The Global Dimension of EU Energy Policy

Abstract

The European Union (EU) energy policy has essentially been driven by domestic European concerns, to increase energy efficiency and reduce carbon emissions, and to raise self‐sufficiency and reduce import dependence. Concerns about global issues have been subdued. Costs are hardly mentioned, nor the competitiveness of European industry, nor the trade relations with the immediate neighbourhood, North Africa, the Middle East and Russia. Even concerns for social issues, such as the redistributive effect of energy costs and taxes, are not mentioned. The justification was that external oil and natural gas supplies are unreliable and increasingly expensive. Instead, world market energy prices have fallen. Climate concerns are essentially a European matter. Consequently, EU energy policy has become a burden for industrial competitiveness. Support for wind and, especially, solar power has reached levels where the implicit price of CO₂ not emitted is up to one hundred times the traded Emission Trading System (ETS) price. The policy provides the EU with the world’s most expensive electricity without corresponding reliability, at a huge social cost.