The Impact of Green Bond Markets on Energy Intensity in the EU-27 (2014–2024)

This thesis investigates whether the development of green bond markets is associated with lower energy intensity across the twenty-seven member states of the European Union over the period 2014–2024. Energy intensity—economy-wide energy use per unit of gross domestic product—is the central macro indicator of how efficiently an economy converts energy into output, and labelled green bonds have become a prominent instrument for channelling capital toward the energy transition. Combining harmonised country-year data on green bond issuance, bond-market scale, energy use, and a set of macroeconomic and structural controls, the analysis estimates a transparent ladder of two-way fixed-effects panel models. The green bond measure is the inverse-hyperbolic-sine of green issuance scaled by total debt securities outstanding, entered with a one-year lag; inference is based on country-clustered standard errors. The main finding is that the analysis does not detect a statistically significant negative association. The within-country association between lagged green bond market development and subsequent energy intensity is statistically insignificant, with a small positive point estimate rather than the expected negative one (β ≈ 0.31, p ≈ 0.73, N = 270, within-R² ≈ 0.29). This pattern remains similar across gas-price and climate-policy augmentations, a dynamic specification with a lagged dependent variable, panel local projections at horizons of one to four years, and an extensive/intensive margin decomposition. The pre-specified hypotheses of a negative association (H1) and of effects that strengthen over longer horizons (H2) are not supported, while the post-2022 interaction (H3) is inconclusive. The one specification that produces a significant negative coefficient does not provide convincing evidence of a causal financing channel: a placebo lead is significantly negative, which is consistent with reverse timing (selection into issuance) rather than with an effect of issuance on subsequent energy intensity. An event study around first issuance is consistent with this reverse-timing interpretation, although it is not conclusive. The model nonetheless recovers the expected significant negative associations of energy intensity with income per capita and with the renewables share, suggesting that the specification captures standard correlates of energy intensity. The thesis interprets the null as a substantive contribution: at the level of national energy intensity and over this decade, green-finance development is not detected as a statistically distinguishable predictor, and the pattern is more consistent with countries already on a decarbonisation path subsequently developing green bond markets. Keywords: green bonds; energy intensity; European Union; two-way fixed effects; panel data; energy transition; sustainable finance; null result.