Supply of renewable energy sources and the cost of EU climate policy

Stefan Boeters and J. Koornneef

No 142, CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: What are the excess costs of a separate 20% target for renewable energy as a part of the EU climate policy for 2020? We answer this question using a computable general equilibrium model, WorldScan, which has been extended with a bottom-up module of the electricity sector. The model set-up makes it possible to directly use available estimates of costs and capacity potentials for renewable energy sources for calibration. In our base case simulation, the costs of EU climate policy with the renewables target are 6% higher than those of a policy without this target. As information on the supply of renewable energy is scarce and uncertain, we perform an extensive sensitivity analysis with respect to the level and steepness of the supply curves for wind energy and biomass. In the range we explore, the excess costs vary from zero (when the target is not binding) to 23% (when the cost progression and the initial cost disadvantage for renewables are doubled).

JEL-codes: D58 Q42 Q54 (search for similar items in EconPapers)
Date: 2010-02
New Economics Papers: this item is included in nep-cmp, nep-ene and nep-env
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Citations: View citations in EconPapers (5)

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Journal Article: Supply of renewable energy sources and the cost of EU climate policy (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:cpb:discus:142

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