Institute for Research in Economic and Fiscal issues

IREF Europe - Institute for Research in Economic and Fiscal issues

Fiscal competition
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EU Energy Policy: Time to Reform

Energy policies are the object of fierce debates due to their important and multidimensional effects. It is in fact one of the major realms of action of the European Union. One of the main goals of current EU policy is known as the three 20s: a 20 per cent hike in energy efficiency, a 20 per cent cut in CO2 emissions and a 20 per cent share of renewables by 2020. This IREF publication contains four studies dealing with the various facets of EU energy policy.

Three of the four studies were previously undertaken by IREF between 2009 and 2011. The fourth was initially published by the European Center of Austrian Economics Foundation (Spring 2011) and addresses essential technical and geopolitical issues.

The first two studies present the rationale behind EU energy policy and provides an assessment of the results, concluding a gap between government and EU rhetoric and reality. The concept of a green fiscal policy based on the double-dividend principle for taxation relies on unsound economics. Tax harmonization is harmful and promoting pre-selected renewable energies by political means is dubious considering the very limited knowledge of central authorities. Therefore there are strong reasons to believe that an unhampered market would do a better job in bringing about safer and cleaner energy sources. The third essay recounts the development of the EU’s biofuel policy and offers a clear illustration of the unintended consequences stemming from current policies.

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