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Energising Europe

Climate Change, Energy Security
& Europe’s Next Big Project

Abstracts

STAKEHOLDER INVOLVEMENT IN THE UNITED KINGDOM’S RESPONSE TO THE EU’S CLIMATE CHANGE PROGRAMME

Milena Büchs

This contribution analyses from a political science perspective the ways in which the UK government involves stakeholders and policy-makers from ‘neighbouring’ policy areas in implementing the EU’s Climate Change Programme (2000, 2005) and the Greenhouse Gas Emissions Trading Scheme (2005).
Broader frameworks in which EU climate change policies are embedded, such as the EU’s Sixth Environmental Action Programme (2002-2012) and the Sustainable Development Strategy (2001, 2006), clearly state that member state governments are expected to involve stakeholders at all levels in national policy-making implementing EU environmental policies. Broad involvement of stakeholders and policy-makers from related policy fields appears to be crucial in the implementation of EU climate change policies as these policies touch upon a range of different interests and potentially are in conflict with other policy areas such as economic and labour market policy. At the same time, it is important to ensure fairness and transparency of consultation processes.
Based on the analysis of policy documents and expert interviews this contribution will examine actor involvement in the implementation of EU climate change policies by the UK government to provide an initial examination of issues such as range of involvement, transparency and accountability and the means of mainstreaming climate change issues into other policy areas.

DELIVERING CARBON EMISSIONS CUTS: MARKETS OR CITIZENS?

Anna Syngellakis

On January 23^rd the Commission tabled an ambitious legislative package which it believes will fight climate change and promote renewable energy, as the EU has long committed itself to do. The Commission is confident of ticking all the boxes: to meet carbon emission cuts targets and to benefit the economy; we are told that the proposals are industry-friendly, jobs-friendly, and consumer-friendly.
A few days later, on January 29^th, the Commission announced the launch of the Covenant of Mayors; the Commission believes it to be the most ambitious initiative to date involving the citizens in the fight against global warming. The Covenant consists of the formal commitment of the adhering cities to go beyond the objectives of the EU in terms of reducing their CO₂ emissions through energy efficiency and renewable energy actions. Almost 100 cities throughout Europe, including 15 capital cities, have expressed their early support for the Covenant.
Is the Commission hedging its bets? If the markets do not deliver, perhaps the citizens will?
It has been doubtful so far that the markets are delivering. The debacle of the first ETS round gave much ammunition to critics of this particular market mechanism. Are the new proposals a better design? they seem to raise just as many questions.
This contribution will argue in favour of engaging with the citizens. Designing instruments appropriate for the citizens needs to be considered seriously and urgently.

THE IMPACT OF EUROPEAN INTEREST GROUP ACTIVITY ON THE EU ENERGY POLICY - NEW CONDITIONS FOR ACCESS AND INFLUENCE?

Maren Becker

In the energy sector the European Union has to face new realities. The rising threat of climate change and the uneven distribution of energy supplies among countries with its implications for energy security form challenges that require the realignment of conventional strategies. With the Reform Treaty the mitigation of global warming linked to energy policy as well as matters of energy security gained intensified importance. The question of who will determine the content of new strategies and the instruments being suitable to attain these objectives arises. Existing theories on interest group activity state that especially internationally operating companies have an impact on the policy outcomes. In contrast to this, I assume that due to the rising importance of renewable energies in regard to both climate change and energy security, new roads for access will be opened to new actors. Based on these considerations, I will examine the possibilities for access and influence of European interest groups representing fossil energies and compare them to those representing the renewable energy sector and environmental issues. The European Commission will be regarded as the central addressee for interest group activity [186].

