Are EU low-carbon structural funds efficient in reducing emissions?

Abstract

We investigate the effectiveness of low-carbon expenditures from the European Structural and Investment Funds in reducing greenhouse gas emissions across EU regions. Using trend and cycle decomposition of per capita emissions and emissions intensity, along with a panel data approach that incorporates long lags to mitigate reverse causality, we find highly heterogeneous effects. In less developed regions, investments are associated with long-term increases in per capita emissions, whereas in transition and developed regions, the effects are weak or not significant. When disaggregated by gas type, results remain inconsistent. Our findings highlight that regional disparities challenge the effectiveness of EU climate efforts.