Energy Policy in the European Union

Abstract

The atmosphere of deregulation is just that - an atmosphere - while it may be some kind of necessary condition - at best - for deregulation and liberalization, it is by no means sufficient, as can be seen by the variety of sectors and modes of intervention that do NOT fit with the liberal market model. "Whether the energy sector should be treated as a market governed by commercial rules or as a sector to be managed by public firms lies at the heart of the political controversies over the internal energy market." (7) "In a Green Paper on a common energy policy, published by the Commission in early 1995, ensuring security of supply was presented as one of the main problems in the energy field in the years ahead, along with the environment and the continued work on the internal energy market, and in the White Paper that followed it, security of supply was one of the main goals of EU energy policy." (9) "1988 energy policy did not really develop beyond recommendations in the form of guidelines that were not binding on the member governments." (12) Early European Policy Two of the three original EU treaties, EURATOM and the ECSC were on energy, which belies the weakness of Europe on energy in the early years. The ECSC was created by the Treaty of Rome in 1952 and "created a de jure common market in coal." (14) "In terms of energy policy...the ECSC did not lead to the development of a common energy policy covering energy sources other than coal." (16) Euratom was created in 1957 to facilitate the peaceful use of nuclear energy. It didn't really work: the US became the key supplier of enriched uranium and France developed a national policy and it really only jointly funded R&D efforts. (17) The 1960s and 1970s was a mess. Neither of the previous treaties had foreseen the rise of oil in fuel use. There was no EU competency in oil, but only in these two areas. (18) Internal Market "The original intention of the Treaty of Rome was to create a customs union, and, gradually, a barrier-free market." (19) The turning point for energy, though, was the internal energy market proposal. The Single European Act (SEA) was adopted in 1986, and it changed decision-making procedures away from unanimous voting, which was needed to pass the 300 directives required to make the internal market. Because governments had relinquished veto power, decision-making power was also transferred mainly to the COuncil of Ministers. (19-20) This all meant that Europe got greater independence from national governments. Energy was NOT included in the White Paper on the internal market. It wasn't included originally because it was viewed as too difficult, and was only added later, "as late as 1988." (20) "Work on developing an IEM started in 1988. The first four directives came in 1989. They were then restated, and extended beyond the EC area, through the European Energy Charter. (21) "Although the member governments supported the idea of an IEM, they had strong reservations about the parts of it that directly affected their domestic energy sectors. In other words, they supported the general concept, seeing that it might bring advantages to energy trade, but were wary of losing national control over energy policy." (21) Maastricht Summit Britain, Holland and Germany opposed the inclusion of a Common Energy Policy in the treaty, reflecting their positions as producers. The final treaty did not include a chapter on energy, but the Commission followed up with a common energy Green Paper in 1995, followed by a White Paper. France was cautious, and it rejected the inclusion of an Energy Chapter in the end. (89) French Policy "How to restructure the energy sector has been a major preoccupation in French energy policy in recent years, and in 1993 the govenrment set up a group to assess the problem." The group's report was called the Mandil Report, and was published in 1994. France appied to join the IEA in 1991. FRANCE ONLY BECAME A MEMBER OF THE IEA IN 1994!!! "The French govenrment has been adamant about protecting its own version of partial privatization, and has battled with the EU Commission for several years on this issue." (39) The Germans and the French had been at each other over IEM policy. It was over coal. The Germans said the French had been too pushy over coal subsidies, becuase France wanted to export electricity to Germany. The issue was dealt with bilaterally between Germany and France, that is, between Kohl and Mitterand. They reached an agreement in 1989. France accepted German monopoly status for their utilities, and later phasing out of coal subsidies than demanded by the Commission. Germany in return accepted French electricity. (82-3) The Commission didn't complain about the outcome, supporting 'negotiated solutions' between member states. "Of the four states in this study France has been the most active in the IEM process. It has sought to shape the IEM in a way that benefits its domestic electricty interests, and has thus pursued an offensive international strategy...Finally, France has been able to adjust domestically to the IEM regime as the latter has evolved: it hsa sought to impose commercial criteria on publicly owned energy companies and has carried out a certain amount of privatization." (134-5) EUROPEAN COMMISSION "The main actors in energy policy in the Commission are DGXVII (Energy), DGIV (Competition), DGXXI (Customs Union and Indirect Taxation), DGXII (R&D), and DGXI (Environment)." (107) Proposed directives from one of these have to be cleared by the others before they can be sent to the EP.