1. Master en études Européennes à finalité Politique
EUROPEAN EXTERNAL ENERGY POLICY: A LIBERAL
INTERGOVERNMENTALIST APPROACH
Jacopo PENDEZZA
Advisor: Vercauteren Pierre
Academic year 2007-2008

2. Contents
List of Abbreviations
Introduction
4
Hypothesis
5
The structure of the thesis
1.
3
6
Theoretical Approach to the International Energy Relations
7
About the method
7
The International Energy Relations
7
Definitions of the concepts
12
The concept of 'energy'
12
The concepts of ‘Energy Policy’ and ‘External Energy Policy’
14
2. The Theoretical Approach to the European External Energy Policy
18
Introduction: theories of European Integration
18
The liberal intergovernmentalist approach
21
The multi-level governance analysis
26
3. Energy Policies in EU Countries
29
Introduction: A European Overview
29
Germany
31
France
33
United Kingdom
36
Poland
37
Conclusions
39
4. Elements for a External Energy Policy
40
Introduction: The Competences of the EU in the Energy field
40
The EEP Proposals of EU Institutions
42
Bilateral energy relationship with Russia
51
1

3. The Energy Charter Treaty
53
The Role of Member Governments (Germany, France, UK, Poland)
55
Conclusions
61
5. Empirical Conclusions and Theoretical Implications
References
62
66
2

4. List of Abbreviations
CIS
Confederation of Independent States
CIEP
Clingendael International Energy Programme
DTI
Department of Trade and Industry
EBRD
European Bank for Reconstruction and Development
EC
European Commission
EEP
External Energy Policy
ENA
Ecole Nationale d’Administration
ENP
European Neighbourhood Policy
EP
European Parliament
EU
European Union
Euratom
European Atomic Energy Community
IEA
International Energy Agency
IHT
International Herald Tribune
mtoe
millions tons of oil equivalent
OJ
Official Journal of the European Union
OPEC
Organisation of Petroleum Exporting Countries
PCA
Partnership and Cooperation Agreement
TACIS
Technical Aid to the Commonwealth of Independent States
3

5. Introduction
The study object of my thesis is the Energy Policy of the European Union and of its member
states, in particular I will focus my analysis on the External Energy policy (EEP).
Energy policy is regarded a strategic policy area, because energy has influence on national
economies, whether energy will be available at reasonable prices influences a state economic
competitiveness and power. Changes in energy prices can have enormous effect on a state
budget revenues or on wealth allocation and distribution nationwide and internationally.
Moreover it affects the security in and of a state, as a disruption in energy supply restrict a
state defence capabilities. Energy is both strategic good and commercial good. Therefore,
there are two aspect of energy policy: geopolitical and commercial. Governments take
decisions and conducts negotiations about energy, but there are other important actors
involved, namely major energy companies. Although in some ways European integration has
always included "energy issues" – think of the founding treaties of the European
Communities on Coal and Steel and on Atomic Energy – EU policy-making related to
security of energy supply has gained attention only later. Characterized by strong conflicts
between a common policy and divergent national policies, decisions on energy security were
initially excluded from the central EU level. Member states was very different interests in the
various forms of energy – France wanted to develop its nuclear sector, Germany had vast coal
reserves and needed to support its coal industry – and the High Authority of the ECSC never
became truly supranational. When oil became dominant in Western economies, dependence
an Middle eastern oil resulted in bilateral agreement between exporters and importers rather
than in a common import policy (Matláry 1997). Although the domain of the ECSC and
Euratom Treaties, member states have not ceded some of their competences in the energy
field to the Community: there are a number of reasons for the reluctance of EU member
states to maintain their national competence over energy matters and that there are still no
competences on a European level in the field of external energy policy. Member states
repeatedly were reluctant to include an external energy chapter in the Treaty on the European
Community, as energy policy has been always considered an issue related to national security
and therefore states were unwilling to share with the EU parts of their sovereignty in this
field. Although the member states of the EU pursue a number of shared goals on international
level, as for example the Kyoto Protocol negotiations or negotiations within the WTO,
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6. foreign and security policy are fields in which the objectives and policies of individual
countries highly differ.
One can argue that a real integration of the national external energy policies did not happen,
or only very partially.
Hypothesis
The European Commission is convinced that would be better that the EU had a common
external energy policy, but as noted by a number of analysts (see Westphal 2006; Hoogeveen
and Perlot 2007; Dehousse 2007; Andoura 2007) the adoption of a real energy policy
remained a challenge for the European Union since its beginning and the solutions developed
to deal with security of energy supply were mainly national.
Although, as I noted during the reading of several analysis of the EU and energy (see for a
review Finon. and Locatelli 2006, Mañé-Estrada 2006, Costantini et al. 2007), there is a
tendency to consider the European Union already as a autonomous actor in the international
energy arena and the focus of such analysis is on ‘how’ the EU should act in order to achieve
its energy security. On the contrary, in the present thesis, I make a step behind and I try to
review the EEP policy-making within the EU, in order to supply a more precise picture of the
present role of the EU on the international energy stage.
By using the theoretical tools provided by the so-called ‘Regions and Empire’ approach of
the international energy relations (Correlijé and van der Linde 2006), I want to demonstrate
through the ‘liberal intergovernmentalist’ model of the European integration that Member
States do not want to delegate to the European institutions their sovereignty over their own
external energy policy in spite of the fact that the EC makes pressure for the creation of a real
common external energy policy.
The Commission approach is a multilateral governance approach that aims to manage energy
(inter)dependence on the basis of equally applied rules and an access to resources and
investment moderated by market mechanisms, along with strong involvement of private
companies. The approach of the Commission is basically opposite to the approach of member
states. The basic hypothesis is that, according to the ‘Regions and Empires’ approach, EU
member states search to maximise their influence on international energy supplies in a
5

7. autonomous manner because of the opposite energy relations though of the Commission, the
more entrepreneurial supranational actor at the EU level.
Other hypothesis stem from this general one and they are focused on the policy-making of
the external energy policy of the European Union. According to ‘liberal intergovernmentalist’
model, secondary hypothesis are that the only significant actors of the EU external energy
policy are governments. Furthermore it is assumed that their interest are formed prior to
decision-making at the EU level. Hence the second hypothesis: all external energy policymaking outcomes in the EU process can be traced to prior governments interests, mainly
energy security interests. The counterhypotheses to these are that institutional EU actors
matter independently, that interests may be formed during the policy-making process and not
prior to it.
The structure of the thesis
The first chapter of the present thesis explains the theoretical approach that I adopt in order to
examine the global energy situation, in particular the presentation of the Empire and Regions
approach, and it presents some useful definition for 'energy' and 'external energy' policy in
order to obtain some theoretic instruments to analyze the European External Energy Policy.
The second chapter below identifies the form and concept of the European integration: in
particular, I adopt Moravcsik's 'liberal intergovernmentalist' approach. The third chapter
identifies the forms and extend of the European Union and its Member States energy
situation and reviews the various energy policies of the UE Member States. The fourth
chapter try to organizes those explanatory concepts of European External Energy Policy
(EEP) into a analysis that depicts the proposals, process and effects of the EEP. Finally, the
thesis end with a conclusion that evidence the liberal intergovernmentalist tendency of the
EEP decision-making.
6

8. 1: Theoretical Approach to the International Energy Relations
About the method
In logic, there are two distinct methods of reasoning: namely the deductive and the inductive
approaches. Deductive reasoning works from the ‘general’ to the ‘specific’. This is also
called a ‘top-down’ approach. The deductive reasoning works as follows: think of a theory
about topic and then narrow it down to specific hypothesis (hypothesis that one can test).
Narrow down further to collect observations for hypothesis (one collects observations to
accept or reject hypothesis and the reason that one does it is to confirm or refute original
theory). In a conclusion, when one uses deduction the reasoning is from general principles to
specific cases. On the contrary, an Inductive reasoning works from observations toward
generalizations and theories. This is also called a ‘bottom-up’ approach. Inductive reason
starts from specific observations, look for patterns (or no patterns), regularities (or
irregularities), formulate hypothesis that one could work with and finally ended up
developing general theories or drawing conclusion. In a conclusion, when one uses Induction
one observes a number of specific instances and from them infer a general principle or law
(Feynman 1999).
In the present analysis I adopt the deductive reasoning in order to demonstrate the liberal
intergovernmentalist characteristics of the European External Energy Policy. So in the first
and the second chapter I will explain the theories that I will use to demonstrate my
hypothesis, indeed in the third and fourth chapter I will collect observations to accept my
hypothesis.
The International Energy Relations
The history of international and regional energy markets shows that the state of the world as a
whole is a key factor in what happens in the global energy industry. (Sébille-Lopez 2006,
Furfari 2007). Two theories of international relations, the neo-liberal paradigm (see in
particular Keohane and Nye 1977) and the neo-realist paradigm (see in particular Waltz
1979), offer opposite interpretations of the evolution of international relations. In the neorealist theory summarized by Waltz (1979, 2003), states seek to survive within an anarchical
system. Although states may strive for survival through power balancing, balancing is not the
7

