Emission reductions in EU countries

Abstract

This chapter analyses potential conflicts in Europe arising from an implementation of a uniform carbon tax. It shows why different sectors may expect the resulting costs to be unacceptably high in different countries. As a consequence, distributional policies — perhaps in the form of distributing emission permits — will probably have to be designed in order to take into account conditions within each country in order to mitigate conflicts. This implies that common measures at the EU level should be avoided. However, differences among countries may to a large extent be explained by unequal conditions for the electricity sectors. Hence, harmonising the electricity market may help the EU to achieve a cost-effective climate policy without severe conflicts.