Analysing the interactions of energy and climate policies in a broad policy ‘optimality’ framework: the Italian case study

Abstract

The paper investigates the effectiveness and efficiency of energy-environmental policy
\ninteractions in Italy, adopting a broad optimality perspective that includes policy
\nfeasibility and dynamic efficiency. The analysis highlights that though some
\ncomplementarity among different policies exists, climate policies have been often
\nundermined by energy and renewables policy. Nevertheless, some complementarities
\nbetween policy landscapes are found, as in the case of the Kyoto Fund (climate policy)
\nand of the incentives and funding towards thermal energy, both acting as a
\ncomplementary tool to cover non-EU-ETS sectors. Overall, renewables oriented
\npolicies bring about efficacy, but this often occurs at the expenses of their efficiency,
\nthus generating a trade-off between these two components of optimality. Finally,
\nincentives remuneration of renewables and also energy efficiency investments give a
\nmixed signal to improve innovation and to stimulate the green sector. In conclusion,
\nnotwithstanding efficacy is present in some case, cost effectiveness and efficiency are
\nfar from being optimal, and it would be better to provide a clear and durable price
\nsignal using carbon taxation tools.