Economic iNsTRuments to Achieve Climate Targets in Europe
September 2012 until August 2015
344.662 € funded by EU - European Union: ENVIRONMENT 2012: ONE-STAGE, FP7-Env-2012/ENV.2012.6.1-4
Ottmar Edenhofer, Brigitte Knopf, Beatriz Gaitan
PIK number / OEH

Climate policy-making in today's world is complex. Transaction and enforcement costs are significant and affect the effectiveness and efficiency of policy instruments. Developments in related policy fields, such as energy policy, may influence the performance of climate policy instruments, while path dependency could lead to a lock-in on carbon intensive technological paths and hinder the penetration of low carbon technologies. European climate policies may impact upon the competitiveness of European producers, which, in turn, may affect both the policies' environmental effectiveness and economic efficiency. Issues of equity are also likely to affect the political feasibility of a particular policy instrument. A mix of policies (or, in other words, a policy portfolio) can be developed that comprehensively addresses these complexities whilst realising the overarching objectives. Yet, in developing this policy portfolio we must acknowledge the interdependencies between potential policy instruments. The overarching objective of the ENTR'ACTE research project is to assess, understand, and model the EU's current, as well as future, climate policy portfolios in light of the key interdependencies between policy instruments and thereby identify the optimal mix of policies needed to achieve legislated (i.e. 2020) and aspirational (i.e. 2050) targets of GHG emission reductions.

The ENTR'ACTE project has four goals: First, to coherently assess the most important climate policy instruments with the full range of economic research methods. Second, to gain a deeper understanding of the interactions between multiple climate policy instruments. Third, to provide an analysis that takes into account the barriers to the implementation of climate policy instruments. Fourth, to identify mixes of climate policy instruments that provide an effective, efficient, and feasible overall climate policy.

PIK is the work package leader of WP5, it will act as task leader for WP2 Task 2.3 Assessment of sectorial and regional expansion and contribute research to WP3 and WP1.