Climate change policy in the European Union

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CLIMATE CHANGE POLICY IN THE EUROPEAN UNION Confronting the Dilemmas of Mitigation and Adaptation?

The European Union (EU) has emerged as the leading player in the international struggle to govern climate change. The transformation that has occurred in its policies and institutions has profoundly affected climate change politics at the international level and within its 27 Member States. But just how has this been achieved when the EU comprises so many actors and levels of governance, when political leadership in Europe is so dispersed and the policy choices are so fiendishly difficult? Drawing on a variety of detailed case studies spanning the interlinked challenges of mitigation and adaptation, this volume offers an unrivalled account of how different actors wrestled with the complex governance dilemmas associated with climate policy making. By opening up the EU’s inner workings to nonspecialists, it provides an unparalleled perspective on why the EU governs in the unique way that it does, as well as exploring its ability to maintain a leading position in international climate change politics. A N D R E W J O R D A N is Professor of Environmental Politics at the University of East Anglia, Norwich. He is interested in the governance of environmental problems in different political contexts, but especially the European Union. He is a Managing Editor of the journal Environment and Planning C and has published numerous books, including Environmental Policy in the EU, 2nd edn (Earthscan, 2005), The Coordination of the EU (with A. Schout, Oxford University Press, 2006), and Governing Sustainability (with N. Adger, Cambridge University Press, 2009). D A V E H U I T E M A is a senior researcher at the Institute for Environmental Studies (IVM) of the Vrije Universiteit Amsterdam. He specialises in public administration and public policy and has 15 years of experience in analysing environmental policy. His current focus is on adaptive governance and the institutional prescriptions that this entails. His most recent book focuses on policy entrepreneurs and their role in accomplishing transitions in water management (Edward Elgar, 2009).

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H A R R O V A N A S S E L T is a researcher in the Institute for Environmental Studies (IVM) of the Vrije Universiteit Amsterdam, and research fellow with the Global Governance Project. He has published extensively on issues related to global climate governance, focusing on the interplay between climate and trade issues, and the Kyoto Protocol’s flexibility mechanisms. He is Managing Editor of the journal International Environmental Agreements, and Associate Editor of the Carbon and Climate Law Review. T I M R A Y N E R is a senior researcher at the Tyndall Centre for Climate Change Research based at the University of East Anglia in Norwich. He is a political scientist by training and has a long-standing interest in environmental policy, particularly its formulation and evaluation. Prior to joining the Tyndall Centre, he lectured in environmental policy at the London School of Economics and held research posts at the Department of Geography, University of Cambridge. F R A N S B E R K H O U T is Director of the Institute for Environmental Studies (IVM) of the Vrije Universiteit Amsterdam. He has extensive research and management experience across a number of fields. His early research was concerned with the nuclear fuel cycle and radioactive waste management. His more recent work has been concerned with technology, policy and sustainability, with a special emphasis on the links between technological innovation and environmental performance.

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CLIMATE CHANGE POLICY IN THE EUROPEAN UNION Confronting the Dilemmas of Mitigation and Adaptation? Edited by

ANDREW JORDAN University of East Anglia, Norwich, UK

DAVE HUITEMA Vrije Universiteit Amsterdam

HARRO VAN ASSELT Vrije Universiteit Amsterdam

TIM RAYNER University of East Anglia, Norwich, UK

FRANS BERKHOUT Vrije Universiteit Amsterdam

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cambridge university press Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo, Delhi, Dubai, Tokyo Cambridge University Press The Edinburgh Building, Cambridge CB2 8RU, UK Published in the United Kingdom by Cambridge University Press, UK www.cambridge.org Information on this title: www.cambridge.org/9780521196123 © Cambridge University Press 2010 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 2010 Printed in the United Kingdom at the University Press, Cambridge A catalogue record for this publication is available from the British Library Library of Congress Cataloguing in Publication data ISBN 978-0-521-19612-3 Hardback Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.

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To: Alexander, Alma, Artem, Ben, Boaz, Eva, Joe, Lauren, Niké, Simon, Siri, Tilly, Walter and Yenthe. Fourteen especially important members of the generation that will grow up in a warming world.

