ENTICE: D1.4 – Modelling research needs

Large-scale macroeconomic and integrated assessment models have been widely used in analysing policy scenarios at the intersection of trade, climate, and industry (TCI). They have been utilised to assess policy impacts, distributional effects, and transition pathways within an increasingly interconnected global economy. As climate ambitions intensify and global trade patterns evolve, the capacity of these models to adequately represent the TCI interconnections is a core issue within the modelling community. This deliverable provides a systematic assessment of the current modelling landscape with respect to this nexus, and demarcates research capabilities, limitations, and modelling challenges. This analysis focuses primarily on the Computable General Equilibrium (CGE) models and Integrated Assessment Models (IAMs), which form the backbone of quantitative analysis for trade, climate, and industry (and their interface)—as well as the bedrock of one of the key lines of evidence in IPCC assessments. By means of a series of (systematic) literature reviews and exchanges with the modelling community, it examines not only the depth of model coverage but also theoretical and structural assumptions shaping models’ response to shocks. Two core modelling dimensions, which are both central in the ENTICE project, are given particular attention: the representation of international trade and the treatment of technological progress. In addition, the review considers complementary dimensions that are relevant to the project’s activities, including international transport, material flows, sectoral granularity, and land-use impacts.