Conflicting energy policy priorities in EU energy governance

Conflicting energy policy priorities in EU energy governance In the last decade, energy policies across EU member states have shifted, with fears emerging over the feasibility of the decarbonisation targets set up at European level. In many cases, the changes have been triggered by weakened economic conditions linked to the last international economic crisis (2008), but in some others, they respond to national political preferences that have been given priority over long-term goals related to sustainability. The second half of 2016 was particularly full of events that on one hand, introduced uncertainty over markets, and on the other hand, may condition the progress (both weakening it and leaning it towards the wrong path) towards the Energy Union, the latest attempt to achieve energy market integration by the EU institutions. This paper will focus on three events to analyse their influence over EU’s energy governance patterns: The first is the Brexit vote and the implications over budget availability for emissions reduction projects. The second is the election of Donald Trump as president of the USA, with his declared disbelief in climate change. Finally yet importantly is the latest decision by OPEC to cut production in order to increase oil prices. With the exception of Brexit, these events are external to the EU, but all of them will have an impact over EU energy policy decisions. Bearing in mind that goals set up for 2030 are already ‘softer’ than expected compared to the 2020 ones, the question is whether those events could push policymakers more towards European targets concerned with security of supply, conflicting with emissions reduction goals. . . . . Keywords Energy governance Energy policy Energy Union Integration Sustainability Introduction (binding, i.e. compulsory for member states) and energy effi- ciency (indicative, non-binding) are delivered. It should also The European Union (EU) launched its Energy Union Package be anchored in EU legislation, existing and new, which should (European Commission [EC] 2015a) in 2015, a Framework involve full participation of the European Parliament Strategy ‘with a forward-looking climate change policy’.The (European Commission 2015b). The difficulties of achieving language suggests that priority has been given within energy this desired governance framework are acknowledged by the policytotacklingclimatechange-relatedissues. Thestrategyis proposal to regulate it [‘certain redundancy, incoherence and built around five priority areas (decarbonisation, energy effi- overlaps and lacking integration between energy and climate ciency, internal energy markets, energy security, and research, areas’…‘not suited to support the achievement of the 2030 innovation, and competitiveness) which are supposed to be Framework for Energy and Climate, nor synchronised with integrated (European Commission 2015a). the planning and reporting obligations under the Paris Governance of the Energy Union needs to be based on Agreement’] (European Commission 2016a). This proposal several elements: integrated national climate and energy plans, intends to promote better coordination between the EU and planning and reporting obligations of the member states, a national actors as well as to reduce administrative burdens. transparent monitoring system, and regional cooperation Within the Energy Union Framework Strategy, the element (European Commission 2015b). Among other aims, gover- most closely related to climate change is the ‘decarbonisation’ nance should ensure that the EU-level targets for renewables priority. However, the primary means of meeting its objec- tives—reduction of emissions using the Emissions Trading Scheme (ETS), increased energy efficiency, be the number * Rosa Maria Fernandez one in renewables—may be vulnerable to weaknesses in im- r.fernandez@chester.ac.uk plementation strategy as well as to tensions with the goals of energy security articulated elsewhere in the same Framework Department of Social and Political Science, University of Chester, Strategy. Specifically, energy efficiency is intended to be the Westminster Building Room CWE110 Parkgate Road, Chester CH1 foremost renewable energy transition strategy, but progress on 4BJ, UK J Environ Stud Sci implementation has been limited by the poor functioning of economic crisis has left countries rebelling against austerity the marketplace supporting the ETS, due in part to the non- measures that had disturbing social costs (Oxfam 2013; binding nature of its targets (Nichols 2014). Inability to meet Caritas Europa 2014;ESAD 2015). The refugee crisis, caused energy efficiency goals thus hampers the ability of renewable by the war in Syria and other instability movements in the targets to offset reliance on fossil fuels as a source of energy Middle East, revealed lack of solidarity in some countries security, ensured by the Directive on minimum reserves of (Chappel 2016;Sherer 2017). Indiscriminate jihadist terrorist crude oil or petroleum products (Official Journal of the attacks took place in cities across several member states European Union [OJEU] 2009). (Hanrahan and Wang 2017). Worrying signals of undemocrat- The purpose of this paper is to analyse whether the EU’s ic behaviour appeared in some member states [Hungary’snew energy policy is consistent and forward-looking or if there are constitution in 2013 (Verseck 2013); attempts in Poland to internal contradictions that could hinder the achievement of undermine the constitutional court or to approve regressive successful and coherent outcomes that are in line with the pub- anti-abortion laws (Bilefsky 2016; Lyman and Berendt licly expressed commitments towards the decarbonisation of 2016)]. Scepticism about the unity of the EU and the pursuit the European economies. Examples of these public expressions of further integration has existed in various degrees for some are the ‘Roadmap to a low carbon economy’ approved in 2011 time, more visibly since the rejection of the EU Constitution in (EC 2011) or, more recently, the speech of Commissioner Arias 2005 by France and the Netherlands (Lubbers and Scheepers Cañete at the Business Europe Power Market encounter in 2016 2010). However, aforementioned circumstances have height- (EC 2016b). Recent events (2016) namely Brexit, the change ened this Euroscepticism, resulting in unsettled political re- on climate policy brought by the election of Donald Trump as gimes (France, Netherlands, Austria) and particularly in the president in the USA, and the agreement of the Organisation of United Kingdom (UK) in the vote to leave the EU taken on Petroleum Exporter Countries (OPEC) to reduce production to June 2016. Issues cited above led to demonstrations pro and keep oil prices high, may compound any internal stresses within against migration and refugees, and anti-austerity in several the EU energy policy framework, potentially shaping its direc- cities across EU member states. Politicians needed to react to tion going forward. The research questions to be answered then these citizenship voices, and the results of electoral processes become: Is the EU energy policy consistent and forward- taking place in 2017 may have been influenced by what ap- looking? Can the Energy Union really fulfil its aims? What pears to be a new focus on national issues, instead of wider impact may 2016 events have on EU energy governance? transnational integration. This interaction or protest reaction The framework overlooking the analysis builds around the can be seen as an increasing participation of civil society in concept of governance (see for instance Kolher-Koch and EU governance (Finke 2007) with differentiated results across Rittberger 2006) and the different actors participating in EU countries. In France, Macron, successful presidential candi- energy policy governance. Discourse analysis has been used date, advocated transition to renewable energy, defended the for the study, with sources including official documentation implementation of a carbon tax and positioned himself against from the European institutions, reports from interest groups the moves of Trump’s administration, but in general, issues and energy experts, and the views publicly expressed by dif- around climate change were not the main priority in electoral ferent actors, reflected mainly in interview transcripts discourses (Timperley 2017a). In Germany, the tone of the appearing in press articles, press releases, and public speeches. discourses in the electoral process of 2017 turned clearly to Terms particularly looked at in line with the Energy Union national concerns, even when talking about climate-related stated aims include ‘decarbonisation’, ‘low carbon’, ‘gover- topics. The Christian Democratic Union (CDU), Angela nance’,and ‘climate change’. The analysis shows that among Merkel’s party, did not mention the European ETS in its man- the three events under scrutiny, Brexit is the one with the ifesto, whilst stating that climate protection ‘must not lead to highest likely influence over EU energy policy governance; jobs moving to countries with lower standards’ (Timperley insofar, it will change the actors participating in the process 2017b), reflecting worries over the loss of jobs in coal- and the composition of the institutions. The following section related industries and regions. will summarise the current political environment in the EU In the EU energy policy area, however, the current situation and member states and its link with energy policy develop- of alackofintegratedenergypolicyhas its originsdecades ments. It will be followed by three sections covering each of ago. Focusing on the aftermath of the economic crisis, what the three identified events, finishing with concluding remarks. was observed across different member states, particularly those worse affected by it, is the reduction or elimination of any support schemes for renewables—in particular the Feed- Situation at EU level and in member states In-Tariffs (FIT). Some countries, particularly Spain, are at risk of not reaching their targets for 2020 (European Renewable Recent years have witnessed a convulsed environment across Energy Council 2013). Table 1 summarises the situation across EU member states. the EU for a variety of reasons. The recovery from