Electric vehicles (EVs) are considered alternatives to internal combustion engines due to their energy efficiency and contribution to CO2 mitigation. The adoption of EVs depends on consumer preferences, including cost, social status and driving habits, although it is agreed that current and expected costs play a major role. We use a partial equilibrium model that minimizes total energy system costs to assess whether EVs can be a cost-effective option for the consumers of each EU27 member state up to 2050, focusing on the impact of different vehicle investment costs and CO2 mitigation targets. We found that for an EU-wide greenhouse gas emission reduction cap of 40% and 70% by 2050 vis-à-vis 1990 emissions, battery electric vehicles (BEVs) are cost-effective in the EU only by 2030 and only if their costs are 30% lower than currently expected. At the EU level, vehicle costs and the capability to deliver both short- and long-distance mobility are the main drivers of BEV deployment. Other drivers include each state’s national mobility patterns and the cost-effectiveness of alternative mitigation options, both in the transport sector, such as plug-in hybrid electric vehicles (PHEVs) or biofuels, and in other sectors, such as renewable electricity.

CGE (computable general equilibrium) and bottom-up models each have unique strengths and weakness in evaluating energy and climate policies. This paper describes the development of an integrated technological, economic modeling platform (HYBTEP), built through the soft-link between the bottom-up TIMES (The Integrated MARKAL-EFOM system) and the CGE GEM-E3 models. HYBTEP combines cost minimizing energy technology choices with macroeconomic responses, which is essential for energy-climate policy assessment. HYBTEP advances on other hybrid tools by assuming 'full-form' models, integrating detailed and extensive technology data with disaggregated economic structure, and 'full-link', i.e., covering all economic sectors. Using Portugal as a case study, we examine three scenarios: (i) the current energy-climate policy, (ii) a CO2 tax, and (iii) renewable energy subsidy, with the objective of assessing the advantages of HYBTEP vis-à-vis bottom-up approach. Results show that the economic framework in HYBTEP partially offsets the increase or decrease in energy costs from the policy scenarios, while TIMES is very sensitive to energy services-price elasticities, setting a wide range of results. HYBTEP allows the computation of the economic impacts of policies in a technological detailed environment. The hybrid platform increases transparency of policy analysis by making explicit the mechanisms through which energy demand evolves, resulting in high confidence for decision-making. © 2014 Elsevier Ltd.

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