EconPapers    
Economics at your fingertips  
 

Macroeconomic Impacts of the EU 30% GHG Mitigation Target

Francesco Bosello, Lorenza Campagnolo, Carlo Carraro (), Fabio Eboli, Ramiro Parrado () and Elisa Portale
Additional contact information
Fabio Eboli: Euro-Mediterranean Center on Climate Change, Fondazione Eni Enrico Mattei, Italy
Elisa Portale: Euro-Mediterranean Center on Climate Change, Fondazione Eni Enrico Mattei, Italy

No 2013.28, Working Papers from Fondazione Eni Enrico Mattei

Abstract: The reduction of GHG emissions is one of the most important policy objectives worldwide. Nonetheless, concrete and effective measures to reduce them are hardly implemented. One of the main reasons for this deadlock is the fear that unilateral actions will reduce a country’s competitiveness, and will benefit those countries where no GHG mitigation measures are implemented. This kind of argument is also often used to explain why some governments and many business leaders are not in favour of the EU 30% GHG mitigation target that has been proposed to replace the previous 20% GHG emission reduction objective approved by the EU within the well-known 20-20-20 climate and energy package. By developing and applying a recursive, dynamic, very detailed CGE model with energy generation from both fossil fuel and renewable sources, we address this issue by estimating the cost for different EU countries and industries of the EU climate and energy package under a set of alternative international scenarios on global GHG mitigation efforts. Results show that, thanks to the EU economic recession, achieving a 20% GHG emission reduction entails a moderate cost for the European Union - about 0.5% of EU GDP – even in the case of EU unilateral action. This cost could be reduced to almost zero if not only the European Union, but also the other major world economies, comply with the “low pledge” Copenhagen Accord. A 30% GHG emission reduction target would certainly be more costly: the total loss in the European Union would be 1.26% of EU GDP in the case of EU unilateral action, whereas the total cost would be 0.55% of EU GDP if all major economies reduce their own GHG emissions according to the “low pledge” Copenhagen Accord. Both border tax adjustments and free allocation of carbon permits are shown to be successful in reducing some adverse competitiveness effects of the EU GHG mitigation policy into energy intensive sectors, but at the expenses of the other economic sectors.

Keywords: EU Climate Package; UNFCCC Conference of Parties; Kyoto Protocol; Computable General Equilibrium Analysis (search for similar items in EconPapers)
JEL-codes: C68 Q43 Q48 Q54 (search for similar items in EconPapers)
Date: 2013-03
New Economics Papers: this item is included in nep-cmp, nep-ene, nep-env and nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://feem-media.s3.eu-central-1.amazonaws.com/w ... oads/NDL2013-028.pdf (application/pdf)

Related works:
Working Paper: Macroeconomic Impacts of the EU 30% GHG Mitigation Target (2013) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2013.28

Access Statistics for this paper

More papers in Working Papers from Fondazione Eni Enrico Mattei Contact information at EDIRC.
Bibliographic data for series maintained by Alberto Prina Cerai ().

 
Page updated 2024-03-31
Handle: RePEc:fem:femwpa:2013.28