The energy policy of the European Union (EU) does not stand on its own, but is heavily influenced by the international political economy (IPE), that is, the shifting balance between states and markets in the world economy. This chapter begins by summarizing the key historical shifts in the global political economy of energy, which provides the contextual backdrop against which the EU has attempted to develop its own energy policies and regulations. Next it describes the key features of the EU’s traditional liberal approach to energy governance, focusing on the internal energy market, the attempts to export those internal energy market rules to neighboring countries, and the policies to encourage decarbonization. The subsequent section argues that the EU may be shedding some of its liberal attitudes in favor of a more mercantilist energy governance strategy. The final section concludes and raises some suggestions for future research.