We're in this together: Sustainable energy and economic competitiveness in the EU

Abstract

The paper elaborates an empirical study on the relation between trade competitiveness and energy policy based on a bilateral gravity model applied to a panel of 19 EU countries over the period 1990–2015. We focus on harmonisation of domestic policies and on the speed of convergence towards low-carbon energy targets. By explicitly connecting international trade with innovation and economic competitiveness, we fill a gap in the literature on the sustainable energy transition. Our analysis yields three main findings. First, bilateral policy alignment matters for trade performance. Second, the more balanced and comprehensive the domestic policy mix, the higher the export capacity. Third, countries at the frontier of the EU transition process gain market shares at the expense of those lagging behind.