result of cooperation between the basic material suppliers andthe downstream industrial producers, in which newly developedmaterials play a considerable role. For example, power plantswith greater efficiency levels and lower primary energy sourceconsumption rates require high-performance, temperature-resis-tant steels. Alternatively, specific fuel-consumption rates in thetransport sector, for example, can be reduced by using lightmaterials in automobile construction.3.
The situation in various energy markets (coal, oil, gas,electricity) and their impact on energy-intensiveindustries
)3.1 The basic material industries
cement, steel, nonferrous metals, chemical products, glass and pulp and paper
employ fossil fuels in the form of energy as well as raw materialand they are affected by the costs of the various energy sourcesin a variety of ways. Crude oil, for instance, is used in thechemical industry as a raw material for the production of plas-tics and other petrochemical products. Meanwhile, develop-ments in the oil markets have also affected purchase prices for gas and electricity because gas prices are still linked to the priceof oil. Developments in the coal market also affect the cost of electricity for energy-intensive industries. At the same time, thesteel industry uses coal and coke as reducing agents.3.2 The static range of oil reserves, e.g. of those resourceswhich can today be profitably and technically exploited, is about40 years. It could essentially expand if further resources can beopened up economically in the future, especially non-conven-tional oil resources like oil sand. The evolution of oil prices ischaracterised by growth in consumption, particularly in Chinaand India. The effect of this situation is amplified by the OPECnations' growing power on the market, which is making diversi-fication of supply sources increasingly difficult due to unevenly distributed reserves. The regional concentration of productionin nations characterised by considerable political and economicinstability will increase uncertainty due to the incalculablenature of possible future restrictions on supply, with all their concurrent effects on price.3.3 The static range of natural gas reserves is
at approxi-mately 60 years from today's viewpoint
greater than that of oil. Natural gas is Europe's most rapidly expanding primary energy source. The EU's dependence on imports of natural gasis increasing at an even greater rate than its consumption. Indi-vidual oil and gas deposits in Member States likethe Netherlands, Norway and the United Kingdom are gradually becoming depleted, while the importation of gas
largely from a single source, Russia
increases. Rising gas prices mustbe expected in the long term and, what is more, such relianceon a single source may result in the potential for Russia to exertpolitical influence over the EU. The possibility of such a devel-opment is enhanced by naturally limited strategic reserves of gaswithin the EU.3.4 Coal reserves that may be extracted in an economically viable manner are far greater than reserves of oil and gas. Astatic range of 150 years for coal is the general assumption.Furthermore, these reserves are more widely distributedamongst the continents as well as being, on the whole, locatedin politically stable countries such as the USA or Australia. Likeother energy carriers, due to rising demand, the price of coalhas increased significantly in recent years.3.5 Electricity is a secondary form of energy that is producedmainly from coal, gas, nuclear and renewable primary energy sources and a good deal of power generation is still based uponoil in some Member States. The composition of the electricity generating mix largely determines the electricity generationcosts. Coal and nuclear based power offers a cost-effectivesource for base-load power supplies, while renewable energies inthe EU are to be developed further. Compared to other primary energy sources, the latter have so far been characterised by rather high cost, not least because external effects to a largeextent are not reflected in the price of conventional energies. Inthe case of wind power and photovoltaic power, there is low and fluctuating availability with corresponding problems for thegrids which will need to be adapted to accommodate the futuregrowth of electricity supply from renewables. Certain renewablesources are less costly than others, differing from region toregion. Photovoltaic power, for example, may be economically advantageous in sunny regions like the south of Europe, while itis not economical in Northern Europe.4.
Changing environment for energy markets
4.1 The energy markets exist in a dynamic environment, towhich assorted economic, political and social influences
theinteractions of which are complex
contribute. Industry isconfronted by a change in the conditions and costs of energy supply which results in excessive uncertainty. The growingdependency of Europe on energy imports and anticipatedfurther increases in energy prices reinforce the concerns aboutmeeting energy demand in the future. It is well recognised thatensuring secure and reliable energy supplies at affordable, stableprices is vital to economic and social development and shouldconstitute an integral part of a sound and consistent energy policy.4.2 The recent rapid changes in the economic environmentin Europe and worldwide require the energy sector to developnew concepts and policies to respond better to the security requirements of energy supply. While in the past security of energy supplies has traditionally been considered primarily theresponsibility of the MS governments, the current status of theEuropean energy market requires market forces to play acomplimentary role. In a liberalised market, security and compe-titiveness come at a cost. To achieve long-term security of supply the common European energy policy becomes an issueof key strategic importance (
).31.3.2009C 77/90 Official Journal of the European Union
) For exampleBP StatisticalReview of World Energy June 2007.(
) Opinion TEN/312
Towards a common energy policy
CESE 236/2008 fin.