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Foreword Preface List of contributors List of abbreviations Part I Introduction and overview Climate change policy in the European Union: an introduction Andrew Jordan, Dave Huitema and Harro van Asselt Part II The evolving governance context: the European Union Governing the European Union: policy choices and governance dilemmas Andrew Jordan, Dave Huitema, Tim Rayner and Harro van Asselt The evolution of climate policy in the European Union: a historical overview Andrew Jordan and Tim Rayner Part III Climate policy in the European Union: understanding the past Burden sharing: distributing burdens or sharing efforts? Constanze Haug and Andrew Jordan Renewable energies: a continuing balancing act? Roger Hildingsson, Johannes Stripple and Andrew Jordan Emissions trading: the enthusiastic adoption of an ‘alien’ instrument? Harro van Asselt Adapting to a changing climate: an emerging European Union policy? Tim Rayner and Andrew Jordan Adaptation in the water sector: will mainstreaming be sufficient? Eric Massey, Dave Huitema, Andrew Jordan and Tim Rayner vii

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The evolution of climate change policy in the European Union: a synthesis Andrew Jordan, Dave Huitema, Harro van Asselt and Tim Rayner Part IV Climate policy in the European Union: future challenges 10 Exploring the future: the role of scenarios and policy exercises Frans Berkhout, Constanze Haug, Roger Hildingsson, Johannes Stripple and Andrew Jordan 11 Governance choices and dilemmas in a warmer Europe: what does the future hold for the European Union? Johannes Stripple, Tim Rayner, Roger Hildingsson, Andrew Jordan and Constanze Haug Part V Climate policy in the European Union: retrospect and prospect 12 Governing climate change in the European Union: understanding the past and preparing for the future Andrew Jordan, Dave Huitema, Harro van Asselt, Tim Rayner and Frans Berkhout Index

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Foreword

Surveying the role of the European Union (EU) in relation to climate change policy is no easy task. Both have been in the course of evolution for the past several decades. Worries about the risks posed by climate change date back some thirty years within the Union, as the contributors to this important volume show. They distinguish a number of main phases of policy development, beginning in the 1980s, the time at which initial anxieties, prompted by scientific findings, emerged. Over that period, however, the EU itself changed massively, from a group of nine nations to one incorporating twenty-seven Member States. These changes have been very mixed in their consequences. The EU countries now have a population of some 480 million, and the Union wields considerable economic might. It stretches almost to the borders of Russia and adjoins the Middle East. A number of countries at the margins of the EU have declared their intention to seek to join up, including Turkey, which has formally been recognised as an accession country. Yet enlargement has been far from plain sailing. Rules and procedures of governance designed for a small number of Member States have come under great strain. Decision-making has become correspondingly more difficult and cumbersome. New divisions among Member States have opened up: for example, the former Eastern European countries mostly have a more fearful and jaundiced view of Russia than those from what used to be Western Europe. The Lisbon Treaty should restore greater leadership capacity to the EU, since it provides for more majority voting and introduces a more permanent President of the European Council. Yet at the point of writing the Treaty is stalled, pending final ratification from some countries. For the time being, at least, federalism is dead. There is no collective will to create a United States of Europe. The EU as it stands is more than a international body, since its component nations have agreed to pool some of their sovereignty; however, it is a long way from being a super nation-state. As several contributions to this book ix

