European Integration and the Changing
Paradigm of Energy Policy
The case of natural gas liberalisation
Professor Svein S. Andersen
ARENA, University of Oslo
Energy policy and EU integration [1]
Despite its weak institutional core (Kohler-Koch 1996,
Kohler and Eising 1999) the EU has a substantial ability
to initiate and carry out reforms and transformations.
The focus for this article is the development towards a
common EU energy policy, with an emphasis on the transformation
of EU natural gas policy (and markets) over the last
decade. The objective is to develop an neo-institutional
sociological perspective to better understand such
transformations. The article emphasises the relationship
between key theoretical ideas from neo-sociological
institutional theory and their implications for
transformations of policies and institutions. It is not a
policy analysis in a conventional sense, but rather an
attempt to link Europeanisation of policy to European
integration. While such issues are often discussed
separately, this linkage has often been a concern for
students of EU energy policy (George 1985, Matlary 1997,
Usherwood 1998). The EU energy policy is in many ways a
problematic case, but also characteristic of the general
EU development, with its periods of stagnation and
conflict – and the eventual break through for quite
radical transformations during the 1990s.
Up to the 1980s EU energy policy was regarded as a
spectacular failure (George 1985:100). It has been
characterised by strong conflicts between a common
policy, on the one hand, and divergent national policies,
on the other. Despite its inclusion in the very first
treaties on the European Community energy was until very
recently more or less unaffected by common market
legislation, and few energy policy decision were taken at
the central EU level (Schmitter 1996). A number of EU
policies and regulation affects energy production,
transportation, sales and consumption in many ways
(general rules as well as more targeted ones, like taxes
on mineral oil). Still, the EU is far from a common
energy policy. However, since the late 1980s a number of
important EU initiatives have been taken to strengthen
the supernational influence over particular energy
sectors (Matlary 1991, Lyons 1992, 1994, Padgett 1992).
Results have been mixed, but in some areas EU level
policies and regulation are emerging. Such changes are in
line with, but unique versions of, global trends towards
liberalisation. In the EU they take place within a
special institutional context which at the same time
reinforce, elaborate and modify such external influences.
Europeanisation as institutionalisation of a policy
paradigm
The empirical focus is the emergence of a common EU
energy policy during the 1990s, but not as energy policy
in a traditional sense. Energy issues have been redefined
and increasingly linked to three general perspectives.
First, the EU's internal market programme where
competition policy plays a major role. Second, EU's
attempts to establish a common environmental policy with
fiscal measures as key instrument. Third, the European
Energy Charter and the Charter Treaty which were attempts
by EU to create international market regimes that could
support reform in the former East Bloc and thereby secure
EU's energy supplies (Andersen 1995, Dore and DeBauw
1995). The most important changes in the last few years
are related to the internal market directives on the
electricity and gas markets (Hancher 1998).
The theoretical perspective is that of
neo-institutional sociology. Europeanisation of policy is
discussed as the institutionalisation of new policy
paradigms at the EU level. Europeanisation of policy is
not only a question of moving decision-making authority
across levels, but also tied to the
re-institutionalisation of policy-paradigms on both the
EU and national level (Andersen 1995). Such paradigms
represent the institutionalised principles of policy
action. They structure the way in which policy-makers see
the world and their role within it. Policy paradigms
consist of both practises, in the form of policies, and
means-ends designations, in the form of tenets of
governmental action. As cultural frames they create and
sustain certain patterns of action, and they symbolise
those patterns as efficient (Hall 1992, in Dobbin
1994:19, Andersen 1993). The concept of policy paradigm
challenges a neo-realist perspective, linking the general
perspective of neo-sociological institutional theory
(Meyer 1994, Meyer et al 1987, 1997, Scott 1994) to the
study of policy sectors. This relationship will be
further developed below.
In the area of energy successes reflect the `pull' of
increased EU integration despite diverse and conflicting
interests, to be exploited by political entrepreneurs,
primarily the Commission (Nylander 2000). These changes
involve three stages that are closely linked. First, the
introduction and legitimisation of an alternative
EU-level model or frame, where arguments about
appropriate organisational principles and form play a key
role. Second, the gradual specification of the content of
this frame, towards to the formulation of an EU level
policy paradigm where implications of alternative
organisational forms are debated and negotiated. Third,
the national implementation and modification which
further give substance to the new EU level paradigm. The
relationship between such processes may very; in terms of
being sequential or parallel, and with respect to the
type of interaction that takes place between them. A key
point here is that this sequence differs from what would
be expected within a neo-intergovernmentalist model.
A widespread assumption in the EU literature is that
the emergence of common policies reflect member states'
preferences in the context of wider international
pressures that undermine existing national models:
In a strict version of the neo-intergovernmentalist
argument, states act on their preferences and as a result
new normative models emerge and become codified in EU
legislation. States initiate and control processes as
well as outcomes. In another version states will develop
and accept unplanned and unintended consequences of
earlier commitments, even if it means changing earlier
preferences, as long as domestic preference changes and
EU level outcomes are controlled by member states
(Moravcsik 1993, 1998). A third modified version of
neo-intergovernmentalism is that states will accept
initiatives from supernational institutions developing
unforeseen consequences of established policies and
legislation in the form of agenda setting and proposals
by the Commission, the European Parliament or through
court decisions (Matlary 1997, Peterson 1995, Tallberg
2000). In the latter version it is not clear that the
states control the EU level process, or that changing
state preferences are exogenous to the EU process.
However, it is assumed that supernational initiatives can
be accepted even in cases where sector effects are
negative, as long as overall member state gains are
higher than losses.
In all three types of argument, EU policy and
legislation are regarded as projection of state
interests, and their legitimacy rests on a cost-benefit
analysis. All three versions of the
neo-intergovernmentalist argument have clear empirical
implication for sector studies. The first assumes that
observed state interests in the sector explain processes
and outcomes. The second version is more difficult to
verify empirically since it presumably involves complex
weighing of interests, transcending the sector, which may
be difficult to observe and assess. The third version
differ from the other two with respect to how
Europeanisation is brought about by allowing a certain
autonomy to EU level process, including state preferences
being influenced by the EU level process, although
outcomes are assumed to be restricted by state interests.
However, it is difficult to verify complex cost-benefit
analyses in cases where reluctant acceptance of sector
changes are weighed against complex and long term
interests in the EU project.
In the case of EU energy policy a number of studies
suggest that the first and second version of the
neo-intergovernmentalist models are not in accordance
with data (Andersen 1995, Matlary 1997, Usherwood 1998,
Eldevik 1999). The legitimisation of a new EU level frame
takes place despite widespread and intense opposition
from a majority of member states. Eventually the
formulation of state (as well as industry) preferences
reflected the new frame. This happened only when the new
frame was established, and initially arguments about
appropriate forms of organisation seemed to weigh as much
as, or more than, calculations of costs and benefits.
Only gradually state (but also industry and court)
actions can be seen as shaping and elaborating the
emerging policy paradigm.
The ambition here is not to disprove empirically a
basic intergovernmental argument about why certain
initiatives or outcomes prevail despite initial strong
opposition from member states. Verification and
falsification face the same problems of empirical
measurement. Instead the discussion focuses on how
transformation of policy takes place. The argument is
that the intergovermentalist framework is weak with
respect to three aspects of the transformation that has
taken place in EU energy policy. This is particularly the
case for two versions of intergovernmentalism which
assume that state interestss are driving and controlling
the process. The third version provides a certain role
for supernational actors and processes, but even this
argument has serious limitations when analysing EU
transformations.
