The Role of Digital Financial Issues on the Effectiveness of European Energy Policies

Abstract

Renewable energy investments are of vital importance for the effectiveness of energy policies of countries. The carbon emission problem will be eliminated with the help of these projects. Additionally, renewable energy investments help countries to achieve energy independence. Financing is one of the most important problems of renewable energy projects. The main reason for this is the high-cost and long-term nature of renewable energy projects. Due to these negative aspects, financial institutions such as banks and leasing companies are reluctant to lend to renewable energy projects. This situation also creates a disadvantage for renewable energy projects. Currently, the initial costs of renewable energy projects are very high compared to fossil fuels. This situation creates a cost disadvantage for clean energy projects. Therefore, some actions need to be taken to solve the high-cost problem of these projects. The EU still has an energy infrastructure that is dependent on fossil fuels. Political and military tension and other reasons especially between Ukraine and Russia affect global energy prices, and Europe’s energy supply security is under intense threat. Thus, the EU is faced with increasing energy costs. Rising energy costs make the EU economy more fragile. Therefore, sustainable and zero-carbon energy policies are vital for the EU. Therefore, they must take urgent measures to solve the energy dependency problem of European countries. In this context, renewable energy projects need to be increased. To achieve this goal, it is necessary to develop digital financial products. The initial cost of renewable energy projects is quite high. This situation hinders the increase of the mentioned investments. Digitalized financial products, on the other hand, enable investors to access more funds in a shorter time. This will help increase renewable energy projects. Thus, it will be much easier to solve the energy dependency problem of European countries.