Promoting Renewables and Discouraging Fossil Energy Consumption in the European Union

by Cathrine Hagem

- The European Union (EU) identified some positive and negative externalities related to energy production and consumption when adopting its Renewable Energy and Climate Change Package. Given these externalities, we derive the optimal combination of policy instruments. Thereafter, we explore the second-best outcome, given constraints on the use of some policy instruments, due to political considerations and international regulations.

Hagem, C. (2010). "Promoting Renewables and Discouraging Fossil Energy Consumption in the European Union"Discussion Papers 610 - Statistics Norway, Mar 2010.