The Low-Carbon Economy - EU Policy Approach

The process of transformation of the economy towards a low-carbon economy seems to be shaped as a certain solution for the world economy, with the scope to internalize the social cost of pollution. The European Union is set to become an energy efficient and low-carbon economy on a long run. These options have been identified as holding significant potential to increase the economic competitiveness. As for the present, implementing integrated energy and climate policies is the direction EU has engaged. The main policy instrument is to establish the carbon market. Although two phases of institutional enforcement have passed, EU-ETS is delaying to produce the expected results and the trust of companies and investors is shaken by the market crash, price volatility and contradictory energy policies. If the carbon market turns as an impediment of economic competitiveness of companies, not accomplishing the purpose to determine behavioral change, this would be the most exposed risk as regards the EU climate policies.