the 2008 J Environ Stud Sci Table 1 Summary of supporting instruments for renewable energies in the EU Country FIT program Government subsidies/support instruments FIT start year Austria Yes Subsidies; subsidy for heating First: 2000; last: 2012 Belgium No Certificates; quota system; subsidies; First: 1999; last: 2002 loans and taxes depending on region Bulgaria Yes Grant for heating (loan) and tax exemption First: 2007; last: 2011 Croatia Yes Loans 2012 Cyprus Yes* Subsidy and net metering First: 2017 Czech Republic Suspended from 2014 Premium tariff (green bonus); subsidies First: 2005; last: 2013 Denmark No Premium tariff; net metering; loan guarantees; First: 1998; last: 2012 subsidies and tax regulation Estonia No Premium tariff; investment support; First: 2003; last: 2007 subsidies for heating Finland No Premium tariff; subsidies; 2010 bonus and investment support for heat France Yes Premium tariff; tenders; tax benefits; First: 1996; last: 2000 loans and subsidies for heating Germany Yes Loans; premium tariff; subsidies First: 1991; last: 2017 and loans for heating Greece Suspended 2015 Feed-in premiums; net metering; First: 1994; last: 2015 subsidies and tax exemptions; loans; subsidies and tax regulation for heating Hungary Yes Premium tariff; net metering; subsidies First: 2007; last: 2016 Ireland Suspended end 2015 Tax relief scheme; subsidies and tax regulation First: 2006; last: 2012 mechanism for heating; new measures expected 2017 Italy Yes Premium tariffs; net metering; tax regulation First: 2007; last: 2012 mechanisms; tenders; price base mechanisms; loans Latvia Yes- but on hold Net metering; tax reductions for heating On hold till 2020 on suspicion of corruption Lithuania No Feed-in premium; tenders; net-metering; tax relief 2012 Luxembourg Yes Subsidies; tax regulation mechanisms; First: 1993; last: 2008 Subsidies for heating Malta Yes Investment grants; subsidies for heating First: 2012; last: 2016 Netherlands No Premium tariff; loans; net metering; tax regulation 2009 mechanisms; same except net metering for heat Poland Yes Quota system; tenders; loans; subsidies and tax 2014—approved incentives; subsidies and loans for heat (first tender December 2016) Portugal Yes Subsidies for heating cancelled First: 2001; last: 2014 Romania No Quota system (green certificates); subsidies; None subsidies for heating; financial support for new installations producing renewable electricity finished at the end of 2016 Slovakia Yes Subsidies; tax regulation mechanisms; subsidies for heating First: 2001; last: 2012 Slovenia No Premium tariff; loans and subsidies; loans and subsidies for heating 2002 Spain Suspended 2012 Premium tariff (suspended); price regulation system since 2015 1997 Sweden No Quota system; subsidies and tax regulation mechanisms; None tax exemption for heating United Kingdom Yes Loan; quota; tax regulation mechanisms; loans and First: 2009; last: 2012 price-based mechanisms for heating Source: RES-Legal (http://www.res-legal.eu/), last extracted 27.11.2017 Unless otherwise stated, the instruments listed for each country are applicable to electricity *Transitional FIT system for 1 year, after which companies will pass to the normal market price Despite the expressed wish to promote renewables and the to have moved from the ‘sustainable, smart, and inclusive targets set for 2020 or the aim to become in general a low growth’ discourse to one of security of supply and market carbon economy by 2050, the European Commission seems competition. The Commission set out the guidelines to move J Environ Stud Sci from fixed tariff rates to feed-in premiums from 2016 onwards authors consider the election of binding or indicative targets (European Commission 2013), considering wind and solar irrelevant and depending on government priorities (cost- technologies mature enough to face market competition and containment or effectiveness in deployment) (Mir-Artigues existing subsidies as distortion of the internal market. This and Del Rio 2016). However, the indicative nature of the move has been criticised for being driven by the big energy targets involves no sanctions if they are not reached, and en- companies and their lobbying groups (Nielsen 2014). In fact, forcement options would be softer (Lafferty and Ruud 2008). latest reports highlight both historical and still existing gov- On these grounds, the approach taken has been criticised ernment support of fossil fuels, particularly coal, in the mem- openly by green industry and climate groups (Nichols 2014). ber states (Ecofys 2014), even if said reports also mention the The decision was made under the pressure of the increasing support given to renewables through different public policy tensions between Russia and Ukraine, which is significant as interventions. Lobbying activities by energy companies are there were fears of disruptions in energy supply, as it had well known, and evidence seems to indicate that fossil fuel previously happened. A united position was sought even if companies have been more successful in their contact with was not as ambitious as it would be desirable. There was a authorities and dedicate considerable amounts of money to view of possible modifications occurring after the Paris ensure their voice is heard ahead of relevant decision- Summit in 2015 (Jacobsen and Crisp 2014) in order to make making processes. Examples can be found at country level, the targets more ambitious, but in the aftermath of the Summit, where for instance Shell had 112 meetings with ministers in no mention was made of such possibility. the UK and BP had 79 meetings, between 2010 and 2014, Controversial discourse continues with what can be classi- totalling more than twice the meetings that Green groups fied as an anti-environmental decision in 2016, when the (Greenpeace and Friends of the Earth) had with ministers dur- Commission approved a continuation of coal subsidies for ing the same period (Evans et al. 2015). At EU level, a report another 8 years. This was celebrated by the fossil fuel lobby (Corporate Europe Observatory 2017) indicates that gas com- and gives room for the UK to provide even higher subsidies to panies have been meeting the commissioners in charge of fossil fuel companies after Brexit (Hope 2016). But this is in climate and energy policy 460 times during the last two and line with the national concerns of other member states over the a half years and have spent more than €100 million in lobby- potential job losses in the coal sector, namely Germany and ing activities to ensure that gas projects are approved Poland. (Chapman 2017). Public interest groups against the expansion If the concept of governance is understood as the interac- of gas infrastructure spent barely 3% of that amount tion of public and private actors to engage in policy formula- (Corporate Europe Observatory 2017). Most fossil fuel com- tion (Heritier 2002), the examples abovementioned (with re- panies are multinationals: their activities go beyond the EU gard to lobbying) could be used to argue that, with regard to energy policy, fossil fuel companies may have had advantage context and there is evidence of their influence in the USA. A representative group of fossil fuel companies is thought to to get their points of view upheld in front of the European spend $115 million per year on obstructive climate policy institutions. This poses questions about the legitimacy of the lobbying: $27 million by ExxonMobil, $22 million by Shell, governance framework, if the provision of information is $65 million by the American Petroleum Institute (Exxon and asymmetrical and only elites have access to the institutions Shell contribute here too), and $9 million by the Western (Hauser 2011). It also indicates that national priorities are States Petroleum Association and the Australian Petroleum influencing the decision-making process at EU level. Production & Exploration Association (InfluenceMap 2016). Something similar seems to have happened with the energy efficiency (and renewables) targets for 2030. After multiple Effects of Brexit rounds of negotiations and conflicting positions, the potential gains that could come from the promotion of energy efficiency The main concern with regard to Brexit has to do with the were outweighed by the fears of a negative impact on the resources available for sustainability projects, given that the European ETS. Increased energy efficiency would mean re- UK has been providing a substantial amount of the EU budget, duction of emissions, which would translate into lower needs but also given that EU resources have funded many environ- to acquire emission permits, making their price go down and mental projects in the UK (House of Commons 2017). In the subsequently making the purpose of the market redundant. energy area, investments on infrastructures could be compro- Even if some groups considered the initial call of the mised, and it remains to be seen how the interconnections be- Commission for a 30% target insufficient, the Council opted tween countries will progress in order to avoid energy ‘islands’. by a smaller goal of 27%, to be reviewed in 2020 (European The UK is a net contributor to the EU budget. Its contribu- Commission 2015c). This is an indicative and not a binding tion was 18,209.4 €million in 2015. This accounts for 15.4% target, which leaves member states without individual targets. of the total revenue, making the UK the third largest contrib- It thus weakens the possible outcomes of any measure. Some utor after Germany and France (European Commission J Environ Stud Sci 2015d). As part of the Brexit negotiations, it is expected that discussion table have more polarised positions? The UK is the UK will pay some sort of divorce bill ‘to honour its share considered a big country within the EU. Without the UK, a of the financing of all the obligations undertaken while it was country like Poland could take a more prominent role, and a memberofthe Union’ (European Commission 2017a). Poland is not likely to champion ‘green’ issues in the way However, it is clear that, for the next Multiannual Financial the UK has historically done (Martewicz 2017). Framework, changes would need to be made, as otherwise Some had already warned before the referendum (Rayner there will be a gap in the finances. There are several options 2016) that Brexit could