The European Climate Policy is Ambitious: Myth or Reality?

We investigate carbon emission trends among EU Member States by testing the assumption of ?-type convergence in per capita CO 2 emissions, conditional upon per capita output, world oil price, energy use per capita and investment in renewable energy. Our study supports the assumption of conditional convergence among all EU Member States. It should take around 10 years for the EU-15 countries to stabilize their per capita emissions. This result holds if we include the new Member States in the sample. We also find that the emission growth/GDP relation is strictly negative, indicating that EU-15 countries switched to a less carbon intensive economy starting from the early 1990s. This result remains robust when the new Member States are included. We therefore argue that the decline in EU carbon emissions is a long-term trend and not a result of the economic crisis. We then discuss the effectiveness of climate and energy policies and the EU burden-sharing agreement. Some countries like Germany, Great Britain and France can meet their carbon targets without adopting more aggressive climate and energy policies by 2020. Other EU-15 Member States can reduce their domestic emissions beyond their targets if they adopt energy-efficient technologies. Most of the new Member States emit much less than their domestic targets even when per capita income and oil price increase.