How cost effective is EU climate policy? Evidence from Portugal using integrated modelling

Sara Proenca, Patricia Fortes

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

The European Union (EU) has long been at the forefront of international efforts to tackle climate change. The challenge becomes designing the most cost-eDective policy mix, capable of reducing greenhouse gas (GHG) emissions at the lowest cost to the economy. In this paper, an integrated CGE modelling approach is applied to explore the cost-effectiveness of EU climate policy, taking Portugal as a case study. Results indicate that the current EU climate policy configuration makes GHG reduction more costly than needed. The mitigation targets for 2030 could be achieved at least cost through the implementation of a comprehensive cap-and-trade system instead of the actual emission market segmentation. Moreover, the economic argument on counterproductive overlapping regulation is not corroborated by our results. This finding shows the importance of considering the specificities of each Member State when designing policy mixes. Results also highlight the importance of considering market distortions when assessing policy performance.

Original languageEnglish
Title of host publication2017 14th International Conference on the European Energy Market, EEM 2017
PublisherIEEE Computer Society
ISBN (Electronic)9781509054992
DOIs
Publication statusPublished - 14 Jul 2017
Event14th International Conference on the European Energy Market, EEM 2017 - Dresden, Germany
Duration: 6 Jun 20179 Jun 2017

Conference

Conference14th International Conference on the European Energy Market, EEM 2017
CountryGermany
CityDresden
Period6/06/179/06/17

Keywords

  • Cost-effectiveness analysis
  • Economic impacts
  • EU climate policy
  • Integrated CGE modelling
  • Policy interactions

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  • Cite this

    Proenca, S., & Fortes, P. (2017). How cost effective is EU climate policy? Evidence from Portugal using integrated modelling. In 2017 14th International Conference on the European Energy Market, EEM 2017 [7981890] IEEE Computer Society. https://doi.org/10.1109/EEM.2017.7981890