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The European Green Deal (EGD), which was launched at the end of 2019 as a major facet in the EU-wide growth strategy, proceeds facilitating the member states’ economic transition through sustainable models and transforming developmental patterns along modern, resource-efficient and competitive lines.
Background
The EGD marked a comprehensive shift in the EU-wide political priorities: being historically a global leader in the environmental protection, the EU wide green deal was a significant departure from the past because it set out to handle climate, environment and sustainability’s crises from a modernised political-economy’s perspective.
The theme “social impacts of green transition” is highly pertinent in the present politico-economic discourses within the EU member states, specifically that of the so-called “vulnerabilities” and just transition. The latter shall be used vary cautious: as any transition produces “polar interests” with beneficiaries, losers and the interests’ groups in between.
Strategy’s implementation
Current (2025-26) status in the strategy’s implementation represents some shifts from the initial focal points, including e.g.:
= Transition to implementation: during over five years of intensive deployment, the vast majority of legal acts have been adopted defining the EGD concept; and effective implementation has been the main driving force in the optimal process.
= “Fit for 55” package has been a central pillar, which is aiming to reduce net greenhouse gas emissions by at least 55% by 2030 (compared to 1990 levels); however, there are presently some stumbling blocks in this part of the package’s implementation.
= Legislative milestones: key legislation, including the European climate law, has enshrined the 2050 neutrality objective. Recent developments include the adoption of the nature protection legislation aimed to restore 20 percent of land and adjacent sea areas by 2030.
= Industrial development is also in the focus: it is aimed at expanding towards the “Green Deal Industrial Plan”, which aims to boost the competitiveness of Europe’s net-zero industry.
= Just transition mechanism: to ensure that the whole transition is fair; hence, the “mechanism” focuses on supporting regions and sectors most affected by the moves away from fossil fuels, and generating €100 billion in funding.
For example, since February 2022, the EU and the member states have implemented several regulatory measures: a) on diversified energy supplies; b) on more renewable energy’s share in the national energy mix; c) introducing more energy efficient systems, and d) de-coupling the electricity from fossil fuels; some analysis finds that during 2015-2023, the global economies responsible for the most part of created growth have either completely or in main part decoupled their CO2 emissions.
Note. Decoupling electricity generally refers to two distinct directions/strategies: – breaking the link between electricity prices and high natural gas costs, and – separating utility company’s profits from the volume of energy sold to promote efficiency.
Both aim at reducing price volatility, support renewable energy adoption, while protecting consumers from high costs.
Sources: https://eciu.net/media/press-releases/2025/92-of-the-global-economy-is-decoupling-emissions-from-growth
The EU member states are obliged to accelerate the energy transition: as a matter of competitiveness and as a matter of energy security and economic stability. In the case of energy’s diversification, there are various means: e.g. natural gas and more room for the homegrown clean/green energy; the latter includes such programs as healthier cities, safer citizens, lower bills, more interesting/profitable industrial and business opportunities, as well as more security for all. However, the Green Deal remains the “red thread” running through EU recovery initiatives and the long-term growth strategies.
Reference to: https://www.clustercollaboration.eu/in-focus/green/european-green-deal#:~:text=Through%20Next%20Generation%20EU%20(NGEU,fairer%20and%20more%20resilient%20society.
Regulatory framework
Legislative background is vital in the EGD’s implementation too; for example, four EGD-like legal means shall be mentioned affecting the green deal:
– the Carbon Border Adjustment Mechanism Regulation (CBAM),
– the Revised Energy Efficiency Directive (EED),
– the Revised Land Use, Land Use Change and Forestry Regulation (LULUCF), and
– the Just Transition Fund Regulation (JTF).
Presently, the EGD’s legal block has introduced over 150 executive means and legal policies, aimed at “ambitious transformations” in key economic sectors, such as energy, industry, buildings, transport, etc. aimed to tackle global environmental challenges like climate change, biodiversity loss, sustainability and pollution.
Projects of Common European Interest. IPCEI
It is important to see how the EU-wide “projects of common European interest” (IPCEI) are functioning withing strategic, large-scale, cross-border EU funding initiatives designed to foster innovation, strengthen European competitiveness and achieving green and digital transitions.
They enable state aid for delivering projects in key sectors, such as microelectronics, batteries, hydrogen and cloud, covering R&D and innovation’s application to facilitate industrial and manufacturing development.
Grants for IPCEIs projects, as well as application for infrastructures in energy, nature and environment are aimed to pool the EU member states resources within some large integrated projects. Through such projects, significant market failures or major societal challenges can be addressed.
However, the EU does not provide direct project funding; but the member states do have chances of a wider allocation of state aid. It is the EU member states that initiate an IPCEI project; both companies and knowledge institutions, as well as consortium can participate in the IPCEI projects.
