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Macro-economic analysis of green growth policies: the role of finance and technical progress in Italian green growth

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  • Leonidas Paroussos

    (E3-Modelling)

  • Kostas Fragkiadakis

    (E3-Modelling)

  • Panagiotis Fragkos

    (E3-Modelling)

Abstract

The transition to a low-carbon economy is a complex process that, from a technical perspective, requires coordination of different market players, significant technology advancements and sufficient financial resources. The transition to a low-carbon energy system is a capital intensive process. Different technological options at different scales and different time frames will be required for the successful transition to a low-carbon energy system. The economic impact on countries that transform their energy system depends on a multitude of factors including their energy system profile, the access to low-cost financial resources, whether they are market leaders in the production of clean energy technology and their ability to assimilate knowledge that is produced elsewhere. In this study, we use a large scale applied CGE model to compute the macroeconomic implications of the investments required to reduce by 76% as compared to 1990 levels the GHG emissions of the Italian energy system within a context of global concerted GHG mitigation action. The focus of the analysis has been on the Italian economy and energy system as Italy is both an equipment manufacturer, its energy system is largely based on fossil fuels and its financial system is currently under pressure following the elevation of public debt and deficits. The model-based results suggest that the Italian economy can benefit from the low-carbon transition in the coming decades in case Italian firms and households have access to low-cost financial resources, Italian manufacturers acquire market shares in the production of clean energy technologies and technological progress is rapid driven by innovation and economies of scale. The average annual GDP growth of Italy in the period 2015–2050 can be 1.3% in the case that Italy reduces drastically its GHG emissions and the associated cumulative expenditures sum up to one trillion euro.

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  • Leonidas Paroussos & Kostas Fragkiadakis & Panagiotis Fragkos, 2020. "Macro-economic analysis of green growth policies: the role of finance and technical progress in Italian green growth," Climatic Change, Springer, vol. 160(4), pages 591-608, June.
    • Handle: RePEc:spr:climat:v:160:y:2020:i:4:d:10.1007_s10584-019-02543-1
    DOI: 10.1007/s10584-019-02543-1
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    2. Paul Terhemba Iorember & Solomon Gbaka & Abdurrahman Işık & Chinazaekpere Nwani & Jaffar Abbas, 2024. "New insight into decoupling carbon emissions from economic growth: Do financialization, human capital, and energy security risk matter?," Review of Development Economics, Wiley Blackwell, vol. 28(3), pages 827-850, August.
    3. Harro Asselt & Panagiotis Fragkos & Lauri Peterson & Kostas Fragkiadakis, 2024. "The environmental and economic effects of international cooperation on restricting fossil fuel supply," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 24(1), pages 141-166, March.
    4. Michel G. J. Elzen & Ioannis Dafnomilis & Nicklas Forsell & Panagiotis Fragkos & Kostas Fragkiadakis & Niklas Höhne & Takeshi Kuramochi & Leonardo Nascimento & Mark Roelfsema & Heleen Soest & Frank Sp, 2022. "Updated nationally determined contributions collectively raise ambition levels but need strengthening further to keep Paris goals within reach," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 27(6), pages 1-29, August.
    5. Di Wang & Wei Dou & Jiajun Ning, 2025. "Can new infrastructure construction facilitate low-carbon energy transition? A quasi-natural experiment based on China’s smart city pilots," Economic Change and Restructuring, Springer, vol. 58(2), pages 1-35, April.
    6. Will McDowall & Tobias Reinauer & Panagiotis Fragkos & Michal Miedzinski & Jennifer Cronin, 2023. "Mapping regional vulnerability in Europe’s energy transition: development and application of an indicator to assess declining employment in four carbon-intensive industries," Climatic Change, Springer, vol. 176(2), pages 1-23, February.
    7. Lingling Cao & Huawei Niu, 2022. "Green Credit and Total Factor Carbon Emission Performance—Evidence from Moderation-Based Mediating Effect Test," IJERPH, MDPI, vol. 19(11), pages 1-19, June.
    8. Radek Doskocil, 2022. "The Multicriteria Assessment of the Green Growth in the Context of the European Union’s Green Deal," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 24(61), pages 739-739, August.

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