Welfare implications of EU Effort Sharing Decision and possible impact of a hard Brexit

Frédéric Babonneau, Alain Haurie and Marc Vielle

Energy Economics, 2018, vol. 74, issue C, 470-489

Abstract: In this paper, we evaluate the recent developments of European climate policy from the perspective of the 2030 and 2050 European commitments. Using the general equilibrium model GEMINI-E3, we analyze the European Effort Sharing Decision proposed in July 2016 and evaluate its cost per member state by 2030. We then simulate its possible extension to 2050 applying a non-cooperative meta-game approach that has been proposed to assess European burden-sharing issues. Considering the Brexit referendum that took place in June 23, 2016 in the United Kingdom, we analyze different possible scenarios of British participation in the European climate policy. We show that Brexit could have a significant negative impact on the United Kingdom's climate-policy cost and a relatively negative effect on the remaining twenty-seven EU member states.

Keywords: Effort Sharing Decision; Brexit; European Union; Climate policy; Game theory (search for similar items in EconPapers)
JEL-codes: C68 C72 F53 Q43 Q54 R13 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:74:y:2018:i:c:p:470-489

DOI: 10.1016/j.eneco.2018.06.024

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