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Some reflections on policy mix in the EU low-carbon strategy

Massimiliano Corradini, Valeria Costantini (), Anil Markandya, Elena Paglialunga () and Giorgia Sforna

No 236, Departmental Working Papers of Economics - University 'Roma Tre' from Department of Economics - University Roma Tre

Abstract: The EU low-carbon strategy includes different complementary policies. Potential interactions between instruments and timing of their implementation can influence the cost and likelihood of achieving the targets. We test the interactions between the three main pillars of the EU strategy through a dynamic CGE model (GDynEP) with a time horizon of 2050. Main results are: i) going for the unilateral EU carbon mitigation target without any complementary technological policy will produce large economic losses; ii) by investing in clean energy technologies (energy efficiency and renewable energy) with a carbon tax revenue recycling mechanism, these losses will substantially decrease; iii) when complementary clean energy technology policies are implemented, the optimal timing of binding targets changes; iv) the higher the contribution to clean energy technologies, the larger the economic gains in early adoption of challenging abatement targets.

Keywords: EU low-carbon strategy; dynamic CGE model; GTAP; abatement optimal timing; policy mix design; clean energy technologies (search for similar items in EconPapers)
JEL-codes: H21 O32 Q47 Q54 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
Date: 2018-04
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