First, with its emphasis on local problem solving the
intergovernmentalist perspectives little to say about the
relationship between Europeanisation of policy and wider
international trends. Second, it is not clear how diverse
state interests, articulated within different policy
paradigms, can be integrated within a common EU model at
all. Third, when EU level policies emerge, what are
implications for convergence and divergence of
institutional arrangements in member states? These
questions are central within a neo-sociological
perspective, underlining the legitimisation of
authoritative frames as a precondition for rational
action as well as institutional transformation (Meyer
1994, Andersen 1993, Dobbin 1994).
The theoretical implications of an neo-institutional
perspective will be discussed in relation to the EU
liberalisation of the natural gas sector over the last
decade. It is a case where the Europeanisation of policy
has taken place despite initial intense opposition from a
majority of countries:
The development of the gas directive can be summarised
as follows: The first initiatives (1990) pushed by the
Commission only had support from the UK. The other 11
members (at the time) of the Council of Ministers reacted
strongly. It is one of the few examples where the Council
has refused to handle a Commission proposal according to
the (two-hearing, qualified majority) procedure. In 1994
the initial directive draft failed. Despite this initial
reaction the issue was kept alive and over time a new
directive was developed and eventually passed in 1998.
Gradually the strategic reorientations of states and
companies as well as the impact of court decisions came
to play a key role in the further elaboration of the new
frame.
As a new EU-level policy paradigm emerged, the
traditional national paradigms were radically transformed
in the sense that traditional statist models of energy
policy were replaced by a model emphasising market
functionality. And, as in most cases of EU energy policy,
the initial distribution of (national and industry)
interests were such that this transformation cannot be
explained without reference to the broader context of
European integration. It reflects the weight of the
general internal market (where energy initially was not
included), but also global liberalisation trends
affecting the energy sector. The new directive has
already led to important changes and made it impossible
to preserve other parts of (traditional) national energy
markets in the long run. Such changes have increasingly
been reflected in new strategies both from (often
reluctant) member states and parts of the industry.
This process and its outcome raise several questions
of general interests:
- What is the relationship between the external
influence of `global' models on each country, and
to what extent does the EU represent
institutional form which reinforce, channel and
modify such impulses through the construction of
new policy paradigms?
- What are the mechanisms through which integration
pressures of the EU context affect energy? How
are new policy paradigms developed?
- What is the relationship between EU level and
national level changes? To what extent, and why;
do we find convergence and divergence; i.e.
extent to which a general and idealised model is
reflected at the central EU level or in national
arrangements?
Before we enter the discussion of the natural gas
directive and its implications, we will briefly discuss
attempts to explain energy policy failures and successes
and the relation to general EU integration.
Policy failures and problems of explanations
Various attempts have been made to explain
Europeanisation of energy policy, or the lack of it,
within general theories about EU development. Here we
will crudely summarise a development divided into three
stages: The first, up to the early 1990s, is
characterised by attempt to explain by way of two
competing theoretical perspectives, namely traditional
intergovernmentalism and integration theory. The second
stage, until the mid/ late 1990s, is characterised by
attempts to combine elements from the
neo-intergovernmentalist and neo-integrationist thinking.
The third stage, which has developed over the last years,
is an attempt to analyse the EU on the basis of
institutionalist approaches, but so far little has been
done along such lines in relation to energy policy. The
purpose of this paper is to contribute within this third
group of explanations; to apply neo-institutionalist
sociological theory as an alternative framework for
analysing Europeanisation of policy.
Historically, intergovernmentalism explains the
development towards more EU integration (supernational
authority) and common policy by pointing to the gradual
emergence of common and overlapping interests among
member states. This process is driven by rational actors
building coalitions (Morgenthau 1973, Waltz 1979). Such a
rational actor perspective would be consistent with the
co-operation over coal (and steel) policy during the post
World War II years. The Six (who had lost the war) saw
co-operation on coal as a requisite for successful
reconstruction, but also in the new spirit of a unified
Europe. Within traditional integration theory the
successful co-operation over coal was seen as a driving
force of further EU-co-operation; first by spilling over
to other energy sectors and later to other economic
sectors (George 1985). The latter prediction was sadly
wrong.
The lack of a common EU policy in the energy sector up
to the late 1980s is consistent with a lack of
overlapping interests between member countries (and
national energy sectors). From the late 1950s to the
early 1970s such co-operation did not seem necessary.
During the 1970s national interests were too diverse.
However, failures and successes of EU energy policy pose
asymmetric problems of explanations. It is easier to
explain why diverse and conflicting self-interests
prevent common policies than to explain how a common
denominator emerges (Scharpf 1988). This became
increasingly clear as new initiatives emerged in EU
during the 1980s.
New formulations of intergovernmentalism emphasise how
EU institutions reduce transaction costs of formulating
common policy, and that preferences may be altered
through domestic processes that are exogenous to EU level
processes (Moravcsik 1993, 1998). This has become the
major perspective on EU integration. However, the focus
is mainly on EU's treaty changes, and it can not account
for the considerable variations observed across policy
sectors. In the early and mid 1990s the question was
often how and to what extent new energy sector
initiatives could be accounted for by either
neo-intergovernmentalism or neo-integration theory,
respectively. As it turned out, the support for one or
the other model was dependent on two factors; the time
period studied and the nature of the case at hand.
The general finding was that EU energy policy was a
failure, and that the major action was to be found at the
national level (Schmitter 1996, Matlary 1996). How, then,
to explain (some) successful EU energy policy initiatives
since 1990? They have been pushed by the Commission which
has exploited institutional rules on the EU level to take
the initiative, and to redefine the energy sector in
relation to the internal market, environmental policy and
foreign policy. The areas to which energy is linked all
represent areas where supernational institutions have
been assigned tasks what the neo-functionalists call
inherently expansive (Cameron 1991: 25). However, rather
than Europeanisation of energy policy driving EU, it was
the other way around. This is perhaps most obvious in the
case of the internal marked and in environmental policy.
The radical transformation that has taken place in the
natural gas sector over the last decade is an example of
an issue being redefined in terms of the internal market
logic.
A key to understanding this development is how the EU
– as an institutional framework and a set of central
institutional actors – interact with underlying
interests in the energy sector in the different stages of
EU development. This interaction demonstrates the close
link between EU decision-making, the problem of defining
collective interests, on the one hand, and the dynamics
of EU integration, on the other hand. From the mid 1990s
this question was often posed more pragmatically; i.e.
how specific cases or aspects of the EU development could
be analysed as a combination of intergovernmentalist or
integrationist mechanisms. Peterson (1995) and Peterson
and Bomberg (1999) introduced a general multi-level model
of EU policy-making to account for various types of
decision-making, combing the two models.
Intergovernmentalism, it was argued, is best suited to
understand history-making decisions leading to treaty
reforms. Such decisions frame EUs everyday policy-making
where the central EU institutions as well as the expert
level have a special significance, with a mix of
intergovernmental and supranational influences.
Often decision-making within the EU is characterised
by considerable political entrepreneurship exploiting the
established EU institutional framework, leading to
unexpected processes and outcomes. Such entrepreneurship
is primarily exercised by the Commission, but also other
actors may engage in this (Nylander 2000). Studies of
energy policy in general, and the natural gas sector in
particular, typically concludes that such
entrepreneurship play a key role in explaining the
successes of the 1990s (Andersen 1995, Schmidt 1997,
Matlary 1997, Eldvik 1999, Nylander 2000). It is
generally concluded that processes and outcomes are not
consistent with a strict neo-intergovernmentalist model.
