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Analysis of the EU policy package on climate change and renewables

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  • Capros, Pantelis
  • Mantzos, Leonidas
  • Parousos, Leonidas
  • Tasios, Nikolaos
  • Klaassen, Ger
  • Van Ierland, Tom

Abstract

In 2009 the EU decided to reduce greenhouse gas emissions at least by 20% in 2020 compared to 1990 and to supply 20% of energy needs by 2020 from renewable energy sources. This paper uses an energy model coupled with a non-CO2 greenhouse gas model to assess the range of policy options that were debated to meet both targets. Policy options include trading of renewable targets, carbon trading in power plants and industry and the use of the Clean Development Mechanism to improve cost-efficiency. The models also examined fairness by analysing the distribution of emission reduction in the non-emission trading sector, the distribution of CO2 allowances in the emission trading sector and the reallocation of renewable targets across Member States. The overall costs of meeting both targets range from 0.4% to 0.6% of GDP in 2020 for the EU as a whole. The redistribution mechanisms employed significantly improve fairness compared to a cost-effective solution.

Suggested Citation

  • Capros, Pantelis & Mantzos, Leonidas & Parousos, Leonidas & Tasios, Nikolaos & Klaassen, Ger & Van Ierland, Tom, 2011. "Analysis of the EU policy package on climate change and renewables," Energy Policy, Elsevier, vol. 39(3), pages 1476-1485, March.
    • Handle: RePEc:eee:enepol:v:39:y:2011:i:3:p:1476-1485
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    References listed on IDEAS

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    1. Tol, Richard S.J., 2009. "Intra- and extra-union flexibility in meeting the European Union's emission reduction targets," Energy Policy, Elsevier, vol. 37(11), pages 4329-4336, November.
    2. Jaffe, Adam B. & Newell, Richard G. & Stavins, Robert N., 2005. "A tale of two market failures: Technology and environmental policy," Ecological Economics, Elsevier, vol. 54(2-3), pages 164-174, August.
    3. Oecd, 2010. "Energy Security and Competition Policy," OECD Journal: Competition Law and Policy, OECD Publishing, vol. 11(1), pages 7-90.
    4. Böhringer, Christoph & Rutherford, Thomas F. & Tol, Richard S. J., 2009. "The EU 20/20/2020 Targets: An Overview of the EMF22 Assessment," Papers WP325, Economic and Social Research Institute (ESRI).
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