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State of liberalization of European energy markets

The European Commission has recently adopted a report on the state of liberalization of European energy markets, with particular reference to gas and electricity. The main objective of liberalizing these markets is to further integrate national energy markets, as a means to im...
The European Commission has recently adopted a report on the state of liberalization of European energy markets, with particular reference to gas and electricity. The main objective of liberalizing these markets is to further integrate national energy markets, as a means to improve security of supply, reduce costs and improve competitiveness.

The report documents the various steps and progress to date on the completion of the internal energy market. This is broken down into three phases:

- Phase 1 - the adoption of three Directives to establish a Community procedure ensuring price transparency to the final industrial consumers of gas and electricity;
- Phase 2 - the adoption of the Hydrocarbons Licensing Directive which establishes the conditions for granting and using authorizations for the prospecting, exploration and production of hydrocarbons;
- Phase 3 - the adoption of the Directive establishing common rules for the internal market in electricity and the proposal for the establishment of common rules for the internal market in natural gas (formally adopted on 11 May 1998).

The report then summarizes the situation in each Member State with regard to the liberalization of electricity and devotes a final section to accompanying and follow-up measures, such as the harmonization of rules in the fields of environment and safety which will be required to ensure fair competition. The Commission also proposes a study to examine the social consequences, in terms of employment, of the new market rules.
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