B?hringer C et al (2009) EU climate policy up to 2020 - An economic impact assessment.pdf

Energy Economics 31 (2009) S295–S305
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Energy Economics
journal homepage: ate/eneco
EU climate policy up to 2020: An economic impact assessment☆
Christoph Böhringer a,b,⁎, Andreas Löschel b, Ulf Moslener c, Thomas F. Rutherford d
a Department of Economics, University of Oldenburg, Germany
b Centre for European Economic Research (ZEW) Mannheim, Germany
c KfW Development Bank, Frankfurt, Germany
d Center for Energy Policy and Economy (CEPE), ETH Zürich, Switzerland
article info abstract
Article history: In its fight against climate change the EU mitted to reducing its overall greenhouse gas emissions to at
Received 12 May 2009 least 20% below 1990 levels by 2020. To meet mitment, the EU builds on segmented market
Received in revised form 11 September 2009 regulation with an EU-wide cap-and-trade system for emissions from energy-intensive installations (ETS
Accepted 11 September 2009
sectors) and additional measures by each EU Member State covering emission sources outside the cap-and-
Available online 27 September 2009
trade system (the non-ETS sector). Furthermore, the EU has launched additional policy measures such as
renewable energy subsidies in order to pliance with the climate policy target. Basic economic
JEL classification:
D58 reasoning suggests that emission market segmentation and overlapping regulation can create substantial
Q48 excess costs if we focus only on the climate policy target. In this paper, we evaluate the economic impacts of
Q54 EU climate policy based on numerical simulations with putable general equilibrium model of
international trade and energy use. Our results highlight the importance of initial market distortions and
Keywords: imperfections as well as alternative baseline projections for the appropriate assessment of pliance
Climate policy cost.
Market distortions © 2009 Elsevier . All rights reserved.
Baseline projections
Computable general equilibrium
1. Intro