GEM-E3
Source: Commission modelling inventory and knowledge management system (MIDAS)
Date of Report Generation: Thu Mar 06 2025
Dissemination: Public
© European Union, 2025
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Overview
Acronym
GEM-E3
Full title
General Equilibrium Model - Economy, Energy, Environment
Main purpose
A macro-economic model used to assess energy, climate and air quality policies.
Summary
The GEM-E3 model is a global multi-sectoral general equilibrium model. GEM-E3 covers the interactions between the economy, the energy system and the environment. The model is used to calculate macro-economic impacts such as GDP, welfare, consumption, trade, employment, sectoral output, and carbon price.
It covers all EU Member States and the rest of the world, which is divided into 19 major economies. Countries are linked through endogenous bilateral trade. The calibration of the model is based on the GTAP database and uses techno-economic inputs from sectoral models such as POTEnCIA, PRIMES, POLES, GAINS, and GLOBIOM. The model simultaneously computes the equilibrium prices of goods, services, labour, capital and tradable emission rights such that all markets are in equilibrium. It integrates micro-economic behaviour into a macro-economic framework and allows assessing the medium to long-term implications of policies. The model evaluates the emissions of carbon dioxide (CO2) and other GHG (e.g. CH4). There are three mechanisms of emission reduction: (i) substitution between fuels, and between energetic and non-energetic inputs, (ii) emission reduction due to less production and consumption, and (iii) purchasing abatement equipment.
The model can be used for policy anticipation, formulation and implementation to assess macro-economic impacts of energy, climate and air quality policies. The model has been used, among others, for the Impact Assessments of the 2030 Framework of Energy and Climate Policies, its implementation in the context of the Energy Union, the Paris Agreement, and the Clean Air Package.
Model categories
Economy
Model keywords
EnergyEnvironmentClimateGeneral equilibriumClimate policyAir Pollution
Model homepage
Ownership and Licence
Ownership
Co-ownership (EU & third parties)
Ownership details
Licence type
Non-Free Software licence
The license has one or more of the following restrictions: it prohibits creation of derivative works; it prohibits commercial use; it obliges to share the licensed or derivative works on the same conditions.
Details
Structure and approach
GEM-E3 can be used for policy anticipation, formulation and implementation.
In terms of anticipation and formulation, as applied general equilibrium model covering the interactions between the Economy, the Energy system and the Environment with high level of details, the GEM-E3 Model is well suited to assess the impact of climate, energy, and transport regulations, as well as fiscal, air quality, and labour market policies. It can simulate the welfare effects of alternative regulation regimes as well as the consequences of emission targets.
The Clean Air Programme for Europe envisages a regular update of the impact assessment analysis, to track progress towards the objectives of the Directive and to serve as input into the regular Clean Air Forum. In 2018 GEM-E3 was used to update the Impact Assessment during the implementation phase. For more information see http://ec.europa.eu/environment/air/clean_air/outlook.htm. Results featured in the First Clean Air Outlook.
One of the applications of the model includes an economic and employment impact assessment of different EU decarbonisation scenarios for 2050. This is included in the in-depth analysis accompanying the European Commission's Clean Planet for All communication of 2018. See https://ec.europa.eu/clima/policies/strategies/2050_en#tab-0-1
See https://ec.europa.eu/jrc/en/gem-e3 for latest updates.
Input and parametrization
- Input/Output tables and SAM (GTAP, Eurostat)
- Energy balances (International Energy Agency, IEA)
- Elasticity of Substitution and Armington elasticity (economic literature)
- Costs of Abatement Technology (Research Projects)
- Emission coefficients (Research Projects)
- Techno-economic inputs from sectoral models such as POTEnCIA, PRIMES, POLES, GAINS, and GLOBIOM
Main output
GEM-E3 analyzes the economic and distributional effects of environmental and economic policies for sectors, agents and regions. The output of GEM-E3 includes projections of
- input-output tables
- employment
- trade
- capital flows
- government revenues
- household consumption
- energy use
- atmospheric emissions.
The model allows the evaluation of the welfare and distributional effects of various environmental policy scenarios, including different burden sharing scenarios, environmental instruments (i.e. taxes, pollution permits or command-and-control policy) and revenue recycling scenarios.
