An evaluation of the energy and environmental policy efficiency of the EU member states in a 25-year period from a Modern Portfolio Theory perspective

Abstract

The European Union has being developing its Energy and Enviornmental policy along the last 30 years. Recent European Commision communications confirm the leadership of European Union on reducing pollutant gases emissions and technological change towards climate neutral economy. This study assessess the efficiency of European Energy Policy from a Modern Portfolio Theory perspective. The proposal studies the disaggregated European power portfolio: to make a more exhaustive analysis, focusing individually on each European country along the period 1990-2015. The efficiency of the Energy and Environmental Policy of each Member State is calculated measuring their distance to the power generation efficient frontier. The quadratic optimization model used by MPT is complemented by a cluster analysis of European Member States, in order to be able to observe country behaviour tendencies: regarding the application of their energy and environmental policies without overlooking the efficiency of that implementation. Results stand out that France, Slovakia and Sweden belong to the “leader” efficient cluster for the considered period. In turn, Denmark, Germany, Greece and Italy show a high consistence in the application of their energy and environmental policies along the considered period, as they moved upwards during that period.