Towards a political economy of the green transition

ABSTRACT

This review examines three recent books on the European Green Deal (EGD), analyzing the political and economic challenges of the EU’s ambitious climate neutrality goals. The books offer comparative analysis of EU and US climate governance through punctuated equilibrium theory, explore barriers to sustainability across multiple policy domains, and investigate the legal dimensions of ecological sustainability. Though providing valuable empirical contributions, they inadequately address fundamental political economy questions regarding state-market relations and the green transition. The review argues for a more comprehensive theoretical framework that examines how climate policies interact with evolving policy paradigms, the emergence of winners and losers, and the role of various actors in shaping interventionist approaches. Understanding the EGD requires analyzing it through political economy lenses that connect domestic policy shifts with broader geopolitical trends.

The green transition in Europe

The European Union’s (EU) plan to achieve global leadership in environmental politics has attracted ample public opinion and scholarly attention. The European Green Deal (EGD), launched in December 2019, reflects this ambitious goal, hoping to ‘achieve climate neutrality by 2050’. Presented by the first von der Leyen Commission as the EU’s growth strategy, the EGD is an unprecedented ambitious plan that vows to re-invent the European business model completely.

The existing literature has interrogated the ways in which such agenda informs EU’s political economy, with particular reference to the role of crisis management (Dupont, Oberthu¨r, and Von Homeyer ²⁰²⁰). Extensive work has been carried out in trying to understand the EGD through established theoretical lenses within the European studies literature, in particular in relation to critical junctures and their effects on policy-making (Dupont, Oberthu¨r, and Von Homeyer ²⁰²⁰; Fifi ²⁰²⁵). The green transition is, however, not only influencing the politics of European integration – it is most fundamentally creating new political economy dilemmas and cleavages. The ambitious reinvention of the EU’s economy has sparked increasing conflict and resistance, to the point that the centrality of the green transition to the European project is now being questioned (Bocquillon 2024).

The three books reviewed in this article provide fresh contributions to this debate, assessing the main drivers and policies linked to the European green transition. Notwithstanding their differences in focus and framework, they all share a core concern on the political and economic challenges linked to EU’s climate action.

The dilemmas of the EGD

Frank Wendler’s book offers insights into the discourses related to climate change through a comparative study of the EU and the US post-Paris Agreement climate action. Offering an in-depth comparison of the EU and US climate governance, Wendler’s book represents a valuable resource for future debates on the politics of climate change. He starts from the recognition that climate change needs to be analyzed as a cross-cutting (rather than sectoral) issue (Wendler 2024). Wendler provides a much needed comparison of the US’ and the EU’s approaches to the green transition, with particular emphasis on what he calls ’green industrial policy’. The concepts encapsulate the recent revitalization of state-led investments both in the US and in Europe.

The reasons for such a shift are inherently political-economic in nature, and remain insufficiently addressed in the existing literature. Wendler employs a framework based on changes and continuity in policy-making, the so-called punctuated equilibrium theory (PET), which posits that policy-change occurs when long periods of stability get disrupted by sudden shocks (often due to political or economic crises). In his words, the rationale for such a framework is that it allows to emphasize the ’linkage of new ideas and beliefs to climate action affects policy-making in a comparison between conditions of stability and change’ (Wendler 2024, 26),

In Making the European Green Deal Work, Dyrhauge and Kurze (2023) edited volume groups essays analyzing different dimensions of sustainability that are necessary for the EGD’s success. The chapters touch on various policy areas both within the EU (spanning from the Commission’s proposals on forestry to the relation between the Union and the Visegra´d Four) as well as the role of diplomacy in ensuring reducing emissions abroad. In its entirety, the volume gives insight into the complexity and stakes involved in the EU’s green transition, as well as the challenges and conflicts that might arise. As a whole, Making the European Green Deal Work contributes to our understanding of the barriers that the EU faces in its path to a sustainability transition. The individual chapters give a sense of the distance between the declared goals of the EGD and the structural and normative barriers to change.

