Do climate change policy instruments loom like the sword of Damocles over green technology independence to achieve green growth and sustainability in Europe?

Abstract

We introduce a conceptual framework that synthesizes the European policy framework with country-specific capabilities to examine the impact of green policy tools and non-linear effects of eco-innovation progress on green technology independence within the EU-28 during the transformative period 2010–2019. Focusing on green technology independence allows us to delve into the key contributors of technological aspects of green growth. Despite its recognized significance in sustainability transition, this aspect remains vastly unexplored. We introduce a novel measure, the climate change mitigation policy rate to assess the extent of national action in addressing climate change, alongside climate taxes and environmental policy effectiveness, for the first time. Econometric results from panel quantile regressions indicate that green technology independence is prone to green taxation and climate change mitigation policy rate, across tiers. Findings indicate that green technology independence is affected by eco-innovation in a non-linear manner, as a U-shaped relationship is substantiated. Moreover, highly effective environmental policy negatively affects countries with low level of green technology independence. Policy-wise, a flexible policy framework is more conducive to promoting green technology independence than a rigid one, emphasizing the need for a holistic approach in policy making. This study contributes to SDGs 7, 9, 12 and 13.