CLIMATE CHANGE- A FORUM FOR YOUNG PEOPLE

Nicholas Bardsley, Graham Smith & Corinne Wales

It is important for policy makers to understand people’s attitudes towards climate change issues. Most research into such attitudes has been conducted on adults. However, it is also the next generation that need to be convinced of the need for mitigation and adaptation measures, and theirs and subsequent generations that will bear the costs of policy failures. Extant research has also relied heavily on traditional survey instruments; deliberative techniques which enable respondents to form views on complex issues have been identified as under-used (Anable et al. 2006). We conduct a repeated opinion poll on a sample of 90 British adolescents, to measure how their attitudes change over a period of reflection which culminates in a public debate. Topics probed include the apportionment of responsibility between individuals and government, the perception of urgency and the ranking of climate change amongst other policy concerns.

TRANSATLANTIC CLIMATE POLICY: TOWARDS A COPENHAGEN PROTOCOL IN 2009

Christian Hald-Mortensen

Denmark is a small state with a mission in global climate policy. As the host of the UN Climate Change Conference in December 2009, Denmark’s new Minister of Climate Change and Energy has declared that the United States is the “key” to a global agreement. If the U.S. does not accept reduction targets in 2009, China and India are unlikely to accept even mild emissions reductions. Yet, structural conditions make ratification unlikely, i.e. 50% of U.S. electricity comes from coal. In 2002, President Bush pledged to reduce energy intensity of the economy, but as the U.S. population keeps growing by 1%, absolute emissions are unlikely to fall.
How can a small state such as Denmark effectively engage the United States, relying on the clout of the whole EU’s market and consumers?
Setting targets is not enough for 2009; U.S. climate policy is opposed to targets. Should Denmark instead push for the EU to engage the U.S. in clean technology cooperation, the preferred policy choice of the U.S. federal government? Or should the Danes push for more cooperation on a global emissions trading scheme, aware that a regional U.S. climate change initiative has been launched by several states?

REGULATING CLIMATE CHANGE AND GOVERNING ENVIRONMENTAL RISK IN THE EU

Shane Fudge & Yacob Mulugetta

The debate on climate change is the latest issue to have extended the EU’s influence in regulating environmental risk. Environmental issues have often served to illustrate the benefits of European level regulation in regard to often ambiguous national responsibility for trans-border pollution problems. Since the mid-1970s for example, the EU has been influential in enforcing national policies in areas as diverse as acid rain, ozone pollution, waste, water and leaded fuel. The EU’s development as an active player and instigator in the dynamics of environmental standard setting at an international level has also enabled it to make a more effective contribution to the debate at a global level, particularly in the area of climate change. While the Kyoto ‘flexibility mechanisms’ are perhaps the most significant developments to identify EU policy on climate change, formulating effective policy formats has often been a difficult balancing act, particularly with regard to the reconciliation of environmental goals and economic integration. The business lobby has been particularly influential in shaping the implementation of the Kyoto Protocol where the primary concern has been to maintain competitiveness. Given its position as an ‘opportunity enabler’ for a range of stakeholders, the paper considers whether the EU has a role to play in encouraging ‘climate solutions’ – such as those offered by NGOs, civil society groups, and green political parties – which are able to broaden the discussion at the level of effective policy development and deployment.

CLIMATE AND ENERGY POLICY TEMPLATES: TOP-DOWN OR BOTTOM-UP CONVERGENCE?

Joseph Szarka

A frequent tendency in climate and energy policy analysis is to concentrate on policy instruments per se and recommend implementation of a promising instrument on a cross-national basis. This sits well with a universalistic, ‘downloading’ approach to policy convergence across the EU - for example, the directives on renewable energy and emissions trading. However, it begs the question of why policy actors (often at member state level) come to prefer specific measures in the first place, and how and why particularistic preferences are ‘uploaded’ to the European level.
To improve understanding of these issues, my research has been developing the concept of ‘national policy templates’. By ‘policy template’ is understood a raft of interconnected policy measures which arises in a particular national context due to the following framework conditions: natural resources, economic and industrial structures, technological trajectories, environmental pressures, institutional traditions and policy routines. This approach argues that policy makers have limited room for manoeuvre in the selection and use of new policy instruments, being constrained by path dependency arising from the framework conditions. This paper will present findings related to France, Germany and the UK. It will identify three distinctive national policy templates related to energy and climate, indicate the reasons for their existence and explore the motivations for exporting them to international and supranational levels.

