Economic and environmental impacts of decarbonisation through a hybrid MRIO multiplier-accelerator model

Abstract

This paper analyses the impacts of decarbonisation in three energy-intensive sectors/institutions (electricity generation, road transport, and household consumption) on four economic and environmental variables (value added, employment, energy consumption, and emissions). In our basic scenario, the EU is supposed to complete the decarbonisation of the selected sectors in 30 years, whereas in the rest of the world these sectors will be 30% decarbonised. We hypothesise that emissions and employment will fall once renewable sources of energy replace fossil fuels. Yet, in the meanwhile, massive investments are needed to build the required infrastructure. To compute the full impact, we apply a multiplier-accelerator model to a global multiregional hybrid input-output table derived from EXIOBASE3. In the EU, such a decarbonisation reduces yearly energy consumption, CO2 emissions, and employment by 22%, 19%, and 4%, respectively. Thus, additional measures are necessary to avoid global warming and absorb unemployment.