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Energy Policies of IEA Countries: Portugal 2000 Review Summary

This report provides an overview of Portugal's energy policies and market trends as assessed by the International Energy Agency (IEA) in 1999.

Summary

• Energy Consumption and Imports: Portugal's energy consumption has grown rapidly but remains low intensity. The country is highly dependent on energy imports, mainly oil. I
• Policy Objectives: Portugal aims to liberalize markets, secure energy supply, improve efficiency, and mitigate environmental issues.
• Market Liberalization: Progress has been made in electricity and oil sectors, but competition remains limited.
• Renewables: Natural gas has been successfully diversified, renewable energy is low, and efficiency programs are ongoing. J

Key Recommendations

1. Stimulate Competition: In energy sector and Iberian natural gas and electricity markets.
2. Internalize External Costs: Reforms in tax system to better reflect energy costs.
3. Enhance Coordination: Across ministries for better policy coherence.
4. Improve Energy Efficiency: New programs focusing on cost-effective measures.
5. Develop Renewables: New Energy Programme to encourage cost reductions.

Annex Overview

• Energy Balances: Detailed tables on supply, demand, and key indicators.
• Shared Goals: Framework for IEA members to create stable energy conditions. C

Energy Policies of IEA Countries: Portugal 2000 Review Summary

The report reviews Portugal's energy policies in 1999, assessing progress under the IEA's Shared Goals. It covers policy trends, market developments, efficiency measures, renewable energy, environment, oil, gas, electricity, and technology R&D.

I. Introduction

• Context: Portugal's GDP growth outpaces energy consumption due to liberalization. Energy policy objectives include sustainable growth, security of supply, efficiency, diversification, and cost reduction.
• Structure: Review basis on questionnaires, visits, and official responses. Organized into sections covering policy, market trends, efficiency, environment, oil, gas, electricity, renewables, and R&D.

II. Energy Policy and Market Trends

Background

• Economic Context: GDP growth slowed in early 1990s; Portugal joined EU in 1986. Privatization reduced state control.
• Energy Goals: Reduce oil dependence, improve efficiency, and environmental performance.
• Key Measures: Implemented through the 1994 Energy Programme; focus on rational energy use, renewable promotion, and market liberalization.

Policy Implementation

• Liberalization Progress: Rapid partial privatization of Petrogal and EDP. Created GALP to manage oil and gas assets; privatization aims for market competition.
• Excise Tax: Rightfully reformed in 1994 to reflect supply-demand, removed price ceilings on gasoline and diesel.
• Coordination Challenges: Cross-ministry coordination needed for policy coherence and efficient decision-making.
• Market Structure: Portugal's state and companies with state ownership need clear arm’s-length relations; ongoing efforts to reduce barriers to competition.

III. Energy Efficiency and Environmental Policy

Energy Intensity

• Efficiency Policies: SIURE program funded energy audits and efficiency investments; expected to decline by 2000.
• Industry Measures: RGCE regulations require energy savings plans. EDP Group projects show progress in co-generation and heat recovery.

Environmental Impact

• CO₂ Emissions: Rapid growth from fossil fuels remains a concern; Portugal projects significant increases requiring more stringent climate policies.
• Other Pollutants: Sulfur emissions decreasing, but challenges with urban ozone and water treatment.

IV. Oil

Supply and Consumption

• Growth Trends: Oil consumption increases, especially in transport; share in total energy use is still high.
• Sector-Specific Details: High dependence on imports; ability to import from Middle East concerned.

Economic Impact

• Market Competition: Successful liberalization efforts, but price ceilings on gasoline and diesel remain.
• Recommendations: Continue enhancing competition in oil sector; phase out remaining price controls.

V. Natural Gas

Market Development

• Supply Infrastructure: Imports from Algeria via pipeline; significant investments planned for LNG terminal and storage.
• Regulatory Framework: Derogations allow delayed market opening until 2008; legal unbundling is advocated.

Recommendations

• Competition: Clearer schedules for market opening; regulated access to infrastructure.
• Environmental: Consider carbon taxes or ETS to reflect true costs; promote gas use for decarbonization.

VI. Electricity

Demand and Supply Trends

• Market Structure: Dual system (public vs. independent) yielding mixed competition results; EDP dominant.
• Technical Infrastructure: Investments needed to handle growing demand and trading across Iberian grid.

Recommendations

• Enhance Competition: New Expansion Plans should facilitate independent system development.
• Cross-Border Trade: Remove bottlenecks; enable consortia for SMEs to access competitive markets.

VII. Renewable Energy Sources

Production and Promotion

• Current Levels: Very low contribution from sources like geothermal and biomass; significant growth needed.
• R&D Focus: National grid system support projects; wave power expansion in Azores.

Recommendations

• Develop Strategy: Improve access to renewables; introduce competition to drive down costs.

VIII. Energy Technology, Research and Development

Public R&D Investment

• Funding Levels: Low public R&D; INETI focused on renewable energy and efficiency.

Recommendations

• National Strategy: Align public R&D with policy goals; encourage private sector involvement.

IX. Annex

• Data Tables: Energy balances by fuel and sector for Portugal from 1973 onward.
• Shared Goals: Presented IEA's framework emphasizing sustainable, diverse, efficient, and flexible energy supply.

Summary

I. Introduction

This review assesses Portugal's progress in energy policy since its last IEA review, noting GDP growth and energy consumption patterns. Goals focus on sustainable development, market liberalization, security of supply, environmental improvement, and efficient adjustment.

II. Energy Policy and Market Trends

Portugal aims to liberalize energy markets while ensuring supply diversity and security. Key measures include electricity sector liberalization, promoting natural gas, energy efficiency programs, and renewable support. Challenges remain in fully implementing reforms and balancing economic growth with environmental constraints.

III. Energy Efficiency and Environmental Policy

Efforts to improve energy efficiency have been ongoing through funding mechanisms like SIURE. Environmental policy faces challenges in reducing emissions, especially CO₂, with targets under the Kyoto Protocol requiring more stringent measures.

IV. Oil

Progress in oil sector liberalization is noted, but competition may not be effective enough. The government maintains price ceilings on gasoline and diesel despite market competition, drawing consumer protection arguments.

V. Natural Gas

Natural gas import diversification has been successful; plans for increased infrastructure may enhance security. Recommendations emphasize moving toward competition, unbundling, and phasing out market distortions.

VI. Electricity

The electricity market remains dominated by EDP despite liberalization attempts. Competition effectiveness is mixed, suggesting the need for further reforms to enable efficient market operations.

VII. Renewable Energy Sources

Renewable energy contributes significantly to power generation, especially from non-hydro sources. Support mechanisms include funding, buy-back tariffs, and R&D initiatives aimed at cost reduction.

VIII. Energy Technology, Research and Development

Energy R&D funding is among the lowest in IEA countries, though national institutions like INETI continue work. Strategic alignment of public R&D with market deployment could improve technology uptake.

IX. Annex: Energy Balances

Contains detailed statistical data on energy production, consumption, imports, CO₂ emissions, and growth rates, showing Portugal's position within IEA and tracking changes over years.