Prices and Policies: Carbon Caps and Efficiency Programmes for Europe‘s Low-Carbon Future
This paper was presented at the 2011 ECEEE Summer Study. 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. This paper demonstrates 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. Smart “complementary policies” can directly link ETS and EE strategies, especially by using auction revenue for EE programmes. Complementary policies are also needed to support low-carbon power markets, grid expansion, and renewable power investment across Europe.