EU Treaty revision - an opportunity to update energy policy in Europe's constitution

November 14, 2011 | 00:00

EU Treaty revision - a plea to update energy policy in Europe's constitution

The German decision to abruptly shut down seven nuclear power plants has had major adverse consequences for some of its neighbours, who have already responded with countermeasures. David Buchan proposes that a possible revision of the EU Treaty – if this were to take place as the result of Eurozone crisis – be used to amend the Treaty’s energy article, requiring member states to consult with each other before making major changes to their energy mix. This would help prevent similar surprises in future and put the internal energy market on a firmer footing.

EU Heads of State and Government signing the Treaty of Lisbon, December 13, 2007 (photo: eurunion.org)
Energy policy has of course played no role in causing the eurozone crisis. Yet the Eurozone crisis might be used to make changes in EU energy policy. At a EU summit on October 23, leaders of the eurozone countries said they would explore “the possibility of limited treaty changes”, which they are likely to start discussing next month.

If these changes to the Lisbon Treaty can be limited to economic discipline issues affecting the 17 eurozone countries, there would be no justification for touching the Treaty’s energy policy provisions. Improving the constitutional definition of energy policy is a minor issue compared to solving the eurozone crisis, and arguing about energy policy would be no excuse for causing delay to anything as urgent as solving the euro crisis.

No doubt great effort will be made, especially by Germany and France with the pressure of financial markets behind them, to limit the coming treaty revision to re-founding the eurozone. But limiting treaty revision will be difficult because certain governments, particularly Britain, are likely to try to renegotiate other policy areas unrelated to the euro crisis, such as social policy. (UK coalition leaders are not pushing for treaty revision because they know the tension this will cause between their Tory eurosceptic and Liberal Democrat europhile members. But if there is a revision, there will be massive Tory eurosceptic pressure to widen the re-negotiation beyond the euro) EU treaties are like Pandoran boxes; once opened, what comes out of them and what goes in is hard to control with every member state having a veto. Therefore, if the treaty revision becomes wider, there is a case for looking at energy policy as well. In particular, I would like to suggest that a general treaty obligation be added on member states to consult each other on any major alteration in their respective national energy mixes.

Common concern

The immediate catalyst for my proposal is Germany’s accelerated exit from nuclear power. Adding a treaty clause would come too late of course to remove the complications that Germany’s unilateral decision has caused for its neighbours. For the future, however, it would respond to the fact that the nature of countries’ energy mix – especially the intermittency and carbon content of their electricity – will increasingly be of common concern to EU partners. What is the point of countries electrifying their road transport, for instance, if they import high-carbon electricity to power those cars? Germany’s plan to put 6 million electric cars on the road by 2030 would be counter-productive if these cars ran on Polish and Czech coal.

So what’s the present problem? The Lisbon treaty formalised energy policy goals as aiming “in a spirit of solidarity between member states” to ensure energy market functioning and security of supply and to promote energy efficiency, saving, renewables, and network interconnection. But the crucial caveat was that “such measures shall not affect a member state’s right to determine its choice between different energy sources and the general structure of its energy supply”.

This ultimate right for a country to decide its own energy mix should not change in any new treaty. No one could possibly believe that Germany, or Austria or Ireland (to take the most consistently anti-nuclear states) could be ‘talked into’ nuclear – any more than trying to talk France or the pro-nuclear states of central and eastern Europe out of nuclear would be possible. However, why should a member state not

What is the point of countries electrifying their road transport, for instance, if they import high-carbon electricity to power those cars?
be obliged to consult its EU partners, not on the fundamentals of its energy mix decisions, but on the timing and consequences for their neighbours of such decisions? Surely that would be “in the spirit of solidarity” mentioned in the Lisbon treaty. Such consultations with the pro-nuclear French and Czechs might have been awkward for Chancellor Merkel, giving the impression to her public that she was exposing herself to pressure. But a treaty obligation would have given her political cover to take into account some of her neighbours’ concerns, and perhaps to modify the manner of Germany’s Atomausstieg decision.

Trilateral conference

Merkel’s decision closes the last German reactor in 2022, only a couple of years earlier than was German policy between 2002 and 2010. But instead of a smooth phase-out, seven of Germany’s 17 nuclear reactors were immediately closed for good, causing an immediate reduction in German electricity exports and an increase in its imports. As a result, France is wondering how to replace this winter the German power it traditionally buys for the winter peaks in demand that it cannot cover with its own nuclear plants, while the Czech Republic and Poland have seen their domestic prices rise as they ship more baseload power to Germany. At the same time, the Czechs and Poles are complaining about the unplanned ‘loop flows’ of German wind power from the North and Baltic Seas flooding onto their grids en route to replace the output of shut-down nuclear reactors in southern Germany.