put the EU efforts to reduce carbon for these adjustments (Chomicz 2017): (1) Adjust the budget emissions at risk. After the referendum, this was given more size counting on which programmes the UK may continue to detail, insofar as the European ETS funding would suffer be part of and paying to. (2) Maintain the payments to the without the UK. Reduced funding will compromise the mon- budget of the remaining 27 member states that have been ey that Eastern European countries have been receiving from contributing to the UK rebate (payment that the UK was re- the ETS auction schemes to adapt their energy systems (Khan ceiving back and will not continue). (3) Make budget cuts in 2017), so their transformation to less polluting energy supplies all areas. (4) Decrease the funding for areas considered of could be at risk. lower priority. With regard to energy interconnections between member There will need to be re-calculations to allocate the access states, Brexit could have significant impacts. The remaining to funding from the Cohesion Fund—aimed at member states EU members will focus on building stronger interconnections whose Gross National Income (GNI) per capita is less than between them, with doubts over political support from those 90% the EU average, in order to reduce economic and social remaining members to have greater interconnections with the disparities and promote sustainable development (Official UK. Since the UK depends on energy imports, it will be in its Journal of the European Union 2006) or the Structural interest to take part on interconnection projects, but for the Funds, for instance. This is because the UK is one of the remaining members, their priority would be those countries that members with highest GDP/GNI levels, so once the UK are still part of the EU. However, Ireland would be at the end of leaves, the EU average GDP will decrease, and consequently, pipes that have to cross the UK. So there are questions about the distance of the poorest countries with the new EU average how Ireland can guarantee energy security of supply after will decrease too (they will be closer to the 90% threshold). Brexit, whilst depending on energy flowing through the UK This fact, added to the uncertainty of the negotiation results, market (Simon Virley, from KPMG in Crisp 2017). It is possi- makes the first option, adjusting the budget in line with the ble that energy interconnections between Ireland, the UK, and new pool of contributions, extremely complex, even though it the rest of the EU will be part of the negotiations of the future would be more accurate and the size of the adjustment smaller. relationship of the UK with the EU. Given the fact that the issue of the border with Northern Ireland is already proving contro- The second option is quite controversial, possibly facing re- sistance from those member states that currently contribute the versial, there is uncertainty about what the future may bring for most to the rebate (France, Spain, and Italy—EC 2015d). energy security of supply, particularly for Ireland. Making budget cuts in all areas in a proportional way may On a positive note, there are also arguments saying that the seem fair and relatively simple, but it bears the risk of leaving EU will improve its renewable energy outlook without the UK, sensitive areas without enough funding. This takes us to the since the country is far behind its targets for 2020 whilst other fourth option of assigning levels of priority to different policy member states are making significant progress (Lycetts 2017). areas and cutting the funding of those with the lowest priority. All in all, Brexit is causing uncertainty, so it is difficult to Again, though feasible, this too can be controversial: It poses assess to which extent there will be a positive or negative questions about who is going to decide, and how the levels of impact from the energy governance perspective. However, priority will be defined. If environment and sustainability are given the slow progress observed on the Energy Union negatively affected, which may be a possibility given the low- roadmap (EC 2017b), with status reports based on data mostly ering of the profile that issues such as climate change are related to 2015 (EC 2017c), it seems that 2016 was almost a taking in the political arena (Simms 2017), this can impact lost year with regard to the necessary steps to achieve the the funding for energy projects that try to address climate desired targets. change and sustainability-related problems. Europe could end up with a watered down Energy Union Strategy. Brexit will reduce the number of EU Members of the The new approach of the US government European Parliament (MEPs) and will affect the distribution of votes. It will also affect the Commission composition, and In a globalised world, what happens in one country can have there will be one fewer country making decisions. One party impacts elsewhere. Given the traditional energy dependency less in a negotiation theoretically should lead to decisions of many Western countries, this is particularly true concerning being made more quickly, but what if the parties left at the issues related to climate change and energy. J Environ Stud Sci Before the last US election (November 2016), some already portfolio standards and have been doing so, and there have warned of the possible consequences for climate and energy been multistate efforts to promote renewable energy and ad- policies of a Trump win. The view was that his victory would dress the impacts of climate change. It appears clear that the lead to substantial changes/upending of climate change poli- focus of a majority of states is on continuing with the benefits cies, as his position is radically opposed to the policies adopted that the promotion of renewables has been providing, even if by the Obama administration (Crisp 2016). It could soon be there is no support from the central administration. In the long observed that the fears were not unfounded, when in March term, however, the removal of the Clean Power Plan can make 2017, he took the first steps to dismantle Obama’s Clean Power things change (Divva Reddy, from Eurasia Group in Crisp Plan, gaining criticism in and out of the USA, including from 2016) as it would take out of the picture a long-term vision the EU institutions (Commissioner Arias Cañete) (Smith et al. for a low-carbon economy in the USA. This could be an op- 2017). A few months later, he decided to withdraw the USA portunity for Europe to regain the leadership in renewables, from the Paris Agreement (Selin 2017) creating a generalised which the Energy Union is calling for. The UK, however, will distrust in the USA with regard to multilateral cooperation. not be part of that leadership, unless it specifically agrees to The EU has been firm in its criticism of the new US posi- support the EU’s joint efforts as part of a Brexit deal. This tion, but what can this actually mean in practical terms? There could have been a possibility in the past, but it is doubtful in have been radical calls within Europe to isolate the USA and the current environment, given that the manifesto of the stop any re-initiation of transatlantic trade talks (Martin Conservatives in the last election (Conservatives 2017)did Schulz, candidate in the German elections), the rationale being not mention renewables and specifically supported shale gas. that as the USA is not assuming the costs of fighting against With regard to encouraging other countries to withdraw climate change, it would create competitive distortion, so no from Paris or not make the effort, Trump’s decision may have additional market access should be granted (Livingston and an indirect impact, but so far, the support to move into a lower- Brattberg 2017). The chairman of ArcelorMittal (from India) carbon energy system is strong and expected to continue called for Europe to stablish a ‘carbon border tax’ (Livingston (Simon Virley, from KPMG in Crisp 2016). and Brattberg 2017), which would allow European companies Since European energy imports from the USA are limited, to keep their competitiveness against third countries and main- the behaviour of the USA may not have a big impact on the tain the innovations to continue reducing emissions. diversification of energy imports as part of the Energy Union It has become apparent that the USA is losing the leader- plan. Therefore, even if Trump plans to stop shale gas exports ship role in the fight against climate change that it had taken in the future, the focus of the EU would still be to build bigger from Europe after the failure of Copenhagen in 2009. On one interconnection between member states. The UK can be af- hand, it has made visible the commitment of both China and fected more strongly (Simon Virley in Crisp 2016) since its the EU to work together, and strengthen their relationship fossil fuel reserves are in decline and are supportive of shale (Selin 2017). On the other hand, it seems that this time gas. So in theory, it could be interested in receiving imports. China is taking the leadership role, amid fears in American Thus, it could try to reach individually an agreement with the forums that the consequence of the exit from Paris will ‘make USA on this area, once Brexit becomes a reality. China great again’ (Carrington 2017). The election of Trump may not have a big impact on EU’s Areas in which the USA and the EU can work together even energy governance, at least directly, but it can have an influence in this environment have to do mainly with energy security, as on trade negotiations and energy security approaches, aside it is in the US interest that Europe reduce its energy dependence from the opportunity for the EU to take the leadership role on from Russia. However, this is also problematic, as the USA has climate change matters. However, given the fact that in the publicly opposed the Nord Stream 2 project (Livingston and future the action from the biggest emitters will be fundamental, Brattberg 2017). Regarding attempts for cleaner energy, there it is more likely that the world will look at how China behaves. can be possibilities of cooperation on nuclear and, given the This can have ramifications in other diplomatic areas. There is a preference for coal of president Trump, on carbon capture and risk for EU’s energy governance, if