Energy sector in Portugal

Portugal is a country characterized by a small primary energy production, deriving from non-existent fossil energy resources and no nuclear energy production. Primary energy production is entirely associated with renewable energies. Portugal is one of the few advanced economies for which renewable energy is the only form of energy produced domestically. The most important share it is made by the” Combustible renewables and waste”, followed by the share of hydro power plants with an average share of 20%, the quantity is not the same every year due to its dependence on the annual amount of rain. This thing determines the of coal for electricity since Portugal closed its last coal mine in 1994. In the beginning of the sixties, the share of solid fuels represented around 20% of primary energy production in Portugal, but they disappeared in the last decade while renewable energies like solar and wind energy have increased their importance

About 54% of consumed energy comes from oil, 22% from electricity, and 15% from renewable energy, mainly in the form of biomass. Transport and industry are the most important energy-consuming sectors, accounting for a 62% share in total final energy consumption in 2009. Energy consumption by the road-transport sector increased strongly in the 1990s due to the steady growth of traffic. This, however, changed in the 2000s as the total number of vehicles and distance travelled per vehicle stagnated. Energy used for transportation purposes has then remained relatively stable since 2005. 

All of Portugal’s natural gas is imported, mainly from Algeria (via a pipeline that transits through Spain). In addition, some liquefied natural gas (LNG) is shipped from Nigeria. The electricity sector is the largest consumer of natural gas, accounting for 43% of total consumption in 2008. Industry consumed 32% of the total volume in the same year, while the commercial and residential sectors consumed 11%. Over the last decade, Portugal has made significant efforts to deregulate its electricity sector. Both distribution and generation markets have witnessed important changes

This structural situation naturally leads to a high level of energy dependence, which is a feature also shown by other EU15 economies. Nevertheless, such high energy dependence does not pose immediate concerns about energy security as there is evidence on the diversification of foreign energy suppliers. In what concerns energy consumption patterns, the general picture is not much different from that observed in other European countries, with industry and transport representing the bulk of total energy consumption. The largest difference regarding the energy consumption bundles of the residential and industry sectors is the still small role played by gas. Energy intensity in Portugal has recorded an ascending trend until the nineties, followed by a period of relative stabilization and then a decline in the latest years of the sample. Over the same period, the energy intensity in the EU15 showed a steady and significant declining trend. The comparison with other countries reveals that Portugal records a relatively high energy intensity, which is broad based in terms of sectors. Such underlying structural conditions, together with international high and volatile energy prices, will continue to stand as determinants of the potential growth of the Portuguese economy in the future.

In April 2010, Portugal approved a new plan for the energy sector. The National Energy Strategy (Estratégia Nacional para a Energia, or ENE 2020) updated the 2005 plan and established an agenda intended to increase competition, promote economic growth, and reduce Portugal’s dependency on foreign supplies of energy. In particular, it envisages the decentralisation of energy production, the promotion of competition, the consolidation of MIBEL, the creation of an Iberian Common Natural-Gas Market (MIBGAS), the regulation of the national oil system, and the upgrading of the energy-storage infrastructure. As part of ENE 2020, a number of targets were established for the Portuguese energy sector, which are to be achieved by 2020. They include reducing the country’s dependency on foreign energy supplies, increasing the share of final energy produced from renewable sources, developing the industrial cluster related to energy efficiency and consolidating that for renewable energy to boost economic development and foster job creation, and achieving Portugal’s GHG emission-reduction targets, in line with its EU commitments.

Gabriel Stoica

[artigo de opinião produzido no âmbito da unidade curricular “Economia Portuguesa e Europeia” do 3º ano do curso de Economia (1º ciclo) da EEG/UMinho]