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The adaptation to the CO2 emission cap set by the European Union will require that in 2008-2012 the GDPs of the five largest member countries remain on average 0.4 – 0.9 per cent lower than in the business-as-usual-scenario, according to an analysis by ETLA researchers Olavi Rantala and Paavo Suni. Finland, a small open economy, will be hit harder, with the GDP falling on average some 1.5 per cent short of the business-as-usual alternative.
ETLA researchers analyze the impact of EU climate policy with a model covering Germany, France, Italy, Spain and the United Kingdom as well as Finland. Together the countries represent some 64 % of total EU greenhouse gas emissions. The results reported above are based on a scenario in which the emission trading sectors of the six countries are allowed to reach their aggregate target by the end of the Kyoto commitment period 2008 – 2012.
The scenario presupposes that the countries are able to acquire emission allowances from other EU countries and make use of the other Kyoto mechanisms, Joint Implementation and Clean Development Mechanism. If this will not be possible, adaptation must happen faster and costs as lost GDP will consequently be higher
