An ecological macroeconomics model: The energy transition in the EU

Abstract

The Energy Roadmap 2050 (ER2050) is committed to achieve the European Union's emissions mitigation goals by reducing energy use and a transition to renewables. The macroeconomic impacts of the Ref16 and ‘EUCO’ scenarios of this strategy have been reported to entail an absolute decoupling between GDP growth and energy use. The aim of this paper is assessing the ER2050 targets with a novel modelling methodology based on Post-Keynesian Economics, i.e. demand-led economic growth and Ecological Economics, i.e. taking into account absolute biophysical (energy availability) constrains to economic growth. Thus, this article presents the Economy module of the Integrated Assessment Model MEDEAS-Europe, combining System Dynamics and Input-Output analysis, and evaluates the ER2050 targets under different scenarios regarding primary income distribution, foreign trade, labour productivity, industrial policy and working time reduction. Our results show that GDP growth and employment creation may be halted due to energy scarcity if the ER2050 targets are met even considering great energy efficiency gains. In addition, the renewables share would increase enough to reduce the energy imports dependency, but not sufficiently to meet the emissions targets. Only a Post-Growth scenario would be able to meet the climate goals and maintain the level of employment.