The Impact of EU Decarbonisation Strategies on Regional Economies: a Spatial Computable General Equilibrium Analysis

The European Commission's decarbonisation strategy sets ambitious targets to transform the energy system to reduce its reliance on fossil fuels and reduce greenhouse gas emissions. This thesis evaluates this long-term strategy on a regional EU NUTS 2 level, using the spatial computable general equilibrium model EUEMS. Scenarios with different ambition levels are simulated until 2050, using regionalized required investments resulting from energy-systems model PRIMES-GAINSGLOBIOM. This investment shock affects regional demand and the allocation of capital across regions. Effects on EU GDP, output and employment are small and positive, where certain regions' GDP increases up to +3% compared to the baseline. Regional wages increase but employment effects vary over sectors. Consumption decreases by up to -5% in some regions as purchasing power decreases. Overall, regions in Spain, Southern Italy, the UK and Eastern Europe benefit due to their high renewable energy potential, whereas regions with low potentials and the rest of the world pay in terms of reduced consumption and investment.