Introduction 3

Model 5

  Transportation Sector 6

  Heating Sector 7

  Selected Calibration Aspects 8

Fossil Fuel Price Shocks and the Policy Agenda in Isolation 10

  Oil Price Shock 10

  Gas Price Shock 13

  Europe’s Mitigation Policy Agenda 15

Implications of the Mitigation Policy Agenda for Fuel Price Shocks 19

  Oil Price Shock 10 Years After Policy Implementation 19

  Gas Price Shock 10 Years after Mitigation Policy Implementation 21

  Co-Benefits under Various Shock Configurations and the Role of ETS2 23

  The Role of Merit-Order Electricity Pricing 24

Conclusion 26

References 28