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note, the EU is all about ‘governance’ rather than government. It has little direct connection with its citizenry, since levels of participation in elections to the European Parliament are low and people in any case mostly vote on the basis of national issues. In the early years, decisions were taken largely through energetic leadership on the part of the EU’s bureaucracy, the European Commission. With a relatively small group of political leaders involved, it was relatively easy for close contacts to be sustained, even if decision-making was almost wholly undemocratic. Progressive enlargement made this approach less workable, while pressures also mounted for more transparency and citizen involvement. Endorsement of the Lisbon Treaty is crucial for the future leadership capacity of the EU, but it is nevertheless something of a first step along a new pathway that must reconcile diversity with coordinated action: a lot more constitutional evolution will be needed if the EU’s political resolve is ever to match up to its intrinsic economic strength. The EU’s attempts to respond to climate change both reflect these dilemmas and at the same time offer a possible way of helping to resolve them. Climate change is a type-case of a problem that cannot be dealt with by nations acting on their own. The enlarged EU covers a sizeable geographical area. Effective regional policy in its neighbourhood will make a notable contribution to reducing world emissions of greenhouse gases while providing a possible model for other parts of the world to follow – or at least learn from. Like individual nations, the EU has a double role so far as climate change policy is concerned. It has to play a part in international negotiations to try to control carbon emissions as well as develop effective policy internally. International negotiations leading up to Kyoto and beyond have gone through numerous twists and turns, and no doubt there are more to come. The European Commission initially looked to a carbon tax as a means of regulating emissions, both within its own boundaries and internationally. Carbon trading, based on a market approach, was favoured by the US. For various reasons – particularly the fact that the EU lacks the competence to control the financial policies of its Member States – the Union also adopted carbon trading as its prime approach to regulation. Former Vice-President Al Gore played an important role in promoting the idea of carbon markets and, following the fall from power of the Democrats in the US, remained a major influence upon raising consciousness about the dangers posed by global warming. Under the Presidency of George W. Bush, however, US policy on climate change, as in many other areas, underwent an almost complete volte-face. The US turned its back on international treaties of most types and the leadership was disinclined to see climate change as a serious issue. The EU deserves a great deal of credit during this period for having continued to push forward its climate change agenda, assuming a vanguard role within the world community at large.

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The need for EU leadership on an international level persists, even though President Obama has emphasised that the United States will seek progressively to reduce its emissions and participate fully in international negotiations to limit climate change. The Climate Change Bill introduced into Congress has been weakened by opposition from industry lobbies. It is to be hoped that it will remain fairly robust and ambitious. The feebler the final product, however, the less influential is Obama likely to be on an international level so far as climate change regulation is concerned. Can an organisation that has no recognised leader actually lead? The question is raised at many points in the book, and rightly so. The best opportunity for leadership for the EU, as in most other areas of its activity, is leadership by example – by showing the rest of the world what can be accomplished. What are the chances that its climate change policies will be successful? On a formal level, the EU has made considerable progress in recent years, since a whole range of agreements have been reached among Member States, prompted by the Commission, about how to fight climate change. These are discussed in detail in the contributions that follow. I am a committed pro-European, as well as someone who believes that the threats posed by climate change are serious and demand radical measures to counter them. I hope the EU’s programme will be successful. Yet there is plenty of reason for disquiet. It is less than twelve years to the first generic target date of 2020, by which time 20% of the EU’s energy is to be delivered from renewable sources and emissions are to be reduced by a minimum of 20%, and possibly as much as 30% if other industrial countries agree to follow suit. However, whether these targets can be met is an open question. The EU has come to put a lot of faith in carbon trading and in fact has established the largest such system in the world as measured by turnover. The first version of the scheme encountered major difficulties and it is generally agreed that it has only a minimal impact on emissions. The new version is more rigorous, but how far it will work remains to be seen. If we look across the Member States, there are large differences in terms of carbon emissions. A few, such as Sweden, Denmark and Germany, have made considerable progress in developing renewable technologies for power generation, but very largely as the result of domestic policy rather than anything driven by the EU. In some cases, such as in the first two of these countries, the policies in question date back as far as the first oil crisis of the late 1970s and were prompted by worries about energy security, not climate change. Were it not for the recession, which has temporarily brought down emissions, the contribution by a number of Member States towards the EU’s collective Kyoto target would have looked even less impressive than it is. In some EU countries, such as Spain and Portugal, emissions increased far beyond their target levels. Most of the former East European countries lag far behind in terms of developing effective

