The European Union has made progress in liberalising energy markets, and its global leadership on climate change is to be commended, the International Energy Agency, IEA, said in its new report on EU energy policies presented in Brussels Monday.
However, the report said there remains much room for improvement. It noted that much of the integration of Europe's energy market has been confined to northern and western parts of Europe.
Until important interconnections are built across the entire bloc, the EU will not have a truly integrated, single energy network.
In the report titled Energy Policies of IEA Countries: European Union - 2014, the IEA praised the EU for reducing its carbon intensity and taking the lead in vehicle fuel economy standards.
"As member states adopt different energy policy choices and decarbonisation pathways towards 2030, a strong 'Energy Union' is needed to achieve the EU 2030 goals," said IEA Executive Director Maria van der Hoeven.
"To make the most of the diversity of its energy sources, and to move towards an Energy Union, the EU must better pool its resources within the internal energy market to enhance both energy security and the competitiveness of its industry," she added.
In order to reduce dependency on one single supplier, the EU must further diversify gas and oil supplies, and cannot afford to reduce its energy options: nuclear, coal and unconventional gas and oil will need to be part of the mix, said the report.