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Combining Climate and Energy Policies: Synergies or Antagonism? Modeling Interactions With Energy Efficiency Instruments

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  • Oskar Lecuyer

    (EDF R&D - EFESE and CIRED)

  • Ruben Bibas

    (CIRED)

Abstract

In addition to the already present Climate and Energy package, the European Union (EU) plans to include a binding target to reduce energy consumption. We analyze the rationales the EU invokes to justify such an overlapping and develop a minimal common framework to study interactions arising from the combination of instruments reducing emissions, promoting renewable energy (RE) production and reducing energy demand through energy efficiency (EE) investments. We find that although all instruments tend to reduce emissions and a price on carbon tends to give the right incentives for RE and EE too, the combination of more than one instrument leads to significant antagonisms regarding major objectives of the policy package. The model allows to show in a single framework and to quantify the antagonistic effects of the joint promotion of RE and EE. We also show and quantify the effects of this joint promotion on ETS permit price, on wholesale market price and on energy production levels.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2011.98.

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Date of creation: Dec 2011
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Handle: RePEc:fem:femwpa:2011.98

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Keywords: Renewable Energy; Energy Efficiency; Energy Policy; Climate Policy; Policy Interaction;

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  1. Louis-Gaëtan Giraudet & Céline Guivarch & Philippe Quirion, 2011. "Comparing and combining energy saving policies : Will proposed residential sector policies meet French official targets ?," Working Papers hal-00866424, HAL.
  2. Louis-Gaëtan Giraudet, Céline Guivarch, and Philippe Quirion, 2011. "Comparing and Combining Energy Saving Policies: Will Proposed Residential Sector Policies Meet French Official Targets?," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
  3. Louis-Gaëtan Giraudet & Céline Guivarch & Philippe Quirion, 2011. "Exploring the potential for energy conservation in French households through hybrid modelling," CIRED Working Papers hal-00866425, HAL.
  4. Thure Traber & Claudia Kemfert, 2009. "Impacts of the German Support for Renewable Energy on Electricity Prices, Emissions, and Firms," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 155-178.
  5. Sorrell, Steve & Harrison, David & Radov, Daniel & Klevnas, Per & Foss, Andrew, 2009. "White certificate schemes: Economic analysis and interactions with the EU ETS," Energy Policy, Elsevier, vol. 37(1), pages 29-42, January.
  6. Kenneth Gillingham & Richard G. Newell & Karen Palmer, 2009. "Energy Efficiency Economics and Policy," NBER Working Papers 15031, National Bureau of Economic Research, Inc.
  7. Fischer, Carolyn & Preonas, Louis, 2010. "Combining Policies for Renewable Energy: Is the Whole Less Than the Sum of Its Parts?," International Review of Environmental and Resource Economics, now publishers, vol. 4(1), pages 51-92, June.
  8. Steven Sorrell, 2003. "Carbon Trading in the Policy Mix," Oxford Review of Economic Policy, Oxford University Press, vol. 19(3), pages 420-437.
  9. V. Oikonomou & C. Jepma, 2008. "A framework on interactions of climate and energy policy instruments," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 13(2), pages 131-156, February.
  10. Louis-Gaëtan Giraudet & Céline Guivarch & Philippe Quirion, 2011. "Exploring the potential for energy conservation in French households through hybrid modelling," Working Papers hal-00866425, HAL.
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