The project was intended to contribute to the further development of applied general equilibrium model GEM-E3 for the European Union, a tool which had already previously been successfully deployed. The analytical goal represented within this modelling framework is to deliver an assessment of sectoral, national and international impacts associated with environmental, economic and energy policy measures in Europe. With respect to problems in the field of policy consulting, the present project made four immediately relevant improvements to the model: For one, technical progress was endogenised, i.e. firm-level R&D decision making was specifically integrated to map interdependencies with the economy´s innovation proneness and over all growth prospects. In addition, second, world-wide policy implications can now be adequately represented, something necessitated by the global characteristics of climate processes. Third, processes specific to the energy industry are now captured by a sophisticated energy systems model informed by the actual engineering framework. Fourth, and finally, static expectations of the model agents were redefined in terms of rational expectation formation.