Is the European climate policy a jab against an oil shock? A CGE analysis

Bert Saveyn, Jonathan Pycroft, Helene Maisonnave and Juan Carlos Ciscar

No 330248, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: The European Union has committed itself to reduce greenhouse gas (GHG) emissions by 20% in 2020 compared with 1990 levels. A number of studies have analyzed the impact of these policies for the EU economy and the competitiveness of its industries. However, few studies have looked to the possible benefits of the EU climate policy in terms of energy‐security, and more particular to the interaction between high oil prices and climate policy. In this paper, we try to evaluate the extent to which a climate policy protects Europe from an oil price rise. We use the GEM‐E3 model to analyze the results of three scenarios. The first one refers to the impact of an increase in the oil price. The second scenario analyses the European climate policy and finally, the third scenario analyses the oil shock when the European climate policy is implemented. We find that in the first scenario, the oil price rise reduces emissions significantly, and all the countries suffer economically. In the second scenario, the European economic slowdown has impacts on its trade partners. The last scenario, finds that Europe suffers less from the oil shock if a climate policy is implemented.

Keywords: Environmental Economics and Policy; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 16
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:330248

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