Energy and the Economy in Europe

Europe’s energy landscape is characterized by a great heterogeneity due to differences in terms of population, economy, energy resources (availability of different energy sources) and differing policies in favor or against specific energy sources. Over the decades, the European energy mix has undergone important transformations. The EU set an energy policy framework based on three pillars (security of supply, competitiveness and sustainability) with the goal to address three different priorities: competitiveness (affordable prices), security (of energy supply) and sustainability (clean energy). These three pillars appear to pursue contradictory goals, especially in the short term, but they are seen as converging in the longer term. This chapter aims to analyze how these different objectives have been key drivers of the European energy policy and economics. To illustrate this, the authors also present five case studies: the United Kingdom, Italy, France, Germany and Poland. Lastly, the chapter presents the “European Green Deal”, whose ultimate goal is to reach carbon-neutrality by 2050. The chapter analyzes how a climate-neutrality goal requires a substantial transformation of the EU economy, which comes with some internal and external frictions.