IDEAS home Printed from https://ideas.repec.org/p/ags/pugtwp/331824.html
   My bibliography  Save this paper

The Costs of the EU Energy Package for Finland - a Model-Based Assessment

Author

Listed:
  • Honkatukia, Juha
  • Forsström, Juha

Abstract

The European Union has committed to cutting its greenhouse gas emissions by an average of 20 per cent by the year 2020. In addition, there is a commitment to increasing the share of renewable energy within EU to 20 per cent of energy consumption, also by the year 2020. Finally, energy saving is also given a 20 per cent target by 2020. The European Council accepted the Energy and Climate package in December 2008, making the targets binding for all member countries. This study evaluates the long-run effects of the package from the Finnish point of view. The study utilises specific sectoral models and a CGE model to evaluate the effects of the full climate and energy package. The effects of specific policy measures on the choice of fuels and energy saving within industry and the energy sector are based simulations carried out with an engineering model, while the potential for increased domestic stumpage has been evaluated with forestry models and the potential for crop-based feed stocks for biofuel production, in turn, with agricultural models. Estimates on the potential for energy saving stem from several sectoral studies using also micro level data. The effects on the economy are studied with the VATTAGE model, a dynamic CGE model of the Finnish economy based on the MONASH-model. Our sectoral effects indicate that the energy package accelerates structural change towards a more service-based economy. This may prove challenging, unless productivity growth in the service sector is increased, since the service sector is under increasing pressure coping with the demand of an ageing population. Our regional results also point to structural change in regions that are affected by the slower growth of energy-intensive industries. Finally, we find that the distributional effects of the energy package are surprisingly small, contrary to previous studies on the distributional effects of energy taxes. This is due to the energy package encompassing all energy, not just transport fuels whose consumption shares are larger in lower-income groups. The package thus also increases the costs of the non-fuel energy use of wealthy income groups, distributing the costs of the package more evenly.

