Green investments in Europe surged to €250 billion in 2023, marking a 34% increase from the previous year. This structural acceleration is largely driven by enabling technologies, particularly in renewable energy and energy efficiency.
A new report from the EU Platform on Sustainable Finance, based on data from 2,180 publicly traded European companies, highlights the impact of the EU taxonomy on the continent’s ecological transition.
The EU taxonomy’s impact on green investments after two years
Nearly half of the 2023 investments aligned with the EU taxonomy were directed toward enabling activities. These technologies, which help decarbonize other sectors, reached €125 billion, reflecting an annual growth rate of 40%.
The renewable energy and energy efficiency sectors are leading this trend, supported by technological maturity and targeted policies.
Transition activities, which are in the process of aligning with climate standards, have also seen significant growth. Despite starting from lower levels, investments in these sectors doubled, reaching 11% of taxonomy-aligned investments, or €27.5 billion.
This figure underscores the early efforts of high-carbon industries such as steel and chemicals, where projects involving green hydrogen and carbon capture, utilization, and storage (CCUS) are beginning to materialize.
Investments in taxonomy-eligible but not fully aligned activities
Beyond fully compliant investments, the report identifies €206 billion allocated to “taxonomy-eligible” activities that have yet to meet all criteria. These include:
- Projects that meet climate goals but do not fulfill Do No Significant Harm (DNSH) requirements
- Investments in transitional technologies (e.g., low-carbon gas) with defined phase-out plans
- Partial industrial restructuring projects pending completion
Sector-specific challenges and opportunities
While energy and transport sectors report 40-60% of CapEx aligned with the EU taxonomy, the figure drops to just 15% for construction and agriculture.
Hard-to-abate sectors face an even more challenging landscape. Only 7% of steel industry investments and 12% of chemical sector investments fully meet taxonomy criteria.
According to the report, these industries struggle with fragmented technical standards, high R&D costs that have yet to be offset by carbon pricing mechanisms, and limited access to long-term financing.