A New Growth Path for Europe

In this scenario the EU27 undertakes a GHG mitigation policy based on the unilateral EU27 20/20 climate action. In particular, the EU has committed itself to reducing its GHG emissions by 20% (compared to 1990 levels) and to increasing the share of RES in final energy demand to 20% by 2020. The GHG target is split to a 21% reduction in the ETS sectors and a virtual 10% reduction in the non-ETS sectors. The GEM-E3 model simulated this target by auctioning the GHG permits to the ETS sectors and by imposing a carbon tax to the non-ETS sectors. Permit trade is allowed only between actors involved in the ETS. The government revenues from permit auctioning are then recycled into the economy through a lump-sum transfer to households (support of households income due to energy cost increase). GHG emission reductions through CDM projects are not considered. In addition, the EU27 undertakes energy efficiency measures that lead to an average of around 8% efficiency improvements.