Climate and Energy Security Policies in the EU: Conflict or Cohesion?

The natural gas dispute between Russia and Ukraine in January 2009 caused severe shortages of natural gas in Europe. As a response to the supply disruption, is the EU envisaging a potential for renewable energy sources to reduce its dependency on natural gas. The EU has adopted a binding target in the 2030 Climate and Energy Framework of increasing the share of renewables to 27 percent. This thesis analyzes the degree of coherence between the climate policies for 2030 and the EU s energy security strategy, using the multimarket equilibrium model LIBEMOD. The study finds a strong degree of coherence between the climate and the energy security policies by 2030, as the climate policy leads to a greater dispersion of energy sources. Accomplishing the climate targets implies raising both the common EU subsidies to renewables and the taxation of CO2 emissions. Improvements in the solar and wind power producing technologies lead to lower electricity prices, a lower CO2 price and lower subsidies for renewables. Some of the gas in the power market is replaced by more solar and wind power, but solar power suppresses other renewable energy sources to a greater extent than gas power due to the reduction in subsidies to renewables. Some of the excessive gas is consumed by the other end user sectors at lower prices, such that the EU s gas dependency is marginally affected by more renewables. In addition, the study finds that the degree of cohesion in climate and energy security policies appears to be stronger when implementing measures for increased energy efficiencies