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General Equilibrium Model - Economy, Energy, Environment

EconomyEnergyEnvironmentClimateGeneral equilibriumClimate policyAir Pollution


EconomyEnergyEnvironmentClimateGeneral equilibriumClimate policyAir Pollution

main purpose

A macro-economic model used to assess energy, climate and air quality policies.


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 type


Co-ownership (EU & third parties)
The ownership is shared with the institutions that developed the model and the JRC, European Commission: a) Institute of Communication and Computer Systems - National Technical University of Athens (ICCS/NTUA); b) CES, Centre for Economic Studies, Katholieke Universiteit Leuven c) DG JRC, European Commission (C6) which has developed various modules for GEM-E3, as well as extended and updated the supporting databases (incl. GTAP).


Licence type:
Non-Free Software licence


details on model 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 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

See for latest updates.

model inputs

  • 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

model outputs

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.

model spatial-temporal resolution and extent

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