Believing that combating climate change is among its most important challenges, the European Union is making a concerted effort to develop cost-effective policies for a coherent climate strategy. This study reviews the existing literature on climate policy cost-benefit analysis. The authors identify a number of key strategies for providing significant ancillary benefits in terms of economic efficiency, security of supply, containment of local pollution, innovation, and job creation. To be effective, any policy action must start now, taking into account the existing lead times related to capital stock turnover and to infrastructure development in the energy and transport sectors.
Christian Egenhofer is a senior research fellow at CEPS and at the University of Dundee, Scotland.Jaap C. Jansen is senior economist at the Energy Research Centre for the Netherlands (ECN).Stefan J. A. Bakker is a research fellow at ECN.J. Jussila Hammes works at the Centre for European Policy Studies.