Do Environmental Taxes Stimulate Eco-Investments? Evidence from Seven EU Member States and the EU-27

The European Green Deal places environmental taxation at the centre of decarbonisation policies. Nevertheless, empirical evidence of its effectiveness as a stimulus for capital eco-investments remains limited, particularly at the sectoral level. The present study analyses this relationship through a country–sector panel of seven EU countries and four NACE Rev.2 sectors for the period 2014–2023. A six-step empirical strategy is employed, comprising: preliminary diagnostic tests (cross-sectional dependence, stationarity, cointegration), descriptive statistics, correlation analysis with relative indicators, fixed-effects panel regressions with control variables, a Granger causality test, and nine robustness checks. All monetary values are in real prices (base year 2015). The results reveal a clear scale effect—the correlation between the absolute values of environmental taxes and eco-investments is very high, but after normalisation by sectoral GVA it becomes practically zero and statistically insignificant. The panel regressions also find no statistically significant relationship, and the Granger test does not confirm causality in either direction. The addition of control variables (eco-expenditures, GVA growth) and sector interaction effects does not alter the result. Nine robustness checks confirm the stability of these findings. Within the sample under consideration, the analysis finds no robust direct relationship between environmental taxes and sectoral eco-investments. The results obtained suggest a need to rethink policy through a more targeted use of revenues, sectoral differentiation, and combining tax instruments with non-fiscal mechanisms for the more effective management of the financial risk of the transition.