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Benjamin Tischler IW-Policy Paper No. 1 16. January 2018 EU Energy Efficiency Policy: How a more cost-efficient decarbonization could succeed

At EU level, new proposed legislation for a clean-energy policy is being adopted. New policies are currently being discussed regarding the increased reduction of CO2 emissions, as well as EU-wide energy consumption targets for the year 2030 and national energy efficiency targets and measures to be derived from them. But what happens when the proposed objectives contradict and undermine each other?

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How a more cost-efficient decarbonization could succeed
Benjamin Tischler IW-Policy Paper No. 1 16. January 2018

EU Energy Efficiency Policy: How a more cost-efficient decarbonization could succeed

IW Policy Paper

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German Economic Institute (IW) German Economic Institute (IW)

At EU level, new proposed legislation for a clean-energy policy is being adopted. New policies are currently being discussed regarding the increased reduction of CO2 emissions, as well as EU-wide energy consumption targets for the year 2030 and national energy efficiency targets and measures to be derived from them. But what happens when the proposed objectives contradict and undermine each other?

A restrictive energy consumption target can become a major obstacle to achieving the overall energy and climate-policy objective of cost-effective decarbonization of the energy system. Economic policy instruments for increasing energy efficiency in the EU ETS sectors can make it more difficult to achieve decarbonization at minimal cost. Energy efficiency targets and the corresponding economic policy measures can however make a worthwhile contribution in sectors not included in the EU ETS.

Instruments for increasing energy efficiency should aim at improving technical energy efficiency. With that in mind, the conception of quantitative targets and tools must be improved. The macroeconomic indicators for “energy efficiency” and “energy intensity” used thus far are unsatisfactory as simple political objectives and lead to wrong conclusions regarding the success of the economic policy instruments being used. The indicators must be decisively improved, for example, by considering factors such as business cycle and economic growth, as well as the proportion of renewable energy or of energy-intensive and less energy-intensive sectors. Furthermore, a better database is necessary.

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How a more cost-efficient decarbonization could succeed
Benjamin Tischler IW-Policy Paper No. 1 16. January 2018

Benjamin Tischler: EU Energy Efficiency – Policy How a more cost-efficient decarbonization could succeed

IW Policy Paper

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German Economic Institute (IW) German Economic Institute (IW)

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