9. ultimate goal of that behavior, but rather a product of the aim to survive. And because the
international system is regarded as anarchic and based on self-reliance, the most powerful
units set the scene of action for others as well as themselves. Neo-realist theory is opposed to
the neo-liberal paradigm elaborated by Keohane and Nye (1977), which argues that, even in
an anarchic system of autonomous rational states, cooperation can emerge through the design
of standards, regimes, and institutions, in a system of complex interdependence in which the
role of military force in resolving disputes between countries is negated.
In the neo-liberal paradigm, after the collapse of communism in the Soviet Block, general
market-based rules in the international and regional regimes drive some political scientists to
make some optimistic prophecies about the triumph of globalisation and the 'end of the
history'. The prospect of mutual gains from trade provides the rationale for market-based
arrangements. At the EU level, this provided the backdrop for the single market and, at the
national level, programmes of liberalization and privatization under the aegis of the EU. This
is the sum of what Correlijé and van der Lind (2006), in their scenarios of international
energy relations call the 'Market and Institutions' approach to the international economic and
political cooperation: an integrated, multilateral world with effective institutions and
competitive markets.
The 'Markets and Institutions' approach assumes that there is a continuous intensification of
the social, cultural and economic internationalization or 'globalisation' of markets. This also
implies an enduring cooperation in the international political and economic institutions,
supporting a constant development of the multilateral system that governs international
relations. Ideology, religion and political conflicts continually take place at the international,
the national, and the local level, but effective international and regional institutions (like the
UN, EU) manage to deal with most of these conflicts. Further liberalization of markets allows
the international flow of goods, persons and capital to grow. These flows are coordinate by
'market forces', facilitated by strong economic institutions, including the WTO, the IEA,
OPEC, the IMF and regional free trade organizations like EU, NAFTA, MERCOSUR and
SADC. Generally, international firms' subsidiaries operate in a loosely connected manner,
purchasing and selling their respective inputs and production and intermediary markets.
Collective pressures for good governance and effective financial institutions manage to
establish increasingly sound governments. Potentially destabilizing local issues are
neutralized through international peace-keeping and development cooperation, thus reducing
the impact of local political instability, social tensions, terrorism and international crime,
8

10. even in the periphery. Tensions may arise because of costs of environmental policies. In this
respect there is a clear distinction between a widely supported “Kyoto approach” and a “NonKyoto” world, in which the NIMBY (‘not in my backyard’) phenomenon is powerful. Under
the Kyoto variation there is a much more effective abatement of economic, social and
environmental stress. NGOs and Civil Society play a key role in balancing market forces and
improving corporate responsibility. Environmental and equity issues are embedded in local
economic and social systems, so economic cooperation between nations is based on civil and
corporate involvement (Correlijé and van der Linde 2006).
With regard to the international energy relations, in this approach the emphasis is on the role
of the market over the disturbance (a supply shortfall or a disruption) in the supply of oil and
gas. Under the 'Market and Institution' approach a sudden disruption of oil or gas flows from
existing capacity of whatever kind also belong to the possibilities. Supply arrangements
through markets, however, lead to higher prices reflecting the scarcity of the specific oil, or
products, involved. This induces market reactions and a re-allocation through price. The IEA
and EU emergency schemes may be effective in reducing the price impacts, by alleviating a
temporary shortfall in supply, in close co-operation with OPEC in case the disruption does
not involve a country where the organization's spare capacity is situated (Correlijé and van
der Linde 2006).
On the other hand, the neo-realist perspective stress to an alternative to the multilateral and
free-trade approach that Correlijé and van der Linde (2006) label 'Regions and Empires'. It is
a world primarily based on a balance of diplomatic and military power, in which America
unilateralism has great power and influence, and political and regional blocks complete. It
involves, essentially, a division of the world into countries and regions, on the basis of
ideology, religion and political arguments. Political and military strategy, bilateralism and
regionalism divide the world up into competing US, EU, Russian and Asian spheres of
influence. In this approach, it is difficult for integrated global market to emerge or maintain
themselves. This approach underestimates the European approach to the world affairs based
on integration through the market with neighbours and a multilateral attitudes to international
relations. National and international security issues and military conflicts, bilateralism and
excessive regionalism prevent international economic integration rooted in overall regulation
of the flow of goods, capital, and labour. Trade is part of the broader geopolitical game and
relative gains are more significant than absolute gains. The absence of effective world
markets for strategic goods further stimulates the establishment of bilateral trade
9

11. relationships and treaties, thus reinforcing the formation of more or less integrated blocks
with satellite regions that compete for markets and energy resources. In this though firms are
less international, but operate from a more national perspective. Moreover, to a greater
extent, their subsidiaries operate in vertically and horizontally coordinated structures, with
internal transfers of inputs and production.
With regard to the international energy relations, in the 'Regions and Empires' approach the
emphasis is on the role of the state power over the disturbance (a supply shortfall or a
disruption) in the supply of oil and gas (Clingendael 2004, p. 101). Depending on the scale,
the specific facilities and the regions involved, a sudden disruption of oil flows causes great
distress in the supply of oil, because of a lack of surplus production and transport capacity
that allows for deliveries to be re-scheduled. Particular regions, for instance those that rely on
the supplies of only one exporting region or country, such as the Persian Gulf, can be
severely affected without the remedy of finding oil supplies elsewhere. In fact, the rigid
contractual trade structure impede a flexible adjustment of trade flows. Dependent on the way
in which prices are determined in contracts, a price shock affect these other contracts as well.
Competitions arise between consumer countries to secure supplies in bilateral contracts.
Eventually, the use of military force to achieve access to shut in production capacity belongs
to the possibilities. Given the underestimate role of the market, and the predominance of
bilateral agreements, there are great difficulties in the operation of the IEA and EU
emergency scheme as part of the crisis management policy, because the countries involved all
have different interests. As a result, countries or regions that rely heavily on imported oil are
forced to create much larger strategic reserves because they cannot rely on the collective
system on the IEA to come into effective operation. Particularly, when one of the major
suppliers in the OPEC is involved in the disruption, the ability of OPEC to apply its
production management tools is widely ineffective. This, in general, induces an increase in
crude and product prices (Clingendael 2004, p. 99).
With regard to the analysis of a slowly energy supply gap, the 'Regions and Empires'
approach emphasizes this possibility as a consequence of a dismal investment climate in
various producer countries. This is evident in the situation in the Persian Gulf and in Russia
(in particular for Russia, see Goldthau 2008). A growing lack of surplus production and
transport capacity in specific regions then induce opportunistic competition between
consumers and suppliers to bilaterally secure supplies or investment elsewhere, normally
with an exclusive contractual character. In this neo-realistic though state and state oil
10

12. companies become more involved to compensate for the lack of private capital. This easily
lead to more and more politicized oil trade, and a stronger influence of the nation-state on the
world affairs. As consequence, within the IEA and the OPEC, it is increasingly difficult to
calibrate the oil market management schemes, strategic stock and information systems. The
ensuing rigid contractual essentially bilateral trade structure impede a flexible adjustment of
trade flows. In addition, international conflict may arise over the exclusive relations of some
large surplus oil producers with the several 'empires', as recently exemplified by the Saudi
Arabia (Sébille-Lopez 2006). In fact, these circumstances involve an isolationist approach of
the international relations by major producing countries and a refocusing on domestic affairs.
In this situation, the 'Regions and Empires' approach stress the influences of groups in
producer countries. These groups see the oil industry as the bringer of deep internal political
and social rivalry rather than an industry than has create wide social and economic
opportunities. It is clear that this approach taken departs from more radical neo-realist
theories which treats states as 'black box' with fixed preferences. Instead, governments are
assumed to act purposively in the international arena, but on the basis of goals that are
defined domestically.
With regard to the gas market, the 'Regions and Empires' puts the emphasis on the
competition between consumer countries to secure supplies in bilateral contracts. In general,
giving the relative rigid production and transport capacity and the difficulty, in absence of a
proper infrastructure to physically re-schedule delivers, a sudden disruption of gas flows
cause a great distress in the consumer countries. Given the lack of a real global market
because of the nature of gas, and the predominance of bi- or multilateral agreements, there
are great difficulties in the operation of possible IEA and EU emergencies schemes, as the
countries involved all have different interests and gas supply structures.
In conclusion, I adopt the 'Regions and Empires' approach in my thesis because I think it is
the more useful to analyze the intergovernmental nature of the External Energy Policy of the
EU. Factors like UN Security Council decision-making over Iraq, the lack of progress in the
WTO negotiations, the difficult ratification process of the Kyoto agreements, the difficult
progress of EU power and gas market liberalization, the unilateral approach of foreign
relations of the US after the attacks on New York and Washington, developing relations
between China and the rest of the world, all suggest me that world affairs developments
would be more in line with the 'Regions and Empires' world than with 'Markets and
Institutions' (Correlijé and van der Linde 2006).
11

13. Definitions of the concepts
After the presentation of the theoretical approach to the International Energy relations that I
will use to analyse the EEP, the following section reviews some useful definition of concepts
concerning the energy policies. The definition of the concepts that I will use is
methodologically important because permits to delimitate the research field and to have a
coherent framework to use for collecting and evaluating data and evidences in the next
chapters.
The concept of 'Energy'
Any discussion of external energy policy must start with an understanding of the concepts of
‘energy’. What is become apparent over recent years is the fact that energy governance takes
place in a field of tension between governance based on market and institution (and the rule
of law) on the one hand, and state-centered, power based geopolitics on the other. The latter
represent spaces dedicated to accumulating influence. They are structured by hegemons and
thus capable of resulting in 'Regions and Empires'. The multilateral governance approach
aims to manage interdependence on the basis of anonymously and equally applied rules and
an access to resources and investment moderated by market mechanisms, along with strong
involvement of private companies. The geopolitical pattern seeks to secure exclusive access
to resources, mainly by political and military means (Correljé and van der Linde 2006).
This spectrum of policy approach conducted between the two poles of multilateral
governance and geopolitics and be explained by the specific characteristics of the energy
issue: energy is an ambivalent good in being both a strategic good and a commercial good, as
well as a service (Sander 2007). Taking this into consideration, energy is an essentially
ambiguous good because it can be considered as both a genuine commodity, tradable on the
basis of purely commercial considerations, as a service (e.g. transportation), and above all as
a strategic good to be used as a foreign policy tool (e.g. during the oil crisis 1973-74). Indeed,
the limited availability of energy in the face of growing demand, a twenty-year oil price high,
and the growing concentration of production make it a highly profitable commodity. It takes
up the center of important domestic and international struggles, where visions of energy as
'strategic' and 'commercial' good both coincide and complete. It allows energy to be used as a
12

