SUMMARY
SUMMARY
The title of the article is EU climate and energy policy beyond 2020: Are additional targets and instruments for renewables economically reasonable? It is published in Helmholtz-Zentrum für Umweltforschung GmbH – UFZ on 11 November 2014. The article is written by Jos Sijm, Paul Lehmann, Unnada Chewpreecha, Erik Gawel, Jean-Francois Mercure, Hector Pollitt, Sebastian Strunz. The research is done by the group of scientists from Energy research Centre of the Netherlands (ECN), Helmholtz Centre for Environmental Research – UFZ, Cambridge Econometrics, Covent Garden, Cambridge, CB1 2HT, United Kingdom, University of Leipzig, Institute for Infrastructure and Resources Management, University of Cambridge, Cambridge Centre for Climate Change Mitigation Research, United Kingdom. The article has 8 parts. There are 4 tables and 10 figures.
The European Commission has recently proposed to focus on a greenhouse gas (GHG) emissions reduction target for 2030 climate and energy strategy and to scrap binding targets for renewable energy sources (RES) at the Member State level. In this article, the author examines whether this decision is economically reasonable.
Many studies have shown that a RES policy implemented in addition to a GHG policy leads to economic excess costs as it impairs the cost-effective reduction of GHG emissions. The authors aim to complement these analyses by examining the costs and benefits of a RES policy in a second-best setting with multiple market failures – including the GHG externality as well as technology market failures, other environmental externalities from using fossil and nuclear fuels, and externalities related to fossil fuel imports – which cannot efficiently be addressed by first-best policies for diverse reasons. In addition, the authors also take into account policy objectives that are beyond allocate efficiency but may nevertheless be relevant for practical policy-making, such as job creation or democratic energy supply. The hypothesis of the work is that in such a setting, RES targets and instruments may be justified if they actually help to address the market failure or policy objective, and if they are more cost-effective than other feasible policy approaches.
The authors describe different methods for achieving the goals and present several scenarios:
- S1: GHG target (40% reduction by 2030) addressed by EU Emissions Trading Scheme (ETS);
- S2: GHG target and an additional RES target (40% RES share in electricity consumption) addressed by EU ETS.
- S3: GHG target and RES target addressed by EU ETS and technology-neutral RES subsidy;
- S4: GHG target and RES target addressed by EU ETS and technology-specific RES subsidy.
