FINANCING LOW-CARBON TRANSITION IN THE EUROPEAN UNION: TRENDS AND PROSPECTS

Abstract

The purpose of this conference paper is to identify the main trends and prospects for financing the low-carbon transformation of the EU economy. Based on the results of a quantitative analysis of Eurostat data, it has been established that the current stage of evolution of EU climate policy marks a transition from the declarative stage to the phase of practical implementation of mechanisms for structural capital redistribution. Despite a significant reduction in aggregate greenhouse gas emissions, there is a deep sectoral and geographical asymmetry. In particular, the critical funding gap in energy-intensive industries and the inertia of the transport sector pose significant risks to achieving climate neutrality by 2050. A fundamental change in the structure of environmental financing in the EU has been identified, with the corporate sector’s share of environmental protection investments increasing to 61.4%, while the public sector has shifted to a model of stimulating market mechanisms. The novelty of the results lies in identifying the pattern of transition from direct budget financing to the ‘entrepreneurial state’ model, where public funds act as a catalyst for private investment through a system of targeted funds and guarantees. The institutional environment needs to strengthen risk mitigation tools to attract private capital to sectors that currently receive a minimal share of investment, despite their high emission profile. Meeting investment needs requires the transformation of the financial sector from a passive intermediary to an active driver of structural change through mechanisms for disclosure of information on sustainable financing and taxonomy.