IDEAS home Printed from https://ideas.repec.org/p/ces/econpb/_58.html

Energy and Climate Policy: Quantifying the Benefits of a European Approach

Author

Listed:
  • Mathias Mier

Abstract

The European Emissions Trading System is a cornerstone of the EU climate policy and its development is set until 2030. However, it is unclear what will happen afterwards. This policy brief compares three different scenarios: Rapid Decarbonization, 2050 Climate Neutral and a Break scenario. The simulations quantify the total benefits of a joint European effort at EUR 248 billion between 2024 and 2050. In the worst-case scenario, total costs could reach EUR 8.629 trillion. Key Messages The European Union Emissions Trading System has considerable monetary and environmental advantages over national systems. I compare three different policy scenarios to examine the impact of joint European efforts beyond 2030: Rapid Decarbonization, 2050 Climate Neutrality, and a Break scenario. A common European Union approach leads to monetary advantages generated by lower electricity prices and reduced need for subsidies. The simulations quantify the total benefits for Europe over the period 2024–2050 at EUR 248 billion, for Germany at EUR 66 billion.

Suggested Citation

  • Mathias Mier, 2024. "Energy and Climate Policy: Quantifying the Benefits of a European Approach," EconPol Policy Brief 58, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:econpb:_58
    as

    Download full text from publisher

    File URL: https://www.ifo.de/DocDL/EconPol-PolicyBrief_58_Energy-Climate-Policy.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mier, Mathias & Adelowo, Jacqueline & Weissbart, Christoph, 2024. "Complementary taxation of carbon emissions and local air pollution," Energy Economics, Elsevier, vol. 132(C).
    2. Mier, Mathias & Azarova, Valeriya, 2024. "Investment cost specifications revisited," Energy Policy, Elsevier, vol. 188(C).
    3. Mier, Mathias & Siala, Kais & Govorukha, Kristina & Mayer, Philip, 2023. "Collaboration, decarbonization, and distributional effects," Applied Energy, Elsevier, vol. 341(C).
    4. Mathias Mier, 2024. "Energie- und Klimapolitik: Effekte eines europäischen Ansatzes auf Preise, Versorgungssicherheit und CO₂-Emissionen in Deutschland," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 77(05), pages 15-18, May.
    5. Siala, Kais & Mier, Mathias & Schmidt, Lukas & Torralba-Díaz, Laura & Sheykhha, Siamak & Savvidis, Georgios, 2022. "Which model features matter? An experimental approach to evaluate power market modeling choices," Energy, Elsevier, vol. 245(C).
    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. Mathias Mier, 2023. "European Electricity Prices in Times of Multiple Crises," ifo Working Paper Series 394, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    2. Mier, Mathias & Azarova, Valeriya, 2024. "Investment cost specifications revisited," Energy Policy, Elsevier, vol. 188(C).
    3. Mathias Mier & Valeriya Azarova, 2022. "Investment Cost Specifications Revisited," ifo Working Paper Series 376, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    4. Mathias Mier & Jacqueline Adelowo & Valeriya Azarova, 2022. "Endogenous Technological Change in Power Markets," ifo Working Paper Series 373, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    5. Mathias Mier & Jacqueline Adelowo, 2022. "Taxation of Carbon Emissions with Social and Private Discount Rates," ifo Working Paper Series 374, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    6. Mier, Mathias & Adelowo, Jacqueline & Weissbart, Christoph, 2024. "Complementary taxation of carbon emissions and local air pollution," Energy Economics, Elsevier, vol. 132(C).
    7. Mier, Mathias & Siala, Kais & Govorukha, Kristina & Mayer, Philip, 2023. "Collaboration, decarbonization, and distributional effects," Applied Energy, Elsevier, vol. 341(C).