Most member states are initially against initiatives,
they do not dominate the policy-making process and
preferences seem to be changing as part of the EU level
bargaining process (in contrast to exogenous domestic
preference changes assumed by the intergovernmental
model).
The conclusion of such studies is that there are
integrating pressures at work and that the EU process and
the Commission seem to have a certain autonomous
influence (Schmidt 1997, Matlary 1998). The sources of
this autonomy are existing EU law and obligations which
serves as a context for legitimate political
entrepreneurship. Schmidt (1997), comparing
Europeanisation electricity and telecommunication
policies argue that the mix of intergovernmental and
supranational factors varies with the distribution of,
and relationship between, mobilised interests. It is not
always clear how such observations can be reconciled with
the idea that the EU is primarily an intergovermental
undertaking. However, the assumption seems to be that
lack of a positive shared sector interest may be
overruled by more general member state commitments to the
internal market and to the EU integration process.
Accepting Commission initiatives and adjusting to them
may be seen as part of a learning process where
preferences are adjusted, as side payments in nested or
even secret games. Presumably, the costs of not accepting
a certain sector policy, although not in ones interest,
would be greater since it could harm a more general and
long term interest. If the member states were really
against it, they would revoke earlier commitments, the
argument goes. Legal rules project state interests and
legitimacy of Commission entrepreneurship in the final
analysis rests on a cost-benefit analysis.
This line of argument has some merit. From an
empirical perspective, however, it raises the problem of
how state interest may explain process and outcomes even
when the expressed sector interests are the exact
opposite, and when `broader underlying' interests may be
unobservable except as a post hoc rationalisation.
Theoretically, the explanatory value of given interests
is problematic when they are changed by external
pressures and the momentum of the EU process. On the
other hand, such a fundamental intergovernmental model is
hard to refute on the basis of specific empirical
observations. Although, assumptions about rationality are
strict, almost all decision may be rationalised along
such lines post hoc. This kind of problem has been
discussed by Pierson (1996) in his version of historical
institutionalism.
The concern here is to better understand
Europeanisation of policy as transformation processes.
This points to another class of theoretical models;
namely institutional approaches to the study of the EU
which lately have become popular (Andersen 2000). Below
we will briefly discuss major perspectives and introduce
a neo-institutional sociological approach to the study of
Europeanisation.
An alternative institutional approach
Since the mid 1980s a growing number of researchers
argue that the best starting point for understanding EU
integration and Europeanisation of policy-making can be
found in various institutional approaches (Andersen
2000). The most common ones are variations of so-called
historical institutionalism; where (bounded) rational
choice is framed by institutional rules. Mechanisms
mediating between context and actor choices may vary. One
major type of explanations refers to various
institutional rules framing rational action (Bulmer
1994). Another type of explanations emphasises the impact
of accumulated unintended consequences of earlier
decisions and commitments that frame new choices (Pierson
1996). In both cases changes reflect attempts to
accommodate self interests in a local problem-solving
context. As such they may still be regarded as variations
of rational actor arguments.
Few, if any, have explicitly studied EU energy policy
from such perspectives. It would seem that they would
face some of the same challenges as an intergovernmental
model in that they rely on (bounded) rational action to
explain change and transformation. Interest is still the
primary integrating mechanism. On the other hand, they
would open up for other actors playing a key role, and
that the role of member state governments has to be
determined empirically. There are less strict assumptions
about efficiency gains, particularly among those
historical institutionalists that regard interest
articulation and action as reflecting a web of
institutional rules (Bulmer 1994, Bulmer and Bursch
1998).
The transformation of EU energy policy can be regarded
as the parallel re-institutionalisation of
policy-paradigms at the EU and at the national level.
This transformation is not only a matter of changing
policy content, but also part of a wider EU integration
process. The question is how such transformations should
be conceptualised, and if there are alternative ways to
think about integration mechanisms than those found in
intergovernmentalist and integration theory:
For intergovernmentalists, as historical
institutionalists, integration is mainly based on an
accommodation of self-interests and this is reflected in
institutional change. In integration theory, in contrast,
the concept of spill-over (economic and politic)
underline the impact of the institutional context. There
is a dynamic relationship between the level of EU
integration and national formulations of interests, and
the EU elites play a key role in identifying positive
gains and new collective formulations of policy. The
efficiency of EU level solutions undermines the
sub-optimal nation-state arrangements. In both
intergovernmentalist and integration theory the external
economic environment is an important driving force for
integration, and responses reflect local factors. Local
solutions are either the aggregate of individual state
interests or the systematic response by (entrepreneurial)
EU elites.
From the alternative perspective of neo-institutional
sociology EU integration may be viewed as part of a wider
`modernisation process'. The concept of institution is
used here simply to refer to a location of meaning and
identity outside the social system under examination
(Meyer 2000:3). The argument is that certain forms of
organisation and arguments spread from a global
rationalised culture; characterised by a set of abstract
and universalistic principles, norms and cognitive frames
that drives standardisation in various areas. Global
models may be more or less developed, more or less
contested. Increasingly we find models that reflect
international experiences, codified in scientific and
legal language.
International organisations, like OECD and GATT in the
economic area, play a key role in developing such models
which become autorititative frames. Regional and local
institution building and change increasingly relate to
and reflect such models. In this way global models shape
economic and political responses to challenges in the
international environment. Arguments about efficiency and
functionality will be embedded in a broader cultural
context where legitimacy or appropriateness becomes an
important element. When facing questions of institutional
change involving different types of policy paradigms it
is difficult to calculate and evaluate efficiency.
Authoritative reasons outweigh means-end calculation.
Dynamics is related to the relationship between global
rationalised models, on the one hand, and local and
particular models, on the other hand. External legitimacy
is not only linked to economic performance pressures, but
institutional models heavily vested in cultural forms.
Solutions are not local constructions, but variations
over global trends and themes that facilitate and shape
changes. The argument is that the impact of these
particular cultural forms helps account for two aspects
of EU transformations. On the one hand it bridges the gap
between transformational capacity and a weak
organisational core. On the other hand, it helps
understand why EU level outcomes seem to reflect global
trends, expressed in terms of more universalistic (rather
than national particularistic models).
The spread of global culture is often supposed to
follow a diffusion pattern. An important modification,
which is sometimes stressed, is that the degree of
resonance between global and local models is an important
precondition; i. diffusion is not only dependent upon
interaction patterns. External legitimacy is an
independent explanatory mechanism. On the other hand,
research within an neo-institutional sociology
perspective has also produced a number of studies that
emphasise the role of national paradigms in the Western
world, as specific operationalisations of a general and
rationalised worldview and principles. Such studies
stress that local models represents socially constructed
rationality, sometimes discussed as policy paradigms.
National paradigms may adjust to changes, but their basic
assumptions and structure seem suprisingly stable over
long periods of time (Andersen 1993, Dobbin 1994). In
such studies the internal legitimacy of these paradigms
is the key factor which explain continuity. How such
stable pattern is reproduced in the face of global
pressures is not clear. Presumably, the degree of
perceived (in)efficiency and the resonance between global
and local models plays a key role.
In its standard formulation neo-institutional
sociological theory has little to say about the role of
the EU as an independent institutions between the
global trends and national adaptation. The mechanisms for
change are assumed to work directly on the national
level, so that the EU is explained as a variation over
global modernisation processes where the nation state is
the dominant actor. Here there is a parallel to new
intergovernmentalism that views the EU as primarily
transnational in character, but where ordinary diplomacy
can produce extraordinary results. In neo-institutional
sociology the EU is regarded as an `especially intense
form of elaborating the global system' (Meyer 2000: 14).
