Expanding the European Dimension in Energy Policy

November 1, 2011 | 00:00

Expanding the European Dimension in Energy Policy

This paper relates to events taking place at the European level to help the European Union towards its ambitious 2020 energy and climate goals. Specifically, the paper tracks the European Commission’s initiatives in 2011 to streamline national planning approval of vital energy infrastructure, to use EU funds to leverage more private finance for energy projects, and to lend some reality to a common external energy policy through Commission-led negotiations with foreign energy suppliers on international infrastructure.

These Commission initiatives by themselves will not, and cannot, deliver the 2020 goals. This huge job is overwhelmingly the responsibility of national companies, regulators, and governments, particularly when one large member state manages to complicate its own energy management task and that of its neighbours, as Germany has done with its accelerated exit from nuclear power. However, the Commission initiatives are important to the substance of energy policy, to the EU achieving the necessary doubling of the rate of energy investment over the next decade. They are also significant for the politics of EU energy policy making. Involvement of the EU, for the first time, in the sensitive area of infrastructure planning risks straining subsidiarity – the doctrine of keeping intervention from Brussels to the minimum necessary – while in external energy policy the Commission is making inroads on the traditional preserve of EU governments.

This paper analyses the problems that the Commission initiatives seek to resolve. The proposals to increase EU funds for infrastructure, and to use them to leverage more private sector finance, coincide awkwardly with the severe crisis shaking the eurozone. Yet the current impossibility for many state-owned energy transmission companies of obtaining more money from their cash-strapped government owners, and the present difficulty faced by many private sector energy companies in raising more money from the capital markets and banks, underscore the need for some EU funding assistance. The paper argues that there should be no shame attached to subsidy, which has an entirely proper role to play in Europe’s energy transition. However, it cautions that subsidy should be kept in proportion, and suggests that one way of doing this is to ‘Europeanize’ national renewable energy support schemes.

The move to a low carbon economy will multiply the need for highly visible pylons carrying power from highly visible wind turbines. In order to increase social acceptance of energy infrastructure, the paper applauds the Commission’s suggested re-casting of environmental impact assessments to take more account of climate change benefits.

The Commission has been emboldened in its 2011 initiatives by the new energy policy competences agreed for the Union in the 2009 Lisbon Treaty. The Commission has also received general encouragement from member state governments, which seem to see the usefulness of Union-level action as a catalyst to accelerate energy investment. But member states still have an unqualified treaty right to decide their own energy mix. Germany’s nuclear decision in May 2011 shows that this treaty right should be modified to state that a member state should consult on at least the timing and pace of any change in its energy mix affecting its EU partners. Such a modification, on its own, would not justify a treaty revision. However, the change could be made as part of the general treaty revision that now looks increasingly necessary in order to settle the eurozone crisis.

To read the full paper, click here.

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