Eastern European countries storage. The latter is less likely though, since the EU is still such as Poland, heavily dependent on coal, cultivate ties with committed to getting away from coal, despite the maintenance Trump’s administration in order to break the path towards of coal subsidies previously mentioned, and the investments in decarbonisation that the EU has set and which they consider Carbon Capture and Storage (CCS) have not been completely as ‘utopian’ (Livingston and Brattberg 2017). successful (Livingston and Brattberg 2017). The main driver pro-renewable energies in the USA are state-led policies rather than federal ones, so in the short term, The OPEC decisions there should not be too many changes (Landis-Marinello 2017; Fitfield 2017). States have authority over the siting of In November 2016, OPEC reached an agreement to cut oil energy projects, they have the ability to create renewable production for the first time in 8 years, also including non- J Environ Stud Sci OPEC countries in the deal (Razzouk et al. 2016). The deci- problems of OPEC countries are not an EU priority, notwith- sion was seen with scepticism given the traditional incentives standing that lack of stability in those countries could trigger that individual countries have had in the past to breach the problems whose effects can expand worldwide. agreements. At this time, things look a bit different and the Issues that oil producer countries are facing shaped the agreement has been kept and in fact extended until 2018, after recent agreement reached at the OPEC meeting in Vienna a decision from Saudi Arabia and Russia in May 2017 (Reed (November 2017), to extend once more the cut on production 2017). In a way, the two decisions had some impact, namely until the end of 2018, and again including non-OPEC coun- temporary increases in the price of oil to $56.64 per barrel tries in the deal. The price of Brent (used as benchmark price (Fletcher 2016). However, prices went down again to around mostly in Europe) went up to $63.37 per barrel, but the West $53 per barrel (Reed 2017). Texas Intermediate (used as benchmark price by the USA) OPEC had recognised that part of its problems to keep went down to $57 a barrel (Wearden and Fletcher 2017). prices up and thus stable profits was related to excess of sup- This is a testament to the difficulties and volatility affecting ply (OPEC 2016), so the decision in November 2016 was oil prices and to the lower influence that these agreements trying to balance inventories (Razzouk et al. 2016). Low have in attempts to keep oil prices high. prices of oil had been acting as a disincentive for investments, Even if this purpose (high prices) were fulfilled, since the so there were fears that, in the medium term, lack of invest- EU is committed to decarbonisation, an increase in the price of ments would result in lack of supply and excessive prices as oil could only prompt further commitment in that direction to observed in previous oil crises (OPEC 2016). This may tem- reduce oil dependency. From the governance framework point porarily benefit oil producer countries, but the issues that of view, it could be expected that a big player in the energy would originate elsewhere would lead importer countries to- market like the OPEC could have an influence on energy wards alternative sources of energy, which would ultimately policymaking in the EU, but evidence seems to indicate that go against the producers’ long-term aims. this is not the case and that other actors, as previously dem- The problem now comes from the fact that prices are barely onstrated, play a more relevant role. going over the threshold supposed to be enough to boost in- vestments. This poses questions over OPEC’s continued ability to be a game changer in the energy market. There are three Concluding remarks main reasons for the current situation (Reed 2017): Firstly, predictions over oil reserves that push prices up are made as- Of the three events analysed by this paper, it becomes apparent suming constant increases in demand, but currently demand is that Brexit is the one with the highest likelihood to affect either not growing or not doing it as quickly as desirable (IEA energy policy governance in the European Union. Whilst the 2018). Secondly, linked to the decrease in demand, is the surge outcome for both UK and EU will depend on the result of the of electric vehicles. Technologies are progressing quickly and negotiations, it is foreseeable that the overall impact will be countries clearly favour investment in related innovations, fur- negative, understood as one that takes the EU away from its ther decreasing demand for oil (Prince 2017). Thirdly, the role commitment towards a low-carbon economy. The two main of shale gas, particularly in the US, needs to be mentioned. An reasons for such a negative outcome are, on one side, the increase in the price of oil makes shale extraction more profit- decrease in the level of priority assigned to environmental able, which increases supply in that area. Shale extraction is and climate change concerns, as shown by the disappearance more expensive than conventional techniques, but now, com- of the topic from political discourses. On the other side, we panies are finding the right financing instruments available so find the possible pre-eminence of countries less favourable funding is not a problem (Reed 2017). towards greener energy policy in the governance framework Could this scenario prompt any reaction from EU energy once the UK leaves the EU. policymakers? The likely answer is no. The EU and OPEC Trump’s approach to energy policy however could be pos- have been keeping regular meetings under the framework of itive; insofar, it could bring the EU back to a leadership role in the so called Energy Dialogue, the latest of which took place the fight against climate change, if China does not take the also in 2016 (OPEC 2016). Both parties share information lead first, as some are pointing. However, a joint leadership of about their current situation, common concerns, and forecast EU and China could also prevail. Increases in the price of oil for the coming years, but the reality of activities is reduced to could only contribute positively to enhance the EU’scommit- joint studies and completion of reports (OPEC 2016). A new ment to decarbonisation, so in that regard, actions from OPEC meeting should have taken place on the first half of 2017 but would have little impact. has not yet happened at the time of writing. Governance of The reduced progress observedsofar in theroadmap to the energy policy in the EU is unlikely to be affected by OPEC Energy Union can be attributed to the environment of uncertain- decisions, since EU policymakers already advocate for strate- ty created by Brexit and other internal affairs, as well as the gies that diversify energy sources and suppliers. Internal uncertainty over Trump’s approach towards Europe. So it is still J Environ Stud Sci Conservatives (2017) Forward, together. Our plan for a stronger Britain early to answer the question about the possibility of the Energy and a prosperous future. The Conservative and Unionist Party Union to fulfil its aims. However, with regard to the question Manifesto 2017 about EU’s energy policy being consistent and forward-looking, Corporate Europe Observatory (2017) The great gas lock-in. Industry it is difficult to give a positive answer. The issues highlighted by lobbying behind the EU push for new gas infrastructure. October this paper, particularly the ones related to Brexit and to a lesser Crisp, J. (2016) What President Trump could mean for energy and climate extent the possible influence of US energy policy under Trump, policy. Euractiv. 08 November 2016. https://www.euractiv.com/ dividing member states’ views on coal, pose doubts about the section/climate-environment/interview/what-president-trump-could- direction of EU energy policy in years to come. mean-for-energy-and-climate-policy/. Accessed 31 August 2017 It is not possible to measure if the negative aspects, coming Ecofys (2014) Subsidies and costs of EU energy. Final Report. Project number: DESLN14583. Study ordered by the European from internal events such as Brexit, will be overcome by positive Commission DG-Energy aspects coming from external events (Trump’spolicies and ESAD (2015) The price of austerity. March 2015. TUC OPEC agreements), but it seems unlikely now. What appears European Commission (2011) Communication from the Commission to clear is that the governance framework for energy policy in the the European Parliament, the Council, the European Economic and EU is going to change, and its shape and direction will depend on Social Committee and the Committee of the Regions. A Roadmap for moving to a competitive low carbon economy in 2050. Brussels, which actors and from which remaining member states take the 08.03.2011. COM (2011) 112 final lead. Since the political arena is changing more than ever within European Commission (2013) Communication from the Commission. and out of the EU, the overall picture is one of uncertainty. Delivering the internal electricity market and making the most of public intervention. Brussels, 05.11.2013. COM (2013) 7243 final. Acknowledgements I would like to thank the University of Chester for European Commission (2015a). Energy Union Package. Communication the funding provided to attend the 47th UACES conference in Krakow, from the Commission to the European Parliament, the Council, the where valuable feedback for this paper was received. European Economic and Social Committee, the Committee of the Regions and the European Investment Bank. A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Open Access This article is distributed under the terms of the Creative Change Policy. COM (2015) 80 final. Brussels, 25.02.2015 Commons Attribution 4.0 International License (http:// European Commission (2015b) European Commission—Fact Sheet. creativecommons.org/licenses/by/4.0/), which permits unrestricted use, State of the Energy Union—questions and answers. MEMO-15- distribution, and reproduction in any medium, provided you give appro- 6106_EN. 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Conflicting energy policy priorities in EU energy governance

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Environment; Environment, general; Sustainable Development