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climate change policy. The largest, Poland, is still heavily dependent upon coal for its energy production. All the EU countries have been set targets in terms of emissions reductions for 2020 and, after much wrangling, all have agreed to meet them. A good deal of prodding and pushing, both from the Commission and from some Member States towards others, will be needed to get them to do so. The EU has few sanctions to bring under-performing states into line, as earlier experience with the Lisbon Agenda has shown. The Lisbon Agenda – not to be confused with the Lisbon Treaty, which is completely separate from it – was a framework of change supposed to make the EU states more competitive in world markets. It only made modest progress, in spite of being based on a new mode of collaboration – discussed in some of the contributions below – the ‘open method of coordination’. Those member states that were not inclined to follow its prescriptions simply ignored it. In spite of the problems that the EU faces in making its climate change policies count, one should not sound too negative a note. It is possible, as some hope, that responding effectively to climate change will help re-legitimise the Union at a time when it is losing support. Coping with climate change is not just a matter of incurring costs and making sacrifices: there are major advantages to be gained by being in the vanguard of change, especially as far as technological innovation is involved. The EU’s climate change project will help stimulate investment in renewable technologies and other advances intrinsic to creating a low-carbon economy. The European countries have a lead over many other developed countries – especially the US – in having pioneered a high speed train system now extending across the sub-continent. Such developments can be source of cutting emissions at the same time as they in fact converge with the Lisbon Agenda – that is to say, they also enhance competitiveness. Besides leading the way in terms of mitigation, the EU could also pioneer advances in adaptation, given that a certain level of climate change is inevitable whatever happens from now on in policy terms. ‘Adaptation’ sounds purely reactive: dealing with the consequences of climate change, in the shape of more extreme weather, a greater incidence of floods, droughts and forest fires. However adaptation should be proactive: we should start preparing now for the changes in weather patterns that will occur. The Commission has produced a number of detailed analyses and action plans so far as adaptation is concerned, covering not just the EU area but surrounding regions too, such as North Africa. Political leaders in China, India, Brazil and the other large developing countries are watching closely to see how far the developed nations – which have created the bulk of the emissions now in the atmosphere – will live up to their promises of taking radical action to curb climate change. How successful or otherwise the EU

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might be in this endeavour thus has a resonance across the world. This book provides an invaluable resource for anyone seeking to assess the possibilities and the pitfalls. Anthony Giddens Quote for blurb: “Surveying the role of the European Union (EU) in relation to climate change policy is no easy task … How successful or otherwise the EU might be in this endeavour has a resonance across the world. This book provides an invaluable resource for anyone seeking to assess the possibilities and the pitfalls.” Professor Lord Anthony Giddens

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Preface

Climate change is shaping up to be one of the defining issues of this century. Once a matter that only preoccupied a fairly select group of atmospheric scientists, in the past few years it has forcefully entered the political mainstream in many industrialised states, demanding a political and policy response at all levels of governance. Not only is climate change scientifically very complex but it also raises very challenging governance issues. This is because addressing climate change and its consequences requires governors to make policy interventions that will deeply affect production and consumption decisions right across the world. In this book we focus on the policy choices and their associated governance dilemmas that are constitutive of these interventions. By using the term ‘governance’ instead of government, we seek to draw attention to the changing context in which these policy choices have been (and will in the foreseeable future be) made. So, whereas in the past, governments made and implemented the key choices, today governing – at least in Europe – is undertaken among a wider array of actors, including those in the private sector. In the first chapter, we argue that governing is a purposive activity, which involves making difficult choices between alternative options supported by different groups of actors who commonly subscribe to values that are partly and sometimes wholly incommensurate. By using the term ‘dilemma’ we try to draw attention to the fact that these choices involve very different norms and values – fairness, effectiveness, efficiency, transparency and accountability, to name just a few – which are not easily reconciled. In particular, we seek to explore those choices and dilemmas that flow directly from the desire to mitigate and/or adapt to the unfolding impacts of climate change. At a descriptive level, the title of this book signals that we are interested in understanding whether and how the ensuing dilemmas were confronted by governors in the past. It also reveals that the main locus of our analysis is the European Union (EU). We contend that nowhere has the debate about the governance of climate change been more high-profile and more vibrant than in the EU. What goes on inside xv

