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Overcoming structural barriers to the green transition

Author

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  • Parker, Miles
  • Parraga Rodriguez, Susana

Abstract

This article assesses the state of play for green innovation in the EU and identifies the structural barriers that are constraining the adoption and scaling- up of low-carbon technologies. These include unpriced environmental externalities, knowledge spillovers, limited risk capital markets, regulatory complexity, skills shortages and insufficient enabling infrastructure. The analysis highlights how these structural barriers interact to slow the green transition and raise transition costs. Drawing on recent ECB analysis and insights from corporate earnings calls, this article shows that addressing these obstacles requires a comprehensive policy mix, including carbon pricing, enhanced temporary subsidies, and structural policies that improve the business environment, facilitate the reallocation of resources, and stimulate competition and entrepreneurship. JEL Classification: Q55, O3, H23

Suggested Citation

  • Parker, Miles & Parraga Rodriguez, Susana, 2026. "Overcoming structural barriers to the green transition," Economic Bulletin Articles, European Central Bank, vol. 1.
    • Handle: RePEc:ecb:ecbart:2026:0001:1
    Note: 2631790
    as

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    File URL: https://www.ecb.europa.eu//press/economic-bulletin/articles/2026/html/ecb.ebart202601_01~d8ce53e315.en.html
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    Keywords

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    JEL classification:

    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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