The volume Ecological Sustainability and the Law: The European Green Deal and the New Frontiers of Sustainability edited by Chiti and Giorgi provides an additional layer of complexity to the study of the EGD, focusing on the legal processes that accompany, challenge and impede climate action. The main argument coming out of the different chapters is that sustainability has emerged as an independent legal goal of the EU, independently from sustainable development. While the latter places all the emphasis on economic interests within the green transition, the former provides a more holistic framework which starts from the idea of the primacy of ecosystem integrity as a pre-requisite for social and economic development (Chiti and Giorgi 2024, 9). The study of sustainability is divided into five parts, each focusing on a specific ’transition’ required by the EGD. The chapters provide a rich and valuable overview of the legal changes occurring in policy areas related to green transition (e.g. digitalization, energy markets, etc.).

The dilemmas stemming from the ambitious plan of reaching climate neutrality by 2050 are well depicted in the three books analyzed. The green transition is increasingly seen as a paradigm that cannot be understood in a vacuum, but must rather be studied in relation to an ever increasing number of policy-areas. Such a view is of topical relevance if we are to make sense of the recent struggles European countries face in prioritizing environmental sustainability, amid growing opposition and emerging geopolitical challenges. As argued by Dyrhauge and Kurze (2023, 5):

Overall, the implementation of the EGD directly influences all aspects of member states’ economies and societies as well as third countries and other world regions. It is, therefore, important to understand how the different actors and stakeholders have responded to the proposals to transform the EU into a carbon-neutral society by 2050 at home and abroad.

Policy and investments dilemmas of the EGD are given great consideration. Rosa Fernandez (2023) chapter, for instance, investigates the role played by fiscal policy in making the EGD possible, particularly highlighting the role of environmental taxation. Helen Kavvadia (2023) focuses on the European Investment Bank (EIB), which through favorable loans and investments’ selection can facilitate the green transition. Part II of the book Making the European Green Deal Work Abroad offers a fresh and much needed discussion on the role of the EU in fostering diplomatic efforts to promote the green transition beyond its borders. This is an often underappreciated aspect within the European Studies literature, even though it is clear that Member States ’cannot achieve the objectives of the European Green Deal alone because problems and solutions are not confined to the EU or Europe’ (Dyrhauge and Kurze 2023, 8).

The collection edited by Chiti and Giorgi gives new depth to this debate. Climate neutrality is acknowledged to be ’a highly transformative target, pushing for a rethinking of a wide array of key policy areas capable of deeply impacting the legal, economic, social, and cultural construct of the European Union’ (Chiti and Giorgi 2024, 1). In particular, contributions to the book investigate the ways in which sustainability enters the EU’s legal structure, emphasizing the fact that the EGD requires a variety of transitions in various fields – agricultural, energetic, ecological, digital and economic. This brings the authors to investigate the compatibility of the specific objectives of each transition (2). The collection emphasizes the concept of ’ecological primacy’ which implies that climate-related standards must be given priority over other social and economic regimes (8). It offers insight into the level of permeability of different disciplines to the issue of sustainability. The collection also gives a sense of the reach and potential challenges involved in the various transitions that are required to achieve EU’s climate goals. Lastly, it shows that sustainability broadly defined is a goal that allows the EU to balance the different interests at stake.

Of the three books analyzed, not surprisingly, is Wendler’s monograph to engage more deeply in theoretical discussions linked to the EGD and the role of public authorities in its development. According to Wendler, EU climate action is articulated across three main dimensions. First, regulatory policy-making aimed at restricting and pricing carbon emissions as well as creating rules for energy production and consumption. The regulatory approach to policy-making is usually articulated through taxes on energy, transport, pollution and resources, to set a price on externalities (Fifi and Gao 2025). Second, green investments were mobilized particularly through the Next Generation EU plan, which had climate action as one of its core goals. Moving beyond mere regulation of the market, the Next Generation EU represented the main (although not the first) example of large-scale public investment in environmental sustainability. Third, external action, while still fragmented, is another important realm in which the EU green transition evolves. The typology developed by Wendler resembles other existing frameworks within the EU-focused literature (Fifi and Gao 2025; Prontera and Quitzow ²⁰²²). Yet, as I will argue in the final section, the literature on the EU green transition would still benefit from a more comprehensive attempt to theorize how climate policies interact with the evolution of political-economic paradigms.

