This paper deals with an experience of cooperative research carried out in the context of EU Sixth Framework Programme’s Integrated Project New Energy Externalities Developments for Sustainability (NEEDS, 2004–2008), and in particular in the research stream 2a ‘Modelling internalisation strategies including scenario building’, co-ordinated by the IMAA, CNR. The main objective of this work is to analyse scenarios with generated partial equilibrium technology rich energy models of 29 countries (EU-25 States plus Iceland, Norway, Romania, Switzerland), integrated into a Pan-European model, capable of analysing the impacts of different policies and price mechanisms, and also evaluating them at technology level both at the country level and from an EU-wide perspective. All these models are characterised by a multi-period structure (base-year: 2000, last milestone year: 2050) and will include, in the Pan-European model, the most important life-cycle emissions, materials, and costs analysed by other NEEDS research streams (life cycle assessment and ExternE). This paper describes the current status of the work carried out in research stream 2a, including the basic methodological assumptions and scenario generation.