Energy & climate change at the forefront of the EU agenda

Implications: The related areas of energy policy & climate change are now firmly at the forefront of the European Commission’s program for the years ahead. Despite tactical retreats, as on CO₂ emissions targets for the motor industry, the overall trend points towards significant liberalization of energy markets, accompanied by stringent action on the environment. Yet, the final shape of legislation remains open to debate; countries, companies and industries can use their lobbying power to influence legislative outcomes, as the car industry has just done.

Analysis: Hitherto, the main areas of EU legislation had to do with external trade, the single market (including financial services), social policy and agriculture. Yet, during the last eighteen months or so the related areas of energy and climate change have sprung to the forefront of the EU political agenda.

Given both mounting scientific evidence and the heightened sensitivity of European public opinion, the momentum towards pricing or regulatory measures aiming at a lower carbon content of economic activity is unstoppable. Consequently, the Barroso Commission has staked a lot of its political capital in further liberalizing energy markets and in tackling climate change.

EU policies in these areas are coalescing around three clusters: liberalizing markets (driven by Commissioner Neelie Kroes), harmonizing the energy policies of member states (Commissioner Andries Piebalgs), and devising environmental rules (Commissioner Stravos Dimas). The Commissioner in charge of industry, Gunther Verheugen, usually supports Neelie Kroes on competition issues, but tends to take a more cautious view on any measure that may hurt companies in the short run. President Barroso steers the debate within the Commission, whilst being very sensitive to the views of member states.

The Commission a few weeks ago presented a major ‘Energy & Climate Change Package’ of policy & legislative proposals. The main measures in the offing have to do with the European Emissions Trading Scheme (EU-ETS), with energy end-use efficiency (with wide implications for transport, industry and domestic consumers, as well as for producers of all manner of appliances), and finally with R&D (including on greater use of bio-fuels & renewables).

The next milestone will be the European Council (i.e. summit of Heads Government) on 8 and 9 March, which is due to decide on the Commission’s proposals & to set in motion a common European Energy Policy.

Yet, in the EU as in any democracy, the final shape of legislation is open to debate till the end, particularly as most measures will require the assent of the European Parliament. Countries, companies and industries have ample scope to apply their lobbying in the months ahead, as the car industry has just successfully done.