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Modelling the European Union Sustainability Transition: A Soft-Linking Approach

Author

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  • Andrea M. Bassi

    (KnowlEdge Srl, Consulting Company, 21057 Olgiate Olona, Italy
    International Institute for Sustainable Development (IISD), 1219 Châtelaine Geneva, Switzerland)

  • Valeria Costantini

    (Department of Economics, Roma Tre University, 00145 Rome, Italy
    SEEDS interuniversity research centre, Department of Economics and Management, University of Ferrara, 44121 Ferrara, Italy)

  • Elena Paglialunga

    (SEEDS interuniversity research centre, Department of Economics and Management, University of Ferrara, 44121 Ferrara, Italy
    Department of Economics, Society and Politics, University of Urbino Carlo Bò, 61029 Urbino, Italy)

Abstract

The European Green Deal (EGD) is the most ambitious decarbonisation strategy currently envisaged, with a complex mix of different instruments aiming at improving the sustainability of the development patterns of the European Union in the next 30 years. The intrinsic complexity brings key open questions on the cost and effectiveness of the strategy. In this paper we propose a novel methodological approach to soft-linking two modelling tools, a systems thinking (ST) and a computable general equilibrium (CGE) model, in order to provide a broader ex-ante policy evaluation process. We use ST to highlight the main economic feedback loops the EGD strategy might trigger. We then quantify these loops with a scenario analysis developed in a dynamic CGE framework. Our main finding is that such a soft-linking approach allows discovery of multiple channels and spillover effects across policy instruments that might help improve the policy mix design. Specifically, positive spillovers arise from the adoption of a revenue recycling mechanism that ensures strong support for the development and diffusion of clean energy technologies. Such spillover effects benefit not only the European Union (EU) market but also non-EU countries via trade-based technology transfer, with a net positive effect in terms of global emissions reduction.

Suggested Citation

  • Andrea M. Bassi & Valeria Costantini & Elena Paglialunga, 2021. "Modelling the European Union Sustainability Transition: A Soft-Linking Approach," Sustainability, MDPI, vol. 13(11), pages 1-24, June.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:11:p:6303-:d:567623
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    2. Azrudin Husika & Nurin Zecevic & Ilham Numic & Ejub Dzaferovic, 2022. "Scenario Analysis of a Coal Reduction Share in the Power Generation in Bosnia and Herzegovina until 2050," Sustainability, MDPI, vol. 14(21), pages 1-22, October.

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