Caspian Report - Issue: 08 - Fall 2014

Figure 12. Electricity generation by fuel type
Source: DG Energy (2014). EU Energy, Transport and GHG Emissions, Trends to 2050
4. DISCUSSION AND
CONCLUSIONS
In this paper, we have provided a
brief overview of EU energy markets.
Historically, EU countries have been
dependent on imported fossil fuels.
However, the Council of the European
Union has launched ambitious
energy policies to ensure energy security
and reduce GHG emissions. To
achieve these goals, several legally
binding regulations aimed at increasing
energy efficiency and the share of
clean and renewable energy sources
have already been enacted. But even
if these policies achieve their desired
targets, the EU will still depend on
fossil fuels to meet the energy needs
of the growing economies. In fact, it
is anticipated that fossil fuels will still
provide 63% of the EU’s total energy
consumption by 2050. Oil and coal
will become less important, while
reliance on renewable sources will
increase significantly. Nuclear energy
and natural gas will maintain their
current shares in total energy use.
Market prices (excluding taxes) of
crude oil, refined oil products and
coal were almost the same in the EU
countries, as these products are easily
traded across countries. The prices
of natural gas and electricity, on the
other hand, have been divergent, especially
in countries that are less integrated
with other markets. One of
the priorities of the European energy
policies is to create a single market
for these energy products. 3 Historically,
domestic electricity and gas
markets have usually been highly monopolistic.
Therefore, by integrating
and further liberalising markets, the
EU aims to increase competition in
the markets and thus improve energy
efficiency. It is expected that effective
unbundling (separation of networks
from activities of production and supply)
will ensure secure operation of
the networks and create incentives to
invest adequately in the energy network.
Energy transmission networks
are characterised by high investment
expenditures. However, once the required
interconnections and tie-ins
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3.
See, for example, Directives 2009/72/EC and 2009/73/EC.