Economy-wide impacts of road transport electrification in the EU.

While electrification of road transport is a key component of decarbonisation, the implications for the broader economy and related jobs remain underexplored. We quantify these impacts in the EU in a global Computable General Equilibrium (CGE) model, combining techno-economic assumptions about electric vehicles with deployment scenarios derived by energy models. We augment input-output tables underlying the JRC-GEM-E3 model with an explicit representation of vehicle manufacturing and upgrade the modelling of vehicle purchase and operation. Our findings illustrate that greater road transport electrification reduces the overall costs of climate mitigation, primarily driven by lower fuel costs for electric vehicles and a faster decline of battery costs. Transport electrification alters supply-chains and leads to structural shifts in employment from traditional vehicle manufacturing towards battery production, electricity supply and related investments. Finally, we expand the set of labour market indicators to cover skills and occupations, to refine the socio-economic assessments of climate policy.

Climate policy design, competitiveness and income distribution: A macro-micro assessment for 11 EU countries.

Concerns about industry competitiveness and distributional impacts can deter ambitious climate policies. Typically, these issues are studied separately, without giving much attention to the interaction between the two. Here, we explore how carbon leakage reduction measures affect distributional outcomes across households within 11 European countries by combining an economy-wide computable general equilibrium model with a household-level microsimulation model. Quantitative simulations indicate that a free allocation of emission permits to safeguard the competitive position of energy-intensive trade-exposed industries leads to impacts that are slightly more regressive than under full auctioning. We identify three channels that contribute to this effect: higher capital and labour income; lower tax revenue for compensating low-income households; and stronger consumption price increases following from higher carbon prices needed to reach the same emissions target. While these findings suggest a competitiveness-equity trade-off, the results also show that redistributing the revenues from partial permit auctioning on an equal-per-household basis still ensures that climate policy is progressive, indicating that there is room for policy to reconcile competitiveness and equity concerns. Finally, we illustrate that indexing social benefits to consumer price changes mitigates pre-revenue-recycling impact regressivity, but is insufficient to compensate vulnerable households in the absence of other complementary measures.

EU climate action through an energy poverty lens.

Carbon pricing can steer energy choices towards low-carbon fuels and foster energy conservation efforts. Simultaneously, higher fossil fuel prices may exacerbate energy poverty. A just portfolio of climate policies therefore requires a balanced instrument mix to jointly combat climate change and energy poverty. We review recent policy developments in the EU aimed at addressing energy poverty and the social implications of the climate neutrality transition. We then operationalise an affordability-based definition of energy poverty and numerically illustrate that recent EU climate policy proposals risk raising the number of energy poor when not accompanied with complementary measures, while alternative climate policy designs could lift more than 1 million households out of energy poverty through income-targeted revenue recycling schemes. While these schemes have low informational requirements and appear sufficient to avoid exacerbating energy poverty, the findings suggest that more tailored interventions are needed. Finally, we discuss how insights from behavioural economics and energy justice can help shape optimal policy packages and processes.

The global and regional air quality impacts of dietary change.

Air pollution increases cardiovascular and respiratory-disease risk, and reduces cognitive and physical performance. Food production, especially of animal products, is a major source of methane and ammonia emissions which contribute to air pollution through the formation of particulate matter and ground-level ozone. Here we show that dietary changes towards more plant-based flexitarian, vegetarian, and vegan diets could lead to meaningful reductions in air pollution with health and economic benefits. Using systems models, we estimated reductions in premature mortality of 108,000-236,000 (3-6%) globally, including 20,000-44,000 (9-21%) in Europe, 14,000-21,000 (12-18%) in North America, and 49,000-121,000 (4-10%) in Eastern Asia. We also estimated greater productivity, increasing economic output by USD 0.6-1.3 trillion (0.5-1.1%). Our findings suggest that incentivising dietary changes towards more plant-based diets could be a valuable mitigation strategy for reducing ambient air pollution and the associated health and economic impacts, especially in regions with intensive agriculture and high population density.

Global roll-out of comprehensive policy measures may aid in bridging emissions gap.

Closing the emissions gap between Nationally Determined Contributions (NDCs) and the global emissions levels needed to achieve the Paris Agreement's climate goals will require a comprehensive package of policy measures. National and sectoral policies can help fill the gap, but success stories in one country cannot be automatically replicated in other countries. They need to be adapted to the local context. Here, we develop a new Bridge scenario based on nationally relevant, short-term measures informed by interactions with country experts. These good practice policies are rolled out globally between now and 2030 and combined with carbon pricing thereafter. We implement this scenario with an ensemble of global integrated assessment models. We show that the Bridge scenario closes two-thirds of the emissions gap between NDC and 2 °C scenarios by 2030 and enables a pathway in line with the 2 °C goal when combined with the necessary long-term changes, i.e. more comprehensive pricing measures after 2030. The Bridge scenario leads to a scale-up of renewable energy (reaching 52%-88% of global electricity supply by 2050), electrification of end-uses, efficiency improvements in energy demand sectors, and enhanced afforestation and reforestation. Our analysis suggests that early action via good-practice policies is less costly than a delay in global climate cooperation.

Bridging between economy-wide activity and household-level consumption data: Matrices for European countries.

This dataset represents bridging matrices between two different data classification systems: consumption by purpose (COICOP) and products by activity (CPA). While the former classification is used in household budget and expenditure surveys, the latter represents the industry sector dimension that is typically adopted in national accounts and input-output tables. We collect input data from Eurostat on total household consumption for 35 COICOP and 63 CPA categories for the year 2015. Based on these data, we construct bridging or concordance tables for 30 European countries using recently developed matrix balancing techniques. The resulting tables enable data conversion between consumption- and production-based statistics, facilitating research that integrates macroeconomics, multi-sectoral international trade and heterogeneous agents in household-level expenditure micro-data. Although they are a necessary input in several types of research, they are often constructed on an ad hoc and region-specific basis and not shared publicly. As such, making this dataset available will be useful for computable general equilibrium and input-output models and for carbon footprint and life cycle analyses that incorporate rich consumption micro-data, for instance to shed light on distributional aspects of climate and energy policies. Furthermore, by eliminating a barrier raised by differences in statistical classifications, this dataset may foster collaboration between different research teams and may facilitate soft-linking between complementary analytical tools used for policy support.

Air quality co-benefits for human health and agriculture counterbalance costs to meet Paris Agreement pledges.

Local air quality co-benefits can provide complementary support for ambitious climate action and can enable progress on related Sustainable Development Goals. Here we show that the transformation of the energy system implied by the emission reduction pledges brought forward in the context of the Paris Agreement on climate change (Nationally Determined Contributions or NDCs) substantially reduces local air pollution across the globe. The NDCs could avoid between 71 and 99 thousand premature deaths annually in 2030 compared to a reference case, depending on the stringency of direct air pollution controls. A more ambitious 2 °C-compatible pathway raises the number of avoided premature deaths from air pollution to 178-346 thousand annually in 2030, and up to 0.7-1.5 million in the year 2050. Air quality co-benefits on morbidity, mortality, and agriculture could globally offset the costs of climate policy. An integrated policy perspective is needed to maximise benefits for climate and health.