General Equilibrium Model for Economy - Energy - Environment (GEM-E3)

GEM-E3 is a recursive, dynamic, computable, general-equilibrium model that examines interactions between the economy, the energy system, and the environment at the regional and global levels. The model is especially capable of evaluating climate and energy policies and fiscal issues.

This tool is included in the Development Impacts Assessment (DIA) Toolkit from the LEDS Global Partnership.

Approach

The GEM-E3 model simultaneously computes the equilibrium prices of goods, services, labor and capital. The economic agents optimize their objective functions and determine separately supply and demand. Market prices guarantee a global equilibrium endogenously. The structural features of the energy/environment system and the policy-oriented instruments (e.g. taxation) have a considerable level of detail. The geographical regions are linked through bilateral trade.

When to Use This Tool

This tool is most useful for development impacts assessments focused on:

Social

Economic

Environmental

Learn more about the topics for assessing the impacts of low-emission development strategies (LEDS).

Key Outputs

The equilibrium prices of goods, services, labor and capital that simultaneously clear all markets under the Walras law, and the optimum balance for energy demand/supply and emission/abatement. The model setup includes the energy-related and non-energy related emissions of carbon dioxide (CO2), other GHG such as methane (CH4), nitrous oxide (N20) sulfur hexafluoride (SF6), hydrofluorocarbon (HFC), and perfluorocarbon (PFC).

How to Use This Tool

Training Available
Documentation and manual provided; recommended training on Computable General Equilibrium (CGE) and economic modeling approaches.

Level of Expertise
Advanced

Key Inputs

Energy and economic data. There are two versions of GEM-E3: GEM-E3 Europe and GEM-E3 World. GEM-E3 World is based on the Global Trade Analysis Project (GTAP) 7 database (base year 2004). GEM-E3 Europe is based on EUROSTAT data.

Case Studies

Examples of how General Equilibrium Model for Economy - Energy - Environment (GEM-E3) has helped people assessing the impacts of low-emission development strategies in countries and regions:

Case studies of European Union are available at: http://ipts.jrc.ec.europa.eu/activities/energy-and-transport/gem-e3/publications.cfm.

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