At most it would seem to synchronise national changes.
This perspective is also reflected in attempts to
introduce elements of such thinking in the international
regime literature (Finnemore 1996). Collective
international actors are only `non-state' actors vested
with cognitive and normative authority – `otherhood'
reflecting, focusing, elaborating and emitting
authoritative `globalised' institutional models.
The idea here is that EU policies reflects external
economic and institutional pressures, and that
solutions cannot be understood solely as local
constructions. Like nation states, the EU to a
surprisingly high degree reflects global institutional
models and themes. However, the argument presented here
differ from the standard presentation of
neo-institutional sociological theory in several ways:
First, the EU member countries represent historical
traditions consistent with key elements in global
rationalised culture and therefore have accumulated
experience and competence in the form of embedded
political, organisational and legal concepts and rules.
Such characteristics make each country perceptive to, and
able to, influence external change impulses. At the same
time such elements may also serve as the common
denominator that makes it possible to find collective
solutions in situations characterised by diverse
interests and policy paradigms.
Second, the EU is seen as a collective institution
that, over time, has acquired characteristics which tend
to reinforce elements of a rationalistic global culture.
The institutional set-up and political culture emphasise
rational and universalistic arguments even more than in
international organisations. At the same time
co-operation is comprehensive and codified in an
accumulated set of legally binding rules. This creates a
context of legitimate discourse where legitimacy often
becomes a question of legality.
Such factors play a key role when new policy paradigms
are developed in the EU. Sometimes the
neo-institutionalist perspective is given a rather
deterministic and uni-directional interpretation. Here,
in contrast, the emphasis is on the interaction between
global models and regional and local institutionalisation
of policy paradigms. Global models may be more or less
developed. They represent an external pressure for
change, but how and to what extent depends on a number of
factors. They may serve as sources of `concepts of
control' (Fligstein 1996), but there is considerable room
for modification and innovation during regional and local
institutionalisation processes.
Fligstein (1996) discusses the creation of the
internal market programme as the construction of a
market. He argues that the concept of the internal market
served a `concept of control', bringing together a number
of ideas and proposals in a way which creates commitment
to the wider EU integration project. However, he says
little about how this general frame is translated into
specific sector legislation. This is the focus here, and
we will pursue this though the example of EU natural gas
policy. In discussing the transformation that has taken
place over the last decade it is useful to distinguish
between three aspects of this change:
The first concerns the introduction and legitimisation
of a new policy frame, as an alternative way to think
about energy issues. This involves the interaction
between global, the EU and national level. The second
aspect is how the emerging policy paradigm on the EU
level influences strategic orientation and action between
government, in the court system and the industry. The
third has to do with how and what ways the new European
policy paradigms, as expressed in a new directive, is
implemented in a national context.
Changes in EU energy policy – and the increasing
integration of this policy area in the EU system -
reflect that new global models of economic organisation
emerge. Such emerging models affect both the EU and the
individual countries directly. The general hypothesis is
that, everything equal, the external global models will
spread more easily in situations where there is high
degree of resonance with regional and national policy
paradigms. However, when looking at particular cases this
hypothesis will be modified by a several other factors.
Developed Western countries are more likely to be able to
uphold their own models, reflecting core principles of
rationalised culture, than countries, which lack this
tradition. This is more likely for big powerful countries
– or influential groups of countries – than for
smaller countries. Such factors may influence the
willingness of member countries to engage in reform
processes. The collective aspect of EU transformation
also add two other factor; namely the political weight of
`movers' versus `resisters' in the sector and the impact
of the wider EU-integration context.
Natural gas - the introduction of a new frame
Within a neo-intergovernmentalist perspective changes
may be externally driven, but external forces are mainly
linked to competitive pressures or demands on efficiency.
In a strict version regional and local changes are
down-up processes where state interests drive and control
the process, and where institutional models reflect local
problem solving efforts. This has not been the case in
the energy sector, or in the particular case of natural
gas reform. Commission initiatives were taken despite the
expressed opposition of almost all member states. These
states reacted strongly in the Council of Ministers,
finding the Commission initiative unacceptable. This
would appear to be in line with softer version of
neo-intergovernmentalism which assumes member states'
control with the process. However, the initiative was
kept alive, despite member states' strong opposition. How
can this be interpreted?
The external pressures motivating the Commission
proposal were not related to competitive pressures
undermining existing national arrangements. The
introduction of the proposal must be viewed in the
context of the internal market, but the content of the
proposal primarily reflected the growing support for
global institutional models emphasising market
organisation of the energy sectors. The model for a
reorganised gas market was inspired by an international
normative model, most clearly expressed in the US system
with its emphasis on an active competition authority. The
initial content of the directive proposal did not reflect
local performance problems, but a general model
emphasising market functionality and a strong competition
authority.
Also, member state opposition was expressed in a way
which question the assumption about member states as
unitary actors: `(S)o successfully did the Continental
European gas industries enlist the support of their
governments, that nearly a decade passed before an EU
directive dealing with the opening up of gas industries
to competition and liberalised access to networks was
agreed' (Stern 1998: vii). The confrontation that
resulted was characterised by a mismatch. The alternative
model was argued from universal principles of market
functionality. The counter arguments were based on
alternative ideas about appropriateness and the
acceptable performance of existing national systems, but
also the possible damaging consequences of the proposal
for existing national models. In the first period, the
confrontation can be seen as mainly being a struggle over
the legitimacy of competing models of industrial
organisation.
For a long time the energy sector was even in the
Western world influenced by strong state regulation and
hierarchy, in the planned economies it represented the
core. Sometime during the 1980s the dominant global model
became contested. This happened partly through the
general change towards a market model. This led to
far-reaching changes in the US, but also other countries,
most notable the UK. In both the US and in the UK, energy
had been heavily regulated for decades (Tugwell 1988),
and liberalisation of the energy sectors followed a
political break through for `market ideology'. The
sources of this change are outside the scope of this
paper (but see Hall 1989, Haas 1992). However, as a
result an international model of energy policy has
emerged emphasising a more active use of markets, with
less political interference.
The change towards a new global economic policy model
for energy reflected the general political climate, but
also changes in the international supply situation which
had been `normalised' after more than a decade of
turbulence. The change in the dominant political-economic
perspective on energy was partly formalised by the Energy
Charter Treaty during the early 1990s. This treaty
brought together the former Soviet and its satellites and
the OECD countries. In the EU such changes were first
reflected in the UK during the mid 1980s. However,
reforms, most importantly as privatisations, were not
primarily driven by new theorising about market
functionality. They were motivated and legitimated by a
revival of liberal ideology in economic policy
(`Thatcherism') rather than the failures of the old
system (Andersen 1993). At the EU level pressures for
change were picked up and reinforced by the Commission
and the British government, as part of the internal
market programme. In other words the changes in the
energy sectors mimicked the general changes towards
market based solutions, as part of a broader trend.
There were, however, some special characteristics of
the energy sectors in EU countries that complicated the
further transformation. They represented historical
experiences and perceptions of market failures as well as
political objectives:
There were real reasons why the energy sector had been
organised with clear elements of state control and
hierarchy. Important energy resources were concentrated
in a few countries outside the EU and this had led to
concern for supply and price stability. Also, there was a
strong tendency in European countries to view the energy
sector as more than just an economic sector.
