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The impact of dynamic capital formation in energy transition: Empirical evidence from the European Union

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  • Betencourt, Matilde
  • Fuinhas, José Alberto

Abstract

Our analysis focused on the effects of dynamic capital formation in energy transition on twenty-five European Union countries from 1990 to 2019. The analysis of short- and long-run effects between our variables was possible by applying a panel Autoregressive Distributed Lag model. The results support the hypothesis of an adverse impact of a higher concentration of private capital on energy transition in the short run. Our results are reinforced by an estimation controlling for shocks and regions, where the effects are also statistically significant in the long run with a negative and greater than one elasticity. Our conclusion points to the inefficiency of private capital hampering energy transition efforts in the European Union, pointing to a need to improve resource allocation of public capital and stimulate private investment while aiming to achieve a certain complementarity of both public and private capital stock. Therefore, policymakers should encourage private investment through public-private partnerships that can jointly use both sources of capital towards a common objective: energy transition.

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  • Betencourt, Matilde & Fuinhas, José Alberto, 2025. "The impact of dynamic capital formation in energy transition: Empirical evidence from the European Union," Energy, Elsevier, vol. 335(C).
    • Handle: RePEc:eee:energy:v:335:y:2025:i:c:s0360544225038289
    DOI: 10.1016/j.energy.2025.138186
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