IEA commends Portugal on effective implementation of energy policy but cautions that further challenges remain

“Portugal continues to make good progress in developing and strengthening energy policy”, said Nobuo Tanaka, Executive Director of the International Energy Agency (IEA), today in Lisbon at the launch of Energy Policies of IEA Countries – Portugal 2009 Review. “The publication of the National Energy Strategy in October 2005 paved the way for a large number of positive changes in the energy sector. Portugal has gone a long way towards attaining the objectives of the 2005 strategy, and the energy sector is well placed to meet challenges brought about by the present global economic downturn”, Mr. Tanaka added. 

Progress in reducing green house gas emissions
Portugal is making progress in its efforts to reduce green house gas emissions under the Kyoto protocol. “The establishment of the Climate Change Commission as a co-ordinating body for policy is a progressive step that will strengthen Portugal’s efforts to meet its climate change obligations,” Mr. Tanaka stated. “Furthermore, the adoption of ambitious targets leading to significant growth in renewable energy capacity over the past four years – and planned for the future – will also play a large part in enabling Portugal to meet its responsibilities.” These measures have in turn been complemented by a robust set of policies and measures set out in the Action Plan for Energy Efficiency.

Energy Policies of IEA Countries – Portugal 2009 Review commends the many steps that have been taken to enhance security of energy supply. Portugal is in compliance with IEA oil stockholding obligations, fossil fuel import sources have been broadened and the electricity generation portfolio has further diversified. Moreover, the LNG terminal at Sines is now operational; natural gas storage capacity has grown; capacity in both the electricity and natural gas networks has been expanded; and interconnections and market arrangements with neighbouring Spain have been strengthened.

Liberalisation of energy markets
“The IEA welcomes the many progressive changes that have been taken towards the liberalisation of energy markets”, noted Mr. Tanaka. In this regard, the IEA publication recognises the growth of competition in the natural gas and electricity markets, the implementation of the Iberian electricity market (MIBEL), and the creation of a single operator (REN) for the transportation of both natural gas and electricity – as well as the operation of natural gas storage facilities and the recently built LNG terminal. “These are notable achievements and have taken place over a short period of time”, Mr. Tanaka said.

Each of these encouraging developments demonstrates a strong commitment to energy policy reform on the part of the Portuguese administration. “These efforts reflect a broad attempt to engage with, and build upon, previous IEA recommendations and the continued implementation of EU energy policy and targets”, Mr. Tanaka said while cautioning that a number of policy challenges remain.

Portugal is among the leading IEA member countries in terms of both hydro and wind power penetration. “In this context, care must be taken to ensure that new targets are realistic, affordable and are regularly monitored and updated as necessary. Environmental assessments of new projects should continue to be subject to the broadest possible public analysis“, said Mr. Tanaka.

Structural reform of the electricity sector
The electricity sector has benefited greatly from recent reforms but there remains scope for competition to develop further in the near future. “Policy in this sector must continue to focus on the design and implementation of effective mechanisms to encourage competition and deliver further benefits to consumers”, said Mr. Tanaka. Similar progress must also follow in the natural gas market.

The IEA report notes that energy research and development potential in Portugal is strong but public funding, expressed as a percentage of GDP, remains the lowest among IEA member countries. “Because R&D is fundamental to achieving economic, security and environmental goals, the sector needs clearer leadership and closer co-operation between the different ministries, relevant research laboratories, academic institutions and the private sector,” Mr. Tanaka concluded.