Spatial & Temporal extent
The output has the following spatial-temporal resolution and extent:
| Parameter | Description |
|---|---|
| Spatial extent / country coverage | ALL countries of the WORLD |
| Global coverage; EU 27 Member States + UK and 18 World Regions | |
| Spatial resolution | World-regions (supranational)National |
| Country level for each of the 27 EU Member States and for 8 non-EU countries; regional resolution for the rest of the world | |
| Temporal extent | Long-term (more than 15 years) |
| Currently, typical runs go up to 2050 (but can be extended beyond if there is a need to) | |
| Temporal resolution | Multiple years |
| The model is solved in 5-year steps |
Quality & Transparency
Quality
Model uncertainties
Models are by definition affected by uncertainties (in input data, input parameters, scenario definitions, etc.). Have the model uncertainties been quantified? Are uncertainties accounted for in your simulations?
- response
- yes
- details
- Policy uncertainty is covered by running several scenarios in a what-if fashion
- url
Sensitivity analysis
Sensitivity analysis helps identifying the uncertain inputs mostly responsible for the uncertainty in the model responses. Has the model undergone sensitivity analysis?
- response
- yes
- details
- Sensitivity of output results is done on ad-hoc basis
- url
Have model results been published in peer-reviewed articles?
- response
- yes
- details
- The output published in academic papers and presented on academic conferences have been reviewed by peers. In addition, separate versions of the model are run independently by JRC and NTUA / E3M-Lab in Athens, enabling comparison of findings and investigation of differences.
- url
Has the model formally undergone scientific review by a panel of international experts?
Please note that this does not refer to the cases when model results were validated by stakeholders.
- response
- no
- details
- url
Model validation
Has model validation been done? Have model predictions been confronted with observed data (ex-post)?
- response
- yes
- details
- As the model does not aim to predict the future, we mainly validate the model through results with our peer group. In addition, elasticity parameters are based on historical data to validate partial model responses, such as reactions to changes in energy prices
- url
Transparency
To what extent do input data come from publicly available sources?
This may include sources accessible upon subscription and/or payment
- response
- Entirely based on publicly available sources
Is the full model database as such available to external users?
Whether or not it implies a specific procedure or a fee
- response
- yes
- details
- The core data, GTAP, are publicly available (if purchased) Other major inputs like IEA energy balances etc. are as well. The input-output tables for future years are published and freely available for the GECO report (from 2018 onwards).
- url
Have model results been presented in publicly available reports?
Note this excludes IA reports.
- response
- yes
- details
- documents
For details please refer to the 'peer review for model validation' documents in the bibliographic references
Have output datasets been made publicly available?
Note this could also imply a specific procedure or a fee.
- response
- no
- details
- Output usually is published in Report and academic papers. More detailed output can be published upon request
- url
Is there any user friendly interface presenting model results that is accessible to the public?
For instance: Dashboard, interactive interfaces...
- response
- no
- details
- url
Has the model been documented in a publicly available dedicated report or a manual?
Note this excludes IA reports.
- response
- yes
- details
Is there a dedicated public website where information about the model is provided?
- response
- yes
Is the model code open-source?
- response
- no
- details
Can the code be accessed upon request?
- response
- no
- details
The model’s policy relevance and intended role in the policy cycle
The model is designed to contribute to the following policy areas
- Climate action
- Employment and social affairs
- Energy
- Environment
- Taxation
- Transport
The model is designed to contribute to the following phases of the policy cycle
- Anticipation – such as foresight and horizon scanning
- Formulation – such as ex-ante Impact Assessments
- Implementation – this also includes monitoring
The model’s potential
GEM-E3 can be used for policy anticipation, formulation and implementation.
In terms of anticipation and formulation, as applied general equilibrium model covering the interactions between the Economy, the Energy system and the Environment with high level of details, the GEM-E3 Model is well suited to assess the impact of climate, energy, and transport regulations, as well as fiscal, air quality, and labour market policies. It can simulate the welfare effects of alternative regulation regimes as well as the consequences of emission targets.
The Clean Air Programme for Europe envisages a regular update of the impact assessment analysis, to track progress towards the objectives of the Directive and to serve as input into the regular Clean Air Forum. In 2018 GEM-E3 is used to update the Impact Assessment during the implementation phase. For more information see http://ec.europa.eu/environment/air/clean_air/outlook.htm. Results featured in the First Clean Air Outlook.
One of the applications of the model includes an economic and employment impact assessment of the European Commission's strategic long-term vision for greenhouse gas reductions, a document that sets the stage for the debate on the long-term climate policy in the EU.
Concerning contributions to Impact Assessments see www.gem-e3.net for latest updates.
Previous use of the model in ex-ante impact assessments of the European Commission
Use of the model in ex-ante impact assessments since July 2017.