Another reason was that state interests were heavily
biased by the fact that energy policy in every sector was
dominated by monopolistic companies (often state owned)
and regulatory authorities which could articulate clear
and strong interests within established national
paradigms. The preceding decade of turbulence in the oil
market has reinforced this.
Estrada et al (1988) provided an authoritative
overview over the West-European gas market by the late
1980s. Their conclusion was that the impressive `existing
structure.. is well founded in a complex network of
economic and political interests' (pp. 254). Discussing
the potential for transformation in the 1990s they
conclude that: `It does take a lot of imagination to
foresee the present structure being undermined' (i.e.
liberalised). Political `undercurrents have to grow to a
wave of political determination and a forceful coalition
of economic interests to become a serious challenge for
the status quo' (pp. 259).
For such, and other, reasons it would take some time
before EU's internal market philosophy could be
transformed into an operational policy paradigm on the EU
level. The energy sector was deliberately kept out of the
first round of the internal market `package'. However, it
was never the Commission's intention to make a permanent
exception. That would violate the general pattern of
economic reform, and besides the Commission's general
argument that increased EU-wide competition would improve
global competitiveness was assumed to hold also for
energy. When energy was introduced a few years later it
was thought that it would be possible to achieve success
despite strong national resistance, precisely because of
the momentum of the wider integration process.
The natural gas sector was relatively new and it had
expanded during the 1980s, almost as a `counter culture'
to the internal market programme, characterised by high
degree of regulation and oligopolitics sector
organisation. The introduction of a new policy frame, as
a directive proposal on the liberalisation of EU natural
gas markets, challenged key elements the existing system.
The transmission companies, linking major sellers and
buyers had an especially strong position. They would use
their monopoly to serve as an intermediary; buying from a
few producers and selling to national monopolies, with
high profits. As a consequence there was no gas-to-gas
competition. Natural gas was priced according to
competing energy, most often oil. The benefit of the
system was that long-term contracts made it possible to
secure the financing of gas field and transportation
development, and thereby security of supplies.
The so-called gas directive proposal was part of a
package. Other directives concerned price transparency
for electricity and gas contracts and transit rights for
electricity and gas. The so-called gas directive proposal
aimed at liberalising the gas market by attacking the
present structure. The proposal covered four major areas:
One major issue concerned market opening; i.e. how
much of the gas market should be opened for competition,
and who should have the right to send gas through
transmission lines. The latter had so far been the
exclusive right of the pipeline owners; the proposal
introduced the concept of regulated third party access
with a EU-level regulatory authority. This became the
major source of controversy. The second major issue
concerned the impact of liberalisation on long term
contrasts (take-or pay) which traditionally had been a
key instrument to secure investments and long term
supplies. The third issue was whether it was possible to
impose special obligations (equal price, supply security,
environmental protection etc.) on suppliers all over
Europe. The fourth issue concerned the need to establish
separate markets around various functions in the gas
market which had before been `bundled' by monopolies.
The Commission proposal reflected a strategy for
deregulation and liberalisation. However, with the
exception of the UK, no EU member countries had any clear
recognition of the crucial role to be played by
regulatory authorities in the implementation and policing
of competition and liberalisation (Stern 1998: xxii). The
introduction of the directive proposal led to strong
confrontation and polarisation, where a clear majority
(11 of 12 members) rejected the Commission initiative,
and so did the industry. The Commission's attempt to
involve the industry through committees, to achieve
dialogue and find common ground, broke down. Why was the
initiative not dropped? Part of the answer was that the
existing national industrial models in the majority of
member countries did not have the proper form in the new
international and EU context where market models were on
the offensive. Representatives of traditional models were
used to argue that `energy was too important to leave to
the market', they were unprepared for the new discourses
focusing mainly on market functionality.
The degree of resonance and conflict between the
emerging model and pre-existing national paradigms
varied. These paradigms partly reflected traditions of
state – economy relations in various countries, and
partly the countries' position with respect to natural
gas resources, affecting interests related to an emerging
European market:
Most countries were only, or primarily, consumers and
heavily dependent on import. For this reason the
Commission initiatives found it politically feasible to
start its reform effort with an up stream focus
(production and transmission). The expectation was that
consumer prices would be lower in a (more) deregulated
market. This would also lead to expansion of local
market, pushing out other types of energy that were seen
as harmful to the environment (coal, nuclear). A major
concern for most consumer countries was related to
security of supplies, traditionally dealt with through
diversification of supply countries and long term
contracts.
Most directly affected were countries with producer/
exporter interests, but also here interests differed.
British gas production was primarily for domestic
consumption. The UK was the first to privatise its state
monopoly. The country initiated the EU reform, but knew
that it would take time, and in the meantime the national
market could be protected and developed. In the wider
picture the active British stand in this area could
balance some of the blame for its scepticism towards EU
integration in other areas. The Netherlands, the other
major EU producer and exporter, had a production and
sales monopoly based on a partnership between the
government and private international companies. It has
played a key role in developing the European gas industry
as major exporter and there was initially no interest in
reforms.
The gas directive was motivated by a wish to increase
gas-to-gas competition and lower prices. It would also
make it difficult to keep up traditional statist
structures (strong regulation, direct ownership and state
companies) and national (state-dominated) sales monopoly.
This was a particular challenge for Norway as the major
Western country supplying the EU with natural gas. As an
EEA member, Norway would be affected by the new
directive.
The European gas industry was strongly against the
reform initiatives. The national gas industries, serving
national markets, were not experiencing problems in terms
of technical efficiency or earnings. They had vested
interests in national infrastructure – for example
pipelines - which the Commission wanted to open up for
competitive use. The only industrial interests that
supported the Commission were large industrial customers
(like the chemical industry) that hoped for lower prices.
The first years after the introduction of the
Commission directive proposal was characterised by strong
opposition, periodic stale mate and uncertainty about the
feasibility of the project. The opposition in the natural
gas sector was to a certain extent legitimised by the
general scepticism towards further EU integration which
characterised this period, symbolised by reactions to the
Maastricht treaty. The discussion on the natural gas
directive was kept alive, mainly due to the Commission.
However, the legitimacy of Commission actions rested not
only on formal mandates and earlier state commitments
which was weighed against the costs of accepting new
sector arrangements. The legitimacy of the alternative
model as an appropriate form for organising any economic
activity was an important factor, and this was expressed
in member states' lacking ability to come up with
legitimate reasons for preserving the existing sector
arrangements. Although opposition to parts of the
proposal was still strong, it gradually became clear that
natural gas issues had to be addressed in terms of new
concepts and perspectives.
Frame elaboration and strategic re-orientations
By the mid 1990s, the fate of the natural gas reform,
seemed quite uncertain. In 1994 the original Commission
proposal was formally rejected. Over the next years the
EU Commission worked on an alternative, some would say
watered out, version of the original directive. Key
concepts and formulations were altered, but the general
perspective and normative orientation remained the same.
The observed development contradicts an
intergovernmentalist model of explanation, as pointed out
by several students of EU energy, and more specifically
natural gas, policy (Matlary 1997, Eldevik 1999). Member
states are not the privileged actors; changes involve not
only interests, but also perspectives and models and such
changes cannot realistically be seen as independent
domestic processes. The EU is not just a neutral arena
for given interests (Eldevik 1999:82-83).
