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Economic Assessment of Climate, Energy and Air Quality Policies in the EU with the GEM-E3 model: An overview

This chapter illustrates how the GEM-E3 CGE model is used for impact assessment in support of European policy in areas of the climate change mitigation policies, climate change impacts, energy issues and air quality. The presented analyses on climate change mitigation include an assessment of the Copenhagen Accord (COP15), and the Intended Nationally Determined Contributions discussed in the context of the COP21 in 2015 in Paris. Further, the model is used to assess the macro-economic costs of a policy aiming to reduce the level of air pollutants, and shows that the positive feedback effects are more important than the costs of the policy. For the climate impacts, the results point to categories and regions with the largest potential to avoid negative effects of the climate change: in the EU, more than half of the potential GDP loss could be avoided by preventing negative outcomes in the human health category. The discussion on energy production and use includes two applications relevant to energy policy: illustration that the EU can gain from early climate action through triggering technological progress in energy technology, and quantification of the impact of changes in electricity, gas and oil prices on the EU economy.