Raise your game or fall behind? Explaining the use of EU sustainable finance in the EU’s Central and Eastern European member states

This paper investigates the variation in how the EU member states from Central and Eastern Europe (CEE) have used and are using newly developed EU structural support mechanisms in the Recovery and Resilience Facility (RRF) to finance sustainable growth and the ‘green transition’, which have been key policy priorities for the von der Leyen European Commission. We conduct a comparative case study to investigate the use of EU sustainable finance mechanisms in two member states which have taken two very different approaches to managing the available EU ‘green transition’ financing, namely, Estonia and Bulgaria. In particular, we investigate how the mechanisms of powering and puzzling shape the diverging pathways of the ‘green transition’ in the selected member states. We examine how domestic policy capacities (analytical, operational, and political) have influenced the use of EU funds for supporting the green transition. As sources of data, we used policy documents and semi-structured interviews with key policy actors. The findings have important implications and offer policy insights into the design and operation of EU sustainable finance support mechanisms, especially regarding the risks they create and challenges that are encountered. Moreover, the initial empirical results reveal a significant ‘developmental’ agenda in the use of the EU Recovery and Resilience Facility in both member states in the sense of financing infrastructural and other large-scale investment gaps, for which the individual national budgets of the CEE member states do not have sufficient means.