The European Union (EU) is at a crossroads, faced with the pressing need to accelerate the green transition in response to climate change and energy security concerns. Historically, the EU has been plagued by a core-periphery divide, with each economic crisis deepening the gap between the resilient German-centred core and the more vulnerable southern periphery. The core economies have traditionally outperformed the peripheral ones, benefiting from stronger technological capabilities, higher productivity and faster recovery from downturns. The green transition offers an opportunity for innovation and growth, but it also presents complexities that could disrupt this dynamic. Indeed, while core countries are better equipped with resources to manage the transition, their sectoral specialisation and reliance on energy imports could lead to significant restructuring costs. This raises critical questions: will the green transition lead to further divergence within the EU, with the core pulling ahead, or, alternatively, could the core face challenges that will result in downward convergence? And, finally, which policies can reduce the gap by promoting upward convergence?

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