14. strategic good or – under a normative view – a good that needs to be used for the 'greater
good' or 'public welfare' in a state. Reflecting the very nature of the energy issue, the
international political economy of oil and gas is characterized by two political approaches to
governing the energy trade: as a commodity embedded in a liberal market economy and, on
the other hand, by the desire to keep it a strategic asset (Westphal 2006).
Since I opt for the 'Regions and Empires' approach of the international energy relation in
order to analyze the European External Energy Policy, I adopt in my analysis a definition of
energy that takes account of its commercial aspect but stress the geopolitical one. Indeed, as
Rittberger and Zürn (1991, p. 178) state 'the properties of issues (pre)determine the ways in
which they are dealt with', in what follow, it will be argued that the very nature of energy as a
strategic good, once instrumentalized for foreign policy goals, impedes multilateral
governance as it calls into question in particular the suitability of the energy issue for
multilateral regimes. Moreover, the geography of the distribution of reserves and the need to
transport oil and gas over long distances bring geographical considerations into politics, often
resulting in traditional geopolitics (Westphal 2006). In the 'Regions and Empires' approach
energy policy is regarded as a vital and strategic policy area. The high priority put on the
issue can be explained by the fact that energy is a major input into national economies, even a
factor of production. Energy is a policy field of great strategic importance: whether energy
will be steadily available at reasonable prices greatly influences a state's economic
competitiveness, domestic capacity, and power. Energy availability also strongly affects the
wealth and security in and of a state since a disruption in energy supply constricts the defense
capability of states. Changes in energy prices have drastic effects on wealth allocation and
distribution nationwide and internationally (Bielecky 2002).
Energy relations in general are characterized by the intrinsic tension between cooperation and
conflict: while there are mutual gains to be realized from international trade, there are also
intrinsic elements of tension. In addition, both the producers as well as the consumers face
the dangers of becoming too dependent on the other side and this can cause conflicts. The
understanding of energy security from the consumers perspective relies on geographical
diversification of energy supplies, diversification of energy sources, and predictable, stable,
and low energy prices (Bielecky 2002). Thus, the key economic concerns of energy importers
are managing disruption and minimizing energy costs. The supplier side is interested in
stability of demand and improving terms of trade (Helm 2002). Moreover, there is an
13

15. inherent tendency to strengthen one's own market position to the point of establishing
monopoly status to the supplier's own favourable ends. Whereas the buyer of energy has an
interest in competition on the supply side in order to keep prices low, the producer has an
interest in competition only in the demand side. This is because energy prices have highly
redistributional affects. This is why Mommer emphasizes that 'the game is strategically about
prices, and only tactically about capturing of rents' (2000, p. 1, cited in Wesphal 2006).
However, rents play a decisive role, too, and because of the high impact of revenues for the
state budget and the ideological and politicized meaning of energy resources, many states are
reluctant to open their market to foreign investment, in line with the Region and Empires
though of the international energy relations.
The concepts of ‘Energy Policy’ and ‘External Energy Policy’
After a review of the concept of energy as a strategic tool in a power-based world described
in the 'Regions and Empires' approach, this section presents a useful detailed definition of the
Energy Policy and the External Energy Policy. Energy policy in consumer countries involves
three main components. First, there are the basic aims of energy policy: a) low supply costs,
b) security of supply, i.e. the continuity of supply and the dispersion of risks and, more
recently, c) environmental considerations (Clingendael 2004) These basic aims are shared
widely among consumer country governments and international organization (e.g. AIE). This,
however, is not the case with the other two components of the energy policy, where even
among the European countries there is a wide variation in the policy and policy instrument
choices. At the second level, there is how these basic aims are or can be achieved. The way in
which these basic aims can be achieved varies among countries, depend, on their domestic
resource endowments and other policy choices. To achieve their energy policy goals
countries make decisions on a) the balance between domestic and imported sources, b) the
balance between different types of technology and, c) the balance between costs,
environmental and national security considerations. At the third level of energy policy,
countries choose among the various policy instruments at their disposal. These may include
diversification of their energy mix, avoiding over-reliance on a single fuel; diversification of
sources of imported energy; the exploitation of domestic energy resources (expansion of
nuclear energy); strategic reserves of oil on their own territories and promoting energy
14

16. efficiency and reducing the energy intensity of their economies (Umbach 2004).
Several factors explain the variation in the choice of policies and instruments among
countries at the second and the third level. There are, firstly, technical, natural and
economical constraints, such as the varying energy resources endowments, the structure of
the economy, the structure and size of consumption per capita, and the geographic location. A
second group of factors involve national peculiarities with regard to the organization of the
energy sector and the economy, such ad the institutional structure, traditions and culture, and
the balance of power between various national interest groups. Distinct institutional
structures in EU member states have led to market variations in the objectives and
instruments of energy policy in these countries (Clingendael 2004).
The External Energy Policy in consumer countries is relating to the security of supply of
needed energy. Energy security is one of the core elements of overall energy policy (Matláry
1997, EC 2006a). A standard definition of a security of supply is a flow of energy supply to
meet demand in a way and at a price level that does not disrupt the course of the economy in
an environmental sustainable manner. The concept is vast, multiform and covers the whole
physical and non physical supply chain. It involves technology, politics, economics,
investments planning and weather conditions (Constantini et al. 2007). This concept has also
important time and space dimensions. Chevalier and Corbeau (2005) define more precisely
this concept as:
−
A reliable supply of energy. Choices both for primary energy sources and geographical
suppliers ought to be as plentiful as possible, within a competitive framework, in order to
reduce as far as possible the dependence on only one or two. Diversification in these two
areas – primary energy sources and suppliers – is considered by experts the key to
ensuring security of supply (Keppler 2007).
−
A reliable transportation of supply. Transportation networks ought to be physically
available to qualified players, well maintained, and expanded as required, and should
offer as many competitive route options as far as possible.
−
A reliable distribution and delivery of supply to the final customer. Energy must be
efficiently delivered to the final customer according to particular time and quality
standard without discrimination.
−
At 'reasonable price' over a continuous period. In theory, 'reasonable' price means
marginal cost reflective. In practice the price range between 22 and 28 dollars per barrel,
15

17. maintained by OPEC between 1999 and 2003 was implicitly considered by most market
participants as 'reasonable', unlike the current price of 145 dollars per barrel (June 2008).
The time dimension of security of supply is very important:
In the short term a sudden unexpected disruption may happen in the supply of electricity,
natural gas, oil or coal. It can be caused by a variety of reasons: accidents, sabotage, strike
and other social demonstration, unusual climatic event. In the very short term, such
disruption may be alleviated by rapid repair, military or police intervention, use of available
storage, price adjustment. For electricity, a sudden disruption may be caused by an
insufficient available capacity in which case neither storage nor price may provide an
adjustment.
In the medium and long term, security of supply may be threatened by long lasting political
or social turmoil, lack of available resources but also because the needed investments in
productive capacity, transmission and storage were not made or delayed. Security of supply
has an important investment component (Chevalier and Corbeau 2005
The space dimension indicates that disruption in energy supply may have local, national, but
also international causes and implications, some components of supply are exogenous (world
oil price) and some are endogenous related for example to the organization of the energy
industries, to safety standards or storage obligations.
It is also important to be recalled that security of energy supply has a significant military
dimension. Energy supply is crucial for military forces which are heavily dependent on oil
products for their national and international activities (Chevalier and Corbeau 2005).
With regard to the EU, the European Commission in its Green Paper 'Towards a European
strategy for a security of energy supply' (EC 2000) point out four types of risk that can
disrupt the European energy security: first, physical risks, involving permanent or temporary
disruptions; second, economic risks, referring to erratic price fluctuations in markets; third,
social risks, involving the consequences of the former two types of disruption; and fourthly,
environmental risks, as a consequence of accidents or polluting emissions.
Consequently, the Commission in its Green Paper 'A European Strategy for Sustainable,
Competitive and Secure Energy' (EC 2006a) stress the role of a coherent common EEP as a
'essential to deliver sustainable, competitive and secure energy' (p. 14).
Since the EU is not a nation-state the tools to achieve the aims of this policy are necessary
different from the tools used by a state. As we can see further in the analysis, energy policy is
16

18. one of the fields in which there are major and persistent conflicts of interest between the
Commission, member governments, and economic groups (Matláry 1997). The next chapter
identifies a theoretical framework of the European Union integration in order to obtain a
useful theoretical model to analyse the EEP. Since this is an area where the EU institutions
enjoy no formal competence, I assume that the member state governments will remain at the
forefront of this process. In my analysis I adopt therefore Moravcsik's 'liberal
intergovernmentalist' approach to the European integration.
17

