ECONOMIC EFFECTS OF DECARBONISATION IN THE EU ENERGY SECTOR: THE ROLE OF RENEWABLE ENERGY IN ENERGY MARKET TRANSFORMATION

Abstract

The article examines the economic effects of decarbonisation in the energy sector of the European Union. The study highlights the relevance of this issue in the context of global climate commitments, energy security concerns, and the transformation of energy market structures across the EU. The objective of the article is to provide a systematic analysis of how EU energy and climate policies – particularly the European Green Deal, Fit for 55, and REPowerEU – influence electricity production, pricing, and trade, while contributing to long-term competitiveness and economic resilience. The methodology is based on comparative structural analysis, logical modeling and interpretation of statistical indicators, drawing on data from Eurostat, the IEA, and the European Commission. The study also incorporates selected policy and market evaluation reports from Ember and other independent institutions. The results show that decarbonisation policies have led to a significant increase in the share of renewable energy sources in the EU energy mix, a reduction in fossil fuel consumption, and a noticeable decline in dependency on energy imports – particularly from geopolitically sensitive suppliers. These processes have contributed to greater energy stability, lower long-term energy costs, and diversification of energy sources. The study identifies key economic effects of the transition: a stabilisation of wholesale electricity prices following the 2022 energy crisis, the emergence of new industrial segments (such as green hydrogen and storage technologies), and growth in employment linked to renewable energy sources deployment. A logical model is developed to demonstrate the relationship between policy instruments, rising renewable generation, energy security, and economic outcomes. The practical value of the article lies in its potential for application in policy planning and economic modelling. The proposed conceptual framework can also serve as a basis for developing energy strategies in Central and Eastern European countries, adapted to their structural constraints and energy transition challenges.