Abstract
This study explores the global business and policy determinants of sustainable energy efficiency across the 27 European Union member states from 2013 to 2023, using the ODEX index to measure aggregate progress in reducing energy intensity in industry, transport, and households. Based on balanced panel data from Eurostat, the World Bank, WIPO, and the Worldwide Governance Indicators, we apply fixed-effects and System GMM estimations to assess the contributions of foreign direct investment (FDI), per capita GDP growth, government effectiveness (GE), and the Global Innovation Index (GII), while controlling for the 2022 energy crisis. The results reveal strong persistence in energy efficiency patterns, a robust positive influence of the Global Innovation Index (GII), and a negative effect of GDP per capita growth through rebound mechanisms, which becomes statistically significant in the dynamic specification. Government effectiveness exerts a strong structural effect in the static model. These findings underscore the strategic role of innovation and governance in improving energy performance and inform EU policymakers on aligning investment, innovation, and institutional frameworks with the Union’s 2030 energy efficiency and 2050 carbon-neutrality objectives.