19. 2: The Theoretical Approach to the European External Energy Policy
Introduction: theories of European Integration
In order to analyses the External Energy Policy of the European Union I utilize the theoretical
tools provide by the 'integration theory'. Contrary to several analysis on international energy
situation, I consider very important evaluate through the integration theory the level of
integration of the European EEP in order to avoid the conceptual trap of consider the
European Union an autonomous actor on the field of the energy security.
Integration theory is the theoretical wings of the EU studies. The emergence and
development of the institutions of the economic integration in Western Europe after the
Second World War provided a valuable site for both the application of existing theories and
the development of new perspectives. The theoretical accounts that emerged in the 1950s and
1960s offered rival though of how and why regimes of supranational governance developed
and how closer cooperation in relatively narrow, technical, economic spheres of life could
generate wider political integration among countries. (Rosamond 2000).
More often than not, integration theorists traded in the vocabulary of the discipline of
International Relations (IR). What seemed to be at stake in Europe were not just the
Westphalian nation-state, but also the interstate system that grew outwards from the territorial
way of organizing government. The great rows that developed within early IR were about the
relationships between the states system and war, or conversely, between 'post-national' forms
of organization and peace. For many intellectuals and politicians of the first part of the
twentieth century, the most important thing is to turn itself to the avoidance of war. So,
federalists contemplated the ways in which states could engineer some sort of mutual
constitutional settlement that involved the delegation of power upwards to a higher form of
government, thereby securing peace. Functionalists, on the other hand chastised the nationstate as an irrational and value-laden concept. For them, the task was to secure the most
efficient method of administering to the real material needs of the people. Often human
welfare could be best served on a post-national, post-territorial basis. In the meantime, social
scientists were developing new investigative techniques as their disciplines became
increasingly professionalized. Armed with new ideas, scholars began to speculate about the
mechanisms by which communities form. Interesting analogies were draft between the
process of communication that helped historically to solidify national communities and the
18

20. growth of cross-border, international transactions as the century developed. The earliest
theories of European integration grew out of this intellectual context (Rosamond 2000).
Neofunctionalism grew out of the efforts of a small cluster of American political scientists to
apply Mitrany's functionalist thinking to a delimited international region (Rosamond 2006).
Using the experience of the European Coal and Steel Community (ECSC) and the European
Economic Community (ECC) as their starting point, neofunctionalists as Haas (1958) set
about the task of describing how the deliberate merger of economic activity in particular
economic sectors across borders could generate wider economic integration. They also
sought to explain how this economic integration would produce political integration and how
the creation of supranational institutions could accelerate these processes. These claims came
under serious scrutiny from writers eager to point out that reports of the death of the nationstate had been somewhat exaggerated. Indeed, the evidence of the West European politics in
the 1960s illustrated some rather profound truths about the persistence and continued
dominance of national interests and international exchange. The resultant conversation
between neofunctionalists and intergovernmentalists is usually presented as the main ongoing
schism in the integration theory literature since the mid-1060s (Pollack 2005). In many ways
they present utter alternatives. In terms of identifying key actors, intergovernmentalists
emphasize the centrality of national executives whereas neofunctionalists point to
supranational institutions such as the Commission as well as national and transnational
interest organizations. Neo-functionalism is a theory of change and transformation, whereas
intergovernmentalist emphasize international politics as usual, albeit under new conditions
(Rosamond 2006, Moravcsik 2006). While there is still much to say in this particular
dialogue, other writers have begun to think about the EU in different ways. The fate of the
nation-state or the issue of 'more versus less integration' was not only issue at stake. For
many, the Union constitutes a polity – a venue where interested actors pursue their goals and
where authoritative actors deliver policy outputs. This may be a radically new form of
political system or simply a polity like any other, but from this perspective the most
appropriate theoretical tools may not be those calibrated to predict the supposed destination
of the integration project (Rosamond 2000).
As pointed by Rosamond (2000) in his useful account of theories of European integration at
present, there are at least four locations of investigation in the study of European Union. The
first of these approaches would be to understand the European Union as an international
19

21. organization. The literature on international organizations (IOs) is substantial and ever
developing, but IOs are traditionally thought of as intergovernmental bodies designed in the
explicit context of converging state preferences or common interests. For traditional liberal
theorists of international relations, IOs constitute one of the principal means through which
interstate harmony and, therefore, lasting peace can be secured. Quite a lot of the theoretical
work about EU draws on this tradition, but the EU is evidently rather more than a
straightforward instance of an intergovernmental organization (Rosamond 2000).
The second treats European integration as an instance of 'regionalism' in the global political
economy. The ultimate aim is to offer reflections upon and possibly generalizations about the
tendency of groups of territorially-adjacent states to gather into blocs. Inquiry of this sort can
be motivated by a number of guiding questions, e.g. is it possible make comparisons between
the EU and other regional grouping such as the North American Free Trade Agreement
(NAFTA), Asian Pacific Economic Cooperation (APEC) or Mercosur? Do global economic
and political pressures force or enable the creation of such organizations? How do variations
in levels of institutionalization in regional blocs affects the interests and preferences of
actors? Do regional agreements and institutions form a uniform threat to the nation-state and
the international system of state? The pursuit of questions like these explain why many
specialists in International Relations and International Political Economy regard the EU as
valuable studying (Rosamond 2000).
The third broad approach aims to treat the EU as useful location for the study of policymaking dynamics. Here the EU is an instance of a complex policy system in which
perspectives on policy-making developed largely in the context of national polities can be put
to the test. The focus is turned to the interaction of interested actors and the process of agenda
setting, policy formulation, legislation, interest intermediation and policy implementation.
The analysis of these processes raises questions about the locations of power and the
relationship between formal and informal policy processes. From this point of view, the
development of the EU provides an opportunity to consider policy networks and the role of
institutions in conditions where national, subnational and supranational politics overlap
(Rosamond 2000).
The final approach is less inclined to treat the EU and European integration as an instance of
anything other than itself. Such an approach would regard the EU as a sui generis
phenomenon. These writers consider that there is only one EU and European integration
cannot be a theoretical testing site for the elaboration of wider generalizations. The
20

22. inclination rather would be to treat the EU as an historically-rooted phenomenon, arising in
utterly specific conditions and therefore without meaningful historical precedent or
contemporary parallel (Rosamond 2000).
In the present analysis of the European External Energy Policy, I focus the location of
investigation on the approach that aims to treat the EU as location for the study of policymaking. In my analysis I will answer to the questions about the location of power and the
relationship between formal and informal external energy policy processes. Although EU
does not require a sui generis theory, it is a unique institution and political phenomenon.
There are peculiar and substantial differences between the EU and other International
Organizations. The relations among EU Member States are unique and unique is also the
institutional co-ordination within the EU, as evidenced by the depth of its claimed goals, the
richness of the networks it sustain, and, above all, the solidity of its supranational legal
identity. For that reason, even if I have chosen an approach based on a neo-realistic though to
describe the present international energy relations system, I consider scientifically correct to
utilize a different theoretical approach to analyses the European integration and in particular
the EEP. In my analysis of the EEP I will utilize the Moravcsik's 'liberal intergovernmentalist'
approach that clearly relies on the theories of regimes. Moreover, given the fact that liberal
intergovernmentalist model is more useful to explain the process of European integration,
rather than EU policy-making, I will integrate Moravcsik's approach with the multi-level
governance analysis. The MLG analysis supplies some theoretical instruments that are useful
in the analysis of the EEP.
The liberal intergovernmentalist approach
European integration theories attempt to provide a conceptual model upon which the EC/EU
integration process can be analyzed. Each theory is reductive and essentialist to different
degrees, relying on different set of assumptions respectively. After a reading of different
Integration theories (Haas 1968, Hoffmann 1966, Rosamond 2000, Pollack 2005, Rosamond
2006, Schmitter 2006, Moravcsik 2006), in order to examine the European External Energy
policy I adopt in my thesis the 'liberal intergovernmentalist' approach because I consider it
the more useful to demonstrate the elusive character of a common external energy policy.
Rather than resurrecting neo-functionalism, the approach introduced by Andrew Moravcsik
21

23. in the 1990s takes seriously the self-criticisms of neo-functionalists. Such theory suggest that
the EU is best seen as a peculiar international regime for policy co-ordination, the substantive
and institutional development of which may be explained through the sequential analysis of
national preference formation and intergovernmental strategic interaction. Liberal
intergovernmentalism builds on an earlier approach, 'intergovernmental institutionalism', by
refining its theory of interstate bargaining and institutional compliance, and by adding an
explicit theory of national preference formation grounded in liberal theories of international
interdependence (Moravcsik 1991).
At the core of liberal intergovernmentalism are three essential elements: the assumption of
rational state behavior, a liberal theory of national preference formation, and an
intergovernmentalist analysis of interstate negotiation. The assumption of rational state
behavior provides a general framework of analysis, within the costs and benefits of economic
interdependence are the primary determinants of national preferences, while the relative
intensity of national preferences, the existence of alternative coalitions, and the opportunity
for issue linkages provide the basis for an intergovernmental analysis of the resolution of
distributional conflicts among governments. Regime theory is employed as a starting point
for an analysis of conditions under which governments will delegate powers to international
institutions (Moravcsik 1993). International regimes promulgate principles, norms, rules and
decision-making procedures around which actor expectations converge in given issue-areas,
through which 'the actions of separate individuals or organizations – which are not in preexisting harmony – are brought into conformity with one another through a process of
negotiation' (Keohane 1984 p.51). Regime theory provides a plausible starting point for
analysis – a set of common conceptual and theoretical tools that con help structure
comparisons with other international organizations, as well as internal comparisons among
different cases of EU policy-making. At the same time, however, contemporary regime
analysis requires refinements to take account of the unique institutional aspects of policy coordination within the EU (Keohane and Hoffmann 1991).
In the liberal intergovernmentalist approach state action at any particular moment is assumed
to be minimally rational, in that it is purposively directed toward the achievement of a set of a
consistently ordered goals or objectives. Governments evaluate alternative courses of action
on the basis of a utility function. The liberal intergovernmentalist approach departs
decisively, however, from those theories in International Relations, most notably realist and
neo-realist approaches, which treat states as 'billiard balls' or 'black boxes' with fixed
22

