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EU energy efficiency policy: How a more cost-efficient decarbonization could succeed

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  • Tischler, Benjamin

Abstract

At EU level, new proposed legislation for a clean-energy policy is being adopted. New policies are currently being discussed regarding the increased reduction of CO2 emissions, as well as EU-wide energy consumption targets for the year 2030 and national energy efficiency targets and measures to be derived from them. But what happens when the proposed objectives contradict and undermine each other? A restrictive energy consumption target can become a major obstacle to achieving the overall energy and climate-policy objective of cost-effective decarbonization of the energy system. Economic policy instruments for increasing energy efficiency in the EU ETS sectors can make it more difficult to achieve decarbonization at minimal cost. Energy efficiency targets and the corresponding economic policy measures can however make a worth-while contribution in sectors not included in the EU ETS. Instruments for increasing energy efficiency should aim at improving technical energy efficiency. With that in mind, the conception of quantitative targets and tools must be improved. The macroeconomic indicators for "energy efficiency" and "energy intensity" used thus far are unsatisfactory as simple political objectives and lead to wrong conclusions regarding the success of the economic policy instruments being used. The indicators must be decisively improved, for example, by considering factors such as business cycle and economic growth, as well as the proportion of renewable energy or of energy-intensive and less energy-intensive sectors. Furthermore, a better database is necessary.

Suggested Citation

  • Tischler, Benjamin, 2018. "EU energy efficiency policy: How a more cost-efficient decarbonization could succeed," IW policy papers 1/2018e, Institut der deutschen Wirtschaft (IW) / German Economic Institute.
  • Handle: RePEc:zbw:iwkpps:12018e
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    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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