COMBATING CLIMATE CHANGE AND SECURING ELECTRICITY SUPPLY: THE ROLE OF INVESTMENT PROTECTION LAW

Anatole Boute

This proposal builds upon the idea that combating climate change and guaranteeing security of electricity supply can relate to each other in a mutually reinforcing way. In order to reap this potential ‘double dividend’ of future electricity investments, these policies need to be aligned. However, current climate policies appear to conflict with the underlying principles of security of supply policies, especially with the necessity to create a long-term stable and secure investment climate.
This contribution proposes to examine to what extent investment protection law could provide investors with the required regulatory stability and certainty. This field of law aims indeed at protecting investors from unreasonable infringements of their property rights. Based on these provisions, climate-friendly investments suffering from ex post regulatory changes could try to obtain that the commitments existing at the moment of investing be respected. However, on the other hand, holders of carbon-intensive assets could try to obtain compensation for the imposition of drastic emissions reductions affecting the economic value of their investments. This fear has been highlighted by the legal challenge of the Emissions Trading Scheme before the Court of Justice of the European Communities.
It is argued that the ability of investment protection law to guarantee the sovereignty of states to combat climate change while providing investors with sufficient certainty will determine the credibility and thus feasibility of future climate initiatives.

THE USE OF BORDER TAX ADJUSTMENT AS A TOOL TO REDUCE GREENHOUSE GAS EMISSIONS

Helen Tung

The paper is to examine the use of Border Tax Adjustment as a tool to reduce greenhouse gas emissions. A comparative study of the UK, EU ETS (European Trading System), New South Wales Greenhouse Gas Reduction Scheme (GGAS) and the Californian AB32 models will be drawn upon.
Under the mechanisms set up under the Kyoto Protocol in the 1992 United Nations Framework Convention on Climate Change (UNFCCC), that is the joint implementation, the clean development mechanism and international emissions trading, the European Union has developed the largest company level scheme for trading in emissions of carbon dioxide.
BTA are import fees levied by carbon-taxing countries on goods manufactured in non-carbon taxing countries. The aim is to ensure that there is a fair level playing field in international trade. In Europe there are current discussions of levying EU carbon tax on goods from countries which refuse to implement the Kyoto Protocol after 2012.
Against the above background, the aim of the EU and Australia comparison is to compare the current trading methods and whether the BTA would provide a more efficient system of reducing carbon emissions. The aim is to study the difference throughout Phrase I and the lessons that could be learnt for Phase II 2008- 2012. The greater issue would be how the BTA would affect those states that have not signed the Kyoto Protocol and whether it would be an efficient tool.

RESOLVING THE EU’S ENERGY SUPPLY DILEMMA: IS MARKET LIBERALISM IN AN AGE OF ECONOMIC NATIONALISM THE BEST APPROACH?

Francis McGowan

The EU’s higher profile in energy policy matters is arguably due to the increased importance of market liberalisation as a policy objective over the last twenty years. Given the EU’s own competences in the internal market and competition policy, the European Commission has accordingly been able to play a more active role in energy policy-making. Moreover it has been active in extending this approach to its energy relations with its neighbours as manifest in the Energy Charter Treaty, the European Energy Community Treaty and bilateral agreements. The European Commission has been keen to assert the centrality of market liberalisation to its future energy policy and energy diplomacy, notwithstanding the changes that have taken place in energy markets. Given that there appears to be an increased interest in “national champions” amongst both energy exporting countries and at least some EU member states, how far can the EU sustain a strategy of market liberalisation? The paper will place current policy dilemmas (and the EU’s role) in the context of a shifting energy policy agenda – essentially from a supply security “economic nationalism” to market liberalism and back again – and consider how future EU policy might have to adapt in response to these changes.