24. preferences for wealth, security or power. Instead, governments are assumed to act
purposively in the international arena, but on the basis of goals that are defined domestically.
Following liberal theory of IR, which focus on state-society relations, the foreign policy
goals of nationals governments are viewed as varying in response shifting pressure from
domestic social group, whose preferences are aggregated through political institutions.
National interests are, therefore, neither invariant nor unimportant, but emerge through
domestic political conflict as societal groups compete for political influence, national and
transnational coalition form, and new policy alternatives are recognized by governments. An
understanding of domestic politics is a precondition for, not a supplement to, the analysis of
the strategic interaction among states (Moravcsik 1991).
The model of rational state behavior on the basis of domestically-constrained preferences
implies that international conflict and co-operation can be modelled as process that takes
places in two successive stages: governments first define a set of interest, than bargain among
themselves in an effort to realize those interests.
This conception of rationality suggests that parsimonious explanations of international
conflict or co-operation can be constructed by employing two types of theory sequentially: a
theory of national preference formation and a theory of interstate strategic interaction.
Unicausal explanation of European integration, which seek to isolate either demand or supply
are at the best incomplete and at the worst misleading (Moravcsik 1993, Moravcsik 2006).
Indeed, the liberal intergovernmentalist model is composed by three stages:
−
In the first or liberal stage of the model, national chiefs of governments aggregate the
interest of their domestic constituencies, as well as their own interest, and articulate
their respective national preferences towards the EU. National preferences are
complex, reflecting the distinctive economics, parties, and institutions of each
member state, but they are determined domestically, not shaped by participation in the
EU, as some neo-functionalists had proposed (Pollack 2005). Societal groups
articulate preferences; governments aggregate them. The relationship between society
and the governments is assumed to be one of principal-agent; societal principals
delegate power to (or otherwise constrain) governmental agents. The primary interest
of governments is to maintain themselves in office; in democratic societies, this
requires the support of a coalition of domestic voters, parties, interest groups and
bureaucracies, whose views are transmitted, directly or indirectly, through domestic
23

25. institutions and practices of political representation. Through this process emerges the
set of national interest or goals that states bring to international negotiations
(Moravcsik 1993). The interest of societal groups are not always sharply defined.
Where societal pressure is ambiguous or divided, governments acquire a range of
discretion. The nature of this constraint varies with the strength and intensity of
pressure from social groups. Sometimes, the principal-agent relationship between
social pressure and state policies is close, sometimes, 'agency slack' in the relationship
permits rational governments to practice greater discretion (Moravcsik 1993). The
liberal focus on domestic interests and state-society relations is consistent with a
number of plausible motivations for governments to support (or oppose) European
integration. These include federalist (or nationalist) beliefs, national security interests
and economic motivations. Here in the present analysis the focus is on motivations
that stem from energy security concerns and the ways in which they constrain
governmental preferences in European negotiation.
−
In the second or intergovernmental stage, national governments bring their
preferences to the bargaining table at the EU level, where agreements reflect the
relative power of each member state, and where supranational organisation such as
the Commission exert little or no influence over policy outcomes. By contrast with
neo-functionalists, who emphasize the entrepreneurial and brokering roles of the
Commission and the upgrading of the common interest among member states in the
Council, liberal intergovernmentalist though emphasizes the bargaining among
member states and the importance of bargaining power, package deals, and 'side
payments' as determinants of intergovernmental bargains on the most important
decisions of the European Union (Pollack 2005). The following three assumptions
about interstate bargaining offer a plausible starting point for analysis of EU decisionmaking. First, intergovernmental co-operation in the EU is voluntary, in the sense that
neither military coercion nor economic sanctions are threatened or deployed to force
agreement. Thus, fundamental decision in the EU can be viewed as taking place in a
non-coercive unanimity voting system. Second, the environment in which EU
governments bargaining is relatively information-rich. National negotiators are able to
communicate at low cost and possess information about the preferences and
opportunities facing their foreign counterparts, as well as the technical implications of
24

26. policies that are of the greatest interest to them. Third, the transaction costs of
intergovernmental bargaining are low. Negotiations within the EU take place over a
protracted period of time, during which member governments can extend numerous
offers and counter-offers at relatively little cost. Side-payments and linkages can be
made (Moravcsik 1993). EU can be viewed as a 'co-operative game in which the level
of co-operation reflects patterns in the preferences of national governments' (ibid. p.
499). Yet, relative power of the states is important, even in this relative benign
environment. Bargaining strategic advantage stems from asymmetries in the relative
intensity of national preferences. The more intensely governments desire agreement,
the more concessions and the greater effort they will expend to achieve it. The greater
the potential gains for a government from co-operation, as compared to its best
alternative policy, the less risk of non-agreement it is willing to assume and the
weaker its bargaining power over specific terms of agreement (Moravcsik 1993).
−
Third and finally, liberal intergovernmentalist approach puts forward a rational choice
theory of institutional choice arguing that EU member states adopt particular EU
institution – pooling sovereignty through qualified majority voting, or delegating
sovereignty to supranational actors like the Commission and the Court – in order to
increase the credibility of their mutual commitments. In this approach, sovereign
states seeking to cooperate among themselves invariably face a strong temptation to
cheat or defect from their agreements. Pooling and delegating sovereignty through
international organizations allows states to commit themselves credibly to their
mutual promises, by monitoring state compliance with international agreements, such
as those have constituted the EC/EU (Pollack 2005). In the intergovernmental view,
the unique institutional structure of the EU is acceptable to national governments only
insofar as it strengthen their control over domestic affairs, permitting them to attain
goals otherwise unachievable. European institution strengthen the power of
governments in two ways. First, they increase the efficiency of interstate bargaining.
The existence of a common negotiation forum, decision-making procedures and
keeping agreements, thereby making possible a grater range of co-operative
agreements. This explanation is based upon the regime theory, which focuses on the
role of regimes in reducing transaction costs (Keohane 1984). However, in order to
explain the unique level of institutionalization found in the EU, this body of theory
25

27. must be extended to include the delegation and pooling of sovereignty. Second, EU
institution strengthen the autonomy of national political leaders vis-à-vis
particularistic social groups within their domestic polity. By augmenting the
legitimacy and credibility of common policies, and by strengthening domestic
agenda-setting power, the EU structures a 'two level game' (Putnam 1988) enhances
the autonomy and initiative of national political leaders (Moravcsik 1993).
The multi-level governance analysis
The 'liberal intergovernmentalism' approach is not exclusive of the 'multi-level governance'
(MLG) paradigm (Moravcsik 2006). Far from denying that the EU is a multi-level
governance institution, 'liberal intergovernmentalism' dictates that it must be such a
supranational institution. Liberal intergovernmentalist model of interstate negotiations is a
three-state process of national preference formation, interstate bargaining, and institutional
delegation. In the third step, governments delegate to EU institutions as credible commitment
mechanism, within which further decision are taken. This in turn implies that there is a
substantial uncertainty about precisely what decision will be taken within the treaty
arrangements, otherwise governments would simply negotiate the subsequent agreements ex
ante. These institutions empower national governments to outvote their counterparts; social
and bureaucratic actors to act as litigants, lobbyist or representatives; European citizens to
vote for elected representatives; and supranational actors to render decisions. If institutions
were unimportant, then governments would not need to negotiate (Moravcsik 2006).
The emphasis on governance takes and debates about authority away from the zero-sum
notions associated with discourses of sovereignty. The normal politics of sovereignty is,
therefore, a politics of absolutes. Theoretical treatments that engage this notion indicates that
the sovereignty is own by the state or not. Analysts associated with multi-level governance
do not maintain that the states are unimportant. Indeed, MLG is in agreement with a rather
more pluralistic view of the state as an arena in which different agendas, ideas and interests
are contested (Rosamond 2000). The multi-level governance is useful when the analysis is
more oriented about comparative politics and policy analysis. Indeed, the European Union is
not a precise analogue for the processes of politics within nation-state. The EU may be read
as a hybrid form: neither political system nor international organization, but a sui generis
phenomenon. The multi-level governance literature seeks to avoid two traps: neo-realistic
26