More on IPCEI in: https://copenhageneconomics.com/publication/handbook-for-important-projects-of-common-european-interest-ipceis/
Just transition framework, JTF
Even though it has been relatively easy to implement the JTF compared with other EGD policies, it has not been without challenges. The purpose of the JTF regulation is to support people, economies and the environment in regions that face negative socioeconomic impacts in the transition to a climate-neutral and sustainable economy (e.g. regions with large fossil-fuel industries), to ensure that it happens in a fair and inclusive way. Hence, just transition entails not only decent alternative employment, but also companies addressing issues such as human and labour rights are taking part in dialogue with workers and affected communities facilitating their strategies for managing climate risk.
The so-called EU’s “Citizens Energy Package”, CEP puts people first and comes up with different proposals. Many of them have already been tested in different constituencies, but it is important to come up with a strategy and provide the full set of tools that can help support families. The package contributes to ensuring that citizens are supported and protected in these difficult times; it helps reducing the EU’s dependency on fossil fuels by scaling up homegrown energy and providing the right infrastructures to ensure that the states and companies can steer and seize the opportunities alongside energy security in an energy efficient electrified system.
More on the CEP in: https://fsr.eui.eu/the-citizens-energy-package-pathways-to-an-inclusive-and-gender-responsive-energy-transition/
Presently, the EU-wide JTF has a budget of about € 17.5 billion divided among member states to invest in diverse economic activities in the regions most affected by the phase out of fossil fuels. The funds should be used to create new jobs and reskill workers while also investing in research and development, clean energy technologies, digitalization and many other activities linked to decarbonizing the EU-wide energy production. Commissioner Jørgensen explained recently “who suffers from energy poverty and having difficulties heating their houses or paying their bills”.
Source: https://ec.europa.eu/commission/presscorner/detail/da/speech_26_587
The EU member states are primarily responsible for establishing national frameworks that issue funding calls/applications, and distributing funds to businesses and regions. The JTF requires regional involvement in distributing funds, and even recommends that it is administered at a regional level; thus, about 75 percent of the funding must be allocated and distributed among the EU member states by the end of 2026.
Political economy in the EGD
So-called “socio-environmental justice” addresses some inequitable distribution of environmental hazards, risks and benefits; it argues that marginalized communities often bear disproportionate burdens of pollution, climate change and resource extraction. But it integrates social equity, human rights and environmental sustainability to ensure fair treatment, access to a healthy environment and meaningful participation in environmental decision-making.
The environmental and social “justices” are distinct yet intrinsically connected realms: they intersect when the brunt of environmental issues are disproportionate by marginalized and socially disadvantaged groups. At the core of the connection between environmental and social justice is the fact that the natural environment in a great sense impacts quality of human life: i.e. clean air, potable water and access to green spaces, to name a few, are essential components of healthy living and prosperity.
Unfortunately, these resources are not distributed equally, and historically disenfranchised communities often live in areas where these essentials are scarce or under threat. Thus, the “socio-environmental justice’s” concept demands that the fight against climate change and environmental degradation does not come at the cost of the vulnerable groups, but instead lifts them up through equitable policies and actions.
Source: https://elflaw.org/news/the-interwoven-paths-of-environmental-and-social-justice/#:~:text=Our%20collective%20journey%20towards%20environmental%20sustainability%20will,an%20equitable%20and%20inclusive%20future%2C%E2%80%9D%20Emma%20concludes
There is a clear vision that modern geo-political end energy challenges are questioning the optimal EGD’s implementation; some even suggest the without fundamental revision of “transformative and disruptive national policies” used traditional governance structures, institutional and financial resources the ultimate EGD’s aim is hardly delivered.
Reference to: Kappe, K., Mikaelsson, M.A., & Krustok, I. (2025). The EU Green Deal in turbulent times: insights from the EU Green Policy Tracker from Sweden and Estonia. – SEI Discussion Brief. Stockholm Environment Institute, Stockholm. https://doi.org/10.51414/sei2025.017
Clean energy investment strategy
Delivering the clean energy transition will require €660 billion of investment annually until 2030, rising to €695 billion by 2031 and 2040. Despite the good progress already made, the pace and scale of investments is not adequate, and has to increase to ensure Europe’s economy is powered by secure, affordable and clean energy. Thus, the Commission adopted recently a Clean Energy Investment Strategy, CEIS (COM/2026/116) to help mobilising significant additional private investment for clean energy.
While public funding plays a vital role as a catalyst, the energy transition will, first and foremost, require the mobilisation of substantially more private capital. By using public financing as a catalyst, the strategy aims to de-risk projects, spread financing costs over time and attract a wider base of investors, including large-scale institutional capital.
In this context, the European Investment Bank Group intends to deliver over €75 billion of financing over the next 3 years to support the objectives of the energy transition and the Clean Energy Investment Strategy. Hence, the EU has suggested the CEIS’ sub-strategy in order to facilitate EU-member states’ “common cooperation” to develop joint standards, joint licensing and a fleet approach. This framework is aimed at creating “enabling conditions” for research and innovation and builds on work that has already been underway for some time through the IPCEI programs and through the alliance of industry and those EU states willing to devote resources to creating a predictable and reliable energy’s framework.
More in: https://energy.ec.europa.eu/news/commission-launches-strategy-accelerate-clean-energy-investment-2026-03-10_en