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the EU is immensely important for several reasons. First and foremost, the EU is a relatively large emitter of greenhouse gases, accounting for around 10% of global emissions. Second, the EU has slowly emerged as a key player in the global politics of climate change and has well-known aspirations to continue leading the world towards effective governance solutions. There is widespread agreement that it strengthened the 1992 Framework Convention on Climate Change and saved the 1997 Kyoto Protocol from potentially terminal decline after the US government’s withdrawal in 2001. Third, the manner in which the EU confronts the dilemmas of governing will significantly and possibly permanently affect national policy and politics within its 27 Member States. Finally, the EU is intriguing because it represents a microcosm of the international climate change problematique. It is therefore a potentially rich source of lessons on how to govern when governance is mutli-levelled and multi-actored. In spite of the EU’s undoubted importance as a governor of climate change, confusion continues to surrounds its precise role. This is partly because it does not fit easily into conventional categories: states, international organisations, etc. It is also because of its notorious inherent complexity, which easily baffles those working outside the Brussels ‘beltway’. Even people who have worked on climate change issues for many years are not always entirely sure what the EU does and why. In order, therefore, to fully appreciate why and how the EU became involved in climate policy making, we claim that analysts should explore its inner workings – specifically the policy choices made, the dilemmas (not) confronted and the overarching system of governance – all within the context of international and national policy developments. The title indicates that our intention is to critically examine previous, current and possible future policy interventions with respect to climate change. What choices have been made during the past 20 to 30 years? Who made them and on what basis? How willing – and able – were governors to confront the associated dilemmas? And what of the future? What might policy and governance look like 10 or 20 years from now? How well prepared are today’s policies and institutions to handle the dilemmas and associated choices that could surface in future worlds? These are some of the many intriguing questions that are outlined and unpacked in this book. This book draws together some of the principal findings of a large EU Framework 6 funded research project known as ADAM, or ‘Adaptation and Mitigation Strategies: Supporting European Climate Policy’ (Contract number: GOCE-018476). ADAM ran from 2006 until 2009 and involved a large number of research institutes in and outside Europe. All the authors involved in the writing of this book worked in the policy and governance part of ADAM. Part of the task that we set ourselves was to develop an analytical framework to account for the governance of climate change. It was at this stage that we came to appreciate the central part played by dilemmas in the act of governing a ‘wicked’ policy problem such as climate change. The rest of this book describes what we discovered when we applied this framework to the EU. We

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explore what a focus on policy choices and governance dilemmas tells us about EU governance in general and climate change governance in particular. With hindsight, our focus on dilemmas also served another, more reflexive purpose – that of understanding what it takes to govern a large, multi-disciplinary book project involving nine authors from several different countries. If we start with the first dilemma – that associated with the various ways in which problems can be framed – then we can now appreciate how differently we approached the ‘problem’ of understanding EU climate governance. Some of us were interested in contemporary policy making, some policy evaluation and others future policy. Still others were more interested in the role of the law or the broader structures of the EU. This diversity in our respective starting points helped us to understand what it really means to govern. Governance, of course, goes well beyond our immediate focus (‘public policy’), but we think that national governments and the institutions of the EU provide a very good place to start. When it comes to the dilemmas associated with choosing between the best level and scale of governing, in the EU these tend to be expressed in rather binary terms – i.e. should policies be enacted at Member State or at EU level? One of the more innovative features of our approach is that we show how this important dilemma is inextricably connected to many other dilemmas: problem framing, the timing and sequencing of action, implementation and of course enforcement. In our part of the ADAM project, there were many different nationalities, but somehow all roads (and hence all team meetings) led to Amsterdam, a choice that had more to do with its central position in the European network of airports than with its undoubted beauty or the variety of its night life. In this book we also show how the dilemmas associated with the timing and sequencing of policy choices are hugely important in the EU, particularly given the ever-present tension between states that want to lead by example and those that prefer to operate in unison or perhaps not at all. During the writing of this book we had to confront – and therefore find ways to govern – similar dynamics among the chapter authors. In this book, we use the term modes and instruments as shorthand for the choice between different ways of governing. One of the more remarkable things about the EU is that it has been able to develop so much policy on the basis of a narrow legal mandate and a relatively bare tool-box. On paper, it is heavily reliant on the hierarchical instrument of regulation, but in practice it relies heavily on what might be termed networked governance. We certainly relied heavily on this particular mode of governing to produce this book, with some authors providing intellectual leadership, others constructive feedback and the rest copious amounts of draft copy to be edited into shape. Governing climate change has also required difficult choices to be made about the costs and benefits of different policy interventions. In this book we show that the EU has always sought to govern as a single entity, but with some actors carrying more of

