EU climate aid and trade interests: strategy or byproduct of closer ties?

To what extent do strategic trade-related considerations influence the European Union’s allocation of climate aid? As a major climate aid donor and a global trade power, the EU has frequently been shown to prioritize economic interests, particularly those of its export-oriented industries, in its external actions. This paper investigates whether trade influences EU climate aid allocation and, if so, whether this effect reflects strategic efforts to enhance trade or is simply a byproduct of estab-lished ties and familiarity with trade partners. Using disaggregate, sector-level data on both cli-mate aid and trade flows, we assess whether the EU directs aid towards sectors that serve trade interests, especially those where its export stakes are high. Results from two-part regression models provide mixed evidence regarding strategic allocation: On the one hand, the EU consistently favors sectors linked to its export interests in climate aid allocation; on the other hand, trade interests play only a modest role in shaping other aspects of that allocation. Beyond the EU case, the paper contributes to the broader literature on (climate) aid allocation and its links to trade, offering in-sight into the mechanisms that may shape this relationship.