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Are Carbon Prices Redundant in the 2030 EU Climate and Energy Policy Package?

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  • Finn Roar Aune
  • Rolf Golombek

Abstract

In 2018, an agreement between the key EU institutions—the Commission, the European Parliament, and the European Council—was reached after a long-lasting discourse over the 2030 EU climate and energy policy package. This paper offers a comprehensive assessment of the EU package, with its three main targets: lower greenhouse gas emissions, higher renewable share in final energy consumption, and improved energy efficiency. We find that the renewable and energy efficiency targets have been set so high that the derived emissions reduction (50 percent) exceeds the EU climate target (40 percent). Hence, there is no need for an EU climate policy, for example, to use carbon prices to reach the EU climate goals. It is, however, not cost-efficient to achieve the climate target by imposing the three EU targets. We demonstrate that a cost-efficient policy that obtains a 50 percent GHG emissions reduction would increase annual welfare (relative to the Reference scenario) by an amount corresponding to 0.6 percent of GDP in Europe.

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  • Finn Roar Aune & Rolf Golombek, 2021. "Are Carbon Prices Redundant in the 2030 EU Climate and Energy Policy Package?," The Energy Journal, , vol. 42(3), pages 225-264, May.
    • Handle: RePEc:sae:enejou:v:42:y:2021:i:3:p:225-264
    DOI: 10.5547/01956574.42.3.faun
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    3. Rolf Golombek & Mads Greaker & Snorre Kverndokk & Lin Ma, 2021. "The Transition to Carbon Capture and Storage Technologies," CESifo Working Paper Series 9047, CESifo.
    4. Theis Madsen & Yiannis Kountouris & Rasmus Bramstoft & Phoebe Koundouri & Dogan Keles, 2024. "Pathways for Pan-European Energy System Decarbonization: The Effect of Emission Policies on Target Alignment," DEOS Working Papers 2404, Athens University of Economics and Business.
    5. Golombek, Rolf & Lind, Arne & Ringkjøb, Hans-Kristian & Seljom, Pernille, 2022. "The role of transmission and energy storage in European decarbonization towards 2050," Energy, Elsevier, vol. 239(PC).
    6. Gaure, Simen & Golombek, Rolf, 2022. "True or not true: CO2 free electricity generation is possible," Energy, Elsevier, vol. 259(C).
    7. Cathrine Hagem & Snorre Kverndokk & Eric Nævdal & Knut Einar Rosendahl, 2022. "Policies for electrification of the car fleet in the short and long run. Subsidizing electric vehicles or subsidizing charging stations?," Discussion Papers 980, Statistics Norway, Research Department.
    8. Arkadiusz Piwowar & Maciej Dzikuć, 2024. "The Economic and Social Dimension of Energy Transformation in the Face of the Energy Crisis: The Case of Poland," Energies, MDPI, vol. 17(2), pages 1-12, January.
    9. Rolf Golombek & Mads Greaker & Snorre Kverndokk & Lin Ma, 2023. "Policies to Promote Carbon Capture and Storage Technologies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 85(1), pages 267-302, May.
    10. Fæhn, Taran & Yonezawa, Hidemichi, 2021. "Emission targets and coalition options for a small, ambitious country: An analysis of welfare costs and distributional impacts for Norway," Energy Economics, Elsevier, vol. 103(C).

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    More about this item

    Keywords

    Climate policy; Renewables; Energy efficiency; Energy modeling; EU 2030;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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