Why E3?

The research at 4CMR is centred on interdisciplinary exploration of the links between energy, environmental and economic (E3) systems and policies, building on decades of experience creating and applying E3 models. We take this approach because we believe it is only the way forward to identifying policies that tackle environmental challenges such as climate change while maintaining a vibrant economy and allowing for sustainable growth. Our empirical studies suggest several features of the policy landscape in regard to climate change:

1. There are uncertainties in regards to climate change, but the evidence to hand suggests that at least initial policies are needed in the short-term (by 2020) to reduce greenhouse gas emissions;

2. This timeline for effective policies means nations cannot afford to waste time on partial solutions that do not take into account side effects both beneficial, such as reductions in air pollution, and damaging, such as carbon leakage;

3. Modern economies are significant contributors to the cycles of material and energy flow in the environment, and so climate change policies must reflect the role of national and international government in managing these economies;

4. Therefore, effective, efficient and equitable solutions must address the interconnections between energy, environmental and economic processes, and joined-up policies must reflect these interconnections;

5. An integrated and interdisciplinary approach to analysing E3 systems is the only way to ensure that climate change policies reflect the full impacts of policies on the goal of decarbonising the global economy, and to demonstrate that solutions to climate change and other threats to sustainability can be consistent with a sound economy.

From these five claims, we have built a programme of research that is at heart macroeconomic and focused on social welfare and equity. Many decisions by the world’s actors are made on the basis of microeconomic concerns, but balancing these concerns to achieve true sustainability is the role of macroeconomic assessments. This approach allows us to consider not only the impact of energy, environmental and economic policies on the risks of climate change, but the equity with which risks, benefits and costs are spread across a society. The result is a better understanding of the overall social welfare created by these policies.