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Abstract

In the last decade, energy policies across EU member states have shifted, with fears emerging over the feasibility of the decarbonisation targets set up at European level. In many cases, the changes have been triggered by weakened economic conditions linked to the last international economic crisis (2008), but in some others, they respond to national political preferences that have been given priority over long-term goals related to sustainability. The second half of 2016 was particularly full of events that on one hand, introduced uncertainty over markets, and on the other hand, may condition the progress (both weakening it and leaning it towards the wrong path) towards the Energy Union, the latest attempt to achieve energy market integration by the EU institutions. This paper will focus on three events to analyse their influence over EU’s energy governance patterns: The first is the Brexit vote and the implications over budget availability for emissions reduction projects. The second is the election of Donald Trump as president of the USA, with his declared disbelief in climate change. Finally yet importantly is the latest decision by OPEC to cut production in order to increase oil prices. With the exception of Brexit, these events are external to the EU, but all of them will have an impact over EU energy policy decisions. Bearing in mind that goals set up for 2030 are already ‘softer’ than expected compared to the 2020 ones, the question is whether those events could push policymakers more towards European targets concerned with security of supply, conflicting with emissions reduction goals. . . . . Keywords Energy governance Energy policy Energy Union Integration Sustainability Introduction (binding, i.e. compulsory for member states) and energy effi- ciency (indicative, non-binding) are delivered. It should also The European Union (EU) launched its Energy Union Package be anchored in EU legislation, existing and new, which should (European Commission [EC] 2015a) in 2015, a Framework involve full participation of the European Parliament Strategy ‘with a forward-looking climate change policy’.The (European Commission 2015b). The difficulties of achieving language suggests that priority has been given within energy this desired governance framework are acknowledged by the policytotacklingclimatechange-relatedissues. Thestrategyis proposal to regulate it [‘certain redundancy, incoherence and built around five priority areas (decarbonisation, energy effi- overlaps and lacking integration between energy and climate ciency, internal energy markets, energy security, and research, areas’…‘not suited to support the achievement of the 2030 innovation, and competitiveness) which are supposed to be Framework for Energy and Climate, nor synchronised with integrated (European Commission 2015a). the planning and reporting obligations under the Paris Governance of the Energy Union needs to be based on Agreement’] (European Commission 2016a). This proposal several elements: integrated national climate and energy plans, intends to promote better coordination between the EU and planning and reporting obligations of the member states, a national actors as well as to reduce administrative burdens. transparent monitoring system, and regional cooperation Within the Energy Union Framework Strategy, the element (European Commission 2015b). Among other aims, gover- most closely related to climate change is the ‘decarbonisation’ nance should ensure that the EU-level targets for renewables priority. However, the primary means of meeting its objec- tives—reduction of emissions using the Emissions Trading Scheme (ETS), increased energy efficiency, be the number * Rosa Maria Fernandez one in renewables—may be vulnerable to weaknesses in im- r.fernandez@chester.ac.uk plementation strategy as well as to tensions with the goals of energy security articulated elsewhere in the same Framework Department of Social and Political Science, University of Chester, Strategy. Specifically, energy efficiency is intended to be the Westminster Building Room CWE110 Parkgate Road, Chester CH1 foremost renewable energy transition strategy, but progress on 4BJ, UK J Environ Stud Sci implementation has been limited by the poor functioning of economic crisis has left countries rebelling against austerity the marketplace supporting the ETS, due in part to the non- measures that had disturbing social costs (Oxfam 2013; binding nature of its targets (Nichols 2014). Inability to meet Caritas Europa 2014;ESAD 2015). The refugee crisis, caused energy efficiency goals thus hampers the ability of renewable by the war in Syria and other instability movements in the targets to offset reliance on fossil fuels as a source of energy Middle East, revealed lack of solidarity in some countries security, ensured by the Directive on minimum reserves of (Chappel 2016;Sherer 2017). Indiscriminate jihadist terrorist crude oil or petroleum products (Official Journal of the attacks took place in cities across several member states European Union [OJEU] 2009). (Hanrahan and Wang 2017). Worrying signals of undemocrat- The purpose of this paper is to analyse whether the EU’s ic behaviour appeared in some member states [Hungary’snew energy policy is consistent and forward-looking or if there are constitution in 2013 (Verseck 2013); attempts in Poland to internal contradictions that could hinder the achievement of undermine the constitutional court or to approve regressive successful and coherent outcomes that are in line with the pub- anti-abortion laws (Bilefsky 2016; Lyman and Berendt licly expressed commitments towards the decarbonisation of 2016)]. Scepticism about the unity of the EU and the pursuit the European economies. Examples of these public expressions of further integration has existed in various degrees for some are the ‘Roadmap to a low carbon economy’ approved in 2011 time, more visibly since the rejection of the EU Constitution in (EC 2011) or, more recently, the speech of Commissioner Arias 2005 by France and the Netherlands (Lubbers and Scheepers Cañete at the Business Europe Power Market encounter in 2016 2010). However, aforementioned circumstances have height- (EC 2016b). Recent events (2016) namely Brexit, the change ened this Euroscepticism, resulting in unsettled political re- on climate policy brought by the election of Donald Trump as gimes (France, Netherlands, Austria) and particularly in the president in the USA, and the agreement of the Organisation of United Kingdom (UK) in the vote to leave the EU taken on Petroleum Exporter Countries (OPEC) to reduce production to June 2016. Issues cited above led to demonstrations pro and keep oil prices high, may compound any internal stresses within against migration and refugees, and anti-austerity in several the EU energy policy framework, potentially shaping its direc- cities across EU member states. Politicians needed to react to tion going forward. The research questions to be answered then these citizenship voices, and the results of electoral processes become: Is the EU energy policy consistent and forward- taking place in 2017 may have been influenced by what ap- looking? Can the Energy Union really fulfil its aims? What pears to be a new focus on national issues, instead of wider impact may 2016 events have on EU energy governance? transnational integration. This interaction or protest reaction The framework overlooking the analysis builds around the can be seen as an increasing participation of civil society in concept of governance (see for instance Kolher-Koch and EU governance (Finke 2007) with differentiated results across Rittberger 2006) and the different actors participating in EU countries. In France, Macron, successful presidential candi- energy policy governance. Discourse analysis has been used date, advocated transition to renewable energy, defended the for the study, with sources including official documentation implementation of a carbon tax and positioned himself against from the European institutions, reports from interest groups the moves of Trump’s administration, but in general, issues and energy experts, and the views publicly expressed by dif- around climate change were not the main priority in electoral ferent actors, reflected mainly in interview transcripts discourses (Timperley 2017a). In Germany, the tone of the appearing in press articles, press releases, and public speeches. discourses in the electoral process of 2017 turned clearly to Terms particularly looked at in line with the Energy Union national concerns, even when talking about climate-related stated aims include ‘decarbonisation’, ‘low carbon’, ‘gover- topics. The Christian Democratic Union (CDU), Angela nance’,and ‘climate change’. The analysis shows that among Merkel’s party, did not mention the European ETS in its man- the three events under scrutiny, Brexit is the one with the ifesto, whilst stating that climate protection ‘must not lead to highest likely influence over EU energy policy governance; jobs moving to countries with lower standards’ (Timperley insofar, it will change the actors participating in the process 2017b), reflecting worries over the loss of jobs in coal- and the composition of the institutions. The following section related industries and regions. will summarise the current political environment in the EU In the EU energy policy area, however, the current situation and member states and its link with energy policy develop- of alackofintegratedenergypolicyhas its originsdecades ments. It will be followed by three sections covering each of ago. Focusing on the aftermath of the economic crisis, what the three identified events, finishing with concluding remarks. was observed across different member states, particularly those worse affected by it, is the reduction or elimination of any support schemes for renewables—in particular the Feed- Situation at EU level and in member states In-Tariffs (FIT). Some countries, particularly Spain, are at risk of not reaching their targets for 2020 (European Renewable Recent years have witnessed a convulsed environment across Energy Council 2013). Table 1 summarises the situation across EU member states. the EU for a variety of reasons. The recovery from the 2008 J Environ Stud