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The Excess Cost of Supplementary Constraints in Climate Policy: The Case of Sweden’s Energy Intensity Target


  • Broberg, Thomas

    () (National Institute of Economic Research)

  • Forsfält, Tomas

    () (National Institute of Economic Research)

  • Östblom, Göran

    (National Institute of Economic Research)


From the perspective of climate policy, a target for energy efficiency could imply costly overlapping regulation. We estimate, using a computable general equilibrium model of the Swedish economy, the potential economic cost of attaining the national 2020 energy intensity target by means of tax policy instruments. Our analysis shows that the efforts to meet the energy intensity target will also reduce carbon dioxide emissions, but at excessive costs compared to alternative climate policy instruments. Moreover, attainment of the energy intensity target will call for policy instruments additional to those needed for fulfilling the national climate policy target. The results are sensitive to the development of the nuclear energy production as the definition of energy intensity includes conversion losses in electricity production

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  • Broberg, Thomas & Forsfält, Tomas & Östblom, Göran, 2011. "The Excess Cost of Supplementary Constraints in Climate Policy: The Case of Sweden’s Energy Intensity Target," Working Papers 123, National Institute of Economic Research.
  • Handle: RePEc:hhs:nierwp:0123

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    1. Fischer, Carolyn & Newell, Richard G., 2008. "Environmental and technology policies for climate mitigation," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 142-162, March.
    2. Newell, Richard G. & Pizer, William A., 2003. "Regulating stock externalities under uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 45(2, Supple), pages 416-432, March.
    3. Jaffe, Adam B. & Newell, Richard G. & Stavins, Robert N., 2005. "A tale of two market failures: Technology and environmental policy," Ecological Economics, Elsevier, vol. 54(2-3), pages 164-174, August.
    4. Helfand, Gloria E. & Berck, Peter & Maull, Tim, 2003. "The theory of pollution policy," Handbook of Environmental Economics,in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 6, pages 249-303 Elsevier.
    5. Sanstad, Alan H. & Howarth, Richard B., 1994. "`Normal' markets, market imperfections and energy efficiency," Energy Policy, Elsevier, vol. 22(10), pages 811-818, October.
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    climate policy; energy efficiency; carbon tax; overlapping regulation; general equilibrium; Sweden;

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