The Energy-Environment-Economy Global Macro-Economic (E3ME) model
The Energy-Environment-Economy Macro-Econometric model (E3ME – www.e3me.com) is a computer-based model of the world’s economic and energy systems and the environment. It was originally developed through the European Commission’s research framework programmes and is now widely used in Europe and beyond for policy assessments, forecasting and research purposes.
E3ME assesses the interactions between the economy, energy and the environment. As a global model, based on the full structure of the economic national accounts, E3ME is capable of producing a broad range of economic indicators. In addition, there is range of energy and environment indicators.
E3ME as an E3 Model
Key features of the E3ME model
The E3ME model covers the entire globe in 61 regions, which comprise most major economies (including China, India, Russia, Brazil, Japan, Canada, Mexico, Indonesia, and the United States of America), the EU, at the regional level as well as at the national level (Member States plus candidate countries), and other countries’ economies separately or regionally grouped.
|Rest of Annex I
|Rest of ASEAN
|Rest of Latin America
|Rest of Africa
|Rest of OPEC
|United States of America
|Rest of World
The model covers the entire economy, into up to 69 sectors, with considerable detail of service sectors, as well as up to 43 categories of consumer expenditure.
Energy system coverage
Twenty-three different users of twelve different fuel types are included in the model.
E3ME covers fourteen types of air-borne emission (where data are available), including the six GHGs monitored under the Kyoto protocol. This in essence includes carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O) and F-gases; land-use CO2 (exogenously); and particulate matter (BC, OC, PM2.5), sulphur oxides (SOx), other nitrogen oxides (NOx) and organic compounds (OC/VOC).
The E3ME model includes thirteen types of household, including income quintiles and socioeconomic groups, such as the unemployed, inactive and retired, plus an urban/rural split.
It is built to create annual projections up until 2050 over these main model dimensions (although, theoretically, it can be used up to 2100).
What kind of questions can the model address?
E3ME can be used for both forecasting and evaluating the impacts of an input shock through a scenario-based analysis. The shock could be, for example, a change in policy or a change in economic assumptions. The analysis can be either forward-looking (ex-ante) or evaluating previous developments in an ex-post manner.
As such, E3ME is well-suited to examine questions regarding changes in policies. The
primary strength of E3ME lies in its use as a platform for the analysis of scenarios. As
E3ME is a global Energy-Economy-Environment model, it is capable of addressing such
questions as follows:
- Changes in the economy and labour market associated with changes in policy
- Impacts of changes in energy demand and changes in the composition of energy technologies
- The effect of policy on environmental indicators including emissions (consumption and production-based) and material use
What kind of answers can the model provide?
As noted, E3ME is designed to form annual projections up to 2050. Therefore, E3ME is
commonly used to compare scenario projections. The following, non-exhaustive list shows
the most common model outputs:
- GDP and the aggregate components of GDP (household expenditure, investment, government expenditure and international trade)
- Sectoral output and GVA, prices, trade and competitiveness effects
- International trade by sector, origin and destination
- Consumer prices and expenditures
- Sectoral employment, unemployment, sectoral wage rates and labour supply
- Energy demand, by sector and by fuel, energy prices
- Rebound and spill-over effects
- CO2 emissions by sector and by fuel
- Other air-borne emissions
- Material demands
Given the wide range of both economic and environmental output indicators, and the high degree of disaggregation, E3ME is capable of providing detailed projections of the impacts of policies on both the regional level as well as the sectoral level.
Recent use cases
|Wood et al. (2019)
|Historical impacts of globalisation and future impacts of climate policies on international emission transfers
|The results suggest that absolute embodied emissions will plateau at current levels or slowly return to pre-2008- crisis levels, and differences between the NDC and baseline scenarios imply that NDC policies will not result in significant carbon leakage. The share of national footprint embodied in imports, at least for countries with ambitious decarbonisation policies, will likely increase. This suggests that, despite the world-wide stabilisation of emissions transfers, addressing emissions embodied in imports will become increasingly important for reducing carbon footprints.
|Gramkow and Anger-Kraavi (2019)
|Exploring a transformation of Brazil’s economy, with a focus on manufacturing sectors, while contributing to the Paris targets
|Findings highlight that the correct mix of green stimulus can help modernise and decarbonise the Brazilian manufacturing sectors and the country’s economy grow faster (by up to 0.42% compared to baseline) while its carbon dioxide (CO2) emissions decline (by up to 14.5% in relation to baseline). Investment levels increase, thereby strengthening exports’ competitiveness and alleviating external constraints to long-term economic growth in net terms. Scaling up green fiscal stimulus in manufacturing sectors globally needs to be considered as one of the main policy measures helping with transformation to a low-carbon economy, especially in the developing world.
|Bachner et al., 2019
|Uncertainties in the economy-wide assessment of decarbonisation pathways, in the European iron and steel sector
|We show that the effects depend strongly on the technology choice, the prevailing macroeconomic states as well as regional characteristics. The underlying socioeconomic development and the climate policy trajectory, with a to date expected range of variation, seem to play a less important role. Particularly, we find that the choice of model, with its underlying macroeconomic theory, influences the sign and magnitude of macroeconomic effects and thus should be well understood by both modellers and policymakers. We emphasise that model assumptions should be transparent, results sought to be derived across a range of possible contexts, and presented together with the conditions under which they are valid. To that end, co-design and co-production in research would support its relevance.
|Spijker et al., 2019
|Integrated impacts of low-emission transitions in the Dutch livestock sector
|Findings suggest that each low-emission transition pathway has its own unique ‘footprint’ of positive and negative side-effects. This footprint is largely shaped by the combination of existing and new technologies, practices and behavioral patterns. We consider the findings relevant for climate policy and transition governance processes where there is a need to develop robust transition pathways that meet different development goals and to overcome implementation barriers for the selected low emission technologies and practices.
|Silaen et al., 2018
|Understanding the potential of bioenergy for an energy transition in Bali
|Quantitative research using the E3ME model identified economic benefits of biogas deployment, but also that increased LPG use due technological constraints of biogas could cause a potential increase of national CO2 emissions. Policy stakeholders agreed that LPG subsidies hindered the biogas development and biogas should be considered in Indonesia’s Medium-Term National Development Plan. These factors, in addition to co-benefits of biogas, should be considered while drafting the development plan.
Wood, R., Grubb, M., Anger-Kraavi, A., Pollitt, H., Rizzo, B., Alexandri, E., ... & Tukker, A. (2019). Beyond peak emission transfers: historical impacts of globalization and future impacts of climate policies on international emission transfers. Climate Policy, 1-14.
Gramkow, C., & Anger-Kraavi, A. (2019). Developing Green: A case for the Brazilian manufacturing industry. Sustainability (submitted, under review)
Bachner, G., Mayer, J., Steininger, K. W., Anger-Kraavi, A., & Smith, A. (2019). Uncertainties in the economy-wide assessment of decarbonization pathways - The case of the European iron and steel. Ecological Economics (submitted, under review)
Spijker, E., Anger-Kraavi, A., Pollitt, H., & Van de Ven, D.-J. (2019). Evaluating integrated impacts of low-emission transitions in the livestock sector, Environmental Innovation and Societal Transitions (submitted, under review)
Silaen, M., Taylor, R., Bößner, S., Anger-Kraavi, A., Chewpreecha, U., Badinotti, A., & Takama, T. (2019). Bioenergy in Bali: applying mixed-research methods to understand potential for an energy transition, Environmental Innovation and Societal Transitions (submitted, under review)