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the burden than others. This was very much the basis on which this book was written. Finally, there are implementation and enforcement dilemmas. As is well known, the EU has relatively limited powers in this respect. Thankfully, we as editors had to contend with very few implementation and enforcement dilemmas, and this is largely down to the chapter authors – Eric, Johannes, Roger and Constanze – who responded quickly and carefully to our editorial requests. We owe them a huge debt of gratitude. Without them, this book would never have left the whiteboard in that airless and lightless hotel meeting room in Budapest in March 2008! We are grateful to the Directorate-General for Research in the European Commission for generously funding the research reported in this book and especially to Wolfram Schrimpf, our scientific officer. We are also grateful to Mike Hulme at the University of East Anglia who, together with Henry Neufeldt, Emanuela Elia, Fiona Ring and Angela Ritchie, steered the entire project to a very successful conclusion. David Benson very helpfully proof-read some of the chapters in draft form. During the very early stages of our work, Suvi Monni, Frank Raes and Sandro Federici from the JRC in Ispra helped us to refine our thinking and collect some useful background data on national climate policies. We would also like to highlight the critical part played by Constanze Haug, who remained a driving force throughout the project and a very diplomatic and effective ‘manager of her managers’. Crucially, she set up and ran the policy exercise which is reported in Chapters 10 and 11. Without her and Ivo Wenzler of Accenture Netherlands, the forward-looking part of our analysis simply would not have been possible. Bert Metz kindly agreed to chair the exercise (which also took place in Amsterdam!) and ensured that it ran smoothly. Meanwhile, a number of people were particularly helpful in the writing of the five case studies reported in Chapters 4–8. These were: Karin Ericsson and Lars J. Nilsson (renewable energy); Christian Flachsland, Onno Kuik and Frans Oosterhuis (emissions trading); Bryan Boult and Caroline Cowan (adaptation); and Thomas Dworak and Julian Wright (water adaptation). As a team, we also interviewed a large number of experts and policy makers as part of our future-oriented research. These people are acknowledged in the relevant chapters. We thank them all for agreeing to explore the four future ‘worlds’ of climate policy with us. Last but by no means least we thank our commissioning editor at Cambridge University Press, Matt Lloyd, and his assistant Chris Hudson, for their support, guidance and, above all, patience. Andrew Jordan Dave Huitema Harro van Asselt Tim Rayner Frans Berkhout

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List of contributors

Frans Berkhout is the Director of the Institute for Environmental Studies at the Vrije Universiteit Amsterdam, The Netherlands. Constanze Haug is a researcher in the Institute for Environmental Studies at the Vrije Universiteit Amsterdam, The Netherlands. Dave Huitema is a senior researcher in the Institute for Environmental Studies at the Vrije Universiteit Amsterdam, The Netherlands. Roger Hildingsson is a Ph.D student in the Department of Political Science, Lund University, Sweden, and a research scholar in the Lund University Centre for Sustainability Studies (LUCSUS). Andrew Jordan is Professor of Environmental Politics in the School of Environmental Sciences, University of East Anglia, Norwich, United Kingdom. Eric Massey is a researcher in the Institute for Environmental Studies at the Vrije Universiteit Amsterdam, The Netherlands. Tim Rayner is a senior research associate in the Tyndall Centre for Climate Change Research, University of East Anglia, Norwich, United Kingdom Johannes Stripple is a researcher in the Department of Political Science and the Lund University Centre for Sustainability Studies (LUCSUS), Lund University, Sweden. Harro van Asselt is a researcher in the Institute for Environmental Studies at the Vrije Universiteit Amsterdam, The Netherlands

