The Analysis of Public Funds Utilization Efficiency for Climate Neutrality in the European Union Countries

The aim of this article was to assess the efficiency of the utilization of public funds for climate neutrality. It was concluded that the data gathered in public statistics are not adapted to current challenges and hinder the direct measurement of climate policy objective implementation progress. Due to that, an innovative approach to public intervention efficiency analysis was proposed for the sake of decreasing CO2 emission in 27 European Union (EU) countries, based on Data Envelopment Analysis (DEA) method and soft modeling. Statistical data are derived from the Eurostat database and pertain to the years 2005-2019. It was demonstrated that activity efficiency of the particular EU countries on climate neutrality varied and that together with the increase in public funds spent on environmental protection, the growth of effects in the field of reaching climate neutrality objectives was not observed. The greatest positive impact on achieving climate neutrality objectives was revealed for activities connected with building renewable sources of energy (RES) and there was no correlation detected for expenditures connected with transport infrastructure, which means that public funds used for their construction did not influence climate neutrality. It was established that, in the analyzed period, the decisions on allocating public funds were not taken on the basis of the expected amount of reduction in relation to the volume of outlays. In order to track the reasons for detected inefficiency, 52 projects were analyzed within the case study, which covered 3738 investments in the replacement of heating sources in one region of Poland. It was revealed that the efficiency of those investments varies; however, due to the full availability of data of the acquired results and outlays devoted to them, a synthetic index of efficiency measurement was established that presents the amount of CO2 reduction for EUR 1. When comparing the analyses carried out on macro and micro scales, it was observed that on the scale of the EU, there is a lack of uniform measurements or benchmarks of projects in the field of CO2 emissions reduction. Meanwhile, from the whole EU's perspective, it should be reasonable to undertake projects with the highest economic efficiency, irrespective of political and geographical aspects. The results obtained should be utilized by decision-makers to elaborate reference methodologies and good practices in order to successfully implement climate objectives and especially the Energy Performance of Buildings Directive (EPBD). What should be established are universal, on the EU scale, measurements and rules for gathering and counting data as well as benchmarks for the particular project types.

Automated summary

The aim of this article was to evaluate the efficiency of public funds in achieving climate neutrality. It was found that the current public statistics are not suitable for measuring the progress of climate policy objectives. A new approach combining Data Envelopment Analysis (DEA) and soft modeling was proposed to analyze the efficiency of public interventions in reducing CO2 emissions in 27 European Union countries. The study showed that the activity efficiency of EU countries in achieving climate neutrality varied, and increasing public funds for environmental protection did not necessarily lead to progress in reaching climate neutrality objectives. The study also revealed that building renewable energy sources had the most positive impact on achieving climate neutrality, while expenditures on transport infrastructure did not contribute to climate neutrality. The analysis of 52 projects in one region of Poland further identified variations in the efficiency of investments in replacing heating sources, and a synthetic index of efficiency measurement was established based on CO2 reduction per EUR 1. The study highlighted the need for uniform measurements, data collection rules, and benchmarks for CO2 emissions reduction projects on a European scale. The findings should be utilized by decision-makers to develop reference methodologies and best practices for successful implementation of climate objectives, particularly the Energy Performance of Buildings Directive (EPBD).