Introduction:

This contribution deals with some policy aspects regarding the challenges mentioned. A very widely acknowledged strategy to overcome the difficulties is to rely on technology and energy policy to reduce greenhouse gas (GHG) emissions. In these considerations, however, sometimes important arguments are neglected. This paper constitutes an attempt to point out some of the common pitfalls, making use of data from official Austrian statistics and a modified and expanded input-output modell to assess the quantitative implications of neglecting some basic theoretical ideas. This paper deals only with technological options and does not consider any "soft" approaches to reducing emissions. This is not done because the authors don’t believe in their effectiveness, but to point out that a purely technology based policy has its drawbacks and exclusive reliance on it is not warranted. The contribution is structured in the following fashion: Following an introduction in chapter 1, chapter 2 is dedicated to a description of the commonly used method of marginal CO2 abatement cost curves. Structural weaknesses of this widespread approach are unveiled. The following chapter 3 introduces the SEPE Model, which allows for taking into account interindustrial effects of technology change and energy policy measures as well. Chapter 4 shows some empirical estimates, also of the mistakes likely to occur. Data for Austria are used in this endeavor to put some flesh on the theoretical model bones. In chapter 5 some conclusions are presented.