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About this book

This broad-ranging text provides an analysis and assessment of the European Union's energy policy. It examines the components of the internal energy market alongside energy policy and politics on the international stage, and in doing so outlines the increasing importance of this global issue.

Table of Contents

Introduction

Abstract
Without doubt, energy security is one of the major international political issues of the twenty-first century. A glance at the annual forecasts of the International Energy Agency (IEA) from recent years (e.g. 2012: 52) reveals a projected rise in global energy demand, as much as 35% between 2010 and 2035, of which oil, coal, and gas are expected to account for roughly 60%. This is disquieting because these sources are exhaustible, geographically concentrated, and increasingly more volatile, raising the stakes of energy security as countries compete for access to resources on the one hand and search for alternatives on the other. The game is not new. Energy has been central to geopolitics at least since Sir Winston Churchill ordered the conversion of the British Navy from coal to oil. While substantial advances in recent years in renewable technologies and efficiency raised the hope that energy use could be both environmentally sustainable and politically less sensitive in the near future, other developments, including Russia’s intervention in the Crimea, the unravelling of the Middle East and North Africa, and the shale revolution in the US, demonstrate that the struggle for comprehensive energy security will continue to force countries and their leaders to see access to energy resources as vital to their national security.
Samuel R. Schubert, Johannes Pollak, Maren Kreutler

Chapter 1. The EU’s Energy Portfolio

Abstract
Energy policies encompass crucial public policy decisions over the production, distribution, and consumption of energy, from incentives, taxes, and regulations to the establishment of strategic national security goals. Every decision affects specific interest groups differently and can significantly affect a country’s economy. Politicians, lobby and interest groups, environmental activists, and also industrialists argue over which resource to use, as well as whether, when, and how to switch to alternatives. Governments order their citizens to change their energy-use habits, buy new light bulbs, and drive cars that are more fuel-efficient. Determining the optimal policies to deliver the best possible political and economic outcome is no easy task. Should governments just leave energy prices to the markets or tax energy use and invest the receipts in alternative resources and technologies in the hopes of strengthening domestic markets and reducing dependency on external supplies? Even if one uncovers the best approach for a particular state, can one also conclude that the approach is equally valid for a group of nations as diverse as the European Union?
Samuel R. Schubert, Johannes Pollak, Maren Kreutler

Chapter 2. Principles of Energy, End Uses, and the Global Energy Balance

Abstract
This chapter introduces readers who do not have a background in energy to the key information that they need to make sense of this policy area. It begins by explaining some of the fundamentals of the economics of energy, thereby building upon the foundational principles of energy laid out in the Introduction — that energy comes in two forms, kinetic or potential; that energy can be converted from one to another; and that a variety of energy-carrying resources store energy unequally and are either finite or not. With a firm grasp of energy’s unique and distinguishing economic concepts in hand, we proceed to examine its three main end uses: electricity, heating, and transportation. Keeping in mind the definitive goal of comprehensive energy security, we identify how these end uses drive policymakers to incorporate internal, external, and multidimensional policies. We conclude by contextualizing these end uses in terms of the global balance of supply and demand for the most widely used finite energy resources (oil, gas, coal, and uranium).
Samuel R. Schubert, Johannes Pollak, Maren Kreutler

Chapter 3. The Changing Nature of EU Energy Policy: Theory and Milestones

Abstract
The EU’s conception of energy policy has transformed over time, reflecting the continuously changing debate of the Union’s competences and functions and its theoretical understanding. Given that energy policies are ‘product[s] of the interaction of material and technological factors with political ones’ (Prontera 2009: 1), its analysis must always be contextualized, that is, put into the right historical context. For example, the supranational- intergovernmental dynamics of integration in the aftermath of its failed attempt to pass a constitution, as well as the dramatic repercussions of the financial crises hitting the Union hard since 2008, and the new tensions between Russia and the EU have played an important role in structuring its energy objectives - member states have simply become more reluctant to transfer more competences to the supranational level while at the same time publicly calling for a new Energy Union. Furthermore, given Europe’s dependence on foreign energy sources and their changing form and nature, the global nature of energy questions needs to be considered. Indeed, energy politics is a field where the butterfly effect is not only a common trope but a fact. Embedded into changing global flows of energy, reaching from US shale gas extraction to Canadian tar sands, from Australian LNG to Japanese nuclear power, from the exploration of the Caspian Littoral to Turkish pipeline projects, the Union seems more of an outfielder than a pitcher.
Samuel R. Schubert, Johannes Pollak, Maren Kreutler

