Energy sector Special sector: –Depend on energy inputs (imported) –Strategic sector (linkages) –Non-competitive markets, high regulation Liberalization of net energy sectors (petrol, gas, electricity): Oligopoly, with cross stocks in Spanish companies (construction sector, Latin America)

Classification Primary energies: coal, petrol, gas, hydraulic, and nuclear Secondary energies: electricity (final consumption) Non-renewable: coal, petrol, gas Renewable: water, nuclear, “new energies” (solar, wind)

Evolution of energy sector Industrial revolution (19th century), petrol and electricity (20th century) Increase in consumption, less concentrated in petrol (since 1970’s) High intensity in energy consumption (petrol) and less efficiency Industry ↓ energy, households and transport ↑ Product and employment not very important, BUT it is important in imports (3/4), ↓ prices and ↑ productivity

Productive and commercial specialization Petrol dependency: 75% in 1970’s, 50% nowadays (coal, nuclear, natural gas) Self-supply: Spain (1/4), Europe (1/2), OECD (3/4) Problems: cost, quality, security

Productive efficiency Efficiency problems: very protected and regulated sector Nowadays: privatization, liberalization, new regulation Measurement of efficiency: –Real productivity (x 2 since 1985, but based on labor decrease) –Prices of energy (based on imported inputs and extreme concentrated firms): prices ↓ more than in Europe, overall in households

Petrol: “Ley de Hidrocarburos 1998” –High firm concentration (Repsol, Cepsa, BP) –High vertical integration (oil refining plants, transportation and distribution) Gas: “Gas Natural”, high prices Electricity: firm structure and state regulation –Competition activities (generation and commercialization) and non-competition (transportation and distribution) –Prices ↓ (convergence to Europe) because of state regulation rather than competition

Sector policies Problems in industrialization, caused by: –Low resources, bad quality, high cost of energy –Energy policy Coal: reduction (Plan ) Net sectors: privatization but firm concentration → new regulation (EU): –Open generation –No discriminatory nets –Consumers freedom to chose –Vertical disintegration –Domestic markets connection

Petrol and gas (“Ley de Hidrocarburos 1998”): –Firm concentration –Increase in international prices –More formal than real liberalization Electricity. –Need of regulation: irreplaceable input, economies of scale, “natural monopoly”, homogenous prices –“Ley del sector eléctrico 1997”: freedom of openness and supply (pool with marginal prices), and freedom to choose (demand) No global policy. Only in energy savings (renewable energies and Kyoto Protocol)