Panagiotis Karkatsoulis, Panagiotis Fragkos, Nikos Kouvaritakis, Leonidas Paroussos and Pantelis Capros, (2014), "Reference scenario with GEM-E3", SIMPATIC working paper no. 21, Grant Agreement no. 290597
In the context of the SIMPATIC project, E3M-Lab has the specific task of studying endogenous growth and innovation arising from policies and measures related to Greenhouse Gas (GHG) emission abatement. In order to assess the short and long-term consequences of alternative climate, energy and technological innovation policies for Europe, a comprehensive picture of future tendencies of the European economic and energy system has to be consistently elaborated and integrated in the Reference scenario, which provides the basis for evaluating all other scenarios and policy alternatives (considered within the SIMPATIC project) in terms of economic activity, sectoral output, competitiveness, employment and welfare implications.
In particular, in order to construct the Reference projection, GEME3-RD has incorporated demographic and macro-economic assumptions consistent with major studies and publications of international organizations and institutes [4, 6, 7, 8, 9, 18] (including the OECD economic outlooks), the updated projections with regard to the financial constraints and the recovery of European countries from the recent economic crisis as published by DG-ECFIN [5], bottom-up assessment of the most important energy and climate policies for Europe [3, 14] and other parts of the world [13, 15, 17], combined with extrapolation of recent trends and expert judgments (e.g. for clean energy technological learning). Furthermore, the Reference energy system projections for the EU-28 region replicate the evolution of the main energy and emissions variables as projected by the Reference scenario developed by the technologically-rich PRIMES energy system model (which is well-established and extensively used for benchmark EC studies [3, 12]).
The Reference scenario naturally takes a very cautious view with regard to future developments and especially with regard to future energy and climate policies, R&D expenditures and deployment of low and zero carbon energy technologies in all parts of the world. In this it follows the well-accepted practice of using the Reference scenario as the benchmark against which alternative policy scenarios can be compared in order to derive analytical conclusions. Thus, the Reference scenario is not a “forecast” of the global economic-energy-climate nexus for the period 2015 to 2050, but rather a coherent, realistic and policy relevant projection based on past behaviors, consistent socioeconomic projections and bottom-up policy assessments that can reveal the most important macro-economic, energy and GHG emissions trends in the horizon to 2050.
The new enhanced version of the GEME3-RD model with bottom-up representation of the energy, power generation and transport sectors and endogenous learning mechanisms for clean energy technologies (both learning by doing and learning by R&D) has been used for the development of the Reference scenario. The enhanced version of GEME3-RD is described in detail in [10], while the properties of the model are evaluated in a series of diagnostic shock simulations in [11].
The remainder of the report is structured as follows: Section two describes the demographic assumptions and the main macro-economic projections incorporated in the SIMPATIC Reference scenario. It also provides an analysis of the structural changes projected for the EU-28 economy in the period 2010-2050. Section three introduces the main climate policies assumed for the GEME3-RD model regions and their implications for regional and global carbon emissions by 2050. In section four, the report describes the Reference projections for the evolution of the energy system, the restructuring of power generation and the penetration of low and zero carbon technologies. Section five describes the evolution of the clean energy producing sectors in the Reference scenario in the regions explicitly identified in the GEME3-RD model and the role of Europe in the global production and trade of clean energy technologies. Section six concludes.
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