Challenges and opportunities in the financing of the climate transition at the EU level

Abstract

The paper aims to analyze the major need to transition to a climate-neutral economy, which represents both a challenge and an opportunity for the European Union member states. Mobilizing the necessary funds for this transition is essential, and the EU has developed numerous financial mechanisms to support green projects. However, these funds face major challenges, including administrative and bureaucratic obstacles that limit access to funds for many regions or small businesses, and the complexity of the processes to access funds and the lack of administrative expertise are significant factors that prevent the absorption of funds. The economic and technical discrepancies between the member states make it difficult to implement green projects in the less developed regions. Access to funds is also influenced by a lack of knowledge among potential beneficiaries regarding the availability of financing opportunities. At the same time, the COVID-19 pandemic has had a major impact on the European economy, creating both difficulties and new opportunities in the financial sector. Climate transition financing, while facing many challenges, represents a unique opportunity to transform the European economy into a sustainable and competitive one. Adaptation to the new economic realities and the mobilization of private capital, along with more equitable and efficient access to European funds, will be essential for the long-term success of the transition to climate neutrality. The EU and its member states are the largest provider of public financing to fight climate change worldwide.