EU Science Hub

Costs and benefits of climate policies

Through its international agreements the EU has endorsed to reduce greenhouse gas emissions (GHGs) by 20% by 2020. This will redirect EU's energy economy towards a highly efficient and low CO2 one with an important impact on climate change mitigation.

At European level a comprehensive package of policy measures to reduce greenhouse gas emissions has been initiated through the European Climate Change Programme (ECCP).

JRC supports mitigation policies focusing on the analysis of the macroeconomic effects of sector-wise measures taken in carbon-intensive sectors.

It provides the appropriate economic quantitative tools to support the regulatory policy in crucial sectors (electricity, gas, CO2 emissions, etc.) and to address a wider span of policies, all of them around the "green growth" concept. Issues like environmental tax/green fiscal reform, green accounting, environmental welfare analysis and the like require a sound portfolio of tools to evaluate the efficiency and potential outcome of the policies in place.

Green Tax Reform

To improve the competitiveness of the EU Member States, the EU needs a better understanding of the costs and opportunities given by green tax reforms. This includes shifting away from labour taxation towards energy or carbon taxation.

Carbon taxes and Emission Trading Schemes (ETS) play a central role in current climate policies. JRC performs economic analyses of alternative green taxation policies. These include the complex link between fiscal reforms, employment and competitiveness.

JRC studies alternative macro-economic policies fostering a more efficient and less distortive fiscal regime. Alternative formats of the green fiscal reform are developed and analysed in collaboration with the incumbent EC services.

The methodological approach focuses on the microeconomic aspects and integrates the analysis into the CGE GEM-E3 model, which allows the assessment of the distributional effects of taxation.