by Christoph Böhringer, Thomas F. Rutherford and Tol, Richard S J
- Three computable general equilibrium models are used to estimate the economic implications of a stylized version of EU climate policy. If implemented at the lowest possible cost, the 20% emissions reduction would lead to a welfare loss of 0.5-2.0% by 2020. Second-best policies increase costs. A policy with two carbon prices (one for the ETS, one for the non-ETS) could increase costs by up to 50%. The renewables standard could raise the costs of emissions reduction by 90%. Overall, the inefficiencies in policy lead to a cost that is 100-125% too high.
Böhringer, C., T.F. Rutherford and R.S.J. Tol (2009). "The EU 20/20/2020 Targets: An Overview of the EMF22 Assessment." ESRI Working Paper 325, Oct 2009.