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.
[...] Renewable energy sources should be the fastest growing of all, with a 74% increase by 2030, accounting then for of EU's production. Wind is expected to take the lion's share because it is relatively cheap in comparison with solar energy, and widely available in comparison with geothermic energy. The growing share of renewable energies seems in line with the environmental commitments of the European Union. Natural gas grows next fastest with a 64% increase making 32% of EU's production by 2030. [...]
[...] 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. [...]
[...] Long-term prospects could on the contrary underline the risk of an increase in gas prices. No state subsidies should be allowed in a fully liberalized market because they create competition distortion. Nevertheless, renewable energy sources deserve subsidies to make them competitive, because they do not induce the same negative externalities as fossil fuels in terms of pollution. Differential rents will always exist in the electricity market, as plants produce electricity at very different costs, but all of them are necessary to ensure the equilibrium on the market. [...]
[...] 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. [...]
[...] No new investments would be needed in transmission lines or distribution systems. Some analysis have proven that the cost of achieving better energy efficiency was low in comparison with the gains induced by the consequent low electricity prices. Restrictions to liberalization should be implemented in order to promote clean energies and long-term investments. States subsidies and tax allowances could make renewable energy sources much more attractive than they currently are. A complete harmonization of norms for these sources would also strengthen confidence in them. [...]
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