TY - JOUR
T1 - European green bonds, carbon tax and crowding-out
T2 - The economic, social and environmental impacts of the EU's green investments under different financing scenarios
AU - Smeets Křístková, Z.
AU - Cui, H.D.
AU - Rokicki, B.
AU - M'Barek, R.
AU - van Meijl, H.
AU - Boysen-Urban, K.
PY - 2025/4
Y1 - 2025/4
N2 - This study provides novel insights into the economic, social and environmental impacts of green energy investments in the European Union using MAGNET, a computable general equilibrium model of the world economy. MAGNET was extended to include sector-specific investment allocation, investment risk premiums adjustment, and technology learning effects to endogenize productivity growth in renewable and bioenergy sectors. In line with the proposals on climate neutrality and the Green Deal, the study simulates an increase in investments in renewable energy and bioeconomy sectors (additional 15 % increase in capital stock) starting in 2025. Three alternative financing scenarios are compared; the European Green Bonds scenario, carbon tax scenario and the crowding-out scenario (assuming green investments are financed from existing resources). It is found that additional green energy investments bring generally positive GDP, social and emission-saving effects. In the case of GDP, the deviation from the baseline reaches +0.9 % in 2050 for the EU if financed from the Green Bond. The other scenarios show that when green investments are not crowding-out other investments in the EU, the economic impacts at EU level are still positive. It is also shown that, on average, the investment policy would increase the size of bioeconomy sector by between 3.2 % and 4.2 % in 2050. However, the impacts across particular countries and industries are very heterogenous.
AB - This study provides novel insights into the economic, social and environmental impacts of green energy investments in the European Union using MAGNET, a computable general equilibrium model of the world economy. MAGNET was extended to include sector-specific investment allocation, investment risk premiums adjustment, and technology learning effects to endogenize productivity growth in renewable and bioenergy sectors. In line with the proposals on climate neutrality and the Green Deal, the study simulates an increase in investments in renewable energy and bioeconomy sectors (additional 15 % increase in capital stock) starting in 2025. Three alternative financing scenarios are compared; the European Green Bonds scenario, carbon tax scenario and the crowding-out scenario (assuming green investments are financed from existing resources). It is found that additional green energy investments bring generally positive GDP, social and emission-saving effects. In the case of GDP, the deviation from the baseline reaches +0.9 % in 2050 for the EU if financed from the Green Bond. The other scenarios show that when green investments are not crowding-out other investments in the EU, the economic impacts at EU level are still positive. It is also shown that, on average, the investment policy would increase the size of bioeconomy sector by between 3.2 % and 4.2 % in 2050. However, the impacts across particular countries and industries are very heterogenous.
KW - Bioeconomy sectors
KW - CGE modelling
KW - Crowding-out
KW - Emissions
KW - European green bonds
KW - Green energy investments
KW - Macroeconomic impacts
KW - technology learning
U2 - 10.1016/j.rser.2025.115330
DO - 10.1016/j.rser.2025.115330
M3 - Article
AN - SCOPUS:85214328622
SN - 1364-0321
VL - 211
JO - Renewable and Sustainable Energy Reviews
JF - Renewable and Sustainable Energy Reviews
M1 - 115330
ER -