Competitiveness without Capacity? Public Finance; Industrial Strategy; and the EU’s Net-Zero Transition
DOI:
https://doi.org/10.15611/e21.2026.01Keywords:
climate policy, net-zero transition, European UnionAbstract
Aim: This article examines how public financing and institutional capacity shape the development of strategic clean-energy value chains in the European Union. The author investigated whether the EU’s current policy architecture, which is centred on financial mobilisation, market-based instruments, and de-risking; can support the industrial capabilities required to achieve net-zero objectives.
Methodology: The study used a qualitative, institutional political economy approach, combining analysis of the academic literature with examination of EU legislation, policy documents, and institutional reports, while focusing on the governance of investment, production, and risk in transition vulnerable sectors.
Results: Despite the availability of financial instruments and regulatory incentives, limitations in public institutional capacity constrain their effectiveness. Investment tends to favour projects aligned with private risk–return profiles, while production, learning, and technological control concentrate in regions with established industrial coordination. As a result, the domestic development of strategic regions remains uneven and fragile.
Implications and recommendations: Achieving net-zero objectives requires a shift from a financecentred policy model toward deliberate capacity-building. This includes strengthening public functions of direction-setting, long-term risk absorption, strategic coordination, and conditional support for industrial development, moving beyond narrow market-failure correction.
Originality/value: The article contributes to the literature on climate transitions and industrial policy by distinguishing public financing from public industrial capacity. It argues that the success of the EU sustainable transformation depends not only on the scale of investment mobilised, but also on the institutional ability to coordinate, govern, and anchor strategic value chains within Europe.
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