In recent years, the European Union has played a key role in global efforts to combat climate change and the energy transition, focusing on creating fiscal, legal and regulatory policies and instruments capable of supporting the decarbonization process and ensuring a sustainable energy future. Environmental taxation has been considered not only as an essential tool to discourage pollution but also to stimulate cleaner energy production, the integration of renewable sources and energy efficiency. Our research analyses the impact of environmental tax revenues on CO₂ across 27 EU member states from 2012 to 2023. A mixed-method research approach is used, combining policy and strategy analysis, bibliometric mapping and econometric data analysis using OLS, as well as fixed and random effects models that are selected based on the Hausman test. The methodological mix approach provides empirical evidence on how fiscal instruments can simultaneously support environmental sustainability and energy resilience. The results show that environmental taxes are associated with greenhouse gas emission reductions and an increase in the share of renewable energy, especially when integrated into a coherent national policy framework. The policy analysis highlights the role of the Climate Action Budgetary Mechanism (CABM) and the Effort Sharing Regulation (ESR), underlining their importance for the European Union’s energy strategy. The bibliometric results indicate the existence of thematic clusters focused on carbon pricing, renewable energies and international comparisons, particularly with China. Finally, this study suggests that the maximum efficiency of environmental taxes is achieved when the revenues generated are reinvested in green infrastructure, innovation and sustainable jobs. Furthermore, policies should be adapted to the specificities of each Member State to ensure a fair and sustainable energy transition at the EU level.

This study investigates the underexplored relationship between the shadow economy and environmental degradation and governance within the European Union, focusing on CO₂ and GHG emissions, and climate-related natural disasters, from 2012 to 2021. Employing both panel data econometrics and Elastic Net regularisation, the analysis reveals asymmetric effects: while a larger shadow economy is associated with lower reported GHG emissions, likely due to underreporting or less energy-intensive activities, it simultaneously increases vulnerability to climate-induced disasters. Furthermore, environmental taxes, although effective in mitigating emissions, show limited impact on disaster frequency, suggesting that fiscal instruments alone may be insufficient to foster climate resilience. Economic prosperity correlates with higher emissions and greater climate risk, highlighting a trade-off between growth and sustainability. The findings underscore the necessity of integrating informal economic activities into environmental governance frameworks, particularly in the context of the European Green Deal. Recognising and regulating the environmental footprint of the shadow economy is essential for achieving comprehensive and equitable climate goals. Future research should explore the role of institutional quality and fiscal transparency in moderating the environmental effects of informality. Overall, this study calls for a rethinking of climate policies to include both the formal and informal dimensions of economic activity.