Are Carbon Prices Redundant in the 2030 EU Climate and Energy Policy Package?

In 2018, an agreement between the key EU institutions—the Commission, the European Parliament, and the European Council—was reached after a long-lasting discourse over the 2030 EU climate and energy policy package. This paper offers a comprehensive assessment of the EU package, with its three main targets: lower greenhouse gas emissions, higher renewable share in final energy consumption, and improved energy efficiency. We find that the renewable and energy efficiency targets have been set so high that the derived emissions reduction (50 percent) exceeds the EU climate target (40 percent). Hence, there is no need for an EU climate policy, for example, to use carbon prices to reach the EU climate goals. It is, however, not cost-efficient to achieve the climate target by imposing the three EU targets. We demonstrate that a cost-efficient policy that obtains a 50 percent GHG emissions reduction would increase annual welfare (relative to the Reference scenario) by an amount corresponding to 0.6 percent of GDP in Europe.publishedVersio

Friere energimarkeder i Vest-Europa

Økonomiske analyser er tilgjengelige via www.ssb.noDe vest-europeiske energimarkedene er i ferd med å liberaliseres. Dette vil isolert sett medføre betydelige prisreduksjoner og økt forbruk av elektrisitet i Vest-Europa. Mesteparten av den økte kraftproduksjonen vil i så fall komme fra gamle og nye kullkraftverk, noe som vil gi store økninger i CO2-utslippene i Europa. Bruk av CO2-avgifter vil kunne motvirke utslippsøkningen, samtidig som elektrisitetsprisene for husholdninger og industri fortsatt er betydelig lavere enn før liberaliseringen. Friere energimarkeder vil også medføre lavere gasspriser til forbrukere. Mindre markedsmakt i transportleddet kan likevel føre til økt lønnsomhet i norsk gassproduksjon, ikke minst hvis CO2 -avgifter innføres

Are carbon prices redundant in the 2030 EU climate and energy policy package?

In 2018, an agreement between the key EU institutions – the Commission, the European Parliament, and the European Council – was reached after a long-lasting discourse over the 2030 EU climate and energy policy package. This paper offers a comprehensive assessment of the EU package, with its three main targets: lower greenhouse gas emissions, higher renewable share in final energy consumption, and improved energy efficiency. We find that the renewable and energy efficiency targets have been set so high that the derived emissions reduction (50 percent) exceeds the EU climate target (40 percent). Hence, there is no need for an EU climate policy, for example, to use carbon prices to reach the EU climate goals. It is, however, not cost-efficient to achieve the climate target by imposing the three EU targets. We demonstrate that a cost-efficient policy that obtains a 50 percent GHG emissions reduction would increase annual welfare (relative to the Reference scenario) by an amount corresponding to 0.6 percent of GDP in Europe

Are Carbon Prices Redundant in the 2030 EU Climate and Energy Policy Package?

In 2018, an agreement between the key EU institutions—the Commission, the European Parliament, and the European Council—was reached after a long-lasting discourse over the 2030 EU climate and energy policy package. This paper offers a comprehensive assessment of the EU package, with its three main targets: lower greenhouse gas emissions, higher renewable share in final energy consumption, and improved energy efficiency. We find that the renewable and energy efficiency targets have been set so high that the derived emissions reduction (50 percent) exceeds the EU climate target (40 percent). Hence, there is no need for an EU climate policy, for example, to use carbon prices to reach the EU climate goals. It is, however, not cost-efficient to achieve the climate target by imposing the three EU targets. We demonstrate that a cost-efficient policy that obtains a 50 percent GHG emissions reduction would increase annual welfare (relative to the Reference scenario) by an amount corresponding to 0.6 percent of GDP in Europe

Liberalising the energy markets of Western Europe : a computable equilibrium model approach

Using a computable equilibrium model, we examine the short-run effects of a radical liberalisation of the West European natural gas and electricity markets. In each model country, oil, gas, coal and electricity are produced, traded and consumed. There are world markets for oil and coal, and well-integrated competitive markets for gas and electricity in Western Europe. Gas and electricity are transported and traded across markets under the assumption of ideal third-party access regimes for transportation and limited capacities in the transportation networks. We find that relative to the base year 1996, a radical liberalisation reduces the average end-user price of natural gas by around 20 per cent, and the average end-user price of electricity by around 50 per cent. Supply of electricity increases by around 20 per cent, mainly due to increased coal power production. After such liberalisation, coal power emerges with the largest market share of electricity production in Western Europe

Does Increased Extraction of Natural Gas Reduce Carbon Emissions?

Without an international climate agreement, extraction of more natural gas could reduce emissions of CO2 as more “clean” natural gas may drive out “dirty” coal and oil. Using a computable equilibrium model for the Western European electricity and natural gas markets, we examine whether increased extraction of natural gas in Norway reduces global emissions of CO2. We find that both in the short run and in the long run total emissions are reduced if the additional quantity of natural gas is used in gas power production in Norway. If instead the additional quantity is exported directly, total emissions increase both in the short run and in the long run. However, if modest CO2-taxes are imposed, increased extraction of natural gas will reduce CO2 emissions also when the additional natural gas is exported directed.natural gas; carbon; emissions; Norway; envirnoment; CO2

The future of Russian gas exports

acceptedVersio

Liberalizing the energy markets of Western Europe - a computable equilibrium model approach

Using a computable equilibrium model, the short-run effects of a radical liberalization of the West European natural gas and electricity markets are examined. In each model country, oil, gas, coal and electricity are produced, traded and consumed. There are world markets for oil and coal, and well-integrated competitive markets for gas and electricity in Western Europe. Gas and electricity are transported and traded across markets under the assumption of ideal third-party access regimes for transportation and limited capacities in the transportation networks. It is found that relative to the data year 1996, radical liberalization reduces the average end-user price of natural gas by around 20%, and the average end-user price of electricity by around 50%. The supply of electricity increases by around 20%, mainly due to increased coal power production. After such liberalization, coal power emerges with the largest market share of electricity production in Western Europe.

Friere energimarkeder i Vest-Europa

De vest-europeiske energimarkedene er i ferd med å liberaliseres. Dette vil isolert sett medføre betydelige prisreduksjoner og økt forbruk av elektrisitet i Vest-Europa. Mesteparten av den økte kraftproduksjonen vil i så fall komme fra gamle og nye kullkraftverk, noe som vil gi store økninger i CO2-utslippene i Europa. Bruk av CO2-avgifter vil kunne motvirke utslippsøkningen, samtidig som elektrisitetsprisene for husholdninger og industri fortsatt er betydelig lavere enn før liberaliseringen. Friere energimarkeder vil også medføre lavere gasspriser til forbrukere. Mindre markedsmakt i transportleddet kan likevel føre til økt lønnsomhet i norsk gassproduksjon, ikke minst hvis CO2 -avgifter innføres