Paying the Price to Power the Future: Environmental Taxation, Energy Transition, and Europe’s Green Deal

Oana Ramona Lobonț, Mariana Alexandra Bărbulescu, Cristina Criste (), Tao Ran and Nicoleta Claudia Moldovan
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Oana Ramona Lobonț: Department of Finance, Information Systems and Business Modelling, Faculty of Economics and Business Administration, West University of Timișoara, 300223 Timișoara, Romania
Mariana Alexandra Bărbulescu: Faculty of Economics and Business Administration, West University of Timișoara, 300223 Timișoara, Romania
Cristina Criste: East-European Center for Research in Economics and Business, West University of Timișoara, 300223 Timișoara, Romania
Tao Ran: Doctoral School of Economics and Business Administration, West University of Timișoara, 300223 Timișoara, Romania
Nicoleta Claudia Moldovan: Department of Finance, Information Systems and Business Modelling, Faculty of Economics and Business Administration, West University of Timișoara, 300223 Timișoara, Romania

Energies, 2025, vol. 18, issue 22, 1-28

Abstract: In recent years, the European Union has played a key role in global efforts to combat climate change and the energy transition, focusing on creating fiscal, legal and regulatory policies and instruments capable of supporting the decarbonization process and ensuring a sustainable energy future. Environmental taxation has been considered not only as an essential tool to discourage pollution but also to stimulate cleaner energy production, the integration of renewable sources and energy efficiency. Our research analyses the impact of environmental tax revenues on CO 2 across 27 EU member states from 2012 to 2023. A mixed-method research approach is used, combining policy and strategy analysis, bibliometric mapping and econometric data analysis using OLS, as well as fixed and random effects models that are selected based on the Hausman test. The methodological mix approach provides empirical evidence on how fiscal instruments can simultaneously support environmental sustainability and energy resilience. The results show that environmental taxes are associated with greenhouse gas emission reductions and an increase in the share of renewable energy, especially when integrated into a coherent national policy framework. The policy analysis highlights the role of the Climate Action Budgetary Mechanism (CABM) and the Effort Sharing Regulation (ESR), underlining their importance for the European Union’s energy strategy. The bibliometric results indicate the existence of thematic clusters focused on carbon pricing, renewable energies and international comparisons, particularly with China. Finally, this study suggests that the maximum efficiency of environmental taxes is achieved when the revenues generated are reinvested in green infrastructure, innovation and sustainable jobs. Furthermore, policies should be adapted to the specificities of each Member State to ensure a fair and sustainable energy transition at the EU level.

Keywords: environmental taxation; greenhouse gas emissions; European Union; climate policy evaluation; bibliometric analysis; panel data econometrics (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2025
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