Prospects for a Sustainable Energy Policy in the European Union

Abstract

The European Union's Fifth Environmental Action Programme has designated the energy sector as one of the five sectors particularly crucial on the path 'Towards Sustainability'. Current energy trends are clearly unsustainable. Not only are energy activities implied as major culprits in numerous environmental problems, including acid rain and the greenhouse effect; the wastefulness of the system (due to inefficiencies in power stations, in industrial processes, buildings and domestic appliances) is also sub-optimal in economic terms. There are a range of opportunities for improving efficiencies and reducing environmental impact, both through technological solutions and behavioural changes. However, a number of barriers need to be overcome to realise these opportunities. Some of these are caused by institutional and regulatory structures, others by market failures. Clearly, some major changes are required, challenging in particular the supply-side orientation of the energy industry and requiring a better internalisation of external costs. However, as the European Commission has acknowledged, sustainable energy development is very challenging in a situation with abundant fossil fuel supplies at low cost. This paper examines energy policy developments at EU level and in five member states (Germany, UK, France, Italy and Spain), focusing on a number of sustainability indictors (CO2 emissions, energy efficiency and renewable energies). The aim is to identify the main constraints to, as well as facilitating factors for their improvement. While there are differences between the five countries, some general observations can be made. The paper will show that while there has been much rhetoric about sustainable development and energy, and some small steps in the right direction are being taken, there is no evidence of a real shift towards a more sustainable energy policy. Concern about short-term economic costs and the disproportional influence of industrial lobby groups are major obstacles, which under the current economic climate seem unlikely to change.