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List of abbreviations

CO2 CO2e CAP COP DG ECCP ECJ EEA ERTA ETS EU GDP FCCC IEA INC IPCC JRC NGO OECD OJ RES R+D SRES UN UNEP WHO WMO

Carbon dioxide Carbon dioxide equivalent Common Agricultural Policy Conference of the Parties Directorate-General (of the European Commission) European Climate Change Programme European Court of Justice European Environment Agency European Road Transport Agreement (ECJ ruling) Emissions trading scheme European Union Gross domestic product Framework Convention on Climate Change International Energy Authority Intergovernmental Negotiating Committee Intergovernmental Panel on Climate Change Joint Research Centre Non-governmental organisation Organisation for Economic Cooperation and Development Official Journal Renewable energy sources Research and development Special Report on Emissions Scenarios (IPCC) United Nations United Nations Environment Programme World Health Organisation World Meteorological Organisation

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Part I Introduction and overview

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1 Climate change policy in the European Union: an introduction andrew jordan, dave huitema and harro van asselt

Introduction: climate change enters the political mainstream In recent years, climate change has shifted from being a marginal political issue to one that has – depending on one’s point of view – potentially transformative and/or calamitous consequences for virtually all policy areas. The change in its political status has been remarkably rapid but also substantial. So when the global economy slipped into a deep recession in the late 2000s, climate change remained alongside economic growth, employment and crime as a key political issue in the majority of industrialised states. As part of this political transformation, new actors have entered the debate. Whereas before, climate change had mainly preoccupied environmental ministries and their associated policy networks, it now attracts the sustained attention of political core executives: prime ministers, presidents and their inner cabinets. Since 2005, climate change has been a standing item at all G8 summits, and has been regularly debated at United Nations (UN) General Assembly sessions and in countless European Council meetings comprising the Heads of State of the European Union (EU).1 The issue of climate change has, in short, entered the political mainstream. Having struggled for years to persuade politicians to take the issue seriously, environmental actors are now finding themselves under intense pressure to deliver policy solutions that are sufficiently coordinated with their counterparts in ‘non-’ environmental sectors such as energy, transport and agriculture. However, whether at the national, European or international levels, these solutions have proven much harder to identify, agree upon and implement than was first thought. Climate change policy is certainly not delivering emission reductions of the scale or at the speed demanded by scientists (Anderson and Bows 2008; Helm 2008). With hindsight, putting climate change onto political agendas was probably the easy part; the big challenge now is to agree how to address it in ways that avoid significant and potentially irreversible effects.

Climate Change Policy in the European Union, ed. A. Jordan, D. Huitema, H. van Asselt, T. Rayner & F. Berkhout. Published by Cambridge University Press. © Cambridge University Press 2010.

