Abstract
Completion of the single energy market has lagged behind integration in other areas. This is not because energy market integration has failed to make any progress–-a common misperception–-but because in energy the EU faces three challenges that have grown greater over the years. These challenges are for Europe to contain its energy costs so that it can remain internationally competitive, especially in relation to the US and its shale gas revolution; to maintain security of energy supply at a time of political instability among Middle East suppliers and of hostility with Russia; and to sustain its strong commitment to energy decarbon-isation in the hope of leading the way to an effective international climate agreement. The new leaders of the European Council and the European Commission seek to give the EU the new dimension of an ‘energy union’. To give substance to this rhetorical label, the EU will need to keep completion of the internal energy market as its main instrument. This will involve exploiting market forces where possible, and allowing only careful state intervention to achieve specific goals for renewable energy, capacity back-up, energy efficiency and infrastructure.
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