During this stage the nature of the process changed in
several ways. A key element in the construction of the
new paradigm had been to develop implication of market
theory, emphasising market functionality, with political
concerns related to security of supply, public service
obligation. Increasingly this had made it possible to
rethink a number of issues. Another key element was that
the legitimacy of existing national paradigms had been
undermined along the way. This was not primarily due to
failure of performance, but the direct impact of market
ideology in individual countries, sometimes pushed by
privatisation schemes to finance public deficits.
Increasingly we find that arguments and the nature of
confrontations change. This happened partly in political
negotiations, partly through long drawn expert driven
arguments. Along the way we find a more active role of
court decisions, and also new strategic initiatives from
parts of the industry. This trend reflected that the new
frame had been legitimated. It became clear that
alternative member state and industry views could not be
sustained over time. The implementation of the
electricity directive served as a model, both in term of
providing legitimacy and in clarifying the strategic
implications of a new perspective. The new general EU
dynamics, related to the Amsterdam treaty and the
introduction of the Euro reinforced such processes.
Increasingly the question was not if a new directive was
to be passed, but when and with what provisions.
Gradually arguments reflected calculations of future
effectiveness.
Stern (1992:ix), a major authority on the EU gas
market, was one of the first to argue that the debate on
the liberalisation of the natural gas sector had far too
much stress on the European Commission initiatives and
too little on the actions of powerful market players. His
book Third party access in European gas industries
(1992) has the subtitle `Regulation driven or market
led'? This book does not, however, challenge the role of
the Commission as the promoter of an alternative new
frame for European natural gas policy. The argument is,
rather, that the content of major provisions, like third
party access, most likely will materialise as a result
actions taken by major players. The alternative would be
more clear-cut EU regulations to be imposed by a powerful
EU level regulatory authority. In later work Stern (1998)
also describes how market strategies as well as a more
active court system has been instrumental in bringing
about changes. His analysis provides a good account of
how a contested new frame is specified in political
process that runs parallel to processes in the court and
market system.
Changes have taken place with respect to ambitions and
formulations affecting all four controversial areas
mentioned above:
The concept of EU level regulated third party access
to pipelines was inspired by a so-called common carrier
concept in the US, but this was effectively blocked. A
key controversy over the whole decade was how to secure
so-called voluntary or negotiated third party access to
pipelines that controlled the flow of natural gas.
Related to this was the question of how much of the
traded volume should be covered by such arrangements.
Another key controversy concerned the problems of
securing long term investment, and thereby supplies, in a
system which undermined traditional long-term contracts.
Gradually a new concept of security developed,
emphasising the mutual interdependence between exporters
and importers and the reduced operational risk in an
integrated European system. The controversy over the
nature and level of public obligations to be met by
companies has been resolved, partly through the use of
the court system. The controversy over unbundling of
commercial functions has led to a general accept for the
principle, in line with competition law.
For Britain it was important to achieve explicit rules
for third party access and a high degree of market
opening as soon as possible. The proposed 28 per cent
minimum that became the result was considered too low.
Also, they would like to see regulated access, where
companies' access to pipelines was regulated through a
tariff. Most countries had reservations about even the
modified liberalisation directive. For some time the
Netherlands was working against reform. However, as it
turned out it was possible for the Dutch interests to
reposition themselves under a new regime, to see
advantages that might outweigh costs. After resisting the
new regime for several years, the Dutch were among the
first to change their strategy (1995). Also, Spain is
characterised by a pronounced change in attitude to the
new directive. In both countries governments decided to
move towards opening up market more quickly than dictated
by the directive.
Other countries remained reluctant throughout the
whole process. In France, part of the defence for the
national model was pursued through the court systems. The
objective was to limit the role of competition to
preserve the public service obligation. In Germany the
dominant position of Ruhrgas prevented rapid political
changes. However, as will be discussed below, important
changes were introduced through the market. Norway, as
one of three major exporters to the EU (Russia, Algeria)
has waged a considerable lobby campaign against the new
natural gas directive. Under the old regime the three
major exporters were involved in a strategic game with a
few European buyers. In Norway natural gas was produced
by several companies and has to be regulated through one
central negotiating authority (GFU). The present
challenge is to find a way to preserve a legitimate form
of regulation.
Part of the change in national positions was motivated
by threats from the EU Commission to apply competition
policy. The Commission threatened both France and other
countries with court cases for violating competition law.
In the context of growing support for the emerging new
paradigm, and with reorientations going on in other
countries, this created incentives for reform under
domestic control. In other countries changes were
motivated by new company initiatives. The announcement by
the German gas company Wintershall to build new pipelines
in 1989 (to further the consumer interests of the parent
company BASF) and in 1990 (in partner ship with the
Russian Gazprom) introduced competition for the dominant
Ruhrgas.
The natural gas directive was passed in 1998. It can
be considered both a success and failure for attempts to
achieve liberalisation. On the one hand, it has opened up
for an alternative to the pre-existing monopolised
system. On the other hand, the direct and immediate
requirements of the directive are limited. The directive
requires that a minimum of 28 per cent of traded volume
is open for competition when the directive is implemented
(fall 2000). This number is going to be increased over
time, but even in 2008 member countries can refuse small
customer the choice of supplier as long as 43 per cent is
covered by liberalised system. Systems for regulating
third party to pipelines were to be developed on the
national level. In addition, companies may apply for
exception from the third party access article if serious
economic and financial problems should arise as a
consequence.
The directive contains very few supernational
regulations, and the member countries have achieved
considerable freedom to regulate national markets in the
future. Two of the most important battles, determination
of tariff methodologies and regulatory provisions for
enforcing competition and third party access at the EU
level, were defeated already before the first attempts of
finding an agreement (in 1994). In the words of Stern
(1998:xviii):
`The value of the directive, therefore, lies not so
much in its specific provisions, which are likely to be
rapidly overtaken by events, but rather in the fact that
it established both the principle of access to (pipeline)
networks, and the assurance that opponents of competition
and liberalisation cannot indefinitely procrastinate in
the opening up of their gas markets'
Increasingly national regulatory efforts and new
market strategies become important in providing the
content and pace of market liberalisation. However, the
emerging EU level policy paradigm would not seem possible
without the persistent role of the Commission in pushing
for an alternative frame. The legitimacy of this frame is
a precondition for the dynamics to be observed over the
last years. In this process there is ample room for the
interests and strategies of member states, industry
interests and courts. However, the legitimacy of an
alternative normative frame is preceding and facilitating
such strategies, rather than emerge from them.
To summarise, the energy policy
initiatives were introduced at a time when the collective
discipline and commitment to the internal market were at
the highest, around 1990. [2]
However, the following process was influenced by the
reduced enthusiasm and even widespread scepticism towards
further EU integration around the ratification of the
Maastricht treaty (1993). The most controversial issue
was the directive aiming at the deregulation of the
natural gas market. Conflicts led to delays, and for a
long time it seemed uncertain if the initiative could
succeed. It was kept alive by the Commission, and more
and more it became clear that changes were taking place
both at the EU and at the national level which paved the
way for a new directive by 1998, after about 10 years of
continuous struggle. The next stage was the
implementation of the directive, with special emphasis on
subsidiarity.
National implementation - convergence and divergence
The EU gas directive was passed in June 1998, and it
entered into force in August the same year. Member states
were committed to bring into force the laws, regulations
and administrative provisions necessary to comply with
the directive no later than two year after this. Compared
to the original draft, the outcome was rather modest, but
crucial in changing the basic rules of the game. On the
other hand, the directive did not go very far in
specifying how liberalisation should be achieved in
practice. As Stern (1998:viii) puts it: `Not only are the
most crucial commitments and provisions defined in rather
general terms, but the options to adopt `negotiated
access' (rather than `regulated access') could give many
transmission companies an ideal opportunity to indulge in
protracted and inconclusive `negotiations'.
