Impact Assessment of Energy-related Policy Instruments on Climate Change and Security of Energy Supply

This report assesses the impact of several representative policy instruments on sustainability indicators in the areas of climate change and security of energy supply, two important dimensions of sustainable development addressed in the MINIMA-SUD project sponsored by the European Commission (DG Research). Specifically, we pay attention to the effectiveness of these policy instruments in stimulating technological change that could lead to a more secure and climate-benign global energy system in the long-term future. For such purpose, we examine the incremental change in a number of sustainability indicators when the policy instrument is applied relative to the costs of application of the instrument. This measure is referred to as the "impact" of the policy instrument. We concentrate our attention on the following policy instruments: Energyrelated demonstration and deployment (D&D) programs and a carbon-equivalent (C-eq) tax. Impact assessment of policy instruments is an important element of the policy development process of the European Commission, among others. It represents a systematic and careful attempt to shed light on the possible effects of policy proposals. As such, it serves as an aid to the decision-making process. Specifically, impact assessment of policy instruments plays an important role in the implementation of the sustainable-development strategy of the European Commission. Although the numerical results presented here are specific to our particular analysis and highly dependent on the characteristics and limitations of our modeling tools, we want to offer this analysis as a contribution towards the development of more comprehensive methodologies for the assessment of impacts of policy instruments in the context of the quest towards a sustainable global energy system