In 2015, the European Commission launched a two-year project with the objective to improve the modelling of the interactions of European energy and climate policy within the real economy. This major project was led by Cambridge Econometrics and included E3Modelling and Trinomics as partners. In particular, the study aimed to extend two global energy-economy-environment models, to improve the treatment of 1) policy-induced technological innovation in energy production and use, and (2) the role played by private and public money and finance in the availability of funding for investment. The two models chosen represent two very different traditions in economics, so as to test the extent to which differences in assumptions about behaviour in the economy affect the assessment of the potential impact of policies: post-Keynesian macro-econometric modelling (the E3ME model) and Computable General Equilibrium modelling (GEM-E3).
The results of this two-year project have been published in ten output reports, available on the website of DG Energy’s here. These results help to improve the models used to analyse EU decarbonisation policies, leading to better-informed policy. Trinomics in particular contributed to the following three tasks, delivering:
- A review of technological and innovation-focused policy interventions and how these might impact the economies across the EU in a low-carbon future (Deliverable 2),
- A mapping exercise showing the sources of finance for clean energy investment in the EU, with implications on existing macroeconomic models (Deliverable 3), and
- A technical case study, modelling selected EU policy levers which aimed to promote clean energy finance (Case Study 4).
More information on the project can be found on our project page.