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The EU 20/20/2020 Targets: An Overview of the EMF22 Assessment

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  • Böhringer, Christoph
  • Rutherford, Thomas F.
  • Tol, Richard S. J.

Abstract

Three computable general equilibrium models are used to estimate the economic implications of a stylized version of EU climate policy. If implemented at the lowest possible cost, the 20% emissions reduction would lead to a welfare loss of 0.5-2.0% by 2020. Second-best policies increase costs. A policy with two carbon prices (one for the ETS, one for the non-ETS) could increase costs by up to 50%. A policy with 28 carbon prices (one for the ETS, one each for each Member State) could increase costs by another 40%. The renewables standard could raise the costs of emissions reduction by 90%. Overall, the inefficiencies in policy lead to a cost that is 100-125% too high. The models differ greatly in the detail of their results. The ETS/non-ETS split may have a negligible impact on welfare, while the renewables standard may even improve welfare. The models agree, however, that the distortions introduced by total EU package imply a substantial welfare loss over and above the costs needed to meet the climate target. The marginal, total and excess costs reported here are notably higher than those in the impact assessment of the European Commission.

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Bibliographic Info

Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number WP325.

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Date of creation: Oct 2009
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Handle: RePEc:esr:wpaper:wp325

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Keywords: abatement costs/Climate policy/emission reduction target/European Union/renewables target/Policy;

References

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  1. Seán Lyons & Karen Mayor & Richard S.J. Tol, 2008. "Environmental Accounts for the Republic of Ireland: 1990-2005," Papers WP223, Economic and Social Research Institute (ESRI).
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Citations

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Cited by:
  1. Nadine Heitmann & Christine Bertram & Daiju Narita, 2012. "Embedding CCS infrastructure into the European electricity system: a policy coordination problem," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 17(6), pages 669-686, August.
  2. Chiodi, Alessandro & Gargiulo, Maurizio & Deane, J.P. & Lavigne, Denis & Rout, Ullash K. & Ó Gallachóir, Brian P., 2013. "Modelling the impacts of challenging 2020 non-ETS GHG emissions reduction targets on Ireland′s energy system," Energy Policy, Elsevier, vol. 62(C), pages 1438-1452.
  3. Christian Flachsland & Steffen Brunner & Ottmar Edenhofer & Felix Creutzig, 2010. "Climate policies for road transport revisited (II): Closing the policy gap with cap-and-trade," Working Papers 2, Department of Climate Change Economics, TU Berlin.
  4. repec:old:wpaper:347 is not listed on IDEAS
  5. Pashardes, Panos & Pashourtidou, Nicoletta & Zachariadis, Theodoros, 2014. "Estimating welfare aspects of changes in energy prices from preference heterogeneity," Energy Economics, Elsevier, vol. 42(C), pages 58-66.
  6. Hennessy, Hugh & Tol, Richard S.J., 2011. "The impact of tax reform on new car purchases in Ireland," Energy Policy, Elsevier, vol. 39(11), pages 7059-7067.
  7. Margarita Robaina Alves & Miguel Rodríguez & Catarina Roseta-Palma, 2010. "Sectoral and regional impacts of the European Carbon Market in Portugal," GEE Papers 0021, Gabinete de Estratégia e Estudos, Ministério da Economia e da Inovação, revised Jul 2010.
  8. Christoph Böhringer & Andreas Lange & Thomas F. Rutherford, 2010. "Optimal Emission Pricing in the Presence of International Spillovers: Decomposing Leakage and Terms-of-Trade Motives," NBER Working Papers 15899, National Bureau of Economic Research, Inc.
  9. Truong P. Truong & Claudia Kemfert, 2010. "WIATEC: A World Integrated Assessment Model of Global Trade Environment and Climate Change," Discussion Papers of DIW Berlin 1021, DIW Berlin, German Institute for Economic Research.
  10. 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.
  11. Sivaraman, Deepak & Horne, Ralph E., 2011. "Regulatory potential for increasing small scale grid connected photovoltaic (PV) deployment in Australia," Energy Policy, Elsevier, vol. 39(2), pages 586-595, February.
  12. Gren, Ing-Marie & Carlsson, Mattias, 2013. "Economic value of carbon sequestration in forests under multiple sources of uncertainty," Journal of Forest Economics, Elsevier, vol. 19(2), pages 174-189.
  13. Jägemann, Cosima & Fürsch, Michaela & Hagspiel, Simeon & Nagl, Stephan, 2013. "Decarbonizing Europe's power sector by 2050 — Analyzing the economic implications of alternative decarbonization pathways," Energy Economics, Elsevier, vol. 40(C), pages 622-636.
  14. Alfredo Marvão Pereira & Rui M. Pereira, 2014. "What is it going to take to achieve 2020 Emission Targets? Marginal abatement cost curves and the budgetary impact of CO2 taxation in Portugal (," Working Papers 105, Department of Economics, College of William and Mary.
  15. Michael Hübler & Sebastian Voigt & Andreas Löschel, 2014. "Designing an Emissions Trading Scheme for China – An Up-to-date Climate Policy Assessment," EcoMod2014 6775, EcoMod.
  16. Marschinski, Robert & Flachsland, Christian & Jakob, Michael, 2012. "Sectoral linking of carbon markets: A trade-theory analysis," Resource and Energy Economics, Elsevier, vol. 34(4), pages 585-606.
  17. Nadine Heitmann & Christine Bertram & Daiju Narita, 2010. "Embedding CCS infrastructure into the European electricity system: A policy coordination problem," Kiel Working Papers 1657, Kiel Institute for the World Economy.
  18. Gren, Ing-Marie & Carlsson, Mattias & Elofsson, Katarina & Munnich, Miriam, 2012. "Stochastic carbon sinks for combating carbon dioxide emissions in the EU," Energy Economics, Elsevier, vol. 34(5), pages 1523-1531.
  19. Talaei, Alireza & Ahadi, Mohammad Sadegh & Maghsoudy, Soroush, 2014. "Climate friendly technology transfer in the energy sector: A case study of Iran," Energy Policy, Elsevier, vol. 64(C), pages 349-363.

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