28. state-centrism and the treatment of the EU as only operating at the European level in the
institutional arena of Brussels. MLG analysis permits to consider that the EU as a polity
where authority is dispersed between levels of governance and amongst actors, and where
there are significant sectorial variations in governance patterns (Rosamond 2000). The multilevel governance analysis incorporate both vertical and horizontal dimensions. 'Multi-level'
refers to the increased interdependence of governments operating at different territorial
levels, while 'governance' points the growing interdependence between governmental and
non-governmental actors at various territorial level (Bache and Flinders 2004). With regard to
the vertical aspect, MLG authors seek to delineate and explain the substantial variation in the
empowerment of supranational and subnational actors in the various member states. MLG
scholars describe the shift of authority from national governments to the European arena and
to subnational, regional governments in a substantial number of states. It remains
controversial whether such devolution was driven wholly or in part by European integration
or by purely national considerations. Other writers have focused on the horizontal or network
aspects of European integration, drawing on network theory to describe and explain the
working of transnational and transgovernmental networks that can vary from the relatively
closed 'policy communities' of public and private actors in areas such as research and
technological development to the more open and porous 'issue networks' prevailing in areas
such as environmental regulation. The openness and interdependence of these networks, it is
argued, determine both the relative influence of various actors and the substantive content of
EU policies, particularly in the early stage, when the Commission drafts policies in
consultation with various public and private actors (Peterson 2004; Pollack 2005). This
network of form of governance, moreover , has been accentuated by the creation of formal
and informal networks of national regulators, in areas such as competition policy, utilities
regulation, and financial regulation. By contrast with most students of legislative politics,
who emphasize the importance of formal rules in shaping actors' behaviour and polity
outcomes, MLG scholars emphasize the informal politics of the Union, in which such
networks of private and public actors try to determine the broad contours of the policies that
are eventually brought before the Council and the European Parliament for their formal
adoption (Pollack 2005).
In a conclusion, according to this model the first hypothesis is that the only significant actors
of the EU external energy policy are governments. Furthermore it is assumed that their
27

29. interest are formed prior to decision-making at the EU level. Hence the second hypothesis:
all external energy policy-making outcomes in the EU process can be traced to prior
governments interests, mainly energy security interests. The counterhypotheses to these are
that institutional EU actors matter independently, that interests may be formed during the
policy-making process and not prior to it. With regard to the MLG analysis, is assumed here
that horizontal and vertical actors different than governments matter, but national
governments utilize EU institutions to outvote these actors and to maintain the primary role
in shaping of the external energy policy-making.
28

30. 3: Energy Policies in EU Countries
Introduction: A European Overview
This chapter look at the energy sectors of various EU states in order to provide a basis for the
subsequent analysis of policy-making at the EU level. According to the analytical model
proposed in the previous chapter, it was hypnotized that there are national governments at the
forefront of the EEP process. It was also hypnotized that the outcomes of the EEp can be
traced to prior energy security of national governments. In order to obtain some empirical
evidences to demonstrate these hypothesis, I consider useful to review the structural
parmaters of a number of EU member states because it was assumed that national situations
are determinant to the definition of the common EEP. The parameters of energy sector in the
EU and in four states – Germany, France, the United Kingdom, Poland – are here explored,
as well the organization of the energy sectors, the role of interest groups and government
external energy policy.
In 2006 oil and natural gas accounted respectively for 36.9 per cent and 24 per cent of EU
member states grass inland consumption, followed by solid fuels and nuclear power, which
accounted for 17.8 per cent and 14.0 per cent respectively. The share of renewables stood at
7.1 per cent. Import dependency for the same period amounted to 50.5 per cent of which 83.6
per cent for oil, 54.5 for gas and 41.2 per cent for solid fuels (EC 2008). The dominant fuel in
the European energy mix is oil. The Persian Gulf region is vital for the security of EU oil
supply and a disruption or a supply shortfall is very hard to compensate from other sources.
Over the past decade the gas increased its share in the overall EU energy consumption,
mainly at the expense of coal. With the Eastern enlargement, UE energy dependency has
been more important. Natural gas imports, for instance, may arise from 60 per cent to 90 per
cent and oil from 90 per cent to 94 per cent (Umbach 2007).
However, the analysis of the energy mix of each UE member state shows clearly the
heterogeneous character of each national situations, i.e. the importance of the nuclear sector
in France, natural gas in United Kingdom and in the Netherlands, and coal in Germany and
Greece. There has always been a marked difference between the political interest of energyimporting and energy-producing countries. Importing countries have the problems of
securing reliable supplies, and share a common interest in a policy that will safeguard those
29

31. supplies. Producing countries typically have different interests: they want the freedom to
export as they consider profitable, and therefore typically seek to avoid common policies at
the international level (Clingendael 2004). Producers sometimes form alliances, as in OPEC,
and international cartel formed to control oil prices, but within Europe the is no formal
cooperation of this type. Importers cooperate within the IEA, which provides an emergency
oil-sharing mechanism (Furfari 2007). Norway and the United Kingdom are the main
producers of oil in Europe; Norway and the Netherlands are major suppliers of gas to the
Continent. Oil is sold on the world market and thus there are no direct links between
producer and importer. For gas, however, there is the physical link of pipelines between gas
field and user. Three non-member states are major gas exporter to the EU: Norway, Russia
and Algeria (Matláry 1997). National energy policies have clearly dominated European
energy policy since the Second World War. An understanding of the role of national
governments in this area is therefore essential to any analysis of EU energy policy. As early
mentioned, there are basic structural differences between EU countries with regard to energy
and these structural parameters place a large constraints on policy-makers. Energy is a field
where natural resources are very influent in determining a state’s interests and possibilities,
but beyond this there are various political and economic choice possibilities for policymakers (Helm 2004).
In the following, the analysis shows the structural parameters of given states’ energy sector:
their energy mix, indigenous resources, supply dependence and import needs. But I am also
interested in the political structure of the energy sector – the role of the state and economic
actors, the relationship between the governments and energy companies, and so on.
Furthermore, I am particularly interested in the analysis of the energy security and the
national security of supply policies and considerations. Through a multi-level governance
analysis, I assumed that horizontal and vertical economic and political actors matter in the
definition of the national external energy policy.
The reason why this types of information is important in my analysis of the EU external
energy policy is that governments will probably try to use the EU arena in order to achieve
their domestic-shaped objective (Moravcsik 2006). As Putnam (1988) has pointed out,
governments may invoke rules from European institutions to justify domestic policy
measures, arguing that the governments is bound to implements a certain policy despite
subnational opposition.
30

32. Because an in-depth study of all the EU member state is beyond the scope of this thesis, in
the following I focus my attention to four EU member – Germany, France, the United
Kingdom and Poland – because, given their economic and political differences, they can
provide a comprehensive picture of the European energy situation. These differences are
caused by different national energy mix, different degree of domestic energy resources
availability and different degree of state intervention in the economic system and in the
national policy of energy security. Moreover, I choose these states also because they can
provide examples of different approaches vis-à-vis the European Union: beyond France and
Germany, EU founders, I choose the United Kingdom and Poland as examples of states that
joined the Union in different years (UK in 1973 and Poland in 2004) and with peculiar
attitudes from founder states in relation to the Union.
Germany
Energy parameters
Germany is a large importer, a substantial producer and an transporter on energy in the EU. It
energy consumption is 349 mtoe in 2006. The main sources of German energy supply are oil
products and natural gas. While natural gas accounts for 22.7 per cent of German energy
consumption, the percentage of oil products is 35.6 per cent. The fossil fuels account for 23.5
per cent, while nuclear sector for 12.3 per cent (adapted from EC 2008). Germany depends
on oil imports to a vary high degree (97 per cent). Imports from Russia are crucial for oil and
gas, covering 33.7 per cent of oil imports. The situation is similar for gas, Germany imports
gas at 80 per cent of its consumption and it relies on Russian gas imports for 39.1 per cent
(Sander 2007).
Germany maintains a significant coal-based electricity generation capacity to avoid over
dependence on imported energies. A coal-fired plan that emits no greenhouse gases is
schedule to enter into operation in 2008 (Marcelis and Maurer 2006).
Energy actors and policies
The is no uniform energy sector in Germany in terms of organization and government
31

33. involvements. The role of the state in the coal and nuclear sector is a major one, whereas the
oil sector is governed by free-market rules (Matláry 1997). Energy policy is determined not
only by government but also by the Länder, since Germany is a federal political system.
There is a decentralised structure of decision-making with specific competences at various
level, as well as sharp differences in organisation between the energy forms (Bulmer and
Paterson 1996).
Germany is the key transporter of Russian gas through major pipelines to other parts of
Europe. The gas pipelines are privately owned, including the ones that transport gas from
third countries through Germany. One of the main economic actors in this field is E.ON
Rurhgas (former Rurhgas, in March 2003 included in to E.ON). E.ON Rurhgas is the biggest
provider of natural gas in Germany. The company contributes to the reduction of the German
vulnerability in crisis-situation through its 5.2 billion cubic metres of gas stock. It is
important to note, therefore, that the company receives all of its gas from Russia, mainly
from Gazprom. This relation of dependence is framed by the involvement of the company in
the governing body of its main supplier. For example the E.ON Rurhgas CEO is elected to
the boards of directors of Gazprom since 2000. He is the only representative of a non-Russian
company within the structure of the gas-monopolist (Sander 2007). A second major private
actor in this field is WINGAS. The company was founded with the aim of circumventing the
monopoly of Rurhgas by establishing direct import relations for natural gas. Like its
competitor, the company looks mainly to Russia for its gas imports.
In the oil sector too, private companies dominate and there is no government intervention or
policies (Matláry 1997). Concerning the external dimension of energy policy, both in oil and
gas sector, the central actors are private companies with political actors only in a supportive
role. The federal government is supportive to any involvement of private actors into Russian
market and encourages any action in this direction. Within the German government, the main
responsibility for the external energy policy has traditionally been located within the Ministry
for Economic Affairs (BMWI). Since the beginning of the Merkel’s governing coalition, the
political leadership in the overall field of energy policy is claimed by the Ministry for
Environmental Protection (BMU). This competition between the two bureaucracies and their
leading representatives correspond with a structural cleavage within German energy policy.
Nevertheless, the competencies in the international dimension of energy policy are still firmly
concentrated within the BMWI with the BMU focus on energy efficiency and renewable
energies. The Foreign Ministry (Auswärtiges Amt) defines its task as the creation and support
32

