Good things do not always come in threes: On the excess cost of overlapping regulation in EU climate policy

Since the mid-1990's the European Union (EU) aims at pushing global climate policy. The objective is to promote international cooperation by the adoption of substantial EU-wide greenhouse gas emission reduction targets and their least-cost implementation. Our quantitative impact assessment of the EU Climate and Energy Package shows that the myriad of instruments used in the EU to curb greenhouse gas emissions is doomed to generate substantial excess cost. We conclude that EU climate and energy policy should better disentangle its choices of objectives, targets, and policy instruments on rigorous economic grounds in order to improve the coherence and overall cost-effectiveness of policy initiatives.