The paper considers the main components of energy policy, in particular the challenges of network security of supply, long-term contracts and the environmental constraints. It is argued that policy should take account of multiple market failures and context dependent. Given energy liberalisation in the 1980s and 1990s, interventions based upon market-based instruments should be given greater prominence. Institutional reform to reflect the shift in focus towards investment in non-carbon technologies and the security issues associated with networks is proposed, notably the creation of an energy agency.