The EXIOMOD model: assessing economic and environmental impact

The energy transition and the circular economy have a global impact on our economy, as is evidenced by shifts in employment. One example of this, is that mining jobs around the world are expected to disappear. On the other hand, there are likely to be additional jobs in the recycling industry. If there is no proper estimate of the effects of these transitions, public authorities cannot determine whether adjustments need to be made during the process.

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In order to be able to analyse such impacts accurately, detailed data are required on the energy technologies being used. The more detail in the data, the better we can measure the impact of the energy transition. The EXIOMOD model contains these data and is able to calculate the economic and environmental effects of intended measures.

It is very important that the calculations provide stable and transparent outcomes. Every change (such as tax increases, shifts in consumption behaviour or adapted production processes) has an impact on the economy. All of this information needs to be clearly analysed. That’s why we developed the EXIOMOD model, which can test and interpret a great deal of public and transparent data. With the model, we help national and European public authorities to make independent and well-founded predictions. TNO is therefore able to accurately determine the economic impact of the energy transition.

The EXIOMOD model has predictive power

EXIOMOD is a macro-economic model that predicts the effects of public authority measures and shifts in consumer behaviour (see infographic). These can be effects on the economy, such as employment and revenue growth per sector or environmental impact.  This is an extraordinarily comprehensive model, covering 200 products and 163 sectors. This allows the dependency between sectors to be included in an impact analysis. The model take 44 countries into its measurements. The other countries have been merged into a number of rest-of-the-world regions. The model can also predict the impact of a measure on the competitiveness of the Netherlands or Europe.

One of the strengths of this model lies partly in the underlying database: EXIOBASE. The data in EXIOMOD is made up of verifiable statistics from public authorities and organisations worldwide. Due to the high level of detail and the linked environmental data (emissions, water use, material use, land use, etc.), a broad impact study can be carried out. Another strength of EXIOMOD is its flexibility. Depending on the case for which the impact is being calculated, modules of the model can be switched on or off. For example, should price effects be included or not? 

EXIOMOD in practice

With the EXIOMOD model, we’ve been advising European and national public authorities since 2007. For example, we’ve advised the Dutch government on the following question: “To what extent do the quantitative objectives set out in the Government-wide Programme for a Circular Economy and the transition agendas contribute to the achievement of the climate objectives?” We calculated the effects of the programme and the five transition agendas in terms of greenhouse gas emissions. The Dutch climate objectives are based on a 49% reduction in greenhouse gases by 2030 and 85-90% by 2050, as compared to 1990.

Our study showed that the implementation of the measures in the programme and the transition agendas could lead to a reduction of 7.7 Mt of emissions by 2030 and 13.3 Mt by 2050. By way of comparison, 221 Mt of emissions were released in 1990. These kinds of studies provide public authorities with insights into the expected contribution to the climate objectives, given the planned measures. This also provides immediate insights into whether current measures are sufficient or if additional interventions are needed in order to achieve the set objectives.

Information and data

The energy transition and the circular economy are having a global impact on our economy. For a thorough impact study, the quality and detail of the data used is very important. An impact analysis of the energy transition, for example, requires detailed data from the current production structure for as many energy technologies as possible. What is the ‘list of ingredients’ needed to generate one extra euro of revenue through wind energy technology?

With more detail on this ‘ingredients list’, we can also provide the customer with greater detail when looking at the impact of the energy transition on dependent sectors. Of course, for the transition to a circular economy, it’s important that enough information is available on the use of critical materials, scarce metals, waste, recycling and sectors that enable the optimal use of goods.

In addition to sufficient data, it is also important that calculations are carried out by a model that provides stable and transparent outcomes. A small change to the model – such as an increase in taxes, a shift in consumption behaviour or changes to the production process – should lead to explainable shifts in the economy. The information and data used by the model must be clearly analysable. Through this, a modelling exercise can build bridges between the knowledge of all individuals involved in an EXIOMOD session.

Using the macro-economic EXIOMOD model, we help national and European public authorities to make well-founded predictions in an independent and objective manner, such as in the field of the energy transition or the transition to a circular economy.

The model in brief

EXIOMOD is a macro-economic model that predicts the long-term effects of public authority measures and shifts in consumer behaviour. These can be effects on the economy, such as employment and growth of revenue per sector, but environmental impacts can also be calculated. This is a model with 200 products and 163 sectors, which makes it highly suited to taking the dependencies between sectors into account in an impact analysis.

Additionally, it’s a global model in which 44 countries are included, with other countries merged into a number of rest-of-the-world regions. Detailed trade data between regions ensure that the model can also predict the impact of a measure on the competitiveness of the Netherlands or Europe.

The strength of this model lies partly in the underlying database: EXIOBASE. The data in EXIOMOD is based on official and publicly verifiable statistics from public authorities and organisations around the world. Due to the high level of detail and the linked environmental data (emissions, water use, materials use, land use) for the many sectors, a broad impact study can be carried out. Another strength is the flexibility of the model. Depending on the case for which the impact is being calculated, modules of the model can be switched on or off. For example, should price effects be included or not? 

Applied in practice

The EXIOMOD model has been advising European and national public authorities since 2007. One good example of this is the calculation of the effects of the Government-wide Programme for a Circular Economy and the five transition agendas on greenhouse gas emissions. Dutch climate objectives are based on a 49% reduction in greenhouse gases by 2030 and 85-90% by 2050, as compared to 1990. The central question of this project was: “To what extent do the quantitative objectives of the Government-wide Programme for a Circular Economy and the transition agendas contribute to the achievement of the climate objectives?” An example of a quantitative objective from the programme is the complete recycling of asphalt in the Netherlands.

This study has shown that implementing the measures in the programme and the transition agendas could lead to a reduction of 7.7 Mt of emissions by 2030 and 13.3 Mt by 2050. These kinds of studies provide public authorities with insights into the expected contribution to the climate objectives, given the planned measures. This also provides immediate insights into whether current measures are sufficient or if additional interventions are needed in order to achieve the set objectives.

Want to know more or need help?

Get in touch with Hettie Boonman.

Contact
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