2024SWD/2024/63 final
Impact Assessment Report Part 1 Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions Securing our future Europe's 2040 climate target and path to climate neutrality by 2050 building a sustainable, just and prosperous society
- Lead by
- CLIMA
- Run by
- E3Modelling: Energy - Economy - Environment
- Contribution role
- baseline and assessment of policy options
- Contribution details
GEM-E3 is a large scale multi-sectoral recursive dynamic computable general equilibrium (CGE) model that has been used to provide the sectoral economic assumptions as inputs for this Impact Assessment and to assess socio-economic impacts of the scenarios. The model was used to assess the impacts of the energy and climate targets on macroeconomic aggregates such as GDP, employment and sectoral output. This Impact Assessment has used mainly the European Commission’s JRC version JRC-GEM-E3, while the GEM-E3-FIT version operated by E3Modelling was used to generate exogenous assumptions on sectoral gross value added.
2024SWD/2024/63 final
Impact Assessment Report Part 1 Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions Securing our future Europe's 2040 climate target and path to climate neutrality by 2050 building a sustainable, just and prosperous society
- Lead by
- CLIMA
- Run by
- European Commission
- Contribution role
- baseline and assessment of policy options
- Contribution details
GEM-E3 is a large scale multi-sectoral recursive dynamic computable general equilibrium (CGE) model that has been used to provide the sectoral economic assumptions as inputs for this Impact Assessment and to assess socio-economic impacts of the scenarios. The model was used to assess the impacts of the energy and climate targets on macroeconomic aggregates such as GDP, employment and sectoral output. This Impact Assessment has used mainly the European Commission’s JRC version JRC-GEM-E3, while the GEM-E3-FIT version operated by E3Modelling was used to generate exogenous assumptions on sectoral gross value added.
2022SWD/2022/377 final
Impact Assessment Accompanying the document Proposal for a Regulation of the European Parliament and of the Council establishing a Union certification framework for carbon removals
- Lead by
- CLIMA
- Run by
- European Commission
- Contribution role
- baseline and assessment of policy options
- Contribution details
This impact assessment used the results from the model run for impact assessment SWD/2020/176 final regarding '2030 Climate Target Plan'
2022SWD/2022/545 final
Impact Assessment accompanying the document Proposal for a Directive of the European Parliament and of the Council on ambient air quality and cleaner air for Europe (recast)
- Lead by
- ENV
- Run by
- European Commission
- Contribution role
- baseline and assessment of policy options
- Contribution details
The model helped to assess the following impacts:
- Economic growth and employment
2021SWD/2021/643 final
Impact assessment accompanying the document Proposal for a regulation of the European Parliament and of the Council: establishing a carbon border adjustment mechanism
- Lead by
- TAXUD
- Run by
- European Commission
- Contribution role
- baseline and assessment of policy options
- Contribution details
The model helped to assess the following impacts:
- Equal treatment of products and businesses
- Equal treatment of products and businesses
- EU Exports & imports
- Investment flows & trade in services
- Non-trade barriers
- Cost of doing business
- Business' capacity to innovate
- Market share & advantages in international context
- Free movement of goods, services, capital and workers
- Competition
- Innovation for productivity/resource efficiency
- Budgetary consequences for public authorities
- Consumer's ability to benefit from the internal market or to access goods and services from outside the EU
- Prices, quality, availability or choice of consumer goods and services
- Adjustment costs in developing countries
- Goods traded with developing countries
- Economic growth and employment
- Investments and functioning of markets
- Macro-economic stability
- Impact on jobs
- Impact on jobs in specific sectors, professions, regions or countries
- Indirect effects on employment levels
- Wages, labour costs or wage setting mechanisms
- Employment, social protection and poverty impacts in non-Member States (including developing countries)
- Emission of greenhouse gases
- Economic incentives set up by market based mechanisms
- Sustainable production and consumption
- Relative prices of environmental friendly and unfriendly products
- Polution by businesses
- Environment in third countries
- Energy and fuel consumption
2021SWD/2021/623 final
Impact assessment accompanying the Proposal for a Directive of the European Parliament and of the Council: on energy efficiency (recast)
- Lead by
- ENER
- Run by
- E3Modelling: Energy - Economy - Environment
- Contribution role
- baseline and assessment of policy options
- Contribution details
The model helped to assess the following impacts:
- EU Exports & imports
- Cost of doing business
- Economic growth and employment
- Impact on jobs
- Impact on jobs in specific sectors, professions, regions or countries
- Wages, labour costs or wage setting mechanisms
2021SWD/2021/621 final
Impact assessment accompanying the Proposal for a Directive of the European Parliament and the Council: amending Directive (EU) 2018/2001 of the European Parliament and of the Council, Regulation (EU) 2018/1999 of the European Parliament and of the Council and Directive 98/70/EC of the European Parliament and of the Council as regards the promotion of energy from renewable sources, and repealing Council Directive (EU) 2015/652
