Prices and Policies: Carbon Caps and Efficiency Programmes for Europe's Low-Carbon Future
With the adoption of the Climate and Energy Package in 2008, European decision-makers created an integrated suite of policies to reduce carbon emissions, increase renewable energy production, and advance energy savings. As the EU ETS moves to carbon auctioning, decision-makers must continue to link carbon prices with other policy tools to meet Europe’s adopted carbon and sustainable development goals. However, carbon-pricing advocates sometimes object that other public policies will interfere with carbon markets or “undermine” the carbon price. In reply, this paper will show how energy efficiency (EE) policies can help meet ETS goals at lower cost, creating space to tighten carbon caps, and/or reduce the cost of protecting high-emitting industries and new Member States.