Assessment of environmental tax and green bonds impacts on energy efficiency in the European Union

Owing to the increased greenhouse gas emissions and threat of environmental pollution, scholars have drawn attention to the issue of energy efficiency in recent decades. One of the main practical policies related to energy efficiency is deploying green tax and green financing tools. The main purpose of this paper is to analyze the impacts of issued green bonds and environmental taxes on energy efficiency in the 27 European Union (EU) member states from 2010 to 2021. The major results confirm that green bonds accelerate the process of improvement of the level of energy efficiency in EU members. In the EU, environmental taxation is an efficient fiscal policy to encourage enterprises to conduct different policies and projects to improve their energy efficiency levels. In addition, a 1% increase in the gross domestic product leads to an increase in energy efficiency of the EU by nearly 0.39%. The recommended practical policies are promoting the green bond market through more transparency and marketing among private investors, paying attention to the concept of green economic recovery, and issuing digital green bonds (DGBs).