**4. Conclusion**

The European Union (EU) has undoubtedly made a big effort in developing a progressive environmental policy, but many of its own policies are still far from making a difference to climate change. The policy into action to "green" Europe is the so-called 20-20-20 climate and energy package. The 20-20-20 Package, introduced in 2008 through the Communication (COM(2008)30), answers to the call made by the European Parliament about real measures for the transition toward a sustainable development. The Package includes a number of important policy proposals closely interlinked, that are: a revised directive on the EU Emission Trading System (EU ETS); a proposal on the allocation of efforts by member states in order to reduce GHG emissions in sectors not covered by the EU ETS (as transport, building, services, small industrial plants, agriculture and food sectors); a directive on the promotion of renewable energy to achieve the goals of GHG emission reductions.

So far, a large strand of literature on climate change states that we need several economic policy instruments to correct for existing types of market failures, for instance, an environmental tax on the carbon emissions and a research subsidy for research and development (R&D) spillovers in the renewable energy sector (Cremer and Gahvari, 2002). Policy instruments implemented to these aims are generally classified as price-oriented or quantity-oriented. Some of them are claimed to be more market friendly than others, while other schemes are claimed to be more efficient in promoting the development of renewable energy (Meyer, 2003). Currently, there is no general agreement on the effectiveness of each scheme. Evidently, every region would want to spur new activities, new investment, more employment in its own territory, by using an appropriate mix of local taxation and subsidies, in conjunction with other command and control instruments. However, EU regions have the incentive to free-ride, or to impose as few costs as possible on their home economy while enjoying the benefits created at the other countries' cost. So, there are formidable problems of opportunistic behavior and inefficient outcomes.

To conclude, the 20-20-20 Climate and Energy Package requires simultaneous and coordinated action. Both politically and institutionally the EU Member States are quite heterogeneous. Unless cooperation is sustained by institutions which can punish free-riding, every region will earn even higher profits by free-riding on the virtuous behavior of the remaining cooperators.