Sci Table 1 Summary of supporting instruments for renewable energies in the EU Country FIT program Government subsidies/support instruments FIT start year Austria Yes Subsidies; subsidy for heating First: 2000; last: 2012 Belgium No Certificates; quota system; subsidies; First: 1999; last: 2002 loans and taxes depending on region Bulgaria Yes Grant for heating (loan) and tax exemption First: 2007; last: 2011 Croatia Yes Loans 2012 Cyprus Yes* Subsidy and net metering First: 2017 Czech Republic Suspended from 2014 Premium tariff (green bonus); subsidies First: 2005; last: 2013 Denmark No Premium tariff; net metering; loan guarantees; First: 1998; last: 2012 subsidies and tax regulation Estonia No Premium tariff; investment support; First: 2003; last: 2007 subsidies for heating Finland No Premium tariff; subsidies; 2010 bonus and investment support for heat France Yes Premium tariff; tenders; tax benefits; First: 1996; last: 2000 loans and subsidies for heating Germany Yes Loans; premium tariff; subsidies First: 1991; last: 2017 and loans for heating Greece Suspended 2015 Feed-in premiums; net metering; First: 1994; last: 2015 subsidies and tax exemptions; loans; subsidies and tax regulation for heating Hungary Yes Premium tariff; net metering; subsidies First: 2007; last: 2016 Ireland Suspended end 2015 Tax relief scheme; subsidies and tax regulation First: 2006; last: 2012 mechanism for heating; new measures expected 2017 Italy Yes Premium tariffs; net metering; tax regulation First: 2007; last: 2012 mechanisms; tenders; price base mechanisms; loans Latvia Yes- but on hold Net metering; tax reductions for heating On hold till 2020 on suspicion of corruption Lithuania No Feed-in premium; tenders; net-metering; tax relief 2012 Luxembourg Yes Subsidies; tax regulation mechanisms; First: 1993; last: 2008 Subsidies for heating Malta Yes Investment grants; subsidies for heating First: 2012; last: 2016 Netherlands No Premium tariff; loans; net metering; tax regulation 2009 mechanisms; same except net metering for heat Poland Yes Quota system; tenders; loans; subsidies and tax 2014—approved incentives; subsidies and loans for heat (first tender December 2016) Portugal Yes Subsidies for heating cancelled First: 2001; last: 2014 Romania No Quota system (green certificates); subsidies; None subsidies for heating; financial support for new installations producing renewable electricity finished at the end of 2016 Slovakia Yes Subsidies; tax regulation mechanisms; subsidies for heating First: 2001; last: 2012 Slovenia No Premium tariff; loans and subsidies; loans and subsidies for heating 2002 Spain Suspended 2012 Premium tariff (suspended); price regulation system since 2015 1997 Sweden No Quota system; subsidies and tax regulation mechanisms; None tax exemption for heating United Kingdom Yes Loan; quota; tax regulation mechanisms; loans and First: 2009; last: 2012 price-based mechanisms for heating Source: RES-Legal (http://www.res-legal.eu/), last extracted 27.11.2017 Unless otherwise stated, the instruments listed for each country are applicable to electricity *Transitional FIT system for 1 year, after which companies will pass to the normal market price Despite the expressed wish to promote renewables and the to have moved from the ‘sustainable, smart, and inclusive targets set for 2020 or the aim to become in general a low growth’ discourse to one of security of supply and market carbon economy by 2050, the European Commission seems competition. The Commission set out the guidelines to move J Environ Stud Sci from fixed tariff rates to feed-in premiums from 2016 onwards authors consider the election of binding or indicative targets (European Commission 2013), considering wind and solar irrelevant and depending on government priorities (cost- technologies mature enough to face market competition and containment or effectiveness in deployment) (Mir-Artigues existing subsidies as distortion of the internal market. This and Del Rio 2016). However, the indicative nature of the move has been criticised for being driven by the big energy targets involves no sanctions if they are not reached, and en- companies and their lobbying groups (Nielsen 2014). In fact, forcement options would be softer (Lafferty and Ruud 2008). latest reports highlight both historical and still existing gov- On these grounds, the approach taken has been criticised ernment support of fossil fuels, particularly coal, in the mem- openly by green industry and climate groups (Nichols 2014). ber states (Ecofys 2014), even if said reports also mention the The decision was made under the pressure of the increasing support given to renewables through different public policy tensions between Russia and Ukraine, which is significant as interventions. Lobbying activities by energy companies are there were fears of disruptions in energy supply, as it had well known, and evidence seems to indicate that fossil fuel previously happened. A united position was sought even if companies have been more successful in their contact with was not as ambitious as it would be desirable. There was a authorities and dedicate considerable amounts of money to view of possible modifications occurring after the Paris ensure their voice is heard ahead of relevant decision- Summit in 2015 (Jacobsen and Crisp 2014) in order to make making processes. Examples can be found at country level, the targets more ambitious, but in the aftermath of the Summit, where for instance Shell had 112 meetings with ministers in no mention was made of such possibility. the UK and BP had 79 meetings, between 2010 and 2014, Controversial discourse continues with what can be classi- totalling more than twice the meetings that Green groups fied as an anti-environmental decision in 2016, when the (Greenpeace and Friends of the Earth) had with ministers dur- Commission approved a continuation of coal subsidies for ing the same period (Evans et al. 2015). At EU level, a report another 8 years. This was celebrated by the fossil fuel lobby (Corporate Europe Observatory 2017) indicates that gas com- and gives room for the UK to provide even higher subsidies to panies have been meeting the commissioners in charge of fossil fuel companies after Brexit (Hope 2016). But this is in climate and energy policy 460 times during the last two and line with the national concerns of other member states over the a half years and have spent more than €100 million in lobby- potential job losses in the coal sector, namely Germany and ing activities to ensure that gas projects are approved Poland. (Chapman 2017). Public interest groups against the expansion If the concept of governance is understood as the interac- of gas infrastructure spent barely 3% of that amount tion of public and private actors to engage in policy formula- (Corporate Europe Observatory 2017). Most fossil fuel com- tion (Heritier 2002), the examples abovementioned (with re- panies are multinationals: their activities go beyond the EU gard to lobbying) could be used to argue that, with regard to energy policy, fossil fuel companies may have had advantage context and there is evidence of their influence in the USA. A representative group of fossil fuel companies is thought to to get their points of view upheld in front of the European spend $115 million per year on obstructive climate policy institutions. This poses questions about the legitimacy of the lobbying: $27 million by ExxonMobil, $22 million by Shell, governance framework, if the provision of information is $65 million by the American Petroleum Institute (Exxon and asymmetrical and only elites have access to the institutions Shell contribute here too), and $9 million by the Western (Hauser 2011). It also indicates that national priorities are States Petroleum Association and the Australian Petroleum influencing the decision-making process at EU level. Production & Exploration Association (InfluenceMap 2016). Something similar seems to have happened with the energy efficiency (and renewables) targets for 2030. After multiple Effects of Brexit rounds of negotiations and conflicting positions, the potential gains that could come from the promotion of energy efficiency The main concern with regard to Brexit has to do with the were outweighed by the fears of a negative impact on the resources available for sustainability projects, given that the European ETS. Increased energy efficiency would mean re- UK has been providing a substantial amount of the EU budget, duction of emissions, which would translate into lower needs but also given that EU resources have funded many environ- to acquire emission permits, making their price go down and mental projects in the UK (House of Commons 2017). In the subsequently making the purpose of the market redundant. energy area, investments on infrastructures could be compro- Even if some groups considered the initial call of the mised, and it remains to be seen how the interconnections be- Commission for a 30% target insufficient, the Council opted tween countries will progress in order to avoid energy ‘islands’. by a smaller goal of 27%, to be reviewed in 2020 (European The UK is a net contributor to the EU budget. Its contribu- Commission 2015c). This is an indicative and not a binding tion was 18,209.4 €million in 2015. This accounts for 15.4% target, which leaves member states without individual targets. of the total revenue, making the UK the third largest contrib- It thus weakens the possible outcomes of any measure. Some utor after Germany and France (European Commission J Environ Stud Sci 2015d). As part of the Brexit negotiations, it is expected that discussion table have more polarised positions? The UK is the UK will pay some sort of divorce bill ‘to honour its share considered a big country within the EU. Without the UK, a of the financing of all the obligations undertaken while it was country like Poland could take a more prominent role, and a memberofthe Union’ (European Commission 2017a). Poland is not likely to champion ‘green’ issues in the way However, it is clear that, for the next Multiannual Financial the UK has historically done (Martewicz 2017). Framework, changes would need to be made, as otherwise Some had already warned before the referendum (Rayner there will be a gap in the finances. There are several options 2016) that Brexit could put the EU efforts to