<p>The pace of global decarbonization remains insufficient, with current trajectories suggesting that global warming could reach up to 4°C over the next century in the absence of a comprehensive green transition. Policymakers in Europe—and globally—still have a critical window of opportunity to achieve net-zero emissions by 2050 while simultaneously enhancing economic resilience. This can be accomplished by improving energy efficiency and shifting the energy mix from fossil fuels to renewable sources. In this paper, we analyze energy efficiency (or energy intensity) across a panel of 38 European countries from 1980 to 2021 using stochastic frontier analysis. Our findings are both statistically significant and intuitively compelling. We highlight two key insights. First, price signals—such as the implementation of carbon taxes and the elimination of fossil fuel subsidies—play a pivotal role in enhancing energy efficiency, as consumers adjust their behavior in response to energy price changes. Second, robust environmental policies and strong institutional frameworks lead to clear improvements in energy efficiency by encouraging investment in energy-efficient technologies and infrastructure, and by promoting energy conservation among consumers. These results, which are robust across various model specifications and methodologies, offer important policy implications for achieving green growth through higher energy efficiency.</p>