• Energy Research

The EU decarbonization strategy foresees deep cuts in CO2 in the transport sector. Investment in infrastructure, manufacturing of new technology vehicles and production of alternative fuels induce macroeconomic changes in activity and employment for both national and regional economies. The objective of the paper is to present a newly built macroeconomic-regional model (GEM-E3-R general equilibrium model for economy, energy and environment for regions) for assessing impacts of transport sector restructuring on regional economies of the entire EU, segmented following NUTS-3 (nomenclature of territorial units of statistics). The model combines general economic equilibrium theory with location choice and New Economic Geography and implements a dynamic, fully endogenous agglomeration-dispersion mechanism for people and industries coupled with a gravity model for bilateral interregional flows. A novelty of the model is a two-layers structure: (i) the country-wide layer formulated as a global multi-sector, multi-country and multi-period computable general equilibrium (CGE) model; and (ii) the regional economy layer, which simulates impacts on regional economies, while considering country-wide economic trends as boundary conditions. The paper presents a use of the model in the assessment of regional economic effects of electrification of car mobility in Europe and wide use of domestically produced advanced biofuels.

Despite the significant volume of fiscal recovery measures announced by countries to deal with the COVID-19 crisis, most recovery plans allocate a low percentage to green recovery. We present scenarios exploring the medium- and long-term impact of the COVID-19 crisis and develop a Green Recovery scenario using three well-established global models to analyze the impact of a low-carbon focused stimulus. The results show that a Green Recovery scenario, with 1% of global GDP in fiscal support directed to mitigation measures for 3 years, could reduce global CO2 emissions by 10.5–15.5% below pre-COVID-19 projections by 2030, closing 8–11.5% of the emissions gap with cost-optimal 2°C pathways. The share of renewables in global electricity generation is projected to reach 45% in 2030, the uptake of electric vehicles would be accelerated, and energy efficiency in the buildings and industry sector would improve. However, such a temporary investment should be reinforced with sustained climate policies after 2023 to put the world on a 2°C pathway by mid-century.

Abstract Transport sector restructuring to achieve deep GHG emission cuts has attracted much attention because transportation is important for the economy and inflexible in greenhouse gas emission reduction. The aim of this paper is to simulate transition towards low carbon transportation in the European Union until 2050 and to assess the ensuing macroeconomic and sectorial impacts. Transport restructuring is dynamically simulated using a new transport-oriented version of the computable general equilibrium model GEM-E3 which is linked with the PRIMES-TREMOVE energy and transport sectors model. The analysis draws from comparing a reference scenario projection for the EU member-states up to 2050 to alternative transport policy scenarios and sensitivities which involve deep cutting of CO2 emissions. The simulations show that transport restructuring affects the economy through multiple channels, including investment in infrastructure, the purchasing and manufacturing of new technology vehicles, the production of alternative fuels, such as biofuels and electricity. The analysis identifies positive impacts of industrial activity and other sectors stemming from these activities. However, the implied costs of freight and passenger transportation are of crucial importance for the net impact on GDP and income. Should the transport sector transformation imply high unit costs of transport services, crowding out effects in the economy can offset the benefits. This implies that the technology and productivity progress assumptions can be decisive for the sign of GDP impacts. A robust conclusion is that the transport sector decarbonisation, is likely to have only small negative impacts on the EU GDP compared to business as usual.

The transport sector is growing fast in terms of energy use and accompanying greenhouse gas emissions. Integrated assessment models (IAMs) are used widely to analyze energy system transitions over a decadal time frame to help inform and evaluating international climate policy. As part of this, IAMs also explore pathways of decarbonizing the transport sector. This study quantifies the contribution of changes in activity growth, modal structure, energy intensity and fuel mix to the projected passenger transport carbon emission pathways. The Laspeyres index decomposition method is used to compare results across models and scenarios, and against historical transport trends. Broadly-speaking the models show similar trends, projecting continuous transport activity growth, reduced energy intensity and in some cases modal shift to carbon-intensive modes - similar to those observed historically in a business-as-usual scenario. In policy-induced mitigation scenarios further enhancements of energy efficiency and fuel switching is seen, showing a clear break with historical trends. Reduced activity growth and modal shift (towards less carbon-intensive modes) only have a limited contribution to emission reduction. Measures that could induce such changes could possibly complement the aggressive, technology switch required in the current scenarios to reach internationally agreed climate targets.