34. of stable international economic relational and positive international conditions for German
companies (Sander 2007)
The nuclear sector in Germany is important but very controversial. There are 21 nuclear
plants, all in West Länder, the ones in the new Länder having been shut down for safety
reasons. The Schröder’s governing coalition launched a gradual phase-out under which
Germany would shut down all its nuclear reactors by 2020. The two current ruling parties,
the Christian Democrats and the Social Democrats, are, however, divided over nuclear
energy, the CDU/CSU would like to see the issue revisited, but the departure from the use of
nuclear is seen as one of the central achievement of the SPD. So far, Chancellor Merkel has
chosen not to re-ignite the debate. This opting-out of the nuclear option and the decrease of
coal production for environmental reasons make Germany even and even dependent on
imports of coal and natural gas (Marcelis and Maurer 2006).
In summary, the role of private actors in German energy policy and energy security remains
crucial. Economic actors are closely involved in the Germany decision-making process in the
field of energy policy. The companies play and important role not only in the definition but
also in the implementation of energy policy. The government is not an autonomous actors in
the German energy policy, because of the decentralized structure of the political system, the
lack of national energy policy and the lack of uniformity in the organization of the sector.
(Matláry 1997, Sander 2007).
France
Energy parameters
France is a net importer of energy. It energy consumption is 273 mtoe in 2006. The main
sources of French energy supply are oil products and nuclear. While oil products account for
33.8 per cent, nuclear sector account for 42.5 per cent. The fossil fuels count for 4.8 per cent,
while natural gas for 14.5 per cent. France imports 95 per cent of its oil, as well as 95 per
cent of gas (adapted from EC 2008). A difference with other EU member states is that
France’s import requirements are provided not only by Russia: 51 per cent of oil imports
come from the Middle East and North Africa, and 32 per cent from the North Sea, with only
23 per cent from Russian Federation (IEA 2007). The situation for gas is similar: France has
diversified its gas imports. They come mostly by pipeline from Norway (28 percent), Russia
33

35. (21 per cent), Algeria (12 per cent), and the Netherlands (19 per cent). About 25 per cent of
France’s natural gas supply is Liquefied Natural Gas (LNG), mostly from Algeria with minor
amounts from Nigeria and Egypt (IEA 2007).
Fear of excessive dependence on nay one import source has therefore always rank highly in
France’s energy concerns. The development of nuclear energy has been the logical response
to this situation. Nuclear energy distinguishes France from the rest of EU member states:
nuclear generates now more than three quarters of France’s electricity (Marcelis and Maurer
2006)
Energy actors and policies
In France, the history of energy policy has always been characterized by a very strong
intervention of the state. Public firms, or controlled by the state, allowed the development of
the French energy sector and played a major role in its modernization, in the promotion of
independence and in security of supply. The very French concept of national champion is
well exemplified in state owned Électricité de France (EDF) and GDF Suez.
EDF is the main French electricity distribution company. It was founded in 1946 as a result
of the nationalization of several electricity produces, transporters and distributors. Until the
2004 it was a government corporation, but it is now a limited-liability corporation under
private law (société anonyme). The French government partially floated shares of the
company, although it retains almost 85 per cent ownership (Bennhold 2005). EDF is one of
the world’s largest producers of electricity. In 2003, it produced 22 per cent of the European
Union electricity, primarily from nuclear power (www.edf.com).
GDF Suez is a company active in natural gas, renewable energy and now also in electricity
generation and distribution . The company was formed by the merger of Gaz de France and
Suez in July 2008. Gaz de France was the gas monopolist for France. The government
continued to hold 80 per cent stake until the merger with Suez. At present, the government
holds approximately 35.7 per cent of the company (IHT 2008).
The oil companies have been privatised as part of the government’s economic strategy. In
early 1992 it had reduced its participation in Total, from 35 to 5 per cent. In 1994 government
sold most of its share in Elf. In 1998 Total acquired Belgian Fina and in 1999 also its
competitor Elf. The merger with Elf made Total a ‘national champion’ and the fourth largest
oil company in the world (de Lestrange et al. 2005)
34

36. As mentioned early, French government intervene strongly in the definition of the national
energy policy. At present, French policy is defined by the Energy Act of 2005 (Loi n°2005781 du 13 juillet 2005). (Meritet 2007). The government produced a White Paper about
energy policy that caused a huge debate among the French society and caused several
comments and contribution from energy actors, trade union, political parties and associations.
Finally, the Energy Act was presented and discussed in Parliament in 2004, and later
approved in 2005.
With regard to the security of supply, the governments government takes measures to ensure
the long-term security of energy supplies. The Energy Act indicate the intention of
government to put in place various instruments to regulate the market so as to ensure the
security of electricity supply :
-
Multiannual objective contracts signed with the operator of the public distribution
system (RTE) and with the companies that fulfil public service missions, i.e.
Électricité de France (EDF), Gaz de France (GDF) and the other distributors;
-
“Multiannual programming of investment in production” (PPI) which defines the
objectives in terms of breakdown of production capacities by primary energy sources
and by production technique and geographical area (Loi n°2005-781).
To reduce France's energy dependence, it has been decided to promote energy saving and
invest in nuclear electricity generation and renewable energies. These energies are considered
by French governments to provide a reliable long-term supply without greenhouse gas
emissions, and nuclear energy ensures stable electricity prices. For that reason, in 2004 it was
decided to commence construction of a demonstration model EPR (European Pressurized
Water Reactor), not only in order to have the option of eventually using this technology to
replace the present generating facilities, but also to support these facilities and maintain
industrial capacity whilst leveraging exports ( www.industrie.gouv.fr).
In summary, the role of government in French energy policy and energy security remains
very determinant. Indeed, the main debate in France is the privatisation of the energy sector:
there is no agreement on how far privatisation should go. The state’s share of French energy
companies is still large and there has been very strong opposition to privatisation by the
companies themselves and trade union (Matláry 1997). Security of supply is of course
another major issue and France needs to diversify its energy mix, but finally it is less
dependent on energy imports than other member states because its strong nuclear sector.
35

37. United Kingdom
Energy parameters
The United Kingdom is one of the major European energy-producing and exporting country,
together with the Netherlands and Denmark. Its energy consumption is 230 mtoe in 2006. the
main sources of British energy supply are oil products and natural gas. While oil products
account for 35.8 per cent, natural gas account for 35.2 per cent of the total consumption. The
fossil fuels count for 17.9 per cent and nuclear sector represents 8.5 per cent (adapted from
EC 2008). The UK became in 2005 a net importer of crude oil an annual volume basis for the
first time since 1992. However, net exports of refined oil products means that the UK
remained a net exporter of overall oil (crude, feedstock, and refined products) (IEA 2007).
The UK exports nearly all of its oil to the EU and to Canada, Norway and the United States.
However, oil production is expected to decline in the next few years, despite discoveries in
the North Sea (Marcelis and Maurer 2006). The fields will soon be depleted and the UK will
have to import. Gas production from the North Sea has declined and the UK now imports
around 10 per cent of its annual needs of gas (ibid.).
Energy actors and policies
Between 1980 and 2000, the British government made dramatic changes to national energy
sector in line with its overall economic policy. The state-owned fuel industries were
privatised, starting with oil and gas and continuing with electricity and coal. However, this
privatisation programme was not specific to the energy sector, but was a part of the general
privatisation programme of the Conservative government (Nelson 1993). Gradually the
energy industries were privatised (although in fact the Labour Government had begun the
process in the late 1970s by selling some of BP). British Gas was sold in 1986, and the rest of
BP in 1987, followed by the main part of the electricity industry in 1990 and 1991, with
British Coal and Nuclear Electric following in the mid-1990s. By the end of the 1990s
virtually all the energy sector was in private hands, save for the more technological end of the
nuclear industry (BNFL) (Helm 2004).
The government still regulates the market to a certain extend through licensing,
36