State-market relations and the green transition

The books considered here provide several empirical and policy-oriented contributions, which greatly enrich our understanding of the complexity, challenges and opportunities of the EGD. On the other hand, while the holistic nature of the green transition is a latent theme among them, more work needs to be carried out on the ways in which different policy-areas intersect with each other and why.

Traditional political economic questions, such as the evolving role of public authorities (or, more abstractly, the State) within the EGD remain, for the most part, in the background. A framework based on political science or legal frameworks misses the ways in which the political economy of the green transition evolves in relation to (and influences) historical trends in policy-paradigms. In particular, the current re-invention of the role of the state vis-`a-vis the economy and the role of climate action within this context require further attention (Fifi and Gao 2025; Prontera and Quitzow ²⁰²²). The two major frameworks presented in Wendler’s book and in Chiti and Giorgi’s collection appear inadequate to this task. The green transition, in fact, does not develop (mainly) from ’new opportunities brought forth by the redefinition of sustainability’ in legal terms (Chiti and Giorgi 2024, 11), and the framework of punctuated equilibrium seems too abstract to be satisfactory as an explanation of recent trends. Such shortcomings are also common in the broader literature on the EGD, which tends to overestimate the theoretical relevance of traditional European studies debates while underemphasizing crucial political economy dilemmas associated with the Commission’s ambitious climate goals.

This might explain, for instance, why the idea of just transition – central as it has been in recent discussions at the European level – plays a rather marginal role in the analysis. Such concept points to the efforts to ensure that the ‘most affected vulnerable groups […] are directly supported, and not left behind’ as a result of EU’s climate policies (Fifi and Gao 2025, 12). The collection edited by Dyrhauge and Kurze (2023) presents a partial exception, as the so-called Just Transition Mechanism is analyzed both in relation to the Visegr´ad Four and the EU’s attempt to introduce corporate responsibility. Yet, broader reflection on the evolution of state-market relations and their role in light of climate action is missing. Research focused on these aspects might help us, for example, to make sense of the recent re-emergence of interventionist frames in major Western countries, after a period characterized by liberalizations and fiscal tightening.

At the most abstract level, a political economy of the green transition requires us to think about how different groups position themeselves (ideologically and politically) in relation to climate action and how, in a repeated game, they react to their own positions as winners or losers in the process, as well as understanding the aggregate impact of their positions at the institutional level. In more concrete terms, it implies asking some of the following questions. Has the climate crisis (seen as a shock that is qualitatively different from any other recent ones) played a role in the revival of state intervention in the economy? What role do actors both within and beyond the state (e.g. public officials, political parties, trade unions, NGOs and private companies) play in interpreting climate change as needing a thorough paradigm change in established policy-making frameworks? How do these actors change their position in relation to recurring economic and social crises? How are European welfare states producing (and reacting to) new winners and losers through their climate-related policies? What are the conditions that make the EU’s plan to be a global leader and first-mover in climate action possible and/or potentially challenging?

These themes have emerged in all their relevance during the recent European elections, as populist and extreme right-wing groups registered historically positive results, mainly at the expense of social democratic and green parties.

For this reason, thinking in terms of political economy can be seen as a prerequisite to make sense of the transition from the first von der Leyen Commission (which had defined the EGD as the EU’s growth strategy) to the second (with its increasingly more timid and compensatory approach towards climate policies; for a preliminary analysis of this evolution see Fifi and Gao ²⁰²⁵). Political economic lenses applied to the European green transition would, in turn, also bring light to how the EGD (and the struggles therein) fits into broader geopolitical trends, epitomized by Donald Trump’s push to remove environmental concerns from the United States’ top priorities.

Ultimately, while the focus on sustainability present in the analyzed works partially moves in some of these directions, the main contribution of the three books remains empirical and descriptive and does not offer real answers to the research questions highlighted earlier. A more encompassing theory of the redefinition of European policy-making in light of climate change is, therefore, still warranted.

Disclosure statement

No potential conflict of interest was reported by the author.