European and global energy and environment
The world's economies need to reduce significantly their carbon intensities during the 21st century, if the consequences of global warming are to be averted. Economic growth and development will in future need to be associated with the production of goods and services that are less energy-intensive, whilst the energy supply mix moves towards low or zero carbon-emission sources. The introduction of the EU Emissions Trading Scheme in Europe represents a key step towards a achieving a low carbon economy. By putting a price on carbon, the EU ETS creates a strong incentive for energy efficiency and investments that help cut carbon emissions. The challenge now for both European governments and the European Commission is to ensure that proposals announced in January 2008 for the third phase of the EU ETS after 2012 develop into a credible long-term international framework for pricing carbon. The Kyoto Protocol has set the EU a shorter-term challenge of meeting its legally binding target of reducing greenhouse gas emissions (GHGs) by 8% on 1990 levels over the 2008-12 period. The Kyoto commitment period for 2008-12 is, however, only the first step and all major countries, including the US and developing countries such as China, India and Brazil, will need to be included in the future framework for action. The Bali roadmap adopted by the UN Climate Change Conference, in December 2007, will therefore need to deliver an effective post-2012 international agreement on climate change. Given this international policy background, there is a clear need for authoritative and rigorous modelling to evaluate the impact of various policy options on economic activity and environmental emissions, both on a European and global scale, enabling policymakers and businesses to plan for the future.
Tools and competence
CE specialises in the application of energy-environment-economy (E3) modelling and research on the European and global scale to support the needs of clients in business and the European policy and research community. Specifically we offer:
- a long-standing reputation for understanding the interactions between the economy, energy and the environment, based on the development and application of modelling tools for Europe and the global economy that are discussed below.
- the E3ME model, our energy-environment-economy model for Europe, has been built by a European team under the EU JOULE/THERMIE programme as a framework for assessing energy-environment-economy issues and policies. E3ME is intended to meet an expressed need by researchers and policy makers for a framework for analysing the implications of long-term E3 policies, especially those concerning R&D and environmental taxation and regulation. The model is also capable of addressing the short-term and medium-term economic effects as well as, more broadly, the long-term effects of such policies.
- considerable experience in using E3ME to analyse many alternative forms of environmental taxation, including carbon and energy taxes at a sectoral, national and EU level. The model has also been used previously to evaluate the impacts of alternative forms of the EU ETS, including different permit allocations, and different methods of allocating permits, and also the interaction between different tax rates and emission trading schemes.
- our ability to analyse E3 linkages extends beyond Europe with the development of E3MG, a macro-econometric, sectorally-disaggregated economy-energy-environment model of the global economy. E3MG distinguishes 20 regions (including, as separate regions, China, Brazil and India). It has been developed specifically to assess the impact of climate change mitigation policies on energy consumption and greenhouse gas emissions (GHG’s) and on economic performance.
- an innovative treatment of technology in the E3ME and E3MG models. The models require a specification of the technical characteristics (investment cost for a given capacity; energy input and output characteristics, by fuel; assumptions for reduction in unit cost as 'learning' (ie investment in greater global capacity) proceeds) of 28 generic types of energy transformation/electricity generation technologies, assumed to be available to all regions.
The development and application of E3ME has been at the heart of much of our work in the European energy and environment field. More recently, however, our ability to analyse these interactions at the global level has been strengthened by the development of E3MG. The breadth of our experience and expertise in this arena, including our ability to link with other models (notably the TIPMAC project), is illustrated by the examples of projects that we have undertaken.
For further information email:
Sudhir Junankar
Manager, Energy-Environment Service
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