The EU Taxonomy in Practice: Driving Energy Efficiency Investments? Mapping Insights from Stakeholders

By Titouan CHALAVON, Clara KLINT and Barbora RAPANTOVA

Abstract

The EU Taxonomy was established to provide transparency and direct financial resources towards green investments. This report examines its effectiveness in driving energy efficiency investments, critical for EU sustainability goals. Through semi-structured interviews with stakeholders, including commercial banks, policymakers, and industry experts across the EU, we identify key trends, drivers, and barriers for using the Taxonomy as a tool to identify green investment opportunities.

Findings reveal that awareness and uptake of Taxonomy-aligned finance are higher among large firms, while SMEs face challenges due to limited incentives and high compliance costs. Banks are motivated by investor demand, reputational gains, and regulatory alignment. However, they struggle to offer consistent financial incentives to clients and face difficulties regarding technical screening criteria (TSC). Building renovation activities lag behind new constructions due to unequal incentives, data gaps, and regulatory hurdles. Additionally, green bonds face limited interest, with companies favouring simpler financing alternatives.

To address the aforementioned challenges, the paper proposes two policy recommendations: (1) a database for pre approved compliance and methodologies to improve usability, and (2) subsidies to limit upfront costs for SMEs and renovation projects.

By bridging gaps between regulatory intent and practical implementation, this research offers new practical insights and suggestions to strengthen the Taxonomy’s role in advancing EU climate objectives.