The limitations of the gas directive, as a cohersive
and specific EU level policy paradigm, reflect the
opposition of member states over a decade. The
modifications and limitation of the directive cannot be
explained without the active role of the member states.
However, the new general model reflected in the directive
cannot be derived from member states' preferences and
perspectives. The emphasis on subsidiarity reflects
member states' control over the further development. An
interesting question is to what extent states can be said
to control outcomes. As discussed earlier, this is hard
to measure in an exact way. The focus here is on the
transformative aspect of the reform process.
Some of the formulations in the directive are
deliberately not clear with respect to several important
issues. A further clarification of what is meant by
different concepts and provisions in the directive was
left to the implementation process. The emphasis on
subsidiarity, as a political necessity, opened up for
different national approaches with respect to how various
provisions should be secured on the national level. This
meant that the further elaboration of the new policy
paradigm shifted from the EU level to member state level.
To ensure that implementation took place in time, and in
accordance with the directive two follow-up committees
were created by the Commission. One consisted of country
representatives (including EEA countries), the other of
industry representatives. These Committees partly reflect
the Commission's responsibility to secure implementation,
but they are based on voluntary co-operation.
The implementation process faces the challenge of
balancing three important aspects: To clarify the
implications of the directive in relation to various
national setting, allowing for a certain degree of
flexibility with respect to the speed of reform and
specific organisational solutions, and at the same time
making sure that solutions are consistent with the
directive and general EU competition law. In other words,
the problems is to secure convergence around one basic
model of a liberalised gas market, while at the same time
allowing for a certain degree of divergence with respect
to how this model is operationalised in national context,
even over a longer time period.
For many years the discussion of whether and how much
EU integration would lead to convergence or divergence
has been central within EU research (Steunenberg and
Dimitrova 1999). However, ideas of convergence and
divergence are difficult to pursue empirically without a
clear theoretic definition of what we can expect to find.
In neo-sociological theory Strang and Meyer (1993) argue
that convergence is tied to local implementation of
idealised models. This also applies to the imitation of
specific organisations and institutions. What is imitated
is the abstract underlying basic models that certain
arguments and structures are assumed to be (more or less
complete) representations of (Nee and Strang 1998).
Isomorphic tendencies should not be regarded as
equivalent with the uniformity of social processes and
structures.
To what extent is this consistent
with what we find in the natural gas sector? The report
on the state of implementation the EU gas directive [3] summarises the
situation six months before the process is to be
completed. At this stage four countries had already
passed legislation which to a large extent implements the
directive. Nine countries were well advanced in the
implementation process. Two countries were lagging
behind. All were committed to fulfil requirements before
August 2000, but the countries differed somewhat with
respect to how objectives are to be realised.
When it comes to the third party access to pipe-lines,
one of the key issues, countries may choose either
negotiated access (based on publications of the main
commercial conditions applicable) or (nationally)
regulated access based on published tariffs, or a
combination of these two systems. Eight countries will go
for regulated third party access, and two countries a
combination of the two models. Only three countries have
chosen negotiated access, but in a restricted form. The
directive requires countries to achieve a minimum level
of market opening, 20 per cent by August 2000 and 33 per
cent by 20008. However, most countries will go further
and faster than this. The same goes for the required
expansion of eligible customers, and so-called unbundling
of commercial functions.
According to the directive (article 21) member states
shall designate a `competent authority, which must be
independent of the parties, to settle expeditiously
disputes'. Member states shall also (article 22) `create
appropriate and efficient mechanisms for regulation,
control and transparency so as to avoid abuse of a
dominant position'. Here we find that member states are
choosing different regulatory approaches. Few member
states plan to establish independent regulators for gas,
and a few want sector regulators for natural gas as such.
The majority is likely to leave regulatory
responsibilities in the hands of general energy or common
gas/ electricity regulators. In some countries the
ministry responsible for energy matters will play a key
role in the regulatory system.
Similar patterns are found with respect to other
articles of the directive. The point here, however, is
that national solutions may vary considerable and still
be found to be within the general model laid down in the
directive. An important aspect of the implementation
process is to make sure that various solutions are
consistent with demands of equal treatment and general
provisions of EU competition law. This also means that
legitimacy of national structures depends on consistency
with the underlying model, and that this legitimacy in
many ways becomes equivalent to the legality of
particular arrangements.
As Stern (1998) has pointed out the further dynamics
of EU gas market liberalisation has been moved from the
EU level to the national level. The elaboration of the EU
model rests heavily on national processes, but in the
future industry strategies and court decisions will play
a key role in the further maturing of the system. To what
extent can we talk about a real transformation? As
Fligstein (1996) pointed out in his analysis of the
internal market programme, states were more willing to
accept changes affecting transaction rules, than rules
which involved areas which were deeply embedded in member
state structure (like property rights). To some extent we
find the same in the gas sector. There is reluctance to
loose control over national reforms and regulatory
authority.
However, preservation of national divergence with
respect to speed and forms of market liberalisation does
not imply that changes are mainly a matter of form; new
ways to legitimate traditional policies (Brunsson 1989).
The gas directive have changed the basic logic and
unleashed dynamic forces of liberalisation. The result is
not only that national sectors are impacted by EU
decision, it seems even more important that the relative
weight of the market in relation to
politics has been altered in a radical way. The next step
is probably going to be a structural transformation of
the market; with the introduction of new technology, new
companies operating across energy sectors, new types of
actors (traders) and price formation through the spot
market. [4]
To summarise, the further elaboration of a European
gas policy paradigm will most likely depend on
developments on the national level for several years to
come. This process is likely to create pressures towards
convergence, but variations in national arrangements may
persists as long as they operate in a way which is
consistent with the directive. If companies go to court
with complaints that certain arrangements do not function
properly, there will be pressures for change. This may be
regarded as the continuation of a transformation, which
started, with the legitimisation of an alternative and
controversial frame and which was elaborated on the EU
level to become a new directive. The present situation is
characterised by both convergence and divergence, where
the basic rules of the game have changed and this is the
point of departure for national adaptation.
Understanding complex transformation
Changes in EU energy policy are indirectly driven by
global economic competition (wish for lower energy
prices), but even more by clearly political changes which
reflect and reinforce a paradigmatic shift in global
thinking about energy markets. The construction of a new
EU level paradigm is not, however, simply a copying
process, it modifies and elaborates on the global trend.
Such modifications have the underpinning of rational
arguments about market functionality and market failure
in the face of welfare capitalism. At the same time
policy changes reflect and reinforce EU integration; i.e.
increased supranational authority vested in law,
decision-making procedures, as well as a normative model
of EU integration. On the other hand, the principle of
subsidiarity opens up for `flexible' implementation under
EU competition law.
The changes that have taken place in the EU natural
gas policy, legislation and market over the last decade
can best be characterised as a radical and complex
transformation. It is not only a result of states finding
new ways to secure given self-interests or due to
documented superior effectiveness of an alternative form
of industrial organisation. On the contrary, the
construction of a new policy paradigm was only to a
limited extent based on calculations, but rather
legitimisation and elaboration of a market model.
Authoritative reasons seemed to have outweighed means-end
calculation of benefits. The emergence of a new paradigm
led to changes in political influence between states, it
opened for new strategies and new types of calculations.
The existence of a policy paradigm is an important
precondition for actors being able to act under a norm of
rationality. In a rational model, in contrast, the
relationship between these factors should generally be
reversed, and rationally rests in the actors.
