Energising EU Cohesion: Powering up lagging regions in the renewable energy transition

Johannes Többen, Maximilian Banning, Katharina Hembach-Stunden, Britta Stöver, Philip Ulrich and Thomas Schwab

MPRA Paper from University Library of Munich, Germany

Abstract: The European Green Deal mandates a substantial transformation of the energy sector, responsible for more than 80 % of total greenhouse gas emissions. This study investigates the economic implica-tions of achieving climate neutrality in the European energy sector in light of the EU's core goal of economic cohesion, i.e. harmonious economic development across European regions. Employing a novel multi-regional input-output model, our analysis reveals how the renewable energy transition affects European regions. Under complete decarbonisation, changes in value added per capita range from -2,450 Euro to +1,570 Euro, and employment levels fluctuate between -2.1 % and +4.9 %. On average, most regions experience positive effects, characterised by an average increase in value added per capita of 10 Euro and a 0.3 % rise in employment in 2050. Overall, rural regions with sub-stantial renewable energy potential derive the greatest benefits, while urban regions heavily reliant on carbon-intensive industries are more likely to experience adverse effects. This dynamic fosters economic cohesion by providing opportunities for lagging regions to catch up, yet also poses fresh challenges to achieving this goal. Therefore, cohesion policy must expand its scope to counter the adverse effects as well as leveraging opportunities created by the renewable energy transition in all European regions.

Keywords: energy; transition; cohesion; inequality; regions (search for similar items in EconPapers)
JEL-codes: C67 O11 Q43 (search for similar items in EconPapers)
Date: 2023-12-05
New Economics Papers: this item is included in nep-eec, nep-ene, nep-env, nep-eur and nep-ure
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