Member States

The difficulties of the European energy policies stem from the “major differences between the energy structures and policies of the member countries” (Spaak, 1973, p. 35) and from

“entrenched characteristics of energy supply and distribution” (Padgett, 1992, p. 53). In particularly the issue of the common carriage¹⁶ of electricity and gas has been at the heart of the debate and already in 1992 Padgett predicted that on this issue “the opposition is so widespread that even a qualified majority would be hard to achieve without substantial concessions”

(Padgett, 1992, p. 61)¹⁷. The main mechanism through which member states can exert their power is assumed to be through voting in the Council of the European Union. An additional possibility to pursue individual interest is through the Presidency, during which member states have the possibility of agenda setting. For instance, in the negotiation process on the First Gas Directive, The Netherlands significantly influenced the agenda setting during its Presidency and even called for an extraordinary Council meeting to achieve more progress (Lyons, 1998, p. 42).

Finally, it should not remain unmentioned that power of the member states lies in their role as

16Common carriage means “an obligation of network owners to give third parties the opportunity to use their networks for the transport of electricity and gas” (Schmidt, 1998, p. 176). In more recent documents it is denoted as third-party-access (TPA).

17Connected to the third-party-access is also the issue of ownership unbundling. The member states can agree to third-party-access but the actual implementation is possible only under a certain degree of ownership unbundling.

principals and their delegation of responsibilities to the Commission. The last resort of their protest (and power) is then non-compliance with the policies at the implementation stage developed by the Commission.

In 1997, Jane Haatland Matláry offered a first broader theoretical and empirical overview of European Energy Policy. After analyzing the period from 1985 to 1995 of EU energy policy-making, through the prisms of Putnam’s two level game framework, she concludes that the deadlocks in European Energy Policy can be explained by the dominance of the national interests, however, admitting that progress can be achieved through the Commission, which sometimes uses its power “in defining the agenda, the stakes and the outcome” (Matlary, 1997, p. 150).

Generally, the national interests of France and Germany¹⁸ are seen as the main brake to the liberalization process (Dreyer, Erixon, & Winkler, 2010, p. 11; Eising & Jablko, 2001; Geden &

Fischer, 2008, p. 72; Haase, 2009, p. 67; Lyons, 1998, p. 42; Nowak, 2010, p. 31; Padgett, 1992, p. 67). For instance, the final agreement on the First Electricity Directive is often denoted as a

“straight-forward French-German deal” (Schumann & Widmaier, 2003, p. 261). The main reason for this resistance lies in the energy market structure in both countries. While in France there is the monopoly of the GDF Suez SA (former GDF), in Germany there is an oligopoly with four major companies: Eon, RWE, Vattenfall and EnBW (Compare Geden & Fisher (2008)).

A prominent argument to explain the national states’ reluctance towards liberalization is to look at the connections of these states to Russia’s energy market. It is argued that certain member states’ hands are tied due to the bilateral agreements with Russia, which bind them in long-term contracts and projects (Dreyer, et al., 2010; Sander, 2008). In particular the Third Energy package seems to make Moscow unhappy, since it “forces energy groups from non-EU supplier countries to give up control of network infrastructure in the EU” (Agence Europe, 2011). It is feared that Gazprom “could use its dominant position to impose discretionary changes in long-term contracts and create pressure on long-long-term gas prices by restricting the development of capacities oriented towards European markets” (Finon & Locatelli, 2008, p. 432). Making Russia

18Interestingly, the relationship on this matter between France and Germany has developed from confrontation – at the beginning France was in favor of the liberalization of the energy market and was even accused by German Ministry of Economics “of exploiting Community processes for their own purposes” (Padgett, 1992, p. 67) - to cooperation.

a scapegoat is however an oversimplification of the issue: “it is not so much the EU’s dependence on Russian gas that explains its failure to respond to challenges, as its lack of cohesion [of the European Union]” (Grätz, 2009, p. 73).

Less often mentioned or analyzed are the interests of the pro-liberalization coalition.

Nonetheless, apart from the powerful opposing coalition, there has been also a very powerful supporter – the UK government (and industry as discussed in Chapter 2.1). The UK liberalized its energy markets already in 1986 and thus was very much interested that the rest of Europe does as well. Especially, after 2000, when the UK became an importer of natural gas, “it began to realize that it needed to ensure that the terms on which it imported gas from continental Europe were as competitive as possible” (Buchan, 2010, p. 362). The preferences of other member states are often less clear but in the press it is often suggested that further supporters of the Commission’s liberalization approach are Sweden and The Netherlands (Zwijze-Koning &

de Jong, 2005). Additionally, the Eastern European countries that joined the European Union in 2004 or in 2007 could be seen as the adherents of liberalization. Geden & Fischer (2008) suspect that there could be certain package deals between Western and Eastern European countries:

Eastern European countries¹⁹ making concessions in the environmental sector and Western European countries in the energy sector (Geden & Fischer, 2008, p. 48). Nonetheless, the role of the Eastern European countries can also have negative effects on the liberalization, especially when it comes to the implementation of the directives or regulations. Gaman (2010, p. 33) argues that in the Eastern European countries liberalization might be problematic, especially because the markets are highly concentrated and citizens are opposing liberalization. However, the constellations of old and new member states have not been analyzed systematically so far.

The theoretical background of these studies can be succinctly summarized as intergovernmentalism, which posits that the speed and the output of the liberalization process mostly depends on the interests of the powerful member states and that there is little maneuvering space left to the Commission. The strength of such arguments rests largely on the accuracy of the assessment of the member-states preferences’, which – as will be argued in Chapter 6.2 – have not been analyzed in much detail and are very difficult to trace over a longer

19For certain Eastern European countries, which highly or even fully depend on Russian energy, it is very important that the European Union realizes fully integrated energy market, whereas environmental issues are not of a highest priority.

period of time. Moreover, the concentration on Germany and France and to a certain degree on the UK might have biased the results of the existing analyses, as the interests and coalitions of other member states are overlooked.