Project

Investment Report 2024/25 - Chapter 6: The European Union’s green ambitions are driving its economic transformation

European Investment Bank

DOI: 10.26303/3mbn-gp02

What is it about?

Chapter 6 examines the European Union’s decarbonisation strategy and how the green transition is transforming the economy. It outlines three key pillars of the European Union’s decarbonisation strategy: carbon pricing, regulatory measures and financial incentives. The chapter highlights progress in reducing emissions, particularly through the expansion of renewable energy and electrification, while also identifying challenges faced by energy-intensive industries such as chemicals, steel and cement. It explores the impact of environmental regulations on corporate performance, demonstrating how more stringent policies can enhance profitability, productivity and innovation. Additionally, the chapter discusses the role of the EU Emissions Trading System in providing incentives for companies to reduce their emissions and improve innovation.

Why is it important?

Europe’s green transition is not only an environmental necessity but also a fundamental driver of economic transformation and competitiveness. This chapter underscores the critical balance between sustainability and economic performance, showing how proactive policies can spur innovation and strengthen firms’ resilience. The chapter highlights the need for targeted policies that support businesses that are having difficulty, and looks at disparities in energy efficiency and emissions across industries. It also stresses the importance of strong regulatory frameworks in ensuring that green investments yield economic benefits. Furthermore, as climate risks intensify, the chapter calls for greater investment in adaptation strategies to safeguard infrastructure and economic stability.

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