Economy-wide impacts of road transport electrification in the EU

While electrification of road transport is a key component of decarbonisation, the implications for the broader economy and related jobs remain underexplored. We quantify these impacts in the EU in a global Computable General Equilibrium (CGE) model, combining techno-economic assumptions about electric vehicles with deployment scenarios derived by energy models. We augment input-output tables underlying the JRC-GEM-E3 model with an explicit representation of vehicle manufacturing and upgrade the modelling of vehicle purchase and operation. Our findings illustrate that greater road transport electrification reduces the overall costs of climate mitigation, primarily driven by lower fuel costs for electric vehicles and a faster decline of battery costs. Transport electrification alters supply-chains and leads to structural shifts in employment from traditional vehicle manufacturing towards battery production, electricity supply and related investments. Finally, we expand the set of labour market indicators to cover skills and occupations, to refine the socio-economic assessments of climate policy.

Automated summary

This study investigates the impact of electrification of road transport on the economy and employment using a global Computable General Equilibrium (CGE) model. The findings show that road transport electrification reduces the costs of climate mitigation and leads to a shift in employment from traditional vehicle manufacturing to battery production and electricity supply.