The first version of the E3ME model was built by an international European team under a succession of European Commission research projects, which were completed in 1999. The model was built to meet the expressed need of researchers and policy makers for a quantitative framework to analyse the impacts of Energy-Environment-Economy (E3) policies. It covered 17 western European countries and 28 sectors.
E3ME was designed from the outset to address the short- and medium-term economic effects of such policies, as well as long-term effects. An ‘endogenous’ treatment of technology (meaning one that responds to policy) was a core feature of the model. The basic input-output system and underlying Keynesian properties remain unchanged to this day.
In 2001 an update of the E3ME industry output, product and investment classifications brought the model into compliance with the European System of Accounts, ESA95. This led to a significant disaggregation of the services sector which has been maintained ever since and is central to much of our labour market work.
Further projects between 2005 and 2010 allowed the expansion of E3ME to cover 33 European countries, including all the current EU Member States (except for Croatia, which was added later). The materials sub-model, which is often used in our circular economy work, was also added in this period.
Following the global financial crisis in 2008, it became clear that a European coverage was no longer sufficient. At the same time, the Copenhagen climate summit highlighted the need for a global coverage of climate policy. In the period 2010-2015, E3ME was therefore developed into a global model, incorporating features of the previous E3MG model. The expanded model included 53 global regions, which has since been expanded further. The model’s trade equations were also expanded so that the model could be used to assess trade policy.
This period also saw the first integration of the FTT model of technology diffusion. The original power sector model has since been complemented by similar tools for the road transport, household heating and steel sectors; all of which are fully integrated to the model code. The model’s time horizon was also extended to 2050 to allow for the assessment of longer-term decarbonisation scenarios.
Since 2015, the team at Cambridge Econometrics has continued to develop E3ME, notably providing a complete overhaul to the model’s technology indicators as part of the Monroe research project. The latest model updates are described in the developments page.