Energy savings in drastic climate change policy scenarios

Stéphane Isoard and Tobias Wiesenthal, European Environment Agency

Keywords

climate change policies, energy-savings, market-based instruments, new technologies

Abstract

This paper reports a climate change policy scenario compatible with long-term sustainable objectives set at EU level (6 th Environment Action Plan). By setting ambitious targets for GHG emissions reduction by 2030, this normative scenario relies on market-based instruments and flexible mechanisms. The integrated policy that is simulated (i.e. addressing energy, transport, agriculture and environmental impacts) constitutes a key outlook for the next 5-year report of the European Environment Agency (EEA). This scenario highlights what it would take to drastically curb EU GHG emissions and how much it might cost. The findings show that such a 'deep reduction' climate policy could work as a powerful catalyst for

substantial energy savings, and
promoting sustainable energy systems in the long term.

The implications of this policy lever on the energy system are many-fold indeed, e.g. a substantial limitation of total energy demand or significant shifts towards energy and environment-friendly technologies on the supply side. Clear and transparent price signals, which are associated with market-based instruments, appear to be a key factor ensuring sufficient visibility for capital investment in energy efficient and environment-friendly options. Finally it is suggested that market-based policy options, which are prone to lead to win-win situations and are of particular interest from an integrated policy-making perspective, would also significantly benefit from an enhanced energy policy framework.