    8. Liu, Xinglei & Liu, Jun & Ren, Kezheng & Liu, Xiaoming & Liu, Jiacheng, 2022. "An integrated fuzzy multi-energy transaction evaluation approach for energy internet markets considering judgement credibility and variable rough precision," Energy, Elsevier, vol. 261(PB).
    9. Van Liedekerke, Ambra & Gjorgiev, Blazhe & Savelsberg, Jonas & Wen, Xin & Dujardin, Jérøme & Darudi, Ali & Sasse, Jan-Philipp & Trutnevyte, Evelina & Lehning, Michael & Sansavini, Giovanni, 2025. "Policy-relevance of a model inter-comparison: Switzerland in the European energy transition," Applied Energy, Elsevier, vol. 391(C).
    10. Torralba-Díaz, Laura & Gillich, Annika & Hufendiek, Kai, 2025. "How temporal and technological simplifications affect the performance of capacity expansion models," Energy, Elsevier, vol. 330(C).
    11. Barani, Mostafa & Löffler, Konstantin & Crespo del Granado, Pedro & Moskalenko, Nikita & Panos, Evangelos & Hoffart, Franziska M. & Hirschhausen, Christian von & Kannavou, Maria & Auer, Hans & Hainsch, 2026. "European energy vision 2050 and beyond: Designing scenarios for Europe’s energy transition," Renewable and Sustainable Energy Reviews, Elsevier, vol. 225(C).
    12. Lambert, Jerry & Hanel, Andreas & Fendt, Sebastian & Spliethoff, Hartmut, 2023. "Evaluation of sector-coupled energy systems using different foresight horizons," Renewable and Sustainable Energy Reviews, Elsevier, vol. 184(C).
    13. Samuli Honkapuro & Jasmin Jaanto & Salla Annala, 2023. "A Systematic Review of European Electricity Market Design Options," Energies, MDPI, vol. 16(9), pages 1-26, April.
    14. Gils, Hans Christian & Gardian, Hedda & Kittel, Martin & Schill, Wolf-Peter & Murmann, Alexander & Launer, Jann & Gaumnitz, Felix & van Ouwerkerk, Jonas & Mikurda, Jennifer & Torralba-Díaz, Laura, 2022. "Model-related outcome differences in power system models with sector coupling—Quantification and drivers," Renewable and Sustainable Energy Reviews, Elsevier, vol. 159(C).
    15. Valeriya Azarova & Mathias Mier, 2021. "Unraveling the Black Box of Power Market Models," ifo Working Paper Series 357, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    16. Zhang, Jing & Liu, Yu & Yang, Lingyu & Zhang, Jinzhu & Li, Xinbei, 2025. "An assessment of the effectiveness of CCS technology incentive policies based on dynamic CGE model," Energy Policy, Elsevier, vol. 198(C).
    17. Misconel, S. & Zimmermann, F. & Mikurda, J. & Möst, D. & Kunze, R. & Gnann, T. & Kühnbach, M. & Speth, D. & Pelka, S. & Yu, S., 2024. "Model coupling and comparison on optimal load shifting of battery electric vehicles and heat pumps focusing on generation adequacy," Energy, Elsevier, vol. 305(C).
    18. Pöstges, Arne & Bucksteeg, Michael & Ruhnau, Oliver & Böttger, Diana & Haller, Markus & Künle, Eglantine & Ritter, David & Schmitz, Richard & Wiedmann, Michael, 2022. "Phasing out coal: An impact analysis comparing five large-scale electricity market models," Applied Energy, Elsevier, vol. 319(C).
    19. Jacqueline Adelowo & Mathias Mier & Christoph Weissbart, 2021. "Taxation of Carbon Emissions and Air Pollution in Intertemporal Optimization Frameworks with Social and Private Discount Rates," ifo Working Paper Series 360, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    20. Say, Kelvin & Csereklyei, Zsuzsanna & Brown, Felix Gabriel & Wang, Changlong, 2023. "The economics of public transport electrification: A case study from Victoria, Australia," Energy Economics, Elsevier, vol. 120(C).

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:ces:econpb:_58. 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: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/ifooode.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.