Energy-Environment-Economy Global Macro-Economic (E3ME) is a global sectoral econometric model used to analyze long-term energy and environment interactions within the global economy and to assess short and long-term impacts of climate change policy.

The model comprises the accounting framework of the economy coupled with balances for energy and material demands and environmental emission flows; detailed historical data sets; and an econometric specification of behavioral relationships in which short-term deviations move towards long-term trends.

The E3ME model embodies three core strengths:

Integrated treatment of the world’s economies, energy systems, emissions and material demands, enabling the model to capture two-way linkages and feedbacks between these components. Key environmental factors, such as greenhouse gas emissions and resource use are represented explicitly in the model using physical units where appropriate.

A high level of disaggregation, enabling detailed analysis of sectoral and country-level effects effects from a wide range of scenarios. Social impacts (including unemployment levels and distributional effects) are important model outcomes.

Its econometric specification, addressing growing concerns over conventional macroeconomic models and providing a strong empirical basis for analysis. E3ME’s specification enables the model to fully assess both short and long-term impacts. It is not limited by many of the restrictive assumptions common to Computable General Equilibrium (CGE) models.

Key questions addressed:

• What are the impacts of environmental policy on select economic and environmental indicators?

Sample data inputs:

• Demographic factors
• Economic policy
• World oil prices
• Energy policy
• Environmental policy

Sample quantitative 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
• Consumer prices and expenditures, and implied household distributional effects
• Sectoral employment, unemployment, sectoral wage rates and labour supply
• Energy demand, by sector and by fuel
• Energy prices
• CO2 emissions by sector and by fuel
• Other airborne emissions
• Material consumption (minerals and biomass)

Access the E3ME tool.

Resources:

E3ME technical manual

You can see a list of case studies online.

Related publications are listed here.