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"Decarbonisation is the reduction of carbon dioxide emissions using low carbon power sources, lowering output of greenhouse gasses into the atmosphere. This is essential to meet global temperature standards set by international climate agreements. To limit global warming to 1.5°C, hence avoiding the worst-case scenarios predicted by climate science, the world economy must rapidly reduce its emissions and reach climate neutrality within the next three decades. This will not be an easy journey. Shifting away from carbon-intensive production will require a historic transformation of the structure of our economies. Written by a team of academics linked to the European think tank Bruegel, The Macroeconomics of Decarbonisation provides a guide to the macroeconomic fundamentals of decarbonisation. It identifies the major economic transformations, both over the long- and short-run, and the roadblocks requiring policy intervention. It proposes a macroeconomic policy agenda for decarbonisation to achieve the climate goals of the international community."

"Decarbonisation and digitalisation are reshaping the European energy system, which will become more decentralised and interconnected with other sectors. Cities have the opportunity to be the key drivers of decarbonisation, but this will require the implementation of a new bottom-up governance system. This paper outlines a four-step mechanism in order to achieve decarbonisation at city level.oing local: empowering cities to lead EU decarbonisation"

"This report presents the results of the work carried out at ETC/WMGE on Green economy transition: Macroeconomic analytical framework in 2020 and 2021. The main aim was to provide the arguments for adopting a macro-level perspective to the green economy transition and to the European Green Deal (EGD). Some analytical results presented in this report provided inputs to the process leading to the EEA report Reflecting on green growth. Creating a resilient economy (EEA 2021)."

"Even in the early days of COVID-19, the European Union signalled its commitment to make its post-pandemic recovery green. The disruption caused by the pandemic would require significant rebuilding of the economy, offering an opportunity to accelerate green investment in the context of the European Green Deal. But pursuing a green recovery is not as straightforward as it might seem. Complex trade-offs must be negotiated between the need for short-term stimulus and the need to address the long-term challenge posed by global warming.

To support policymakers in this difficult endeavour, Bruegel launched in 2020 the Bruegel Green Recovery Group, an initiative supported by the European Climate Foundation. Its aim was to be a platform for dialogue between high-level EU policymakers and academics on green recovery, in Europe and beyond. This Blueprint compiles some of the work of prominent voices of the Group, on issues that will touch the lives of all Europeans."

"Economic growth has historically been the main driver of rising greenhouse gas (GHG) emissions. To achieve steep emission reductions, the world would have to either decouple global GHG emissions from gross domestic product (GDP) at an unprecedented pace or face deep cuts to GDP. The so-called ‘green growth' literature is optimistic that suitable policies and technology can enable such fast decoupling, while ‘degrowth' proponents dismiss this and argue that the global economy must be scaled down, and that systemic change and redistribution is necessary to accomplish this. We use the so-called Kaya identity to offer a simple quantitative assessment of the gap between the historic performance in reducing the emission intensity of GDP and what is required for green growth, i.e., the basis of ongoing disagreement. We then review the literature on both degrowth and green growth and discuss their most important arguments and proposals. Degrowth authors are right to point out the considerable gap between current climate mitigation efforts and what is needed, as well as the various technological uncertainties and risks such as rebound effects. However, the often radical degrowth proposals also suffer from many uncertainties and risks. Most importantly, it is very unlikely that alternative welfare conceptions can convince a critical mass of countries to go along with a degrowth agenda. Governments should therefore instead focus on mobilizing the necessary investments, pricing carbon emissions, and encouraging innovation and behavioral change."

"In 2022, overall European Union industrial employment and output increased above 2021 levels, despite rocketing energy prices. However, output declined from energy-intensive industries including basic metals, chemicals, non-metallic minerals and paper, for which energy costs represent a much bigger share of production costs than for less energy-intensive manufacturing. Energy prices are likely to remain above historic levels for the foreseeable future.

In its industrial strategy response to this context, the EU must ask first whether the energy-intensive parts of the value chain should be outsourced permanently. Conditional on the answer being no, the second question is how to reduce energy prices to ensure the competitiveness of the energy-intensive productions stages that remain in the EU.

First, the EU could bridge the high energy price period with unconditional subsidies, which seems to be the preferred strategy currently. This will avoid irreversible large-scale relocation abroad but is expensive, does not help to drive down energy prices and poses risks of fragmentation within the EU. It will only succeed if internationally competitive energy supplies are made available quickly.

Second, the EU could support decarbonised production processes built on large-scale deployment of domestic renewables, grid interconnectors and storage. This would accelerate the green transition and reduce clean-tech prices worldwide. However, EU taxpayers would bear the cost of new technologies, without any guarantee of solving the current cost-competitiveness issue.

Third, the EU could facilitate imports of energy-intensive products, while helping EU industry move to higher value-added parts of the value chain. Subsidies could be given directly to industrial sectors that have not become structurally uncompetitive, while bringing down energy demand and thus energy prices. However, this strategy would result in temporarily higher unemployment and factory closures in energy-intensive industries, would need to accommodate concerns over excessive reliance on imports and would need to be engineered to address carbon leakage.

Policymakers should implement a mix of these policies. The EU should subsidise existing energy-intensive industries only in clearly justified cases, while deciding which energy-intensive products can be left to international market forces. By choosing which decarbonisation investments should be supported in Europe, the EU can combine industrial competitiveness and environmental sustainability."

"Green objectives have reshaped public policy worldwide since the signing in 2015 of the Paris Agreement to limit global warming. Climate policy has moved from being one policy among many to an objective embedded in public policies at every level, including energy, industrial, fiscal, trade, development and foreign policies. However, a clear outcome from this policy shift is yet to be seen, with emissions still rising and climate impacts intensifying. There is also backlash against greening in a charged geopolitical environment.

Nevertheless, the chapters in this volume, written by a range of experts worldwide, show that in many countries and policy areas, green objectives are still driving fundamental changes and many lessons have been learned. The goals of reducing emissions and enhancing economic and societal resilience to climate change will persist as climate impacts become more evident, and as the green transition produces successes at city, regional and national levels. In this context, this Bruegel Blueprint offers a fresh intellectual framework for understanding how the green transition is shaping cross-sectoral impacts across the globe."