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Content archived on 2024-05-21

New econometric model for environment and strategies implementation and sustainable development/endogenous technical change (NEMESIS/ETC)


Objectives and problems to be solved:
Recent results of theoretical and empirical modelling suggest that recognising the endogenous nature of technological change (ETC) modifies the impact on both environment and economy of energy-related policies. With an analysis of ETC a new perspective is given on the potential importance of environmental policy instruments. Models with ETC have only recently emerged as the appropriate way to address sustainability questions; for this reason they require major developments to allow for a proper analysis of energy-related policies and technological transitions. The project will develop new insights for technological change in different families of applied models: econometric, general equilibrium and technical-economic ones. From one part in developing and achieving an econometric model with endogenous technical progress, and in reviewing and comparing different approaches with general equilibrium models in order to develop a new method grounded on top-down and bottom-up analysis. Description of the work: The project will use different approaches in order to develop insights into how to realise technological transformation towards non carbon emitting production and growth: endogenous technical progress in econometric models, in applied general equilibrium ones, bottom up technological approach... The study will be illustrated by case studies. The NEMESIS model is built on the former E3ME model Database, which showed some weaknesses and needs improvements allowing a re-estimation of the model. Nowadays the economic mechanisms of neo-Keynesian model are no longer in compliance with the new macro-economic synthesis and ETC mechanisms must be incorporated and the supply side of the model must be adapted. The NEMESIS model will be improved for evaluating energy case studies, particularly the abatement of CO2 emissions for all agents and the electricity production sector, which represents substantial part of the CO2 emissions. Taking into account the existing work already achieved in economic-economic and applied general equilibrium models (DEMETER, FUND, RICE, etc.) and to analyse the robustness of policy recommendations, detailed comparison of results of different models will be done, especially for evaluating the impacts of clean technologies and of environmental policies. Expected results and exploitation plans: This project analyses the strategic socio-economic consequences of generic policy-induced technological change: to what extent market opportunities can be created, for e.g. in the form of the utilisation of existing niche markets or the conception of new ones? What is the improvement of competitiveness of non-carbon technologies? These questions will include a detailed assessment of current and future energy production cost targets, as well as the market size, pricing and potential sales of new environment-friendly electricity technologies, (expressed in reduction of pollutants and greenhouse gas emissions)

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EU contribution
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Ecole Centrale Paris, Grande Voie des Vignes .

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Participants (8)