NORD-STREAM OR NABUCCO? EU RESPONSES TO RUSSIAN ENERGY NATIONALISM.

Bo Petersson

Under Vladimir Putin, Russia has returned to a position of renewed self-esteem and an evident international assertiveness. This is largely due to the rising world market prices of fossil fuels. Russia is a major supplier of oil and, above all, gas to the European market. As of 2006, Russia supplied about 50% of the total imports of natural gas to the European Union, and was believed to have about 30% of the world’s total reserves of gas. Not being experienced as volatile as the oil-exporting countries of the Middle East or Central Asia, Russia has skilfully exploited its position a close-by supplier of fossil fuels. The tables have turned in ten years, and Russia can again be considered a superpower, at least in the energy field.
Against this background, it is imperative to ask what the proper EU policies should be. Should Russian supplier hegemony of natural gas be accommodated according to the formula used by i.a. Germany in connection with the NordStream project? This strategy would seem to have the drawback of favouring individual EU countries at the expense of others, such as the Baltic States and Poland. Or would the answer rather be found in the proposed Nabucco project, where natural gas produced by other states outside Russia would be transported to the markets on routes avoiding Russia? This would have the drawback of alienating Russia and paving the way for Russian countermoves such as the SouthStream project. Analysing intra-EU debates on the two main options thus represented as a background, the paper also traces Russian official discourse on Russia-EU energy relations to see if energy security concerns and considerations are linked to contemporary general great power ambitions of Russia.

ALL GEO-POLITICS IS LOCAL: THE MICRO-POLITICAL FOUNDATIONS OF RUSSIA’S EUROPEAN ENERGY STRATEGY

Samuel Greene

Even as Europe searches for alternative sources of energy, it is clear that Russia will remain an important – and, in some cases, dominant – supplier of hydrocarbons for the foreseeable future. But as Russia has increased its political and economic assertiveness, not least in its relationship with Europe, analysts and policymakers have turned from the question of “Who is Mr. Putin?” to “Who is Mr. Gazprom?” Traditional views of corporate behavior and market-based trade, however, offer little help in understanding how energy companies such as Gazprom think and operate, or how Moscow envisages the future of its relationship with Europe. This paper offers an interpretation of Russia’s European energy strategy grounded in the realities of Russian domestic politics. In this view, behavior is explained better by focusing on tactical maneuvering for the control of administrative resources within Russia, rather than long-term strategic thinking. Companies are seen to seek profit in part to shore up the political standing of their controllers. Meanwhile, an aggressive, adversarial stance vis-à-vis Europe is seen to be accompanied by the ‘Europeanization’ of a large portion of the Russian political elite. Europe, in turn, would be best advised to hold fast to collective policymaking, to tie profit-taking as closely as possible to observance of governance standards, and patiently to insist on a strategic consolidation of the relationship with Moscow.

ENERGY SECURITY AND DEMOCRATISATION: TURKEY AS THE BRIDGE IN THE TRANSATLANTIC DRIFT

Özgür Ünal Eriş

The end of the Cold War, the collapse of the Soviet Union and the September 11 attacks have brought serious challenges to the stability of the international system. The parameters of Western threat perceptions have been fundamentally changed. Access to energy was always seen as a hard security threat related to economic and military issues but given the fact that from many different perspectives it concerns the societies and human factor not only nations, it is now considered a ‘new/soft’ security threat.
However, one should emphasize that the European Union (EU) and the United States (US) still continue to differ on the definition and how to counter these threats. Specifically on the concept of energy security, while the EU treats this issue as a soft security and formulates its energy policies with other states by putting the concept of democratisation and liberalisation at the core, the US continues to look at this issue as a national interest in traditional terms.
Given this background, the paper that I am proposing to present will specifically analyse the different perceptions and strategies of the EU and the US on the concept of energy security and link this with the democratisation prospects for the oil producing countries of the Caucasus; such as Azerbaijan and Georgia. It would be interesting to mention how Turkey takes place in this comparison as it is a candidate for EU membership that is in the negotiation process for accession, an important economic and military ally of the United States and has close ties with the countries in the Caspian region.