The transformation of the EU energy policy paradigm
weakened the role of the government, and strengthened the
role of law and the energy companies. These changes
suggest a movement towards a more `minimalist' type of
regulation, often seen as a characteristic of the EU.
However, the process proceeding this market
transformation involves considerable state-like authority
and capability for keeping initiatives on the track,
securing an outcome, and implementing decisions –
while preserving the general direction of reform. This
ability to carry out radical reforms, which transforms
`almost unchangeable' national policy paradigms seems to
contradict the image of the EU as a organisationally weak
system, with a weak core, unclear institutional
boundaries (Kohler-Koch and Eising 1999) and with a high
degree of freedom for political entrepreneurship and open
access for a wide variety of actors (Andersen and
Eliassen 1996).
What keeps such processes from breaking down? What
provides direction? What is suggested here is that this
gap between the weak organisational core, on the one
hand, and EU's ability to transform entrenched national
paradigms, on the other hand, should also be understood
in he context of the cultural materials institutionalised
in this structure. The culture involved is the
(originally Western European) culture of rationalisation
and something of the same nature is found on the global
level. This would imply that the EU is not only an
especially dense form of an elaborating global system
(Meyer 2000:14). Over time the EU institutional set up
has acquired characteristics that reinforce the kind of
universalistic discourses implied by this cultural frame.
The EU member states represent historical traditions
which make them more able to sustain their models of
nation-state hood than countries that lack this
tradition. However, the member countries also represent
stores of accumulated insight, embedded and operational
knowledge reflecting the basic principles of such a
culture, as a common core. This common denominator
facilitates the construction of new paradigms and it also
opens up for the further elaboration and modifications of
global models. This is reflected in the basic discourse
rules of central EU decision-making processes guiding the
search for authoritative and legitimate arguments. And
also the growing pool of legitimate concepts and
legislation reflecting the wider EU integration.
The institutionalisation of new policy paradigms are
reflexive processes where actors changes perceptions
about interests (energy as commodity versus part of
economic/ social policy), about the proper way to
organise and control activities (`some sort of market'
which will unleash a new dynamics), and even self image
and identities (what is the meaning of sovereignty). This
does not in any way imply a romantic notion of conflicts
being transcended in a collective heaven of EU
co-operation. Conflicts persist, but they are framed in
other ways, and as in all political processes some gain
more than others do, and some lose.
The persistence of interests and conflicts is an
important reason why some have suggested that also
complex transformation and learning should be explained
in terms of rational actors influenced by the
reinforcement of the `stick and `carrot'. Such a model
seem to make more sense when actors face non-paradigmatic
changes which facilitate `single loop' learning, or when
powerful actors may shape or control the process. In
situations of radical and complex transformation the
ability to calculate interests in a future state is
limited, and reinforcement often has to rely on arguments
about appropriate form. The process around the natural
gas directive illustrates the latter.
How are good and authoritative arguments constructed?
What makes old arguments lose their power? This study
suggests a process where the authorisation of arguments
in relation to a wider cultural frame play a key role as
a source of legitimacy, but arguments are not developed
from scratch. Concepts and ideas are downloaded from
various institutional settings; often from international
experience codified in scientific knowledge or legal
concepts and rules (OECD, GATT). In this case also from
the wider EU context; as established competition law. As
integration increases the available repertoire of
embedded concepts and rules for defining issues will
increase. It will be easier to find elements to build
upon in the institutionalisation of new areas. This also
means that certain elements become de-legitimated.
The above interpretation seems most consistent with
the type of paradigm construction that can be observed in
the development of EU energy policy. The long drawn
process of confrontation, stalemate and compromise was
characterised by the parallel de-legitimisation of
traditional statist models, on the one hand, and the
legitimisation of new market oriented model. This process
took place at both the central EU and at the national
level, and the relative weight of central policy, court
decisions and industrial initiatives varied over time.
Because of the special tensions and conflicts between the
EU and national level a major element of the directive
was that implementation should take place under the
principle of subsidiarity. In other words the directive
represented a new policy paradigm, which in principle
represented a new normative model that every country, as
well as the industry, accepted. On the other hand, there
were some `grey areas' as to what some elements of the
directive actually implied. The principle of subsidiarity
should be an instrument to handle this, but the problem
was how to make sure that country specific
interpretations did not violate common competition law,
linking legitimacy and legality. For this reason two
implementation committees were established to handle
implementation under subsidiarity. One for the national
regulator and one for the industry. Such committees are
voluntary, but also linked to the Commission's mandate to
overlook implementation. (Norway has participated in the
Committees, despite the fact that the directive is still
not passed in the EEA).
To summarise: Reforms were originally inspired by US
reform and experiences from the UK. However, reforms in
these two countries had emphasised different aspects. In
the US market functionality had been the key, while in
the UK privatisation had dominated with less concern
about how and under what condition the market would work.
After the initial refusal from a majority of countries
there was a stalemate followed by the pragmatic search
for acceptable ways to construct a new normative model,
but taking into account special needs for modifications
due to the nature of the industry: the maturity of the
market, import dependence, the public service obligation
of the industry (in some countries), national control
over reform process and some freedom of choice over the
actual organisation of national industry structures and
regulatory roles. These factors reflected the special
situation in the EU natural gas sector, the dominance of
consumer country interests and the tension between
supernational and national authority.
Concluding remarks
This paper does not allow for a detailed confrontation
between theoretical ideas and data; a reconstruction of
how and through what mechanisms changes have taken place
in the EU energy policy. Broad social changes of this
nature take place in many ways, at many levels and
sometimes in rather diffuse ways. Various aspect of this
change may be analysed in differently. However, the
discussion suggests that the transformations that have
taken place in the energy sector cannot be well accounted
for a) by models assuming that processes are driven by,
or at least accepted by, rational states with given
interests determined exogenously to the EU level process,
b) by models assuming that EU level solutions drive out
less effective national solutions, or c) by models of
historical institutionalism which emphasise continuity
rather than change or the accumulated pressures of
historical decisions.
Experiences from the EU energy sector experience
illustrate some general point within a neo-institutional
sociological perspective:
- EU reforms do not make sense if not seen as part
of a broader, global change strengthening the
legitimacy of market models. However,
Europeanisation of policy is not only a copying
process, it also represents a modification that
feed back on the wider change process.
- The EU system has a surprising ability to carry
out radical reforms – even against the will
of a majority of states - despite a weak
organisational core. This suggests that the
culture vested in this loose structure plays a
key role in keeping such processes on track and
provides direction. The legitimisation of a new
paradigm, over time, opens up for calculation of
strategic opportunities and efficiencies, and not
the other way around.
- The Europeanisation of the nation state does not
imply uniformity of structure. National
structures may reflect the general European model
to different degrees, not only as matter of
transition. However, legitimacy of form
increasingly becomes a question of legality.
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Footnotes
[1]
Thanks to Johan P. Olsen, and also Dag H. Claes og Ole G.
Austvik, for helpful comments.
[2] A
white paper on the energy sector(s), and its relation to
the internal market programme, was published by the
Commission in 1988.
[3]
State of implementation of the EU Gas Directive
(98/30/EC). Summary report. Prepared for the 3. meeting
of the Follow-up Group held 24 February 2000.
[4]
As a centrally located informant put it: 'We don't know
exactly what is going to happen, but we have confidence
in the future'.
[Date of publication in the ARENA
Working Paper series: 15.08.2000]
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