ABSTRACT
Portugal has committed to become a carbon-neutral economy by 2050, a goal that will require a profound transformation of Portuguese economy and society. This research is dedicated to the development of sustainable solutions for energy policy. Two overarching principles were followed: the need for a lower-intensity lifestyle and the need to involve all social and economic sectors in the transition. The methodology comprehends (1) identification of key issues and trends in the Portuguese energy system, (2) quantification of energy efficiency potential, (3) evaluation of national energy and climate policies, their successes and failures, (4) quantification of the main distortions in the national energy market, (5) review of international best practice in energy policy, (6) consultation with key stakeholders, (7) proposal of a coherent set of policy measures for the next 10 years, and (8) evaluation of the proposed measures. Two major priorities emerge – energy efficiency and transition to renewable energy sources – and a preferred tool – green tax reform. Findings include: (1) there has been progress in renewable sources, but energy efficiency is poor, with potential economic savings still amounting to 25–30% of consumption; (2) mobility, a key sector, lacks a coherent strategy; and (3) market distortions amount to €3873 million per year and are a significant obstacle to decarbonization. Considering the virtues and shortcomings of current policy, our approach was to focus on key issues covered by policy goals but so far neglected in practice. Often this means tax incentives rather than direct subsidies. Proposed measures include: (1) elimination of harmful subsidies in all sectors of the economy, (2) eco-taxation of CO2, among other major pollutant emissions and natural resources degradation, (3) tax rebates and other incentives, benefitting families and business for energy efficiency, (4) active promotion of the photovoltaic “prosumer”, (5) creation of incentives to industry and services for energy-efficient investment and practice, and (6) the creation of effective financing mechanisms for public transportation. Our research indicates that a shift of €1200 million per year in tax revenues and incentives (under the principle of tax neutrality) can generate savings and source substitution up to 14% of energy consumption by 2030, with positive macroeconomic effects. We believe this approach will promote a viable, more sustainable decarbonization of the economy in the energy sector.
