Determining a robust mix of energy carriers for a carbon-neutral EU
Energy transitions manifest themselves across space and time. While necessary targets for decarbonisation are apparent, the accompanying shifts in spatial organisation of economic activity are perhaps not as well understood.
Policies are needed to support green fuel switching by households; support should be phased out as the carbon price rises.
How the G20 can support the recovery with sustainable local infrastructure investment.
To cut the cost of decarbonisation significantly, the best solution would be to provide investors with a predictable carbon price that corresponds to the envisaged decarbonisation pathway.
Policymakers must address the need to displace carbon-intensive hydrogen with low-carbon hydrogen, and incentivise the uptake of hydrogen as a means to decarbonise sectors with hard-to-reduce emissions.
President Biden has promised to implement a levy on carbon-intensive imports, albeit without a federal domestic carbon price. The measure faces a number of difficulties, but could feasibly be implemented. The route chosen by the US will have important implications for the EU's own plans.
In the wake of COVID-19, some economic recovery policies will help green the economy – for example, energy renovation of buildings. But there are limits to the share of stimulus that can be explicitly green. The European Union should therefore also green the fiscal consolidation by setting out the path to much higher carbon prices than today. This would guide investment and provide revenues to help the fiscal consolidation.
Since the beginning of the COVID-19 crisis, Bruegel’s new tool has gauged the impact of the crisis on economic activity by tracking changes in electricity consumption.