Integrated Energy-Environment-Economy (E3) approach

The energy and climate systems have been influential in affecting economic thinking over time. Limits of natural resources, such as oil reserves or the climate’s carrying capacities, as well as human resources have created a debate on limiting economic growth. Moreover, the economic crises in the 1970s have challenged the validity of assuming a stable relationship between inflation and unemployment. In economic theory, this led to macroeconomic theory and modelling based on micro‐economic foundations, rejecting the Keynesian Revolution. However, the climate crisis and especially the 2008 global financial crisis, have led to further challenges to the basic assumptions of the neoclassical consensus, such as whether these micro foundations are valid, the existence of equilibrium, the separation of monetary and fiscal policy, and the economy as a closed system. The economy is an open system, integrated with those involving energy and the environment, requiring E3 approaches for robust consideration of economic management and policies.


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