 A cost–benefit analysis of the EU 20/20/2020 packageEnergy Policy, 2012, vol. 49, issue C, 288-295 Abstract: The European Commission did not publish a cost–benefit analysis for its 2020 climate package. This paper fills that gap, comparing the marginal costs and benefits of greenhouse gas emission reduction. The uncertainty about the marginal costs of climate change is large and skewed, and estimates partly reflect ethical choices (e.g., the discount rate). The 2010 carbon price in the EU Emissions Trading System can readily be justified by a cost–benefit analysis. Emission reduction is not expensive provided that policy is well-designed, a condition not met by planned EU policy. It is probably twice as expensive as needed, costing one in ten years of economic growth. The EU targets for 2020 are unlikely to meet the benefit–cost test. For a standard discount rate (3% pure rate of time preference), the benefit–cost ratio is rather poor (1/30)—so that benefits need to be very much higher, or costs very much lower than typically assumed to justify the 2020 targets. Only a very low discount rate (0% PRTP) would justify the 20% emission reduction target for 2020. Keywords: European Union; Climate policy; Cost–benefit analysis (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:49:y:2012:i:c:p:288-295 DOI: 10.1016/j.enpol.2012.06.018 Access Statistics for this article Energy Policy is currently edited by N. France More articles in Energy Policy from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.