At a trilateral conference at Masaryk University in Prague last month, at which Czech, German and Polish government and industry representatives convened to discuss the German nuclear decision and its consequences, the Poles and Czechs said they were taking defensive measures against these inconvenient loop flows that restrict trading in their own markets. In particular, they are putting phase shift transformers (PSTs) on their borders with Germany to partially block in-flows from Germany, a measure which German transmission operators complain causes knock-on congestion inside Germany. Obviously, in this case the Poles and Czechs have some justification for this segmentation of the single market, but if they were blocking German cars at the border in order to protect their own car sectors, they would be hauled before the European Court of Justice.

Naturally, consultations on national energy mixes should include additions to, not just subtractions from, energy generation. However, adding generation capacity of any form is inevitably a slower, more gradual process than shutting it down, and there are existing institutional forms of consultation covering capacity additions. The Euratom treaty, for instance, requires EU states to consult, through notifying the

Why should a member state not be obliged to consult its EU partners, not on the fundamentals of its energy mix decisions, but on the timing and consequences for their neighbours of such decisions?
Euratom authorities, before they build a new reactor, but not before they shut down an existing one. EU and international environmental legislation also requires that member states consult each other about cross-border environmental impacts of their energy projects; this is why Poland for example has just invited Germany to comment on the environmental impact of planned new Polish nuclear reactors. Why therefore not add consultations on energy mix policy to those on energy-related environmental issues? Moreover, whatever the Lisbon treaty says, national sovereignty over energy mix has already been diluted by the EU’s 2009 energy/climate change package which sets national renewable targets agreed at the EU level.

Unambitious climate policy

Obviously in the present political climate there would be a danger to the European Commission or some governments proposing revision of the energy article in the EU treaty, if other governments took the opportunity to say: “Well, actually, now that you raise the subject of energy, we no longer want to conduct energy policy at 27, we want to go our own way towards faster [or slower] integration”.

This is now clearly a danger in other policy areas, but probably not so much in energy. Two-speed Europe, so long discussed, will become a reality, once the eurozone’s governance is re-negotiated, in all matters of economic and budget discipline and coordination, and it may extend to tax harmonisation and financial market regulation. In social policy, the Conservative majority in Britain’s coalition government would like a ‘no-speed Europe’. They would achieve this, as far as the UK is concerned, by repatriating social legislation powers from Brussels to Westminster. Remember, too, that two-speed Europe already exists in judicial and immigration cooperation and also in defence, and there is already EU treaty provision for “enhanced cooperation” by a minimum of nine countries deciding to integrate faster than the others.

So why it is reasonable to hope that all 27 EU member states still want to make energy policy together? Three reasons. First, EU energy policy is largely about integrating networks across borders, and the more borders the policy ‘crosses’ the more effective it is. Second, the more widespread the integrated energy market, the greater the energy security that it provides. Geographic scale provides diversity of energy sources – Swedish hydropower, French nuclear, UK and German wind power, and Spanish solar power – and in diversity lies security. Finally, energy policy is a key part of climate change policy. It is true that the 10 central and east European states would prefer a less ambitious EU climate policy. But they just have to look further east to Ukraine, Belarus, Russia itself, to see what energy waste and inefficiency is perpetuated by a totally unambitious climate policy. To the extent that Europe still wants to exert world leadership in climate talks, it would count for far less on the world stage, if its clean energy policies were conducted at fewer than 27.

For these reasons, I think revising the constitutional provision on energy policy offers a chance to take a modest step forward, and not a real risk of sliding backward.

 

About the author

David Buchan has been Senior Research Fellow at the Oxford Institute for Energy Studies since 2007. Before that he worked for the Financial Times in Brussels, Washington and Paris. He covered the negotiations for the Maastricht Treaty (1991-1992) as the Financial Times’ Brussels bureau chief.



The Energy article in the Treaty of Lisbon

"1. In the context of the establishment and functioning of the internal market and with regard for the need to preserve and improve the environment, Union policy on energy shall aim, in a spirit of solidarity between Member States, to:
(a) ensure the functioning of the energy market;
(b) ensure security of energy supply in the Union; and
(c) promote energy efficiency and energy saving and the development of new and
renewable forms of energy; and
(d) promote the interconnection of energy networks.

2. Without prejudice to the application of other provisions of the Treaties, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall establish the measures necessary to achieve the objectives in paragraph 1. Such measures shall be adopted after consultation of the Economic and Social Committee and the Committee of the Regions. Such measures shall not affect a Member State's right to determine the conditions for exploiting its energy resources, its choice between different energy sources and the general structure of its energy supply, without prejudice to Article 175(2)(c).

3. By way of derogation from paragraph 2, the Council, acting in accordance with a special legislative procedure, shall unanimously and after consulting the European Parliament, establish the measures referred to therein when they are primarily of a fiscal nature."

 

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