Macroeconomic Climate Modelling

As part of the whole-of-Government approach to address the actions outlined in the Government’s Climate Action Plan, the Department of Finance is working with other government Departments, agencies, and other stakeholders in a co-ordinated manner to achieve the targeted reductions in overall greenhouse gas emissions by 2030, and reach net-zero emissions by no later than 2050.

Currently, the Department of Finance is engaged in a Joint Research Programme (JRP), with the Economic and Social Research Institute (ESRI) and the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation, to further develop and use the Institute’s I3E (Ireland, Environment, Energy and Economy) computable general equilibrium model, to advance our macroeconomic and fiscal analysis of climate change.

The ESRI’s I3E model reproduces the structure of the Irish economy in order to allow simulations which provide results that include: emissions, economic growth, employment and household impacts, among other metrics.

The aim of the JRP is to have the I3E model sufficiently developed and linked in with energy system, transport and other models so to have robust estimates detailing the Macro-Economic impacts of the Low carbon transition over the medium-to-long term.

At a European level, Ireland is an active participant in OECD's Inclusive Forum on Carbon Mitigation Approaches (IFCMA), and at a wider international level the Minister and Department of Finance official are active participants in the Coalition of Finance Ministers for Climate Action. These engagements at a European and wider international level include, sharing expertise and learning from international best practice in the area of climate macroeconomic and fiscal analysis.

Key publications:

2024

• ESRI’s I3E intertemporal computable general equilibrium (CGE) model: The I3E Model - ESRI

2023

• Department of Finance Economic Insights (Spring 2023, paper 1), ‘A Conscious Decoupling: the relationship between economic activity and greenhouse gas emissions in Ireland’: gov - Economic insights - Spring 2023 (www.gov.ie)

2021

• Department of Finance funded ESRI working paper entitled: The impacts of electric vehicles uptake and heat pump installation on the Irish economy (esri.ie)

2020

ESRI’s I3E intertemporal computable general equilibrium (CGE) model Technical documentation of I3E model, Version 3 - ESRI

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