Macroeconomic representation of the clean energy transition

Report - December 6, 2022

The European Commission has put forward a set of measures to facilitate the clean energy transition and to support the creation of the Energy Union. The energy transition is expected to make the EU energy sector even more stable and competitive and at the same time act as a key driver of EU-wide sustainable economic growth. Energy is an essential element of economic growth both directly (all economic processes require energy) and indirectly (energy availability at low cost and the use of different energy types drive innovations and promote efficiency). As the transition involves the substitution of capital for fossil energy, it requires a shift towards more up-front capital spending in return for lower operating costs. This, in turn, requires an effective market for finance for firms and households, and new business models for the delivery of energy and mobility services as well as changes in consumer lifestyles and behaviour. This report falls within the Macroeconomics of the Energy Union project and presents a summary of the main results of the analysis and the resulting policy recommendations.

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