Green Energy, Efficiency and Climate Change: An Economic Perspective - Green Energy and Efficiency: An Economic Perspective - page 11

energy ef ciency standards are a good choice for public policy has raised a great

deal of attention. Parry et al. [ 25 ], using an analytical framework that is parame-
terized with US data, conclude that pricing policy is of crucial importance, although
this does not mean that ef

ed as there
are many arguments that work in favor of standards. This is so when it is crystal
clear that pricing policies may not be credible in cases in which the government
commits to maintaining those policies far into the future. Yet, having said this, it is
also necessary to remember that if ef

ciency standards should be negatively classi

ciency standards are used they should be
imposed in particularly chosen sectors and implemented in ways that guarantee
costs effectiveness.
The conclusion that energy ef ciency standards and Pigouvian taxes need not

be substitutes but should be viewed as complements is made by Tsvetanov and
Segerson [ 28 ] in a context in which consumers do not behave in the traditional
rational way that neoclassical economic models assume. Instead a behavioral
approach where consumers may be

“ tempted ” to buy cheap and inef cient goods

may be a possibility even though that kind of behavior is not rational.

4 Energy Policy in Europe: An Example of the Dif culties

The EU has a full range of objectives and policies that either have signi cant

climate change co-bene ts or aim at directly tackling climate change. However, as

the report by Hohne et al. [ 12 ] shows, there is an overlap among the targets of the
EU Climate and Energy Package, and emissions from some sectors are covered by a
number of targets, which makes energy policy very complicated.
Consider, for example, some emissions from industry that are covered by the EU
ETS, renewables, energy ef ciency and Kyoto Protocol targets. If we concentrate in

the energy ef ciency target, we nd the following plans and actions: (i) The 2005

Green Paper on energy ef ciency (planned to reduce energy consumption by 20 %,

compared to Business as Usual) and (ii) the 2006 Action Plan included as part of
the EU

s Climate and Energy Package in 2008/2009 (adopted in June 2010 as part
of the new Europe 2020

'

' strategy).

rmed on February 2011 at the
Transport, Telecommunications and Energy Council Meeting and the instruments
used in Europe for this policy have been the following: (a) access to

The energy ef ciency target was again con

nance, (b)
availability of innovative products and (c) incentives to induce energy-ef ciency

investments and the use of EU structural funds. Given that the target can be sub-
divided in many others sub-targets it is dif cult to know whether or not there are too

many instruments for only one target.
Three other Directives concerning the achievement of energy ef

ciency are: (i)
the Eco-design Directive (2009), that requires producers to make reductions in
energy use and other environmental impacts an integral part of the design process of
electrical appliances, (ii) the Energy Labelling Directive (92/75) that constitutes the
framework for implementation of Directives for seven household appliance groups