“Macroeconomics of the Energy Union” study reports are out with major contributions from GEM-E3 model

On 18 November the European Commission published 10 reports which fall under the scope of the “Macroeconomics of the Energy Union” study.

The aim of the study, prepared between 2019 and 2021, has been two-fold: (i) offer high-quality, policy-relevant research on the dynamic link between the energy transition and the economy (ii) improve the macroeconomic modeling tools that the Commission uses to inform its decision-making on these topics – GEM-E3 and E3ME.

We are proud members of the team that delivered this demanding and quite insightful work! We group the reports into 6 thematic areas and show key findings of each area through a series of posts, starting with:

Thematic Area #1 – Energy Transition and Economic Growth

The Energy Union, a flagship EU policy since 2015, put the energy transition at the heart of Europe’s sustainable economic growth. Raising the ambition with the EU Green Deal and climate neutrality target will push for the invention and production of new technologies that will create a novel ecosystem of processes. These will affect firm productivity, energy and resource dependence and ultimately define Europe’s technological leadership the decades to come.

In this context, it is critical to impove state-of-the-art models to represent new developments on energy and innovation-induced economic growth, including:
✅ Endogenous modeling of public R&D defining priorities, allocating resources (e.g., R&D funds) across sectors, represent targeted subsidies that increase the levels of private R&D (that is, leveraging).
✅ Use multi-factor and multi-level (regional, global) learning curves, highlighting learning-by-doing, learning-by-researching (public and private), and/or intersectoral spillovers.
✅ Represent different innovation types including radical innovation, despite its initial lack of economic competitiveness.
✅ Distinguish between human capital with general skills applicable to multiple sectors, and sector-specific skills.
✅ Improve proxies used to capture knowledge diffusion.

Access the full list of publications here: https://lnkd.in/dJRqTAs3