Combining Climate and Energy Policies: Synergies or Antagonism? Modeling Interactions with Energy Efficiency Instruments

24 Pages Posted: 26 Jan 2012

See all articles by Oskar Lecuyer

Oskar Lecuyer

CIRED

Ruben Bibas

CIRED, International Research Center on Environment & Development, France

Date Written: January 26, 2012

Abstract

In addition to the already present Climate and Energy package, the European Union (EU) plans to include a binding target to reduce energy consumption. We analyze the rationales the EU invokes to justify such an overlapping and develop a minimal common framework to study interactions arising from the combination of instruments reducing emissions, promoting renewable energy (RE) production and reducing energy demand through energy efficiency (EE) investments. We find that although all instruments tend to reduce emissions and a price on carbon tends to give the right incentives for RE and EE too, the combination of more than one instrument leads to significant antagonisms regarding major objectives of the policy package. The model allows to show in a single framework and to quantify the antagonistic effects of the joint promotion of RE and EE. We also show and quantify the effects of this joint promotion on ETS permit price, on wholesale market price and on energy production levels.

Keywords: Renewable Energy, Energy Efficiency, Energy Policy, Climate Policy, Policy Interaction

JEL Classification: Q28, Q41, Q48, Q58

Suggested Citation

Lecuyer, Oskar and Bibas, Ruben Jonathan, Combining Climate and Energy Policies: Synergies or Antagonism? Modeling Interactions with Energy Efficiency Instruments (January 26, 2012). FEEM Working Paper No. 98.2011, Available at SSRN: https://ssrn.com/abstract=1992324 or http://dx.doi.org/10.2139/ssrn.1992324

Oskar Lecuyer (Contact Author)

CIRED ( email )

Campus Jardin Tropical
45 bis avenue de la Belle Gabrielle
Nogent sur Marne Cedex, F94736
France
+33 1 43 94 73 77 (Phone) (Phone)
+33 1 43 94 73 70 (Fax) (Fax)

Ruben Jonathan Bibas

CIRED, International Research Center on Environment & Development, France ( email )

Campus du Jardin Tropical
45 bis avenue de la Belle Gabrielle
F94736 Nogent sur Marne Cedex
France

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