European Commission: Impact Assessment of Increased Climate and Energy Policy Ambition

Cambridge Econometrics supported the European Commission by undertaking research and modelling to assess the ground-breaking Fit for 55 climate policy package.  

Independent and rigorous modeling analysis by Cambridge Econometrics allowed stakeholders in the legislative process to have confidence that the package of measures proposed would not be detrimental to European economies and society and therefore, could be passed.  

The detailed E3ME analysis of all Member States showed that if the policy package was implemented well, it could bring socio-economic benefits by reducing European dependency on imported oil and gas while boosting investment in clean energy technologies leading to increases in employment.  

Key findings 

• Europe’s economy would benefit from further action to reduce Greenhouse Gas Emissions as set out in the Fit for 55 package 
• The measures would help to reduce Europe’s dependency on imported oil and gas 
• Implementing policy action could lead to a boost to jobs in Europe as demand for clean energy technologies displaces spending on fossil fuels 

The European Commission applied several models in its Impact Assessment to ensure the findings were robust and the E3ME results were in line with the other models.

In comparing the models, the European Commission noted that the real-world features of Cambridge Econometrics’ E3ME model which allows for unemployment and ‘slack’ in the labour market made it more suitable for assessing Europe’s economy as it emerged from the Covid pandemic.