The macroeconomic impact of policy measures, technological progress and societal attitude in energy transition scenarios

This paper compares the macroeconomic impacts of different decarbonization storylines until 2050 using two Computable General Equilibrium models. The modeling shocks are harmonized across models to simulate four decarbonization scenarios through three main drivers: technical development, societal attitude, and policies. The study explores the contribution of each of these drivers to the European decarbonization. The results show that the decarbonization scenarios have moderate effects on GDP; decarbonization scenarios rather result in sectoral shifts. The impact of temperature on labor productivity minimally alters expected growth levels, since larger differences in temperature between the scenarios are only expected to occur in 2100, not yet in 2050. Electricity demand is increasing in all scenarios, particularly with stronger political guidance leading to additional tax and subsidy measures to encourage the use of electricity and discourage fossil-based fuels. When society is a driving factor, it is found that circular business models result in an increase in the service industry but might have a slightly negative impact on overall growth due to stronger spillover effects linked to the manufacturing industry. Technology appears to be the only driver to facilitate decarbonization while maintaining steady economic growth.