EGEM consists of an econometric model of energy demand, integrated into an international macroeconomic model (GEM: Global Econometric Model). GEM has been developed and maintained jointly by the London Business School and the National Institute for Economic and Social Research (NIESR). Energy sector equations were estimated for total fossil fuel energy consumption, which is then divided into three shares for coal, gas and oil, as functions of energy prices, GDP, a time trend and other determinants. In each case cointegration techniques were used to establish the long-term equilibrium relationships. Error correction models (ECMs) were then estimated, using the residual from the long-run relationship in a dynamic form, with the coefficient on the residuals representing the rate of adjustment towards the cointegrating equilibrium. This specification has the advantage of long-term stability together with rich dynamic structure.