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

GEM-E3 is an applied general equilibrium model that covers the interactions between the Economy, the Energy system and the Environment. It is well suited to evaluate climate and energy policies, as well as fiscal issues.

general equilibriumEconomyEnergyEnvironmentclimatepoliciesfiscalEuropean



Initial contribute: 2021-12-25


Is authorship not correct? Feed back


Application-focused categoriesHuman-perspectiveDevelopment activities
Application-focused categoriesHuman-perspectiveEconomic activities
Application-focused categoriesIntegrated-perspectiveRegional scale

Detailed Description

English {{currentDetailLanguage}} English

Quoted from: 

The GEM-E3 model has been used for several Directorates General of the European Commission, as well as for national authorities. The GEM-E3 modelling groups are also partner in several research projects, and analyses based on GEM-E3 have been published widely.

GEM-E3 is a recursive dynamic computable general equilibrium model that covers the interactions between the economy, the energy system and the environment. It is especially designed to evaluate energy, climate and environmental policies. GEM-E3 can evaluate consistently the distributional and macro-economic effects of policies for the various economic sectors and agents across the countries.

The GEM-E3 model is flexible in its regional and sectoral aggregation. Typically, it represents individually the 28 European Member States as well as the OECD and the G20 countries. The model is calibrated to the latest GTAP database, which is EUROSTAT consistent for the EU Member States.

The following sectors are represented in the model:

  • Agriculture
  • Coal
  • Gas
  • Crude Oil
  • Oil
  • Ferrous metals
  • Non-ferrous  metals
  • Non-metallic minerals
  • Chemical Products
  • Paper Products
  • Electricity supply and Power
  • Transport (Air)
  • Transport (Land)
  • Transport (Water)
  • Transport equipment
  • Other Equipment Goods
  • Electric Goods
  • Consumer Goods Industries
  • Construction
  • Market Services
  • Non-Market Services

The Power sector is further split into 10 technologies:

  • Coal fired
  • Oil fired
  • Gas fired
  • CCS coal
  • CCS Gas
  • Biomass
  • Nuclear
  • PV
  • Hydro electric
  • Wind

The GEM-E3 model simultaneously computes the equilibrium in the goods and services markets, as well as in production factors (labour and capital). The economic agents optimize their objective functions (welfare for households and cost for firms) and determine separately the supply or demand of labour, capital, energy, and other goods. Market prices guarantee a global equilibrium endogenously. The competitive market equilibrium under Walras’ law also includes more detailed equilibria in energy demand/supply and emission/abatement. 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.

The production of the firms is modelled with a nested CES production function, using capital, labour, energy and intermediate goods. The model allows for different market clearing mechanisms and alternative market structures, in addition to perfect competition. The amount of capital is fixed within each period. The investment decisions of the firms in the current period affect the stock of capital in the next period. The labour market includes involuntary unemployment. Labour is immobile across national borders.

The consumers decide endogenously on their demand of goods and services using a nested extended Stone Geary utility function. In a first stage, a representative consumer for each region allocates their total expected income between total consumption of goods and services (both durables and non-durables), leisure and savings. In a second stage, the utility function distinguishes between durable (equipment) and consumable goods and services. Households obtain utility from consuming a non-durable good or service and from using a durable good above a subsistence level. The consumption of a durable good is directly linked to the consumption of non-durable good, e.g. fuel for the use of transport equipment.

The demand of goods by the consumers, firms (for intermediate consumption and investment) and the public sector constitutes the total domestic demand. Total demand is allocated between domestic and imported products, following the Armington (1969) specification. According to this specification, products are imperfect substitutes given their origin. Each region buys and imports at the prices set by the supplying regions.

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). There are three mechanisms of emission reduction explicitly specified in the model: (i) substitution between fuels and between energetic and non-energetic inputs, (ii) emission reduction due to a decline in production and consumption, and (iii) purchasing abatement equipment.

Recently, the GEM-E3 contributed to the EU's 2030 Climate and Energy Framework and the EU's preparation of the international climate negotiations at COP21 in Paris in December 2015.

The model is able to compare the economic effects of various cost-efficient climate policy instruments, such as taxes, auctioning, various forms of pollution permits and command-and-control policy in the context of climate and energy policies. It is also possible to consider various ways of revenue recycling.

GEM-E3 distinguishes between 9 categories of receipts, including indirect taxes, energy taxes, direct taxes, value added taxes, production subsidies, social security contributions, import duties, foreign transfers and government firms. Recently, the GEM-E3 model has also been used in order to analyze the Marginal Cost of Public Funds (MCPF) and its cross-border effects of tax increases in the European Union.

In 2013, the GEM-E3 model also was used to analyse the macro-economic impacts of the European Clean Air Package, as well as its (positive) feedback impacts.

Further, the GEM-E3 model has been used for energy issues like the trade and price evolution of oil and other energy sources, energy efficiency and deployment of renewables.



GEM-E3 team (2021). GEM-E3 (General Equilibrium Model for Economy - Energy - Environment), Model Item, OpenGMS,


Initial contribute : 2021-12-25



Is authorship not correct? Feed back

QR Code


{{'; ')}}



Drop the file here, orclick to upload.
Select From My Space
+ add


Cancel Submit
{{htmlJSON.Cancel}} {{htmlJSON.Submit}}
{{htmlJSON.Localizations}} + {{htmlJSON.Add}}
{{ item.label }} {{ item.value }}
{{htmlJSON.Cancel}} {{htmlJSON.Submit}}
名称 别名 {{tag}} +
系列名 版本号 目的 修改内容 创建/修改日期 作者
摘要 详细描述
{{tag}} + 添加关键字
* 时间参考系
* 空间参考系类型 * 空间参考系名称

起始日期 终止日期 进展 开发者
* 是否开源 * 访问方式 * 使用方式 开源协议 * 传输方式 * 获取地址 * 发布日期 * 发布者

编号 目的 修改内容 创建/修改日期 作者

时间分辨率 时间尺度 时间步长 时间范围 空间维度 格网类型 空间分辨率 空间尺度 空间范围
{{tag}} +
* 类型

* 名称 * 描述
示例描述 * 名称 * 类型 * 值/链接 上传

{{htmlJSON.Cancel}} {{htmlJSON.Submit}}
Title Author Date Journal Volume(Issue) Pages Links Doi Operation
{{htmlJSON.Cancel}} {{htmlJSON.Submit}}
{{htmlJSON.Add}} {{htmlJSON.Cancel}}


Authors:  {{articleUploading.authors[0]}}, {{articleUploading.authors[1]}}, {{articleUploading.authors[2]}}, et al.

Journal:   {{articleUploading.journal}}

Date:   {{}}

Page range:   {{articleUploading.pageRange}}

Link:   {{}}

DOI:   {{articleUploading.doi}}

Yes, this is it Cancel

The article {{articleUploading.title}} has been uploaded yet.

{{htmlJSON.Cancel}} {{htmlJSON.Confirm}}