ETC/WMGE Report 6/2021: Modelling the sustainability transition in between the EGD and the Next Generation EU

31 Aug 2021

Evelien Dils

The EU Green Deal, a strategy aligned with the United Nation’s 2030 Agenda and the sustainable development goals, was designed to benefit all economic actors, via cleaner air, water and soil, healthier food, and better health for current and future generations.

This report presents the results of a hybrid modelling exercise, linking Systems Thinking (ST) with a Computable General Equilibrium (CGE) model to assess the outcomes of the EU Green Deal. ST is used to identify the main indicators of the system analysed, conceptualize the interconnections existing among these indicators and explore emerging dynamics of change with the use of feedback loops. The improved systemic understanding achieved with ST informs the development of the CGE model, and the formulation of scenarios, in addition to supporting the interpretation of quantitative results.

The approach proposed is aligned with previous work on Green Economy and Green Growth, and builds on previous research done by the EEA. It provides an assessment of the social, economic and environmental outcomes of the implementation of the EU Green Deal, also in the context of the COVID-19 pandemic. As such, it contributes to policymaking by providing indications on synergies and trade-offs emerging from the implementation of green investments, supporting the creation of a roadmap toward the goal of decarbonization by 2050. The introduction of COVID-19 into the modelling exercise allows considering potential benefits arising from the transition process toward a cleaner energy system in the EU as a way forward to recover from the economic crises.