Introduction

Abstract

Over the last two decades the environmental impacts resulting from energy generation and utilization have become one of the major concerns of environmental policy and a central issue in environmental and energy economics. The emissions arising from the combustion of fossil fuels are major contributors to the currently most heavily debated environmental issues. In particular, more than half of the contribution to the anthropogenic greenhouse effect is attributed to carbon dioxide (CO₂), whose release is largely related to fossil energy use. Since there are no prospects for economically feasible end-of-pipe technologies for CO₂ abatement, these emissions can only be reduced by scaling back fossil fuel utilization. This creates spillovers to other energy-related pollutants (SO₂, NO_x), because the reduction of fossil energy input implies lower emissions of these pollutants as well. Thus, CO₂ abatement plays a key role in energy-related environmental policy.