Contemporary macroeconomic models often fail to account for the interdependence between trade and climate policies. This stems from data gaps and an insufficient consideration of the role of developing countries or supply chains. As a result, policymakers face the challenge of designing policies whose actual impact on the environment, biodiversity, and natural resources remains not fully understood. The effectiveness of the EU’s climate strategy and the resilience of European industry within global value chains depend on understanding these linkages. 

In response to these gaps, the “ENhanced understanding of Trade Impacts on Climate, industries, and the Environment” (ENTICE) initiative was launched – a research project under the Horizon Europe program, whose objective is: 

• analysis of the complex interrelationships between trade, climate, and industrial policy 

• the development of a new theoretical framework and advanced modeling tools that will provide a better understanding of the impact of trade on the climate and the environment. 

To achieve this, the team combines established macroeconomic modeling with modern trade theories and a detailed analysis of empirical data, including by improving the accuracy of the GTAP database. The consortium’s work focuses on analyzing the interactions between trade and industrial policies and sustainable development goals. 

The project will result in a comprehensive set of analytical tools (CGE, macroeconometric, and sectoral models) and an expanded knowledge base on the impact of trade on emissions and resources. 

Within the consortium, the Reform Institute is responsible for conducting a qualitative analysis of the links between trade, climate, and industrial policies, which serves as the foundation for formulating research questions in quantitative modeling. The Institute’s experts are also preparing a case study on how the Polish public perceives the impact of trade on the economy and the environment. 

All of these efforts provide policymakers with the reliable evidence needed to design trade policies that are consistent with climate goals. Thanks to the consortium’s work, in collaboration with the Reform Institute, the debate on the future of global trade can be grounded in hard data, which supports the development of a modern, low-carbon, and competitive industry in Poland and across the European Union. 

The ENTICE consortium, led by E3-Modelling AE (E3M), consists of 16 leading universities, research institutes, SMEs, and think tanks specializing in macroeconomics, trade, climate change, policy modeling, labor economics, material flows, and sustainable development, operating in Europe and beyond. 

The ENTICE project has received funding from the European Union’s Horizon Europe program under grant agreement No. 101184775.