Community Research and Development Information Service - CORDIS

An energy-environment-economy model for Europe

The energy-environment-economy model for Europe (E3ME) is a sectoral model, representing the economy in 31 industrial sectors. Its main purpose is to provide a framework for evaluating different economic and energy policies at a desegregated level. Short-term and medium-term economic effects as well as long-term effects of such policies can be investigated.

The idea of the development of the E3ME model was to combine the features of an annual short- and medium-term sectoral model, estimated by formal econometric methods, with those of a long-term model, providing analysis of the movement towards the long-term equilibrium for key E3 indicators in response to policy changes. Work completed under this project developed from the MEGEVE-E3ME projects in the JOULE II Programme.

The project was split up along several lines. Firstly, long-term relationships were estimated with short-term dynamic adjustment, using econometric methods. Secondly, work took place to put technical innovation and substitution into a new framework, to improve the treatment of the responses to new economic conditions imposed by technical innovations. Thirdly, the modelling of trade flows was developed to allow for the formation of the European single market; trade of Member States is modelled through flows of goods and services into and out of a single European network. Finally, research on energy demand and fuel substitution was linked with atmospheric emissions of carbon dioxide and other pollutants.

The final E3ME is a detailed model of 31 sectors, including the main energy carriers to model energy-environment-economy interactions, which can be estimated and solved for 14 European regions or countries chosen for the project; this has since been extended to 19 regions to cope with the accession of the new Member States, plus Norway and Switzerland. The model permits a full simulation of the effects on the EU macro-economy of policies and changes in behaviour of sectors and agents, both at the regional and sectoral levels. The model allows in particular for the quantification of the respective economic impact of taxes and tradable emissions permits in terms of reduced carbon dioxide emissions, therefore contributing to an evaluation of policies to reduce anthropogenic emissions of greenhouse gases in Europe by 60% over the next 50 years.

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Covent Garden
CB1 2HS Cambridge
United Kingdom
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