reduce carbon for these adjustments (Chomicz 2017): (1) Adjust the budget emissions at risk. After the referendum, this was given more size counting on which programmes the UK may continue to detail, insofar as the European ETS funding would suffer be part of and paying to. (2) Maintain the payments to the without the UK. Reduced funding will compromise the mon- budget of the remaining 27 member states that have been ey that Eastern European countries have been receiving from contributing to the UK rebate (payment that the UK was re- the ETS auction schemes to adapt their energy systems (Khan ceiving back and will not continue). (3) Make budget cuts in 2017), so their transformation to less polluting energy supplies all areas. (4) Decrease the funding for areas considered of could be at risk. lower priority. With regard to energy interconnections between member There will need to be re-calculations to allocate the access states, Brexit could have significant impacts. The remaining to funding from the Cohesion Fund—aimed at member states EU members will focus on building stronger interconnections whose Gross National Income (GNI) per capita is less than between them, with doubts over political support from those 90% the EU average, in order to reduce economic and social remaining members to have greater interconnections with the disparities and promote sustainable development (Official UK. Since the UK depends on energy imports, it will be in its Journal of the European Union 2006) or the Structural interest to take part on interconnection projects, but for the Funds, for instance. This is because the UK is one of the remaining members, their priority would be those countries that members with highest GDP/GNI levels, so once the UK are still part of the EU. However, Ireland would be at the end of leaves, the EU average GDP will decrease, and consequently, pipes that have to cross the UK. So there are questions about the distance of the poorest countries with the new EU average how Ireland can guarantee energy security of supply after will decrease too (they will be closer to the 90% threshold). Brexit, whilst depending on energy flowing through the UK This fact, added to the uncertainty of the negotiation results, market (Simon Virley, from KPMG in Crisp 2017). It is possi- makes the first option, adjusting the budget in line with the ble that energy interconnections between Ireland, the UK, and new pool of contributions, extremely complex, even though it the rest of the EU will be part of the negotiations of the future would be more accurate and the size of the adjustment smaller. relationship of the UK with the EU. Given the fact that the issue of the border with Northern Ireland is already proving contro- The second option is quite controversial, possibly facing re- sistance from those member states that currently contribute the versial, there is uncertainty about what the future may bring for most to the rebate (France, Spain, and Italy—EC 2015d). energy security of supply, particularly for Ireland. Making budget cuts in all areas in a proportional way may On a positive note, there are also arguments saying that the seem fair and relatively simple, but it bears the risk of leaving EU will improve its renewable energy outlook without the UK, sensitive areas without enough funding. This takes us to the since the country is far behind its targets for 2020 whilst other fourth option of assigning levels of priority to different policy member states are making significant progress (Lycetts 2017). areas and cutting the funding of those with the lowest priority. All in all, Brexit is causing uncertainty, so it is difficult to Again, though feasible, this too can be controversial: It poses assess to which extent there will be a positive or negative questions about who is going to decide, and how the levels of impact from the energy governance perspective. However, priority will be defined. If environment and sustainability are given the slow progress observed on the Energy Union negatively affected, which may be a possibility given the low- roadmap (EC 2017b), with status reports based on data mostly ering of the profile that issues such as climate change are related to 2015 (EC 2017c), it seems that 2016 was almost a taking in the political arena (Simms 2017), this can impact lost year with regard to the necessary steps to achieve the the funding for energy projects that try to address climate desired targets. change and sustainability-related problems. Europe could end up with a watered down Energy Union Strategy. Brexit will reduce the number of EU Members of the The new approach of the US government European Parliament (MEPs) and will affect the distribution of votes. It will also affect the Commission composition, and In a globalised world, what happens in one country can have there will be one fewer country making decisions. One party impacts elsewhere. Given the traditional energy dependency less in a negotiation theoretically should lead to decisions of many Western countries, this is particularly true concerning being made more quickly, but what if the parties left at the issues related to climate change and energy. J Environ Stud Sci Before the last US election (November 2016), some already portfolio standards and have been doing so, and there have warned of the possible consequences for climate and energy been multistate efforts to promote renewable energy and ad- policies of a Trump win. The view was that his victory would dress the impacts of climate change. It appears clear that the lead to substantial changes/upending of climate change poli- focus of a majority of states is on continuing with the benefits cies, as his position is radically opposed to the policies adopted that the promotion of renewables has been providing, even if by the Obama administration (Crisp 2016). It could soon be there is no support from the central administration. In the long observed that the fears were not unfounded, when in March term, however, the removal of the Clean Power Plan can make 2017, he took the first steps to dismantle Obama’s Clean Power things change (Divva Reddy, from Eurasia Group in Crisp Plan, gaining criticism in and out of the USA, including from 2016) as it would take out of the picture a long-term vision the EU institutions (Commissioner Arias Cañete) (Smith et al. for a low-carbon economy in the USA. This could be an op- 2017). A few months later, he decided to withdraw the USA portunity for Europe to regain the leadership in renewables, from the Paris Agreement (Selin 2017) creating a generalised which the Energy Union is calling for. The UK, however, will distrust in the USA with regard to multilateral cooperation. not be part of that leadership, unless it specifically agrees to The EU has been firm in its criticism of the new US posi- support the EU’s joint efforts as part of a Brexit deal. This tion, but what can this actually mean in practical terms? There could have been a possibility in the past, but it is doubtful in have been radical calls within Europe to isolate the USA and the current environment, given that the manifesto of the stop any re-initiation of transatlantic trade talks (Martin Conservatives in the last election (Conservatives 2017)did Schulz, candidate in the German elections), the rationale being not mention renewables and specifically supported shale gas. that as the USA is not assuming the costs of fighting against With regard to encouraging other countries to withdraw climate change, it would create competitive distortion, so no from Paris or not make the effort, Trump’s decision may have additional market access should be granted (Livingston and an indirect impact, but so far, the support to move into a lower- Brattberg 2017). The chairman of ArcelorMittal (from India) carbon energy system is strong and expected to continue called for Europe to stablish a ‘carbon border tax’ (Livingston (Simon Virley, from KPMG in Crisp 2016). and Brattberg 2017), which would allow European companies Since European energy imports from the USA are limited, to keep their competitiveness against third countries and main- the behaviour of the USA may not have a big impact on the tain the innovations to continue reducing emissions. diversification of energy imports as part of the Energy Union It has become apparent that the USA is losing the leader- plan. Therefore, even if Trump plans to stop shale gas exports ship role in the fight against climate change that it had taken in the future, the focus of the EU would still be to build bigger from Europe after the failure of Copenhagen in 2009. On one interconnection between member states. The UK can be af- hand, it has made visible the commitment of both China and fected more strongly (Simon Virley in Crisp 2016) since its the EU to work together, and strengthen their relationship fossil fuel reserves are in decline and are supportive of shale (Selin 2017). On the other hand, it seems that this time gas. So in theory, it could be interested in receiving imports. China is taking the leadership role, amid fears in American Thus, it could try to reach individually an agreement with the forums that the consequence of the exit from Paris will ‘make USA on this area, once Brexit becomes a reality. China great again’ (Carrington 2017). The election of Trump may not have a big impact on EU’s Areas in which the USA and the EU can work together even energy governance, at least directly, but it can have an influence in this environment have to do mainly with energy security, as on trade negotiations and energy security approaches, aside it is in the US interest that Europe reduce its energy dependence from the opportunity for the EU to take the leadership role on from Russia. However, this is also problematic, as the USA has climate change matters. However, given the fact that in the publicly opposed the Nord Stream 2 project (Livingston and future the action from the biggest emitters will be fundamental, Brattberg 2017). Regarding attempts for cleaner energy, there it is more likely that the world will look at how China behaves. can be possibilities of cooperation on nuclear and, given the This can have ramifications in other diplomatic areas. There is a preference for coal of president Trump, on carbon capture and risk for EU’s energy governance, if Eastern European