Decarbonizing the EU power sector: policy approaches in the light of current trends and long-term trajectories
ASSESSMENT European climate policy is gradually shifting towards a long-term perspec- tive. The electricity sector has a crucial role to play in the long-term decar- bonization of the EU economy. It makes up a significant share of EU emis- sions and can contribute to the reduction of emissions in other sectors, particularly buildings and transport. The EU 2008 Climate and Energy Package (CEP) took a significant step towards a low-carbon future, initi- ating a very ambitious program of renewables expansion and strengthen- ing the ETS. However, the omissions and internal inconsistencies of the CEP are becoming more and more evident. This relates in particular to the absence of long-term, comprehensive signals for decarbonization and the imbalance between the ETS, energy efficiency and renewables objectives. This risks delaying and distorting investment in low-carbon infrastructure and ideas, raising the ultimate cost of climate policy. In view of the inertias within the electricity sector, it is imperative for the EU to set a long-term signal for the decarbonization of the sector by set- ting 2030 objectives for the ETS and complementary policies. The EU’s decarbonization strategy needs to be robust against future uncertainties; strengthening a technology neutral instrument like the ETS can provide a key part of a comprehensive signal to develop the full range of decarbon- ization options. The instrument imbalance also needs to be addressed. Demand side policies should be the point of departure for supply side interventions: ETS caps should be set so as to achieve carbon scarcity after energy efficiency and RES objectives have been taken into account. A short-term adjustment of scarcity in the ETS may create some incen- tives for low-carbon investment. However, it would not address the funda- mental concern, namely the lack of policy information regarding the post 2020 environment in which these investment will amortize.
|Date of creation:||15 Nov 2011|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Vogt-Schilb, Adrien & Hallegatte, Stephane, 2011.
"When starting with the most expensive option makes sense : use and misuse of marginal abatement cost curves,"
Policy Research Working Paper Series
5803, The World Bank.
- Adrien Vogt-Schilb & Stéphane Hallegatte, 2012. "When Starting with the Most Expensive Option Makes Sense: Use and Misuse of Marginal Abatement Cost Curves," Post-Print hal-00797610, HAL.
- Adrien Vogt-Schilb & Stéphane Hallegatte, 2013. "Marginal Abatement Cost Curves and the Optimal Timing of Mitigation Measures," Working Papers 2013.89, Fondazione Eni Enrico Mattei.
- Adrien Vogt-Schilb & Stéphane Hallegatte, 2012. "When Starting with the Most Expensive Option Makes Sense: Use and Misuse of Marginal Abatement Cost Curves," Post-Print hal-00797612, HAL.
- Adrien Vogt-Schilb & Stéphane Hallegatte, 2013. "When Starting with the Most Expensive Option Makes Sense On Marginal Abatement Cost Curves and Optimal Abatement Pathways," CIRED Working Papers hal-00626261, HAL.
- Adrien Vogt-Schilb & Stéphane Hallegatte, 2012. "When Starting with the Most Expensive Option Makes Sense: Use and Misuse of Marginal Abatement Cost Curves," Post-Print hal-00797611, HAL.
- Neuhoff,Karsten, 2011.
"Climate Policy after Copenhagen,"
Cambridge University Press, number 9781107008939, October.
- Jan Abrell & Anta Ndoye Faye & Georg Zachmann, 2011.
"Assessing the impact of the EU ETS using firm level data,"
Working Papers of BETA
2011-15, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
- Georg Zachmann & Anta Ndoye & Jan Abrell, 2011. "Assessing the impact of the EU ETS using firm level data," Working Papers 579, Bruegel.
- Fankhauser, Samuel & Hepburn, Cameron, 2010.
"Designing carbon markets. Part I: Carbon markets in time,"
Elsevier, vol. 38(8), pages 4363-4370, August.
- Samuel Fankhauser & Cameron Hepburn, 2010. "Designing carbon markets, part I: carbon markets in time," LSE Research Online Documents on Economics 28832, London School of Economics and Political Science, LSE Library.
- Valentina Bosetti & David G. Victor, 2011.
"Politics and Economics of Second-Best Regulation of Greenhouse Gases: The Importance of Regulatory Credibility,"
The Energy Journal,
International Association for Energy Economics, vol. 0(Number 1), pages 1-24.
- Valentina Bosetti & David G. Victor, 2010. "Politics and Economics of Second-Best Regulation of Greenhouse Gases: The Importance of Regulatory Credibility," Working Papers 2010.29, Fondazione Eni Enrico Mattei.
- Rogge, Karoline S. & Schneider, Malte & Hoffmann, Volker H., 2011. "The innovation impact of the EU Emission Trading System -- Findings of company case studies in the German power sector," Ecological Economics, Elsevier, vol. 70(3), pages 513-523, January.
- Geoffrey Rothwell, 2006. "A Real Options Approach to Evaluating New Nuclear Power Plants," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 87-54.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:35009. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.