IS THE CURRENT REGULATORY APPROACH ABLE TO SECURE FUTURE ENERGY SUPPLIES GIVEN CURRENT GEO-POLITICAL REALITIES?

Aldo Spanjer

We examine the future European security of supply policy. We show that the international gas market is changing into a direction opposite to the internal European gas market, often referred to as the new energy paradigm. Europe’s current, competition-oriented regulatory policy will secure supplies under the assumption that an internal European gas market eventually develops. We analyze whether this approach is robust to changes in the market environment, i.e., whether it also secures supplies in the new energy paradigm. We argue it does not. Rather, to secure future energy supplies, a different approach is required which is less emphatically focused on promoting competition. We propose strategic policy options to secure supplies in the new energy paradigm.

RENEWABLE ENERGY: POTENTIAL FOR THE POLICY BEST PRACTICE TRANSFER BETWEEN THE EU AND RUSSIA

Andrei Belyi

The paper suggests an overview of the existing policy and market based mechanisms which have helped some European countries to boost their renewable energy technologies (e.g. wind in Germany, Denmark and Spain; solar thermal in Austria, biomass in the Nordic countries). The overview allows a general understanding of the barriers to the promotion of renewables per source and per country. Furthermore, a potential for similar renewable energy policies are analyzed in the context of the Russian Federation. The main political interest is related to the European and Russian objectives to slow down a demand growth for gas inside Russia for its better availability in Europe as well as for the commitments within the framework of the Kyoto Protocol.
The paper includes four parts: (1) general introduction to the renewable energy policies and barriers to each technology promotion; (2) success stories of the renewable energy technology promotion in some European states; (3) potential for the renewable energy policies in Russia, considering the existing success stories in Europe; (4) policy options for the EU-Russia cooperation in the field of renewable energy. A related presentation would include 8 slides.
The paper suggests a policy analysis, which is partly based on the previous study on the renewable energy policies in the European Union accomplished by the author in 2002. Here, a new idea is proposed: to analyze the potential for the renewable energy policies in Russian political and economic context, considering the experience in Europe. Policy mechanisms for renewable energy are: feed-in tariffs, subsidies via tax exemption, market mechanisms (green certificates and emission trading scheme) as well as voluntary mechanisms. Policy analysis proposes a number of policy options, which are related to the Russian legislative system, policy of public awareness on renewable energy and a Pan-European market mechanisms of the green certificates.

CAN CARBON MARKETS SUPPORT WIND ENERGY INVESTMENTS?

Glória Rodrigues & María Isabel Blanco

This paper discusses whether the EU Emissions Trading Scheme is the most effective way to control greenhouse gas emissions while at the same time promoting wind energy investments. We examine whether CO₂ prices could eventually replace the existing support schemes for wind and if they adequately capture its benefits. We find out that the ETS contains a number of flaws that have prevented it from boosting renewables; notably the free allocation of emissions permits, the influence of national governments on the allocation process and the exclusion of key economic sectors. In addition, CO₂ prices can only reflect the beneficial impact of wind on climate change but not its broader benefits to society, such as security of supply or employment creation. The analysis also looks at the effectiveness of the Kyoto Protocol flexible mechanisms to trigger wind energy projects and technology transfer in developing countries. CDM and JI project-based schemes improves the return rate of wind energy projects in third countries, but it is the local institutional framework and the long term stability of the CO₂ markets which matters the most.

