The study examines how public procurement, financial conditions, fiscal position and energy-market factors are associated with climate performance in European economies. It focuses on whether these relationships differ across the climate-performance distribution and between short- and long-run dynamics. In particular, the study assesses whether the scale and transparency of public procurement, financial-sector fragility, natural-gas dependence, electricity-price distortions, and external financial positions are systematically related to the climate change performance index (CCPI).
The analysis covers 16 European Union countries over 2010–2019. Quantile regression is used to identify heterogeneous associations across the conditional CCPI distribution, while error-correction models capture short-run dynamics and long-run adjustment. The empirical strategy accounts for cross-sectional dependence, non-stationarity, cointegration, heteroskedasticity and contemporaneous correlation. The framework distinguishes between procurement scale and procurement risks associated with direct awards and offshore exposure.
The results reveal strong distributional asymmetries. Large public contracts are positively associated with CCPI, whereas direct-award and offshore-risk contracts are negatively associated, particularly among lower-performing economies. Natural gas exhibits a changing role: its association with CCPI is positive at lower performance levels but turns negative at higher levels, consistent with a transition from coal substitution toward renewable energy lock-in. Financial fragility is positively associated with CCPI, especially in the lower tail, while stronger external financial positions consistently correspond to better climate performance. More than 85% of short-run deviations are corrected within one year.
The study makes three distinct contributions. First, it separates procurement scale from procurement integrity, showing that larger public contracts are consistently associated with better climate performance, whereas direct and offshore-risk contracting is associated with weaker outcomes. Second, it reveals that the role of natural gas is not uniformly transitional: its association with climate performance changes from positive among lower-performing economies to negative among higher-performing ones. Third, it links financial fragility and external financial strength to climate performance, while the error-correction estimates point to rapid and dynamically stable convergence of climate performance toward its long-run equilibrium relationship despite short-run disturbances.
