The economic impact of EU’s climate policy by 2020 (in Finnish with English abstract)

Abstract: The study evaluates the impacts of EU climate policy on emission allowance price, electricity prices, the competitiveness of industry and macroeconomic developments in the third EU emission trading period 2013-2020. The economic impacts of climate policy on Finland are compared to the impacts on the entire EU area. It turns out that due to the cold climate and heating energy demand, higher export intensity of the economy and higher energy intensity of the industry Finland pays a higher price in terms of output and employment losses for the EU’s climate policy than the EU on average. The study examines the macroeconomic effects of climate policy also in a more distant future, assuming that climate policy is tightened further in the 2020s. Climate policy implemented by emission trading means that the long-term economic growth in the EU area depends essentially on emission-free electricity production, and no longer on other growth factors, such as labour supply and productivity growth.

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