A SOUTHERN PERSPECTIVE ON DIVERSIFYING NATURAL GAS SUPPLY. THE CASE OF SPAIN

Francisco Pérez & Jordi Vaquer i Fanés

In the European Union (EU) context, Spain is a relative latecomer to the massive use of gas in its energy mix with the fastest growth rate, nearly 12% p.a. between 1990 and 2004 (BP, 2005). In a comparatively short period of time, it has succeeded in achieving a healthy balance between the amounts of natural gas coming from eight different countries from four continents (Algeria, Nigeria, Qatar, Egypt, Trinidad and Tobago, Norway, Oman, Libya), despite being less than 300 km. distant from Algeria, the World’s sixth natural gas exporter. Spain is increasing its supply capacity: it is building a second underwater gas pipeline linking with Algeria (MEDGAZ) and plans to enlarge its connection with the rest of the EU via France. It has valuable business links and expertise in dealing with African, Arab and Latin American producers – in stark contrast with most EU member states’ focus on North Sea and Russian gas – and it is by far the largest point of entry of Liquefied Natural Gas (LNG) to the EU (46% of the total EU and 3^rdworldwide importer, BP 2006) leading to a more flexible and global gas trading. This contribution aims to analyse the way in which Spain’s gas supply strategy developed from the government, industry and international relations perspectives, and to see which of the lessons learnt in the process might be useful to the EU as a whole in its quest for diversifying gas sources and reducing dependency on Russia.

ELECTRICITY SECURITY VS CLIMATE CHANGE: EXPERIENCES FROM GERMAN AND GREEK ELECTRICITY MARKET

Konstantinos Chalvatzis & Elizabeth Hooper

Electricity generation in different countries is based on a variety of fuel mixes compromising solid fossil fuels, oil, natural gas, nuclear and renewable energy sources. While in the past, national energy agendas have directed the optimal utilisation of domestic resources as a means to achieve supply security, today’s environmental debates are influencing the electricity fuel mix in new directions. The present paper examines the electricity sectors of Germany and Greece in an attempt to identify the policy and technology choices implemented in both countries. The country selection is deliberately made to facilitate an extended overview of national agendas, various domestic energy resources and industrialisation levels still within the common EU framework. Special focus is placed on policies related to two objectives, the climate change mitigation and the increase of electricity supply security. Through a comparative assessment of the knowledge gained in the two different countries the authors provide insights and suggestions that allow for an improved understanding of the trade-offs and synergies that various policy options may introduce.

THE AIRLINE INDUSTRY AND GLOBAL WARMING

Martin Staniland

Air transport has become the focus of criticism within the EU because of the growing, though still relatively small, contribution made by the industry to the accumulation of greenhouse gases. Such criticism has given rise to the European Commission’s (now-adopted) proposal to include air transport in the EU’s Emissions Trading Scheme (ETS) which in turn has provoked both argument between interested parties within Europe and strenuous objections from governments and airlines outside the EU.
This paper will briefly examine the environmental impact of the air transport industry in Europe and the industry’s record in reducing its impact. It will then consider the assumptions and logic of the legislation extending the scope of the ETS to air transport and will assess the criticisms of this legislation put forward by the industry, environmental organizations and observers and experts. It will conclude by examining some of the issues likely to arise in the application of the ETS to civil aviation.

THE ‘RENEWABLE REVOLUTION’ AND THE CAP - POLICY INTERPLAY AND THE ROAD TO REFORM

Malena Rosén Sundström

Over the last few years, the European Union (EU) has taken several steps to increase the production levels of renewable energy. This has had notable implications for a number of different policy areas. The focus in this paper is the interplay between policy areas –primarily agricultural, energy and climate related – in the EU. The launch of an integrated EU climate and energy strategy in March 2007, and the ensuing policy processes, has significantly affected the interplay between these areas. This new nexus of processes raises questions pertaining to the CAP. How have energy- and climate policy related concerns been incorporated into the CAP thus far? How have member states in the Agricultural Council reacted to the sudden increased emphasis on bioenergy? How, if at all, will CAP considerations influence the development of EU energy- and climate policies? The paper addresses these questions, and concludes with a discussion on whether the policy interplay with regard to renewable energy might open up a window of opportunity for a more thorough reform of the CAP in the future. In essence: will the “Renewable Revolution” also mean a renewed CAP?