Suggested Citation

  • Honkatukia, Juha & Forsström, Juha, 2009. "The Costs of the EU Energy Package for Finland - a Model-Based Assessment," Conference papers 331824, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331824
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/331824/files/4396.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bohringer, Christoph & Loschel, Andreas & Rutherford, Thomas F., 2007. "Decomposing the integrated assessment of climate change," Journal of Economic Dynamics and Control, Elsevier, vol. 31(2), pages 683-702, February.
    2. Rutherford, Thomas F, 1999. "Applied General Equilibrium Modeling with MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax," Computational Economics, Springer;Society for Computational Economics, vol. 14(1-2), pages 1-46, October.
    3. Kelly de Bruin & Rob Dellink & Shardul Agrawala, 2009. "Economic Aspects of Adaptation to Climate Change: Integrated Assessment Modelling of Adaptation Costs and Benefits," OECD Environment Working Papers 6, OECD Publishing.
    4. Mendelsohn, Robert & Dinar, Ariel & Williams, Larry, 2006. "The distributional impact of climate change on rich and poor countries," Environment and Development Economics, Cambridge University Press, vol. 11(2), pages 159-178, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Reynolds, Travis & Kolodinsky, Jane & Murray, Byron, 2012. "Consumer preferences and willingness to pay for compact fluorescent lighting: Policy implications for energy efficiency promotion in Saint Lucia," Energy Policy, Elsevier, vol. 41(C), pages 712-722.
    2. Mofoluwawo Esther Omoniyi, 2020. "Sensitizing Nigerian Citizens on the Effects of Climate Change: Challenges for Social Studies Curriculum Planners and Implementers," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(9), pages 699-703, September.
    3. Alejandro Lopez-Feldman, 2013. "Climate change, agriculture, and poverty: A household level analysis for rural Mexico," Economics Bulletin, AccessEcon, vol. 33(2), pages 1126-1139.
    4. Nicole A. MATHYS & Jaime DE MELO, 2010. "Trade and Climate Change: The Challenges Ahead," Working Papers P14, FERDI.
    5. Hermeling, Claudia & Klement, Jan Henrik & Koesler, Simon & Köhler, Jonathan & Klement, Dorothee, 2015. "Sailing into a dilemma," Transportation Research Part A: Policy and Practice, Elsevier, vol. 78(C), pages 34-53.
    6. Matthias Schmidt & Hermann Held & Elmar Kriegler & Alexander Lorenz, 2013. "Climate Policy Under Uncertain and Heterogeneous Climate Damages," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(1), pages 79-99, January.
    7. Hafner, Marco & Yerushalmi, Erez & Andersson, Fredrik L. & Burtea, Teodor, 2020. "Quantifying the macroeconomic cost of night-time bathroom visits: an application to the UK," CAFE Working Papers 5, Centre for Accountancy, Finance and Economics (CAFE), Birmingham City Business School, Birmingham City University.
    8. Bréchet, Thierry & Hritonenko, Natali & Yatsenko, Yuri, 2016. "Domestic environmental policy and international cooperation for global commons," Resource and Energy Economics, Elsevier, vol. 44(C), pages 183-205.
    9. Bretschger, Lucas & Lechthaler, Filippo & Rausch, Sebastian & Zhang, Lin, 2017. "Knowledge diffusion, endogenous growth, and the costs of global climate policy," European Economic Review, Elsevier, vol. 93(C), pages 47-72.
    10. Yoonkyo Cho & Taehwan Kim & Jaewhak Roh, 2021. "An analysis of the effects of electronic commerce on the Korean economy using the CGE model," Electronic Commerce Research, Springer, vol. 21(3), pages 831-854, September.
    11. Robert J. R. Elliott & Ingmar Schumacher & Cees Withagen, 2020. "Suggestions for a Covid-19 Post-Pandemic Research Agenda in Environmental Economics," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 1187-1213, August.
    12. Olga Kiuila & Thomas F. Rutherford, 2014. "Economic modeling approaches: optimization versus equilibrium," Working Papers 2014-04, Faculty of Economic Sciences, University of Warsaw.
    13. Dai, Hancheng & Mischke, Peggy & Xie, Xuxuan & Xie, Yang & Masui, Toshihiko, 2016. "Closing the gap? Top-down versus bottom-up projections of China’s regional energy use and CO2 emissions," Applied Energy, Elsevier, vol. 162(C), pages 1355-1373.
    14. Javier Ferri & Antonio G. Gómez-Plana & Joan Martín-Montaner, "undated". "International inmigration and mobility across sectors: an exploration of alternative scenarios for Spain," Studies on the Spanish Economy 124, FEDEA.
    15. Sebastian Rausch & Valerie J. Karplus, 2014. "Markets versus Regulation: The Efficiency and Distributional Impacts of U.S. Climate Policy Proposals," The Energy Journal, , vol. 35(1_suppl), pages 199-228, June.
    16. David Klenert & Franziska Funke & Linus Mattauch & Brian O’Callaghan, 2020. "Five Lessons from COVID-19 for Advancing Climate Change Mitigation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 751-778, August.
    17. Jonghyun Yoo & Robert Mendelsohn, 2018. "Sensitivity Of Mitigation To The Optimal Global Temperature: An Experiment With Dice," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 9(02), pages 1-8, May.
    18. Diniz Oliveira, Thais & Gurgel, Angelo & Tonry, Steve, 2018. "The Effects for Brazil of Linking Emissions Trading Schemes in the context of the Heterogeneity of Trading Partners," Conference papers 332951, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    19. Nicolas Taconet & Aurélie Méjean & Céline Guivarch, 2020. "Influence of climate change impacts and mitigation costs on inequality between countries," Climatic Change, Springer, vol. 160(1), pages 15-34, May.
    20. Haqiqi , Iman & Bahalou Horeh , Marziyeh, 2013. "Macroeconomic Impacts of Export Barriers in a Dynamic CGE Model," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 8(3), pages 117-150, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:pugtwp:331824. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/gtpurus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.