There is increasing interest in the economics of climate change to inform policy on a) long-term targets, b) the costs of inaction, and c) the costs and benefits of adaptation. The objectives of this project were to advance knowledge across all three areas, i.e. the full economic costs of climate change. To this end, various tasks were performed. First, consistent climate change and socio-economic scenarios were identified and developed. Second, by using bottom-up modelling the ‘costs of inaction’ as well as the costs and benefits of adaptation was quantified for these scenarios in the EU and other major negotiator countries, e.g. the US and China. Third, mitigation costs and benefits were updated with respect to medium and long-term GHG emission reduction targets. To bring all the information together policy relevant output, including information on physical and economic effects, was provided. The part of ZEW included the development of the computable general equilibrium model PACE in order to integrate endogenous technological change. For this purpose, knowledge flows were identified and capitalized. Endogenous technological change was incorporated into the model where technology externalities are taken into account.