Chapter 4. Who Does What? The Main Actors

Abstract
This chapter examines the actors involved in EU energy policymaking and illustrates the interdependence between the major players in the policy process, including formal and informal actors. Wh? are these key actors? How do they relate to one another in energy policymaking, and what instruments are available to them? Due to the divergent degrees of Europeanization in the different areas of European energy policy, the potential to influence the decision-making process differs considerably between actors. Energy policies in the EU primarily remain the responsibility of the member states and are an essential element of domestic politics, not least because any domestic economy is dependent upon reasonably priced electricity for manufacturing and private consumers need affordable home heating as well as fuel for their cars. Thus, domestic lobbying groups in modern democracies try to exert as much pressure as legally and reasonably possible on their governments in order to ensure that the actions and policy choices of that government (internal and external) reflect their interests. Governments, in turn, attempt to realize domestic interests in international negotiations and, in so doing, attempt to mediate between different levels. Putnam describes this two-level game from the perspective of government leaders as follows (1988: 434):
Across the international table sit his foreign counterparts, and at his elbow sit diplomats and other international advisors. Around the domestic table behind him sit party and parliamentary figures, spokespersons for domestic agencies, representatives of key interest groups, and the leader’s own political advisors.
Samuel R. Schubert, Johannes Pollak, Maren Kreutler

Chapter 5. Building a Common Internal Energy Market

Abstract
Installing a common internal energy market is of paramount importance to the EU and its member states, and has been for decades. However, as of today the respective national energy mixes and market prices still vary widely across the Union (see Chapter 2, Section ‘The three end uses of energy’). According to the European Commission, a common market would facilitate lower consumer prices, spark investments in vital infrastructure projects - which in turn would allow for easy energy transportation between the member states (and thus mitigate exogenous supply shocks by allowing multiple points of entry by diverse suppliers) - and foster the development of affordable substitutes and renewable forms of energy. In essence, the Commission presents the common energy market as a major piece of the puzzle to cure the ills of Europe’s energy malaise; one that consists of high external dependence, the lack of int er connectivity between a regionalized infrastructure, high degrees of state involvement in energy companies, substantial differences between energy prices in the member states, and widely divergent interpretations of how to secure supply. Thus, the internal energy market carries significant implications for both of the other energy policy dimensions (external and multidimensional), and constitutes, through fair competition, a core pillar of comprehensive energy security.
Samuel R. Schubert, Johannes Pollak, Maren Kreutler

Chapter 6. Climate Change, Energy Efficiency, and the Quest to Expand the Use of Renewable Energy Sources

Abstract
In recent years, the Commission increasingly emphasized the importance of finding ‘cost-efficient ways to make the European economy more climate-friendly and less energy-consuming’ (European Commission 2015a). To that end, responsibility for all climate-related topics previously held by the DG for Environment was assigned in February 2010 to a DG for Climate Action. In 2014, Connie Hedegaard, then Commissioner for Climate Action, noted that the ambition of the EU member states in realizing these targets should serve as a motivation for other countries to similarly aim for environment-friendly economic growth (Hedegaard 2014). Hedegaard’s comments are indicative of how climate actions stand at the crossroads of internal and external policymaking. It is internal insofar as it relates to the regulation of energy efficiency standards and the promotion of renewable energy forms in the EU. The external dimension applies to the EU’s international obligations and its claim to fame as a united political force on the world stage. The EU’s external climate policy agenda was clearly driven by the entry into force of the United Nations Framework Convention on Climate Change (UNFCCC) in March 1994 (Oberthür Palle-maerts 2010).
Samuel R. Schubert, Johannes Pollak, Maren Kreutler

Chapter 7. External Energy Politics

Abstract
The establishment of the ECS? and Euratom in 1957 marked the first modern example of a collaborative ‘external’ energy policy in peacetime by any state, let alone six historically warring parties. Yet despite growing to include 28 countries in little over half a century and subsequently integrating energy matters between them, developing and sticking to a common position on energy relations with states outside the EU remains one of the most divisive issues in European politics. As two observers of European politics noted, energy is both ‘an issue of integration and disintegration’ and one that may ‘turn out to be the ultimate litmus test of [the EU’s] political and economic unity’ (de Jong and van der Linde 2008).
Samuel R. Schubert, Johannes Pollak, Maren Kreutler

Chapter 8. Policy Challenges on the Horizon

Abstract
As it tries to meet the energy demands of its consumers, the EU needs to resolve several policy challenges. Almost everyone in the Union agrees on the need for comprehensive energy security, but achieving anything close to it will require resolving a lot of unfinished business, both internally and externally. Issues in the internal dimension are comparatively easy to resolve once one identifies and bridges the gaps between national interests. The external dimension is more problematic, because the most severe issues, and those most likely to continue to divide the Union, are geopolitical in nature.
Samuel R. Schubert, Johannes Pollak, Maren Kreutler
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