Oliver Sartor

Shaping the ‘Energy Union': between national positions and governance innovation in EU energy and climate policy

The ‘Energy Union can be seen as the most significant policy idea that seeks to reform European energy governance, policy and regional cooperation. However, so far the concept is mostly an empty box in which every stakeholder tries to put whatever is on the top of their priority list. This article reviews three major theoretical approaches to the analysis of European integration and EU policy that can be used to study the ongoing process of Energy Union formation. It then tries to structure the discussion by showing the evolution of the Energy Union concept, focusing on proposals by D. Tusk, J-C. Juncker and the European Commission, followed by a comparative analysis of four country cases representing different energy mixes and energy policy directions: Germany, France, Poland and Norway. All of these proposals are described and assessed according to their emphasis on the three dimensions of energy policy: security, affordability and sustainability. We sketch two possible scenarios for the future of EU energy policy, as suggested by the intergovernmentalist and supranationalist approaches and emphasize the potential impact of the governance mechanism of the Energy Union, which could reach far beyond what is expected and provide welcome coherence in Europes energy and climate policy. Policy relevance The article structures the policy debate on the Energy Union, discussing the different elements and instruments proposed by key EU actors and provides a useful overview of national interests of some important players, set in the context of their wider systemic conditions and policy goals. The framework for comparing the different proposals and national positions is built around the ‘energy policy triangle. The article concludes with a discussion of possible future scenarios, as well as an in-depth discussion of the potential role of the governance mechanism.

Benchmark-based allocations in EU ETS Phase 3: an early assessment

Phase 3 of the European Union Emissions Trading Scheme (EU ETS; 2013–2020) sees the introduction of new rules governing the free allocations of emissions allowances given to energy-intensive industries. In contrast to Phases 1 and 2, allocations will be based on historical production multiplied by best available emissions technology benchmarks. This article exploits an original database to provide a first analysis of the distributional and economic efficiency implications of the new rules. It is shown empirically that the new allocation rules reduce the scope for windfall gains by EU ETS firms while also effectively mitigating carbon leakage risks, even assuming optimistic forecasts of Phase 3 carbon prices. The example of the cement sector is used to show that benchmarking significantly improves the harmonization of the levels of free allocations to competing firms throughout the EU compared to Phase 2. However, it is also found that the use of ex ante output levels to determine allocations still leaves considerable scope for windfall gains and possible distortions of the internal market.

The 1.5°C target and coal sector transition: at the limits of societal feasibility

ABSTRACT National and global mitigation scenarios consistent with 1.5°C require an early phase-out of coal in major coal-dependent countries, compared to standard technical and economic lifetimes. This appears particularly apparent in the light of recent massive investments in coal power capacity, the significant pipeline of coal power capacity coming online, as well as upstream supporting infrastructure. This article analyses the existing and planned capital stock in the coal power sector in the light of scenarios consistent with 1.5°C. The article analyses the political economy and labour aspects of this abrupt and significant transition, in the light of domestic equity and development objectives. Firstly, the article examines employment issues and reviews the existing literature and practice with support schemes for regional and sectoral structural adjustment for the reduction of coal sector activity. Secondly, the paper surveys the domestic political economy of coal sector transition in major coal using countries, namely Australia, South Africa, China and India. A final section provides conclusions and policy recommendations. Key policy insights Achieving mitigation pathways in line with limiting warming to 1.5°C, or even well-below 2°C, would require the early retirement of coal sector assets in production and consumption. Historically, coal sector transition has often been associated with prolonged socio-economic dislocation in affected regions. Policies to accompany affected regions are thus a crucial part of policy mixes to limit warming to 1.5°C and even 2°C. Such policies should be anticipatory and long-term, as opposed to reactive policies focused on short-term measures to smooth the transition. A survey of major coal using countries shows that each is a long way from putting in place a long-term framework to transition the coal sector.

Giving Shape to the Energy Union: Evolution, National Expectations and Implications for EU Energy and Climate Governance

The “Energy Union” can be seen as the most significant policy idea that seeks to reform European energy governance, policy and regional cooperation. However, so far the concept is mostly an empty box in which every stakeholder tries to put whatever is on the top of their priority list. This paper tries to structure the discussion by first showing the roots and evolution of the “Energy Union” concept in the EU, focusing on proposals by D. Tusk, J-C. Juncker and the European Commission. It then provides a comparative analysis of four country cases representing different energy mixes and energy policy directions: Germany, France, Poland and Norway. Having analysed the different interests and standpoints we move on to exploring the possible scenarios for the future of EU energy policy, emphasizing the potential impact of “Energy Union’s” governance mechanism which can reach far beyond what is expected and provide welcome coherence in Europe’s energy and climate policy.

Pricing carbon consumption: synthesizing an emerging trend

ABSTRACT Nearly every carbon price regulates the production of carbon emissions, typically at midstream points of compliance such as power plants, consistent with typical advice from the literature. Since the early 2010s however, policymakers in Australia, California, China, Japan and Korea have implemented carbon prices that regulate the consumption of carbon emissions, where points of compliance are further downstream, such as distributors or final consumers. This article identifies the pivot towards placing the point of compliance for carbon prices further downstream as an emerging international trend, describes the designs of different prices on carbon consumption around the world, and explains the various motivations of the policymakers implementing them. Findings reveal that policymakers tend to layer prices on carbon consumption on top of prices on carbon production in an effort to improve economic outcomes by addressing incomplete pass-through of the carbon price from producer to consumer, thereby facilitating more cost-effective abatement. Policymakers also use prices on carbon consumption to reduce emissions leakage or because large producers of carbon are not within their jurisdiction. The prevalence of prices on carbon consumption will likely increase as evidenced by proposals in China and Europe. Key policy insights The recent surge in the number of jurisdictions implementing prices on carbon consumption represents an emerging international trend. Policymakers use prices on carbon consumption in an effort to improve economic outcomes and capture environmental benefits. While this article offers insights that detail initial challenges and successes, whether these prices on carbon consumption actually achieve their intended goals is an academically rich topic that requires further research on individual policies.