other failures that warrant intervention, and if so,whether the promotion of renewable generationis the most efficient form of intervention toaddress the problem. It then focuses on the prob-lems posed by intermittency, again assessing theproblem and analyzing the case for policy inter-vention and the most appropriate form that inter-vention might take.
EU Dependence onImported Fuels
The need to reduce dependence on importedfuels is used to justify a range of EU policies,including not only the promotion of renewables,but also the promotion of energy efficiency andthe provision by some national governments of subsidies to domestic coal production. In the pastdecade, these themes have been developed innumerous policy documents and pieces of legisla-tion, including the European Commission’s 2000Green Paper on security of supply, the 2002Regulation on State Aid in the coal sector, the2008 Energy Security and Solidarity Plan, and the2009 Renewables Directive (European Commis-sion 2000; Regulation 1407/2002; EuropeanCommission 2008a; Directive 2009/28/EC).This section therefore presents evidence onthe extent of EU import dependence and the fac-tors that have most given rise to concern withrespect to power generation: the large and grow-ing dependence on Russian gas imports and theeffect of supply interruptions in recent winters. Italso assesses the extent to which import depend-ence is a problem for the main fuels used for power generation and whether the promotion of renewable generation is the most appropriatepolicy response to any such problem.
Current and Projected Levels of EUImport Dependence
As Table 4.1 illustrates, the EU imports a largeproportion of its primary energy sources, includ-ing the main fuels used for power generation. In2006, around 80% of electricity was generatedfrom coal (29%), gas (21%), and nuclear sources(30%) (European Commission 2008b).
Imports are very significant for natural gas,which, as explained below, is the main source of concern among policy makers.The EU holds just1.6% of the world’s gas reserves and currentlyimports 58% of its natural gas demand, mainlyfrom four countries: Russia, Norway,Algeria, andNigeria.
Gas supplies 24% of total energydemand and 21% of electricity generation (Euro-pean Commission 2008b). Gas import depend-ence is set to increase, as EU indigenous produc-tion is forecast to decline rapidly in the comingdecade, from 176 million tons of oil equivalent(Mtoe) in 2010 to 131 Mtoe in 2019 (IEA 2009).
European Commission analysis forecasts netimports of natural gas increasing from 257 Mtoein 2005 (58% of total consumption) to 390 Mtoein 2020 (77% of total consumption) under abusiness-as-usual scenario, without taking intoaccount the impact of the new energy policyadopted in 2009 (see European Commission2008b, Annex 2).
EU import dependence, 2005
EU primary energydemand (Mtoe)EU primaryproduction (Mtoe)Net imports(Mtoe)Import dependence(percentage)
Oil 666 133 533 80.0%Natural gas 445 188 257 57.8%Solid fuel 320 196 127 39.7%Renewables 123 122 1 0.8%Nuclear/ uranium257 8 249 97.0%
: European Commission 2008b,
; Euratom 2008
: Mtoe = million tons of oil equivalent