Navigating Energy Transition: Driving Energy Efficiency Improvement in EU Industry
Navigating Energy Transition: Driving Energy Efficiency Improvement in EU Industry

Summary/Abstract: This study examines the primary determinants of energy efficiency improvements within the European Union’s (EU) industrial sector from 2004 to 2023. The analysis is situated within the strategic framework of the European Green Deal and the “Fit for 55” package, which addresses the challenge of accelerating the industrial energy transition while maintaining global competitiveness. Utilizing a Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) model, this research accounts for cross-sectional dependence and heterogeneous short-run dynamics across Member States. Empirical results reveal that economic growth and rising energy prices act as significant drivers of industrial energy efficiency in both the short and long run. Conversely, higher CO₂ emissions are associated with lower efficiency, reflecting persistent reliance on carbon-intensive production. These findings underscore the need to align economic modernization with price-based incentives to meet EU climate goals.

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