Why Politics Will Control Energy
By Per Ola Bosson, JKL Group, MSLGROUP EMEA
The political grip on the energy market is tightening. Following deregulation, you may have expected the involvement of fewer political and democratic decisions in the market. Instead, we now see detailed RES demands from Brussels and a decision to phase out nuclear power in Germany.
The energy market is regulated through a series of EU directives adopted during the past few years. The 2006 Energy Efficiency Directive was followed by the 2009 Eco-Design Directive, the 2010 Energy Efficiency Labelling directive and the 2010 Energy Performance of Buildings Directive. A new Energy Efficiency Directive is expected in June. On the national level as well, more political decisions and regulations are affecting the energy markets.
Thresholds for entering the energy market remain high. In many places, it is virtually impossible to obtain a political decision for a new power plant, including wind power, or a permit to extract oil or gas. This is not a coincidence, and may actually look like a pattern when you put them next to each other: a clear and consistent trend towards regulation, subsidies and political deadlock in European and national level energy politics. The desire to regulate, monitor and control the energy market is stronger than ever. It seems that there are no limits to what can be controlled by political decisions.
The political landscape of the 2010s is framed by issues relating to climate change, the financial crisis and the euro crisis. Solutions are sought in politicians’ toolboxes rather than the market. In terms of energy, politicians want to do more than cap emissions with a trading scheme. They want to control all aspects of the transformation of the energy system, including the prohibition of ordinary light bulbs.
The big paradox is that most of Europe is controlled by centre-right governments: Cameron (UK), Rutte (Netherlands), Reinfeldt (Sweden), Coelho (Portugal), Rajoy (Spain) and Tusk (Poland) … and this is only a partial list. The generation of politicians governing Europe today was born in the 1960s or late-50s and brought up in youth organisations where the free market was the watchword, Margaret Thatcher was the icon, and Ayn Rand’s books were elevated nearly to the status of the Bible.
How can this development be taking place in a European Union that many voices on the left are constantly touting as a market-liberal project?
We see four possible explanations behind the actions of Europe’s leaders – and these are coherent rather than disparate.
Politicians’ backgrounds in ideologically-driven youth organisations have not made any deep impression. White certificates, nuclear decommissioning and government subsidies for renewable energy are political tools used with dedication and joy rather than with ideological difficulties. Today’s political leaders are pragmatists. Teachings on political handicraft have set deeper traces than ideological training. Especially in energy matters, politicians seek solutions in science rather than ideology.
The desire to regulate, monitor and control the energy market is stronger than ever. It seems that there are no limits to what can be controlled by political decisions.
Fukushima and the long-running debate about how to create a sustainable community have set the limits. Public opinion does not accept the market as a solution … so the market is no solution for anyone who wants to win elections. Public opinion controls politicians. Today’s politicians listen to voters rather than trying to bring them round. The stronger the European Union becomes, the greater the opportunities to legislate, govern and regulate.
Energy has always been a safe haven for fine-tuning. But energy policy has now been extended to the common European level. Politicians are meddlesome by definition. Not even free-market liberals can resist when opportunities pile up.
People are worried about the climate, and politicians want to appear active in climate issues regardless of decision-making level. This is why we now have municipal climate investment programmes, regional climate task groups, national climate incentive schemes and common energy and climate policy. Global warming is behind the revival of energy regulation on all levels.
This will not end. Europe is only at the beginning of its mission to transform the energy system and decrease emissions. Like all major changes, there will be winners and losers. And politicians – through regulations, incentives and taxes – will decide who will win and who will lose.
This article is part of a report “Europe’s Energy – At A Crossroads”, published on April 15, 2012 by MSLGROUP on the state of the energy industry in Europe. With the backdrop of socio-economic challenges facing other countries including climate change, growing fuel poverty and security of supply, MSLGROUP’s dedicated energy team has to confront various issues every day on behalf of our clients and in this report, we share our thoughts on these issues. MSLGROUP has a growing footprint across Europe and beyond, and a fantastic team in place to help our clients rise to the challenge of communicating effectively with stakeholders around the world on these and other critical issues.
Per Ola Bosson is an expert in lobbying and with over 10 years experience at JKL Group. Previously he worked within the Swedish parliament for the Moderate Party, a role he took after gaining earlier experience in the pulp and paper industry.