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Welfare implications of EU Effort Sharing Decision and possible impact of a hard Brexit

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  • Babonneau, Frédéric
  • Haurie, Alain
  • Vielle, Marc

Abstract

In this paper, we evaluate the recent developments of European climate policy from the perspective of the 2030 and 2050 European commitments. Using the general equilibrium model GEMINI-E3, we analyze the European Effort Sharing Decision proposed in July 2016 and evaluate its cost per member state by 2030. We then simulate its possible extension to 2050 applying a non-cooperative meta-game approach that has been proposed to assess European burden-sharing issues. Considering the Brexit referendum that took place in June 23, 2016 in the United Kingdom, we analyze different possible scenarios of British participation in the European climate policy. We show that Brexit could have a significant negative impact on the United Kingdom's climate-policy cost and a relatively negative effect on the remaining twenty-seven EU member states.

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  • Babonneau, Frédéric & Haurie, Alain & Vielle, Marc, 2018. "Welfare implications of EU Effort Sharing Decision and possible impact of a hard Brexit," Energy Economics, Elsevier, vol. 74(C), pages 470-489.
    • Handle: RePEc:eee:eneeco:v:74:y:2018:i:c:p:470-489
    DOI: 10.1016/j.eneco.2018.06.024
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    Cited by:

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    2. Ju, Biung-Ghi & Kim, Min & Kim, Suyi & Moreno-Ternero, Juan D., 2021. "Fair international protocols for the abatement of GHG emissions," Energy Economics, Elsevier, vol. 94(C).
    3. Gavarda, Claire & Diethelm, Lukas, 2022. "Lessons from the EU effort sharing decision for supranational climate cooperation: A firm-level analysis," ZEW Discussion Papers 22-042, ZEW - Leibniz Centre for European Economic Research.
    4. Stefano F. Verde & Simone Borghesi, 2022. "The International Dimension of the EU Emissions Trading System: Bringing the Pieces Together," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 83(1), pages 23-46, September.
    5. Finn Roar Aune & Rolf Golombek, 2020. "Are carbon prices redundant in the 2030 EU climate and energy policy package?," Discussion Papers 940, Statistics Norway, Research Department.
    6. Felix Kattelmann & Jonathan Siegle & Roland Cunha Montenegro & Vera Sehn & Markus Blesl & Ulrich Fahl, 2021. "How to Reach the New Green Deal Targets: Analysing the Necessary Burden Sharing within the EU Using a Multi-Model Approach," Energies, MDPI, vol. 14(23), pages 1-24, November.

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    More about this item

    Keywords

    Effort Sharing Decision; Brexit; European Union; Climate policy; Game theory;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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