Climate Action

Economic analysis

Just as the best available science grounds the goals of EU climate policies, the best available technological and economic evidence is needed to shape these policies.

DG Climate Action uses a wide range of mathematical models, tools and methods to evaluate the potential economic, social and environmental consequences of its policy proposals (impact assessment).

EU Reference Scenario

The EU Reference Scenario is a projection of economic activity and energy, transport and emissions trends in the EU and its Member States, assuming current policies and trends.

It describes, in a detailed and consistent way, a possible future path our economy can take, given certain assumptions.

Such assumptions are made – on the basis of expert judgment, other modelling exercises and scientific peer review – about

  • macroeconomic trends
  • fossil fuel import prices
  • technological development.

Because the Reference Scenario assumes current policies are continued, it can be used as a benchmark to assess the impacts of policy changes.

The most recent published version is the EU Reference Scenario 2020, which was used as the baseline scenario on which specific policy scenarios and variants used to assess options informing the policy initiatives in the European Green Deal package adopted by the European Commission in July 2021 have been developed.

Economic modelling

Economic modelling can be used to assess what different targets mean or what consequences policy other changes have. It can also analyse a pathway towards a long-term objectives and thus help inform strategic decisions on policy.

Such an analysis was carried out for instance for the policy scenarios for Delivering the European Green Deal (July 2021), the EU Climate Target Plan impact assessment (September 2020), or the In-depth analysis of the EU Long-Term Strategy (November 2018).

Modelling tools for EU analysis

The EU reference scenario and impact assessment for the 2030 framework are based on a suite of mathematical models, which cover:

  • all greenhouse gas emissions
  • greenhouse gas removals
  • possible ways to cut emissions.

The models are linked with each other to ensure consistency in the building of scenarios (see illustration below).