Climate Change Policies, Energy Security and Carbon Dependency Trade-offs for the European Union in the Longer Term

Abstract

Energy policy in the European Union (EU) faces two major challenges. The first challenge is posed by EUs commitment to reduce greenhouse gas emissions to the atmosphere in the context of the international agreement on climate change. The second challenge is to keep ensuring European security of energy supply, while its dependency on external sources of energy is projected to increase. In this paper, two long-term alternative climate change policy scenarios for Europe are examined. In the first scenario, EU reduces carbon dioxide emissions by domestic measures; in the second scenario EU maximizes cooperation with the countries of the former Soviet Union (FSU). Impacts on carbon flows between the EU and FSU and on the external energy dependency of the EU are assessed with an applied general equilibrium model, GTAP-E, whose set of energy commodities is expanded with combustible biomass as a renewable and carbon-neutral energy commodity. The results show that there is a trade-off between economic efficiency, energy security and carbon dependency for the EU. The FSU would unambiguously prefer cooperation.