- Lead by
- ENER
- Run by
- E3Modelling: Energy - Economy - Environment
- Contribution role
- baseline and assessment of policy options
- Contribution details
The model helped to assess the following impacts:
- Economic growth and employment
- Investments and functioning of markets
- Macro-economic stability
- Impact on jobs
- Impact on jobs in specific sectors, professions, regions or countries
- Indirect effects on employment levels
- Households income and at risk of poverty rates
- Inequalities and the distribution of incomes and wealth
- Access to and quality of social protection benefits
2021SWD/2021/641 final
Impact assessment accompanying the document Proposal for a Council Directive: restructuring the Union framework for the taxation of energy products and electricity (recast)
- Lead by
- TAXUD
- Run by
- European Commission
- Contribution role
- baseline and assessment of policy options
- Contribution details
The model helped to assess the following impacts:
- Equal treatment of products and businesses
- Equal treatment of products and businesses
- EU Exports & imports
- Investment flows & trade in services
- Cost of doing business
- Business' capacity to innovate
- Market share & advantages in international context
- Free movement of goods, services, capital and workers
- Competition
- Innovation for productivity/resource efficiency
- Budgetary consequences for public authorities
- Consumer's ability to benefit from the internal market or to access goods and services from outside the EU
- Prices, quality, availability or choice of consumer goods and services
- Goods traded with developing countries
- Economic growth and employment
- Investments and functioning of markets
- Macro-economic stability
- Impact on jobs
- Impact on jobs in specific sectors, professions, regions or countries
- Indirect effects on employment levels
- Wages, labour costs or wage setting mechanisms
- Employment, social protection and poverty impacts in non-Member States (including developing countries)
- Emission of greenhouse gases
- Economic incentives set up by market based mechanisms
- Emissions of acidifying, eutrophying, photochemical or harmful air pollutants
- Sustainable production and consumption
- Relative prices of environmental friendly and unfriendly products
- Polution by businesses
- Environment in third countries
- Energy intensity of the economy
- Fuel mix used in energy production
- Demand for transport
- Vehicle emissions
- Energy and fuel consumption
2021SWD/2021/613 final
Impact assessment accompanying the document Proposal for a Regulation of the European Parliament and of the Council: amending Regulation (EU) 2019/631 as regards strengthening the CO2 emission performance standards for new passenger cars and new light commercial vehicles in line with the Union's increased climate ambition
- Lead by
- CLIMA
- Run by
- E3Modelling: Energy - Economy - Environment
- Contribution role
- baseline and assessment of policy options
- Contribution details
GEM-E3 is used for macroeconomic assessment of different CO2 emission standards for vehicles levels.
2020SWD/2020/176 final
Impact Assessment accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Stepping up Europe’s 2030 climate ambition Investing in a climate-neutral future for the benefit of our people
- Lead by
- CLIMA
- Run by
- European Commission
- Contribution role
- baseline and assessment of policy options
- Contribution details
GEM-E3 is used for the assessment of the impacts of policy options on key economic variables, including GDP, sectoral output and aggregate and sectoral employment.
2020SWD/2020/176 final
Impact Assessment accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Stepping up Europe’s 2030 climate ambition Investing in a climate-neutral future for the benefit of our people
- Lead by
- CLIMA
- Run by
- E3Modelling: Energy - Economy - Environment
- Contribution role
- baseline only
- Contribution details
GEM-E3 is used for sectoral economic assumptions used as inputs for the PRIMES energy system model.
2017SWD/2017/0650 final
Impact assessment accompanying the document Proposal for a Regulation of the European Parliament and of the Council: setting emission performance standards for new passenger cars and for new light commercial vehicles as part of the Union's integrated approach to reduce CO2 emissions from light-duty vehicles and amending Regulation (EC) No 715/2007 (recast)
- Lead by
- CLIMA
- Run by
- E3Modelling: Energy - Economy - Environment
- Contribution role
- baseline and assessment of policy options
- Contribution details
The model has been used by E3MLab/ICCS to provide the macro assumptions for the Reference scenario and for the policy scenarios.
2017SWD/2017/0650 final
Impact assessment accompanying the document Proposal for a Regulation of the European Parliament and of the Council: setting emission performance standards for new passenger cars and for new light commercial vehicles as part of the Union's integrated approach to reduce CO2 emissions from light-duty vehicles and amending Regulation (EC) No 715/2007 (recast)
- Lead by
- CLIMA
- Run by
- European Commission
- Contribution role
- baseline and assessment of policy options
- Contribution details
GEM-E3 was used to assess macroeconomic impacts of target setting based on GDP per capita.