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Show 4 2. WHY IS PUBLIC ACTION NEEDED AND WHY AT EUROPEAN UNION LEVEL? A. The Role of Publi~ A~tion. Smoothly operating markets, competition, private initiative and enlightened self- interest should, in principle, ensure that a great deal of the RID required in the context of energy policy is carried out in a focused, efficient, decentralised and overall highly cost effective manner and therefore public intervention would not be justified. However, in many important respects energy markets are characterised by imperfections and disequilibria which make public intervention both desirable and necessary. The integration of energy in the economy is highly complex and multi-dimensional. Many indirect and yet inextricable links with the whole economic system are not apparent to market actors. This is aggravated by two other important factors, a high but uneven degree of market concentration and an unusually extensive and complex public regulation (especially with regard to utilities) which has been set up over long periods for many different reasons. The result of this is partial unawareness of market signals. Additionally, energy has major implications on important issues such as the environment, energy security, regional imbalance and overall competitiveness which are not reflected in the market place but constitute nevertheless concerns and challenges to society. It is therefore the duty of the public sector to take the necessary measures to ensure that these major concerns are duly taken into account in decision making. Future public RID support action must be viewed in this general context in order to achieve a better solution to these problems. Public support often covers the whole cycle from basic research to market implementation: research, development, demonstration, dissemination and demand stimulation by means of public relations and market promotion. Public support is particularly important in initiating each phase where it can serve as a catalyst. This is true not only for RID but also in demonstration projects and demand stimulation activities, even though the relative public contribution diminishes. B. Environmental Protection. The paramount problem here is the accumulation of further greenhouse gases related to energy production (mainly carbon dioxide) in the atmosphere and the attendant risks of global warming. The EU has already taken strong commitments on this issue by adopting the CO2 objective and is encouraging other industrialized countries to set up similar policies and measures. Furthermore, by showing the rest of the world that such a policy is practical, because it meets the objectives without major technical or economic problems, the ED could help to attain a wider international agreement on CO2 reduction. Other environmental issues on SOx and NOx emissions also take trans-boundary dimensions into consideration and are therefore better tackled at EU leveL It could be argued that in the interest of convergence all energy related environmental degradation constitutes an ED concern. |