38. environmental and safety controls as well as through fiscal measures. In general, the
government intervenes only to make the market function better, for instance to create the
conditions for competition in the gas and electricity sectors. It has not interest in retaining
control of the energy sector by indirect means (Matláry 1997).
With regard to the security of supply, the lack of investment of the 1980s and 1990s revealed
that the privatisation approach had focused overwhelmingly on costs rather than on
investment in infrastructure. The UK was to experience in the first half of the 2000s a series
of shocks in terms of security of supply. These were both in infrastructure (power cuts) and
in tightening gas supplies, as the lack of storage and the complex interface between
continental long-term contracts and the British spot-driven market limited physical gas
supplies at points of capacity constraint. The gas effect was particularly important given the
dash-for-gas power station investments in the 1990s. As early mentioned, much of the North
Sea gas sources are been depleted (in oil too). The UK had depleted its oil and gas reserves at
the time period when prices were at an historical low and as fast as possible, because the idea
was that the value of these reserves would be replaces by international financial market
investments (Kemp and Stephen 2007). The UK did not preserve its resources, it did not set
up a state fund for investing the proceeds limiting itself only to taxation and levy instruments
(Helm 2004).
In summary the British government pursued a strategy of general privatisation despite
opposition from the energy sector between 1980s and 2000s. It is promoting competition in
this sector, having divested the economy of many public responsibility. But putting
competition and economic liberalisation over security of supply concerns, the governments
made the British system ill-prepared for the new investments required in the energy sector
and for the increasing dependence the UK on oil and gas imports. The security of supply is
now a major issue of the British debate and the government want to be an active actor (DTI
2006) but the lack of policy instruments creates some problems of efficacy.
Poland
Energy parameters
Poland is a large importer on energy. It energy consumption is 98 mtoe in 2006. The main
sources of Polish energy supply are coal and oil products. While coal accounts for 58.2 per
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39. cent of Polish energy consumption, oil products and gas account for 24.7 per cent and 12.6
per cent respectively. At present, Poland does not have a nuclear sector (adapted from EC
2008). Domestic sources of primary energy dominate total supply, 97 per cent of electricity in
Poland is produced from fossil fuels. However, virtually all consumed oil and 70 per cent of
the natural gas are imported (Jankowski et al. 2002). With regards to oil, Poland relies
principally on one major source, Russia that accounts fro 89 per cent of oil imports. Poland
relies on Russian gas for 61 per cent of total gas imports (Marcelis and Maurer 2006).
Energy actors and policies
The transformation process of converting the Polish economy into a market-oriented
economy began in the early of 1990s. One of the last sectors to undergo this transformation is
the energy sector. A detailed schedule of action, taken to liberalise the energy market, was
approved in December 1999 by the Ministry of Economy. The main aims was giving
permission to trade in energy with many companies, i.e. energy producers, distribution
companies, final consumers and wholesalers. Official prices were replaced with the so-called
‘‘tariff’’ and contract prices. Any tariff-fixed price should let the producer gain an income,
which would both cover the operating costs and modernization expenses, and would be
acceptable to the final consumer. To protect the particular consumers against high tariffprices, the levels of prices were verified and approved by the Energy Regulatory Authority
(URE). Therefore, the tariff price has become the base for fixing the price for the final
consumer, for the Polish Power Grid Company (Transmitting System Operator) and the heatand-power generating plants, whereas the price agreed by direct bilateral contracts between
the energy producers and the distributing companies is settled by negotiation (Kulczycka and
Lipinska 2003). However, it is not possible to consider the energy sector in Poland a modern
and market-oriented sector. The Polish electricity sector consists on 45 public plants and they
are mostly state owned companies. The Polish Power Grid Company monopolises highvoltage transmission service. The district heat sector is more decentralized and is
characterised by companies owned generally by local authorities. The majority of industrial
plants in Poland receive their heat and electricity supply from their own boilers and
generators. The Polish coal sector is organized in four coal companies, each of them owning
and managing a group of hard coal mines. It is now undergoing a restructuring process aimed
at reducing costs and capacity (Kudelko 2006).
38

40. One of the main actors in the Polish energy system is Orlen, a oil refiner and petrol retailer
company. Orlen is the largest oil company in Poland and in Central Europe. The firm was
created by the merger of Poland’s two petroleum oil monopolist in 1999, when both firm
were partially privatised. The company holds three refiner in Poland, three in Czech Republic
and one in Lithuania. The majority of refined oil comes from Russia. At present, the
company’s capital is partially floated, and the Polish government continues to hold 27.5 per
cent stake in the company (Dempsey 2006; www.orlen.pl).
Poland does not have a nuclear plant but in January 2005 the document ‘Energy policy of
Poland until 2025’ prepared by the Ministry of Economy (2005) was adopted by Council of
Ministers. According to this document power generation based on nuclear sources will be an
indispensable condition for the country’s development. The government’s program for the
development of the energy sector assumes the construction of one plant in 2021, while by
2030 there should the three working nuclear power plants in Poland.
With regard to the security of supply, Polish vulnerability to potential supply disruption,
perceived or real – domestic reserves of coal are likely to be sufficient for about 60 years et
the current rate of exploitation –led government to put this issue at the top of preoccupation.
Other aspect of energy policy such as competitiveness and sustainable development, are
treated as second-rank issues (Wyciszkiewicz 2007). This position stems from the immense
reliance on a single dominant supplier of oil and gas, namely Russia. Principally, it is the gas
concern that makes government fell insecure. The main part of supplies is imported under
long-term contract with the Russian monopolist Gazprom. This contract envisaged gradual
increases of gas supplies based on the principles of ‘take-or-pay’ and ‘destination clause’
(which prevent importer from re-selling the gas elsewhere) combined with the obligation to
construct two-branch gas pipeline Yamal-Europe linking Russian deposits through Belarus
with Polish and German Market. Due to overestimate gas consumption projections in Poland
and the unwillingness of Russia to build the second branch, the Polish government reopened
the negotiation process (Wyciszkiewicz 2007). This problematic relationship with Russia led
the attention of governments to be focused on a policy of diversification of sources.
Searching for new suppliers is now a key elements of energy relations with other European
countries and a major driving force of the external energy action of the Polish government.
Conclusions
39

41. EU countries vary considerable in energy structure and political system and this affects their
external energy policy. There are national policy traditions on state versus market that largely
determine how energy sector have been structured, and the availability of domestic fuels
supplies plays a major role in this. The interest of net importing countries differ from those of
net exporting countries, but apart Denmark, all other EU member states are net importers of
energy. As demonstrated the analysis of the four countries under consideration her, this is the
only common characteristic of the EU member state external energy policy.
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42. 4: Elements for a External Energy Policy
Introduction: The Competences of the EU in the Energy field
This chapter turns to the analysis of policy proposals that go in the direction of the formation
of a common external energy policy (EEP), whereby policy-making power would be
transferred from the member states to the EU institutions, formally and/or informally.
The first section of this chapter analyses the point of view of the EU in the field of the
external energy policy, in particular identifies the market-oriented ideology of the European
Commission in the formulation of the EEP proposals. The second section presents two
example of EU external energy actions: the EU-Russia relationship and the Energy Charter
Treaty. I focus my attention to these two action because I consider them important examples
of a European bilateral and multilateral policies, respectively. The third section reviews the
role of four EU member governments – Germany, France, the United Kingdom and Poland –
in the definition and implementation of the previous two examples of EEP. The fourth section
concludes by emphasising the evident differences between the Commission proposals and the
EU and EU member states actions.
Theoretically, energy was always been a prime objective of the European integration. In
1951, coal was with steel the objective of the first Community (ECSC). In 1957, atomic
energy was the object of a particular treaty (EAEC or Euratom). Nevertheless, there has
never been an EC chapter about energy policy. Since the termination of the ECSC in 2002,
there are only two Communities in charge of energy. The EC Treaty covers all energy
sources, except the atomic energy which is covered by the EAEC Treaty. It is important to
note that neither the Convention on the future of Europe, neither the Treaty of Lisbon did not
manage to suppress the EAEC Treaty. A first problem is the fact that the EAEC, due to
political conflicts linked to the military aspects of the atomic energy, has never been
completely implemented. This situation has allowed a shared vision where the fundamental
choices regarding nuclear energy are seen as the monopoly of the member states (Dehousse
2007). There are no provisions in the EC Treaty regarding a European energy policy. In other
areas where there was a rationale for a high level of positive integration, the EC Treaty had
generally foreseen specific legal basis. For energy, this was not the case. Nevertheless, the
41

43. EC Treaty fixes several objectives, which can serve as a basis for a European energy policy:
‘establishing a common market, […] sustainable development, […] sustainable and noninflationary growth, […] a high degree of competitiveness, […] a high level of protection and
improvement of the quality of the environment’ (art. 2 TEC), actions at community level ‘if
severe difficulties arise in the supply of certain products’ (art. 100 TEC),’prudent and
rational utilisation of natural resources’ (art. 174) (ENA 2002, p. 12). With regard to the
Treaty on the Functioning of the European Union (TFEU), still there are not specific
provisions for a real common energy policy. Article 2c of the Treaty on Treaty on the
Functioning of the European Union (TFEU) inserts energy as a shared competence between
the Union and its member states, which gives the EU a means to exert little more influence
on energy policy decision-making. It retains the right of member states to determine the
conditions for the exploitation of their energy resources, the right to decide national energy
mix, the general structure of their energy supply and provides the unanimity in the Council
decision-making process.
For that reason, the European Commission deals with energy issues on the basis of its
competences in the common market; competition policy; environmental policy: regional and
research policy; Trans-European Networks (TENs); and consumer protection. Its most
important competences are related to the internal electricity and gas markets. With regard to
the EU external energy policy, decision-making is subject to intergovernmental cooperation,
where decisions are taken by unanimity. The Commission promote a more cooperative
approach with energy suppliers in cooperation with the High Representative for External
Affairs.
In a conclusion, even if there are not specific legal basis for a EU external energy policy, the
major obstacles to a common policy is more of political nature than of juridical one (ENA
2002). because the ability of European institutions to define common objective depends more
on will of member states than on the existence of a juridical basis. This is in line with a’
liberal intergovernmentalist’ approach of the European integration, which proposes that the
member state governments are the main actors in the European decision-making process
(Moravcsik 1998).
The EEP Proposals of EU Institutions
Nevertheless, the Commission, the principal entrepreneurial EU-level actor, has always
42