An economic analysis of the interactions between renewable support and other climate and energy policies

Abstract

The EU climate and energy policy landscape is characterized by a combination of instruments to achieve the EU 2020 and 2030 targets. In this paper, some of the most relevant interactions between RES-E support and a wide array of other climate and energy policies including the EU ETS, the Energy Taxation Directive and the Effort Sharing Directive in the European Union are assessed. A qualitative methodology is applied considering different assessment criteria such as effectiveness and efficiency of RES-E support and support costs but also distribution of costs between different stakeholder groups. Our analysis shows that, despite a common perception that interactions lead to conflicts, this is not really the case when the discussion is broadened and considers different assessment criteria. While adding one instrument or policy to another worsens one criterion, it usually improves another. Furthermore, the results of the interactions are not only specific to the policy, but also depend on the choice of instruments and design elements.