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Green investment needs in the EU and their funding

Author

Listed:
  • Andersson, Malin
  • Köhler-Ulbrich, Petra
  • Nerlich, Carolin

Abstract

The green transition of the EU economy will require substantial investment to 2030 and beyond, to reduce greenhouse gas (GHG) emissions by 55% from 1990 levels by 2030 and reach net-zero emissions by 2050. Estimates of green investment needs vary and are surrounded by high uncertainty, but these all point to a requirement for faster and more ambitious action. Green investment will need to be financed primarily by the private sector, with support from the public sector. While banks are expected to make a key contribution to funding the green transition, capital markets need to deepen further, especially to support innovation financing. Public funds will be vital to complement and de-risk private green investment. Finally, structural reforms should be tailored to encourage firms, households and investors to step up their green investment activities. JEL Classification: E22, E44, G21, Q41, Q50, Q58

Suggested Citation

  • Andersson, Malin & Köhler-Ulbrich, Petra & Nerlich, Carolin, 2025. "Green investment needs in the EU and their funding," Economic Bulletin Articles, European Central Bank, vol. 1.
    • Handle: RePEc:ecb:ecbart:2025:0001:3
    Note: 427284
    as

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    File URL: https://www.ecb.europa.eu//press/economic-bulletin/articles/2025/html/ecb.ebart202501_03~90ade39a4a.en.html
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    More about this item

    Keywords

    financing; fiscal policy; green transition; investment; structural policy;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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