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European and global energy and environment
The world's economies need to reduce significantly their carbon intensities during the 21st century, if the consequences of global warming are to be averted. Economic growth and development will in future need to be associated with the production of goods and services that are less energy-intensive, whilst the energy supply mix moves towards low or zero carbon-emission sources. The introduction of the EU Emissions Trading System (ETS) in Europe represents a key step towards achieving a low carbon economy. By putting a price on carbon, the EU ETS creates potentially a strong incentive for energy efficiency and investments that help cut carbon emissions. The challenge now is to ensure that the third phase of the EU ETS after 2012, develops into a credible long-term international framework for pricing carbon.
The Copenhagen Climate Change Conference, that took place in December 2009, produced only modest progress towards global and immediate action on climate change, as reflected in the agreement of the non-binding Climate Change Accord. There remains, nonetheless, a need for greater ambition that results in a political agreement that commits developed and developing countries to firm emissions targets and paves the way for the delivery of an effective, legally-binding post-2012 international agreement on climate change.
The UN Climate Change Conference, held in Cancun, Mexico in December 2010, produced a 'balanced package' of decisions dubbed the 'Cancun Agreement' that covered key elements of a future global climate deal to succeed the Kyoto Protocol after 2012. However the discussions left unresolved crucial issues of the legal status of the post-Kyoto framework, the levels for GHG reduction targets and the appropriate commitments from developed and developing countries. Key elements of the deal included:
- an agreement to peak global emissions as soon as possible and an overall 2 degree target to limit the global temperature rise
- a framework for monitoring, reporting and verification of emissions to ensure that countries were keeping to their promises to take action on emissions
- the establishment of a Green Climate Fund to help developing countries to go down the low-carbon route and adapt to climate impacts
- a framework for reducing emissions from deforestation and forest degradation with some progress on accounting rules for land use, land-use change and forestry under the Kyoto Protocol
Nonetheless, the next meeting in Durban, South Africa, in December 2011 will be an important test of the ability of developed and developing countries to sign up to a post-Kyoto framework that delivers genuine global cuts in emissions and so increases the likelihood of the 2 degree target being achieved.
Given this international policy background, there is a clear need for:
- authoritative and rigorous modelling to evaluate the impact of various policy options on economic activity and environmental emissions, both on a European and global scale
- analysis that enables policymakers and businesses to plan for the future
Tools and competence
CE specialises in the application of energy-environment-economy (E3) modelling and research on the European and global scale to support the needs of clients in business and the European policy and research community. Specifically we offer:
- a long-standing reputation for understanding the interactions between the economy, energy and the environment, based on the development and application of modelling tools for Europe and the global economy that are discussed below.
- the E3ME model, our energy-environment-economy model for Europe, intended to meet an expressed need by researchers and policy makers for a framework for analysing the implications of long-term E3 policies, especially those concerning R&D and environmental taxation and regulation. The model is also capable of addressing the short-term and medium-term economic effects as well as, more broadly, the long-term effects of such policies.
- considerable experience in using E3ME to analyse many alternative forms of environmental taxation, including carbon and energy taxes at a sectoral, national and EU level
- our ability to analyse E3 linkages extends beyond Europe with the development of E3MG, a macro-econometric, sectorally-disaggregated model of the global economy. It has been developed specifically to assess the short, medium and longer-term impacts of climate change mitigation policies on energy consumption and greenhouse gas emissions and is ideally suited for industry-level analysis, capturing the inter-industry effects arising from such policies
- an innovative treatment of technology in the E3ME and E3MG models. The models require a specification of the technical characteristics of 28 generic types of energy transformation/electricity generation technologies, assumed to be available to all regions.
The breadth of our experience and expertise in this arena, including our ability to link with other models (notably the TIPMAC project), is also illustrated by other examples of projects that we have undertaken.
See for examples of our work at the global and European levels
See also our expertise in the following related areas:
Global analysis
European sectoral analysis
UK energy and environment
For further information email:
Phil Summerton
Manager, UK Energy Modelling