economic growth, albeit insignificantly. The impact of economic
growth on carbon dioxide has been significant in two magnitudes, whereas in other
cases, it has been insignificant but positive. In Hungary, economic growth has positively
affected renewable energy production. However, the impact on carbon dioxide has been
negative, meaning that this indicator has decreased as economic growth has increased.
The study concludes that the impact of economic growth on indicators of both countries
has been more effective in Hungary, which can be attributed to economic development.
