Policy - 05/March/2021

Metrics that inflate the cost of the energy transition are under attack

Put garbage into an economic model and garbage comes out. By using a discount rate that inflates the cost of the energy transition, the EU’s executive body is undermining the bloc’s new and more ambitious carbon reduction goal. Behind the scenes, however, method may lie in the madness. Officials working on legislative updates are suspected of holding a negotiating trump card up their sleeves

A 10% discount rate is increasingly being seen as too conservative a metric for dictating the scale and speed of the energy transition

OUT OF STEP The discount rate used to assess the cost of EU clean energy legislation is several times higher than that adopted by member country governments for their own models

PRECEDENT The EU Commission has once before lowered its discount rate during talks to win parliamentary and government approval for legislation to facilitate clean energy investment

KEY QUOTE The European Commission must not shoot itself in the foot now by artificially inflating costs ...

 

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