countries storage. The latter is less likely though, since the EU is still such as Poland, heavily dependent on coal, cultivate ties with committed to getting away from coal, despite the maintenance Trump’s administration in order to break the path towards of coal subsidies previously mentioned, and the investments in decarbonisation that the EU has set and which they consider Carbon Capture and Storage (CCS) have not been completely as ‘utopian’ (Livingston and Brattberg 2017). successful (Livingston and Brattberg 2017). The main driver pro-renewable energies in the USA are state-led policies rather than federal ones, so in the short term, The OPEC decisions there should not be too many changes (Landis-Marinello 2017; Fitfield 2017). States have authority over the siting of In November 2016, OPEC reached an agreement to cut oil energy projects, they have the ability to create renewable production for the first time in 8 years, also including non- J Environ Stud Sci OPEC countries in the deal (Razzouk et al. 2016). The deci- problems of OPEC countries are not an EU priority, notwith- sion was seen with scepticism given the traditional incentives standing that lack of stability in those countries could trigger that individual countries have had in the past to breach the problems whose effects can expand worldwide. agreements. At this time, things look a bit different and the Issues that oil producer countries are facing shaped the agreement has been kept and in fact extended until 2018, after recent agreement reached at the OPEC meeting in Vienna a decision from Saudi Arabia and Russia in May 2017 (Reed (November 2017), to extend once more the cut on production 2017). In a way, the two decisions had some impact, namely until the end of 2018, and again including non-OPEC coun- temporary increases in the price of oil to $56.64 per barrel tries in the deal. The price of Brent (used as benchmark price (Fletcher 2016). However, prices went down again to around mostly in Europe) went up to $63.37 per barrel, but the West $53 per barrel (Reed 2017). Texas Intermediate (used as benchmark price by the USA) OPEC had recognised that part of its problems to keep went down to $57 a barrel (Wearden and Fletcher 2017). prices up and thus stable profits was related to excess of sup- This is a testament to the difficulties and volatility affecting ply (OPEC 2016), so the decision in November 2016 was oil prices and to the lower influence that these agreements trying to balance inventories (Razzouk et al. 2016). Low have in attempts to keep oil prices high. prices of oil had been acting as a disincentive for investments, Even if this purpose (high prices) were fulfilled, since the so there were fears that, in the medium term, lack of invest- EU is committed to decarbonisation, an increase in the price of ments would result in lack of supply and excessive prices as oil could only prompt further commitment in that direction to observed in previous oil crises (OPEC 2016). This may tem- reduce oil dependency. From the governance framework point porarily benefit oil producer countries, but the issues that of view, it could be expected that a big player in the energy would originate elsewhere would lead importer countries to- market like the OPEC could have an influence on energy wards alternative sources of energy, which would ultimately policymaking in the EU, but evidence seems to indicate that go against the producers’ long-term aims. this is not the case and that other actors, as previously dem- The problem now comes from the fact that prices are barely onstrated, play a more relevant role. going over the threshold supposed to be enough to boost in- vestments. This poses questions over OPEC’s continued ability to be a game changer in the energy market. There are three Concluding remarks main reasons for the current situation (Reed 2017): Firstly, predictions over oil reserves that push prices up are made as- Of the three events analysed by this paper, it becomes apparent suming constant increases in demand, but currently demand is that Brexit is the one with the highest likelihood to affect either not growing or not doing it as quickly as desirable (IEA energy policy governance in the European Union. Whilst the 2018). Secondly, linked to the decrease in demand, is the surge outcome for both UK and EU will depend on the result of the of electric vehicles. Technologies are progressing quickly and negotiations, it is foreseeable that the overall impact will be countries clearly favour investment in related innovations, fur- negative, understood as one that takes the EU away from its ther decreasing demand for oil (Prince 2017). Thirdly, the role commitment towards a low-carbon economy. The two main of shale gas, particularly in the US, needs to be mentioned. An reasons for such a negative outcome are, on one side, the increase in the price of oil makes shale extraction more profit- decrease in the level of priority assigned to environmental able, which increases supply in that area. Shale extraction is and climate change concerns, as shown by the disappearance more expensive than conventional techniques, but now, com- of the topic from political discourses. On the other side, we panies are finding the right financing instruments available so find the possible pre-eminence of countries less favourable funding is not a problem (Reed 2017). towards greener energy policy in the governance framework Could this scenario prompt any reaction from EU energy once the UK leaves the EU. policymakers? The likely answer is no. The EU and OPEC Trump’s approach to energy policy however could be pos- have been keeping regular meetings under the framework of itive; insofar, it could bring the EU back to a leadership role in the so called Energy Dialogue, the latest of which took place the fight against climate change, if China does not take the also in 2016 (OPEC 2016). Both parties share information lead first, as some are pointing. However, a joint leadership of about their current situation, common concerns, and forecast EU and China could also prevail. Increases in the price of oil for the coming years, but the reality of activities is reduced to could only contribute positively to enhance the EU’scommit- joint studies and completion of reports (OPEC 2016). A new ment to decarbonisation, so in that regard, actions from OPEC meeting should have taken place on the first half of 2017 but would have little impact. has not yet happened at the time of writing. Governance of The reduced progress observedsofar in theroadmap to the energy policy in the EU is unlikely to be affected by OPEC Energy Union can be attributed to the environment of uncertain- decisions, since EU policymakers already advocate for strate- ty created by Brexit and other internal affairs, as well as the gies that diversify energy sources and suppliers. Internal uncertainty over Trump’s approach towards Europe. So it is still J Environ Stud Sci Conservatives (2017) Forward, together. Our plan for a stronger Britain early to answer the question about the possibility of the Energy and a prosperous future. The Conservative and Unionist Party Union to fulfil its aims. However, with regard to the question Manifesto 2017 about EU’s energy policy being consistent and forward-looking, Corporate Europe Observatory (2017) The great gas lock-in. Industry it is difficult to give a positive answer. The issues highlighted by lobbying behind the EU push for new gas infrastructure. October this paper, particularly the ones related to Brexit and to a lesser Crisp, J. (2016) What President Trump could mean for energy and climate extent the possible influence of US energy policy under Trump, policy. Euractiv. 08 November 2016. https://www.euractiv.com/ dividing member states’ views on coal, pose doubts about the section/climate-environment/interview/what-president-trump-could- direction of EU energy policy in years to come. mean-for-energy-and-climate-policy/. Accessed 31 August 2017 It is not possible to measure if the negative aspects, coming Ecofys (2014) Subsidies and costs of EU energy. Final Report. Project number: DESLN14583. Study ordered by the European from internal events such as Brexit, will be overcome by positive Commission DG-Energy aspects coming from external events (Trump’spolicies and ESAD (2015) The price of austerity. March 2015. TUC OPEC agreements), but it seems unlikely now. What appears European Commission (2011) Communication from the Commission to clear is that the governance framework for energy policy in the the European Parliament, the Council, the European Economic and EU is going to change, and its shape and direction will depend on Social Committee and the Committee of the Regions. A Roadmap for moving to a competitive low carbon economy in 2050. Brussels, which actors and from which remaining member states take the 08.03.2011. COM (2011) 112 final lead. Since the political arena is changing more than ever within European Commission (2013) Communication from the Commission. and out of the EU, the overall picture is one of uncertainty. Delivering the internal electricity market and making the most of public intervention. Brussels, 05.11.2013. COM (2013) 7243 final. Acknowledgements I would like to thank the University of Chester for European Commission (2015a). Energy Union Package. Communication the funding provided to attend the 47th UACES conference in Krakow, from the Commission to the European Parliament, the Council, the where valuable feedback for this paper was received. European Economic and Social Committee, the Committee of the Regions and the European Investment Bank. A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Open Access This article is distributed under the terms of the Creative Change Policy. COM (2015) 80 final. Brussels, 25.02.2015 Commons Attribution 4.0 International License (http:// European Commission (2015b) European Commission—Fact Sheet. creativecommons.org/licenses/by/4.0/), which permits unrestricted use, State of the Energy Union—questions and answers. MEMO-15- distribution, and reproduction in any medium, provided you give appro- 6106_EN. 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Journal

Journal of Environmental Studies and SciencesSpringer Journals

Published: Jun 6, 2018

References

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