The EU Green Deal: How’s It Going?

The European Green Deal, launched in 2019, aims for the EU to be climate-neutral by 2050. Two decades into this 30-year plan, a collection of 16 essays edited by Magnus Henrekson, Christian Sandström, and Mikael Stenkula examines the progress and pitfalls of this ambitious initiative. Titled A Green Entrepreneurial State? Exploring the Pitfalls of Green Deals, the compilation provides a critical assessment of the EU's green strategies.

The EU has embraced a wide range of policies, including solar and wind energy, hydrogen, zero-emission vehicles, improved batteries, and more. For instance, from 2035 onward, all new passenger vehicles and light commercial vehicles must be zero-emission. The Hydrogen Strategy envisions establishing at least 40 GW of renewable hydrogen electrolysers by 2030, producing up to 10 million tonnes of renewable hydrogen, with an additional 10 million tonnes to be imported by the same year.

This hydrogen production is seen as a crucial energy carrier for sectors where direct electrification is difficult, such as steel, chemicals, and heavy transport.

In terms of offshore wind, the EU aims for 60 GW by 2030 and 300 GW by 2050. This would be nearly five times the total installed capacity of France's 57 nuclear reactors in 2025. These ambitious targets underscore the scale of the EU's green commitments.

However, the essays also highlight several challenges. Italy's Superbonus program, aimed at encouraging energy efficiency improvements in buildings, led to the largest budget deficit in Europe since World War II. The policy provided households with a 110% tax credit for upgrading their homes, resulting in costs of approximately EUR 220 billion, or about 10% of a single year's GDP. This expenditure generated limited environmental benefits and was plagued by widespread tax fraud.

Germany's Energiewende, or energy transition, has been a model for large-scale renewable energy adoption. However, the shift from nuclear and fossil fuels to renewable sources like wind and solar has faced significant challenges. Michael Deshaies points out that Germany's strategy required large overcapacity, extensive grid expansions, and significant storage capacity.

Despite focusing on renewables, Germany neglected grid and storage development, leaving 80% of the country's energy consumption—primarily transport, heating, and industry—dependent on oil and gas. This reliance on fossil fuels has driven up household electricity prices, making Germany the most expensive in Europe at around 40% above the EU average.

The bankruptcy of Northvolt, Europe's largest battery manufacturing facility, provides another cautionary tale. Founded in 2017 and rapidly growing to employ nearly 6,000 people by 2023, Northvolt struggled to scale production and remained dependent on Chinese suppliers. This undermined the EU's goal of achieving strategic autonomy in green technologies. In March 2025, the company filed for bankruptcy, illustrating the risks associated with ambitious green industrial policies.

Several political economy papers in the collection delve into the political factors influencing the outcomes of Green Deals. Jan Schnellenbach's contribution, "Behavioral Political Economy and Environmental Policy: Explaining Persistent Deviations from Efficient Policies," suggests that Green Deals are often driven by behavioral biases, heuristics, and expressive political behavior rather than purely economic efficiency considerations.

Citizens may embrace "bliss beliefs" about the environment, which signal virtue or identity rather than carefully assessed cost-benefit analyses. Politicians, in turn, respond to these emotionally charged preferences, potentially compromising the economic efficiency of Green Deals.