GEM-E3 Model

The GEM-E3 model (General Equilibrium Model - Economy, Energy, Environment) is a global multi-sectoral general equilibrium model. GEM-E3 covers the interactions between the economy, the energy system and the environment. The model is used to calculate macro-economic impacts such as GDP, welfare, consumption, trade, employment, sectoral output, and carbon price.

It covers all EU Member States and the rest of the world, which is divided into 19 major economies. Countries are linked through endogenous bilateral trade. The calibration of the model is based on the GTAP database and uses techno-economic inputs from sectoral models such as POTEnCIA, PRIMES, POLES, GAINS, and GLOBIOM. The model simultaneously computes the equilibrium prices of goods, services, labour, capital and tradable emission rights such that all markets are in equilibrium. It integrates micro-economic behaviour into a macro-economic framework and allows assessing the medium to long-term implications of policies. The model evaluates the emissions of carbon dioxide (CO2) and other GHG (e.g. CH4). There are three mechanisms of emission reduction: (i) substitution between fuels, and between energetic and non-energetic inputs, (ii) emission reduction due to less production and consumption, and (iii) purchasing abatement equipment.

The model can be used for policy anticipation, formulation and implementation to assess macro-economic impacts of energy, climate and air quality policies. The model has been used, among others, for the Impact Assessments of the 2030 Framework of Energy and Climate Policies, its implementation in the context of the Energy Union, the Paris Agreement, and the Clean Air Package.