FINANCING PRACTICES FOR THE TWIN TRANSITION AT THE SUBNATIONAL LEVEL IN THE EU AND OECD COUNTRIES

Abstract

The article systematises and assesses practices of financing the twin (green and digital) transition at the subnational level in the EU and OECD countries and identifies the conditions for their adaptation to the institutional environment of Ukraine. The research tasks are to reveal the fiscal role of subnational governments in the twin transition, to analyse the analytical programme of the OECD, the grant channel of EU Cohesion Policy and the credit-and-guarantee toolkit of the European Investment Bank Group, and to expose the systemic gap between the competences delegated to local communities and the financial resources actually available to them. A structural asymmetry is confirmed: subnational governments in OECD countries manage about 40 % of public expenditure, 58 % of public investment and up to 68 % of climate-significant investment, yet their own-revenue base does not provide a commensurate investment capacity. Cohesion Policy 2021–2027 operates as the main grant channel of the twin transition, while the EIB Group supplies the credit-and-guarantee channel, with green finance approaching 60 % of annual signatures. At the same time, about two-thirds of municipalities report difficulties in mobilising finance and 83 % rely primarily on EU grants, which indicates the fragility of local investment models and their dependence on external transfers. For the first time in Ukrainian scholarship, the analytical, grant-based and credit-and-guarantee circuits are treated as a single multilevel system of twin-transition finance, and criteria are proposed for adapting this model to Ukraine in the context of war, recovery and reconstruction. Shifting the fiscal burden of the twin transition to the subnational level makes regions and local communities the key determinants of the success or failure of climate policy; therefore, strengthening own revenues, borrowing capacity and project preparation capability of Ukrainian communities is a precondition for the effective absorption of green and digital investment.