EU policies and regulation on CO2, renewables and energy efficiency: A critical assessment of recent experiences

Abstract

For over 20 years, the EU has taken on a clear role of international leadership in energy and environmental policy, with a strong commitment to bringing down CO2 emissions, promoting renewable energies and enhancing energy efficiency. Regulatory experience has been very varied, with several different kinds of regulatory, fiscal and command-and-control instruments, etc. being implemented. The analysis conducted in this chapter shows that there have been “lights and shadows” but it can be concluded that, in general, priority has been given to meeting targets rather than to economic efficiency considerations. Two main tools have been used to bring down CO2 emissions at EU level: the EU ETS and taxation. On the first issue, our main conclusion is that despite the fact that CO2 goals have been achieved, the role of CO2 prices as a low-carbon investment driver has been of relatively little importance. In relation to the second issue, the need to analyse energy and environmental taxation from a broad conceptual perspective, including the extraordinary costs derived from energy, environmental and social policy decisions needs to be highlighted. In the Spanish context, an environmental tax reform needs to be undertaken to address the challenges faced by the energy model: strong incentives are required in favour of technologies which are more efficient and which have lower environmental impacts. In relation to renewables, experience shows good and bad points in each of the supporting frameworks and the general conclusion is that these frameworks should also take into account the characteristics of each technology (particularly its competitiveness). Energy efficiency should be one of the cornerstones for attaining EU energy and environmental goals. Price instruments, standards and information instruments are very useful in overcoming the “energy efficiency gap”. In this regard, the Directive on Energy Efficiency will establish the policy framework for the medium/long term.