Energy choices in Europe: the case of electricity

Résumé du document

Energy is a vital element for the economy as a whole as every sector demands its usage constantly. It is not an end-product by itself, but a pre-requisite for most of the economic activities. A sudden increase in energy prices or a disruption of supply can entail heavy economic repercussions. An example of an economic repercussion due to energy fluctuations was the breakout of the oil crisis in the mid-70s. The effects of this economic disruption has ensured that the worldwide energy policies be implemented in a disciplined manner. With this patterned implementation of policies specifically for each country, energy supply will be secured. Further, energy price fluctuations will be controlled. It has been observed that various types of data influence energy choices. This data or information could be on the availability of energy sources, security of supply, cost, ease of handling, technology, public opinion, and environmental and political issues. We will focus on the production of electricity which is expected to be the fastest growing energy sector in the world. On an estimate, it has been recorded that energy production has increased by 1,6% and will continue to rise at this alarming rate annually until 2030. A case study on electricity is particularly interesting as its production can be achieved using a large panel of easily interchangeable energy sources. For example, government and electricity producers are free to choose between numerous sources to produce energy, whereas the airlines have no choice but to use kerosene. Electricity production thus seems an accurate and appropriate indicator of economic, political and natural constraints encountered by agents in this market.

Extraits

[...] An extensive use of nuclear energy could greatly help to meet the Kyoto Protocol commitments. For instance, in the middle 90s, fossil fuel energy consumption induced the emission of 100 million tons of carbon in the atmosphere. Without nuclear energy, this figure would reach 130 million tons. In addition, nuclear energy ensures high security of supply, as Europe has some uranium on its own territory. Oil and gas reserves are mainly located in geopolitically risky areas, and controlled by unstable (Nigeria) or untrustworthy regimes (Iran). [...]

[...] However, nuclear energy does not emit CO2 in the atmosphere, a decisive advantage in times of great concern for global warming. In some countries, these issues frightened the public opinion, forcing politicians to consider alternative energy sources. In Italy, a referendum in 1987 confirmed the hostility of public opinion toward nuclear energy, leaving the country no choice but to be highly dependent on petroleum products and gas. Germany, where environmentalist lobbies are especially strong, decided to phase out nuclear power plants under the pressure of the Green Party which formed a coalition with the Social Democrats of Gerhard Schröder. [...]

[...] Germany, Denmark and Spain are pioneers is the use of wind. Electricity production from wind has been multiplied by 30 since 1992 in the European Union, but still remains very low in comparison to other sources. The European Union is largely dependent on energy imports in general, raising concerns over the security of supply. The United Kingdom is the only net exporter of energy in Europe, but the decline in the production of oil and natural gas in the North Sea could jeopardize this surplus. [...]

[...] The heterogeneity of energy choices in Europe is justified by national diversity in political, economic and geographical terms Electricity production structure and electricity prices vary a lot depending on the country European countries combine in various proportions coal, oil, natural gas, nuclear energy, hydroelectricity and renewable sources to produce electricity To be able to compare the pertinence of different electricity production structures, we shall first give an overview of the situation. Hydroelectricity is widely used in Scandinavia, Spain and Alpine countries. It accounts for more than half of the total electricity production in Sweden and Austria in Italy, and in Germany. Hydroelectricity's growth is now very limited in developed countries, as most potential is already exploited. Flat countries like Poland, the Netherlands, Malta, Cyprus and Ireland barely produce hydroelectricity. [...]

[...] Individual consumers could also be a target for this kind of policy. For example, lower VAT could apply to the most electricity-efficient domestic electrical appliances. Producers would feel a great pressure to make more efficient products. What could work for electricity could be tried for other products: we can imagine lower VAT on hybrid cars or on cars using liquefied petroleum gas. However, fiscal matters require the unanimity of the 25 members of the EU and it might be difficult to convince everybody. [...]