Industry-Level Emission Trading in the EU
• DOE (Department of Energy 1999): The U.S. Department of Energy gives information
on GDP growth, energy demand, energy supply, and future energy prices for various
countries and world regions.
• EiE (Energy in Europe 1999): EiE provides detailed information on the future
development of the European energy system and economic growth for all individual
EU member states.
We replace the DOE projections which are given only for the whole of Europe with the
detailed baselines at the member state level as given in EiE. The model is then calibrated to
exogenous information on non-uniform growth rates in GDP, fossil fuel production, fuel
mixes in electricity generation, changes in world market energy prices, and CO2 emission
profiles (see Bohringer, Jensen and Rutherford 2000 for a detailed description of related
calibration techniques). AEEI1 factors are used to match energy demands by consumers
and production activities to fossil fuel supplies, i.e. carbon emission projections. It should
be noted, that the prospects for decoupling economic growth and carbon emissions for the
European Union are on average much more optimistic in the EiE perspective than in the
DOE view. Despite of lower average GDP growth rates between 1995 and 2010 (2.2% per
year (DOE) versus 2.5% per year (EiE)) DOE projects significantly higher carbon
emissions for the whole of the EU (3.75 billion tons of CO2 as compared to 3.3 billion tons
1 Autonomous energy efficiency improvement is due to autonomous technical progress in
addition to energy demand reductions that are caused by increases in energy prices.