E3 Models Revisited

This article analyses the contribution of E3 models to fully understand the complex relationship between the environment, economics and the energy sector. We present a survey of the literature on these models, analyzing the assumptions, features and scope of the main kinds of methodological approaches: bottom-up, top-down and hybrid models. Since the literature on these models is vast, complex and diffuse, our aim is to present it in a simple and compact way. We also show how bottom-up (BU) models depart from top-down (TD) ones and how that approach affects their conclusions and implications. As an attempt to solve the TD-BU incompatibilities, different kinds of hybrid models are examined and their capacity to support realistic environmental policies is criticized under a microeconomic perspective.