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Choosing Efficient Combinations of Policy Instruments for Low-carbon development and Innovation to Achieve Europe's 2050 climate targets

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Enhanced climate policies lead to low carbon future

To realise its vision of a competitive low-carbon economy in 2050, the EU must be able to collectively manage its various climate policies. An EU initiative was established to make policy instruments more effective and efficient.

Climate Change and Environment

The EU wishes to transform itself to a low-carbon economy by mid-century. This transformation process will require an overhaul of the European economy, affecting a range of sectors and will affect not only power generation, industry and transport, but also agriculture, construction or finance. Governing this process is a huge challenge and requires policies to be considered as a whole. However, it will enable decision makers to better understand, manage and assess the whole range of climate-related policies across the EU. The CECILIA2050 (Choosing efficient combinations of policy instruments for low-carbon development and innovation to achieve Europe's 2050 climate targets) project studied how policy instruments interrelate, what influences their performance and how they should evolve to lead the transition towards a low-carbon economy. Project partners first identified an optimal combination of climate policy instruments to meet the 2050 targets. They assessed the current policy mix at EU level and in eight Member States through a series of country reports. They then evaluated the coherence and past performance of the existing policy mix based on environmental effectiveness, cost efficiency, and political, administrative and legal feasibility. A series of in-depth studies was produced based on the results. These reports analysed the impacts and limitations of the existing climate policy instruments over a wide range of sectors, namely transport, power, building, cement and steel, and food and agriculture. The initiative identified faster, smoother and more cost-effective emission reduction pathways by improving the mix of climate policy instruments that guide economic and social development patterns in Europe. It also identified a number of market imperfections, bottlenecks and limitations that limit the efficiency and effectiveness of policy instruments and their combinations. In particular, CECILIA2050 took a critical look at the potential for economic instruments (carbon pricing) to achieve fast and cost-effective emission reduction. It empirically analysed key barriers and constraints that inhibit economic instruments from exploiting their full potential, but has also critically reflected on the inherent limitations of carbon pricing. CECILIA2050 thus provided a new starting point for measuring Europe's present and future climate policies and their linkages. The EU will be able to look beyond previous policy evaluation methods as it transitions to clean technologies for its industry and economy over the next decades.

Keywords

Low-carbon economy, EU, CECILIA2050, policy instruments, climate policy, Member States, carbon pricing

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