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Deliverable 3.4

Filed in Deliverables

Report on competitiveness, trade, and industrial implications of the INDCs and 2°C /1.5°C mitigation pathways

This deliverable presents an analysis of trade and competitiveness indicators at the sectoral level focused on energy intensive sectors in Europe, with particular focus on interactions between climate policies compliant with the Paris Agreement long-term goals and various measures supporting industrial competitiveness.

The analysis of decarbonisation scenarios takes into account policy options to address
competitiveness concerns as well as industrial policies in a climate policy context, including those focusing on technological progress and diffusion as well as international cooperation in the form of climate clubs. The first part of the analysis relies on a recursive dynamic multi-region and multi-sector CGE model enhanced with import driven technology spillovers, considering three decarbonisation elements: energy efficiency improvements, the deployment of electricity as the main source of energy, and the decarbonisation of the power generation system. These elements vary in intensity for each decarbonisation scenario reflecting the level of ambition in curbing emissions by 2050. All indicators are calculated for three decarbonisation scenarios and results are presented at the European level as well as by countries for seven industries including a brief analysis of industrial policies in a climate policy context. In the second part of this report (last chapter), the analysis based on CGE modelling is
complemented by the results of DSGE model simulations with endogenous technological change.

Six scenarios are considered with different climate policy settings (equal global effort, diversified global effort) and variants on the availability of low-carbon R&D investment options (no R&D, only private R&D, private R&D with public support).

Published: 21st August 2019
Author: R. Parrado et al. 2019