This work is aimed to illustrate the potentiality of the multi-region NEEDS-TIMES modelling platform, in the economic evaluation of the environmental damages due to air pollution. In particular the effects of external costs on the least-cost optimised energy system configuration were analysed in a national case study with the NEEDS-TIMES Italy model, considering the externalities related to local and global air pollutants (NOx, SO2, VOC, particulates and GHGs). Different scenarios were compared to emphasise the role of external costs in the achievement of strategic environmental targets. The main results obtained are discussed, focusing on the changes in energy fuel mix as well as in local air pollutants and GHG emissions, highlighting the main conclusions in terms of policy strategies.