In the post-Kyoto period there will be a growing need at the European Union level for concrete decisions concerning the specific implementation of policies that aim at reducing atmospheric emissions.

Overview of the GEM-E3-Elite Project

Objectives of the project

The post-Kyoto period emphasizes a growing need at the European Union level for specific decisions concerning the implementation of policies that aim at reducing atmospheric emissions. Any policy mix to be considered for implementation has to take into account a number of inter-related issues.

The policy must

identify inequalities in burden sharing and find ways to alleviate them;
take into account technological possibilities to exploit the dynamics of innovation in order to promote incentives towards the development of less carbon-intensive technologies;
take into account structural changes such as in consumption patterns;
define a realistic time-schedule for the implementation of QELROs (Quantified Emission Limitation and Reduction Objectives);
not hinder economic growth.

The objective of this project is to provide a tool for the consistent evaluation of policy measures in terms of their differential implications for individual EU countries, sectors and consumers, at the level of detail needed to support concrete policy-making. This will be accomplished by the use of an extended version of the highly successful GEM-E3 general equilibrium model which was developed on behalf of the Commission, DGXII.

Technical Approach

The project can be separated in two interrelated components involving modelling research work and policy analysis through case studies. The first component concerns model development in the areas that are in the core of the climate debate, and that are inadequately covered by current empirical approaches:

endogenous representation of dynamics of innovation and technological progress and their role in economic growth;
a consistent representation of external costs of air pollution and its feedback on the behaviour of economic agents;
engineering oriented representation of the energy system;
representation of the links between policy measures and RTD orientation.

The case studies will aim to analyse a bundle of measures involving policy instruments which

internalise externalities and take into account the overall environmental benefits,
ensure a RTD and technology prioritisation that achieve a long-term path of high economic growth in compliance with a predetermined QELRO,
support the achievement of other related policy goals (e.g. employment, tax reforms, etc.).

Each policy package, involving a QELRO and accompanying policy measures, will be evaluated in terms of a catalogue of economic, environmental and distributional criteria.

Expected Achievements

The proposed research activity will provide important quantitative information on the complex links of technical evolution, economy, energy and environment and their relation to the concerning policy fields and measures. The expected results will be based on a methodological consistent framework which enables high flexibility to the decision maker's needs.