The role of the EU taxonomy for the energy transition

Abstract

We are now living in an era that is experiencing a climate catastrophe, which poses a serious challenge to the globe by influencing every aspect of our civilization. Global warming and climate change urge substantial adjustments to our current habits. Limiting climate change and its consequences need rapid action, making global decarbonisation and energy transition to a green economy an urgent priority. The energy transition necessitates unprecedented investments in order to mitigate and adapt the effects of climate change.One of the Paris Agreement's efforts is to align financial flows with a roadmap toward low emissions of greenhouse gases and development that is environmentally friendly.Where as in past years, the EU established the Sustainable Finance Framework to address environmental issues while increasing the awareness of sustainable economic activity.The EU Taxonomy, on the other hand, is a critical tool for achieving the European Union's ambitious EU Green Deal ́s environmental goals of becoming climate neutral by 2050 and boosting sustainable finances by identifying environmentally sustainable operations and preventing greenwashing while aiming to enable and increase sustainable finances.The goal of this thesis is to give insight into the EU Taxonomy by analysing its most recent changes and determining its impact on the energy transition. The methodology itself is a typical qualitative and exploratory research, which is based on material and publications from the European Commission but also on wide-ranging literature for the analysis of the effects of the energy transition.The current renewable energy shift is being pushed by strong decarbonisation regulations and low-carbon technological advancements, while the EU Taxonomy is projected to distribute capital more favourably to sustainable industries. The taxonomy is intended to standardise sustainable operations, and although it has generally had some positive influence on the Energy Transition, several challenges have arisen for the commercial sector.