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Nowhere is this challenge more obvious or more acute than in the EU, which has well-known aspirations to lead the rest of the world towards solutions, but has struggled to deliver the necessary internal changes. Arguably, the bulk of the greenhouse gas emission reductions that it has made to date have been fortuitous, rather than the intended outcome of climate mitigation policies (Skou Andersen 2004; Kerr 2007).2 If the contribution of shipping, aviation and the consumption of globally traded products are also factored in (Helm et al. 2007), emissions from the EU have remained on a sharply increasing trajectory despite all the political promises to the contrary. Globally, carbon dioxide emissions have been predicted to rise by around 50% by 2030 (IEA 2007). In other words, the world – including the EU – seems to be heading substantially in the wrong direction (Helm 2008: 214). Identifying strong, and above all implementable, policies has proven difficult in the EU (as elsewhere) because climate change belongs to a particular category of problems that have been aptly termed ‘wicked’. Rittel and Webber (1973) originally defined wicked problems as those that challenge established social values and institutional frameworks, defy analysis, and have no obvious solutions. Climate change certainly exhibits the same problematic characteristics as many other environmental issues (e.g. scientific uncertainty, public ambivalence, significant lag effects between policy interventions and environmental outcomes, intergenerational asymmetries, etc.), and this helps to explain the abundance of longterm targets, often of a rather declaratory nature (for example, ‘seek to achieve an 80% reduction by 2050’). However, it exhibits many other characteristics that make it especially wicked. For example, it is highly cross-sectoral; it cuts across international borders, exacerbating existing tensions between rich and poorer states; it is stubbornly resistant to simple ‘technological fixes’ such as new forms of energy generation or carbon capture; and it challenges prevailing social norms and practices, which are predicated on very high levels of carbon consumption (Wynne 1993; Biermann 2005). Climate change is therefore not just a difficult problem, but a wicked one par excellence. Its sheer breadth and complexity spans such a huge agenda of different sub-issues – ranging from poverty alleviation in the developing world to long term energy supply decisions in the countries of the Organisation for Economic Cooperation and Development (OECD) – that the normal channels of inter- and intra-state policy making struggle to cope. In the past, this has culminated in slow and sometimes even deadlocked negotiations at the international level (Biermann et al. 2010). In this chapter we set the scene for rest of the book by explaining why it is both important but difficult to understand how a multi-levelled governance system such as the EU has confronted the multi-faceted challenge of climate change. We do so by drawing on theoretical debates about how it operates and relating them to empirical

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accounts of how policy has evolved over the past 20–30 years. In this book, we study climate governance as a series of interacting choices that ‘governors’ (be they at national, international or EU level) make when they develop policies to address such a challenging issue as climate change. We argue that the development of policy requires choices to be made: choices that in turn constantly provoke governance dilemmas, which systems of governance have been established to handle. These choices and dilemmas are especially problematic in relation to a wicked problem like climate change, where there are few ‘best’ options which are immediately selfevident or easily implemented. We analyse the choices that have underpinned the emergence of climate policy and examine how far they were made in ways that depart from the manner in which policy choices have traditionally been made in the EU and/or its Member States. One of the key aims of this book is to identify which policy choices have been made in relation to climate change and to examine who made them and how they affected – or were affected by – the broader framework of the EU. We will also try to explore the ‘non-’ choices too – the decisions that were not made or were actively deferred – as well as those that may have to be made after the expiry of current EU policies in 2020. In the final section of this chapter, we set out a plan for the whole book. Before we go into more detail, it is important to be aware that our decision to focus on the inner working of the EU means that this book will not directly address the way in which the EU participates in international meetings and/or the degree to which it possesses ‘actorness’, namely the ‘extent and weight of the capability of an actor’ (Bretherton and Vogler 2006: 248). Nor do we seek to enter the debate about the meaning or measurement of the EU’s leadership capabilities or compare its performance to that of other international actors. These two aspects are not entirely absent from our analysis, as experience suggests that international dynamics do deeply affect the inner workings of the EU and vice versa, but they are not our immediate focus. We do show, however, that the complex, two-way interaction between internal and external dimensions affects policy choices in the EU. On the one hand it makes internal policy making more problematic, in the sense that it complicates the task of achieving agreement (itself made even more difficult if we include the EU – Member State dynamic). On the other hand, it also generates new opportunities to move policy forwards, opportunities that would not be there if the EU were absent and its 27 Member States negotiated independently. We are also not directly concerned with explaining or assessing national climate policies (see, for example, Harrison and Sundstrom 2010) in Europe, to the extent that they are independent of EU-level policies. Finally, we do not seek to directly and comprehensively assess the outputs and outcomes of EU climate policies in terms of their effectiveness (but see Haug et al. 2010), as sadly this very important task goes well beyond the scope of this book.

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Understanding climate change governance: the importance of the European Union Searching for policy responses to the threat of climate change inevitably raises difficult issues of governance. Much has been written about the governance of climate change, but most of it focuses either on the international negotiations flowing from the UN Framework Convention on Climate Change (FCCC) and its associated protocol, signed at Kyoto in 1997 (e.g. Grubb et al. 1999; Oberthür and Ott 1999; Yamin and Depledge 2004) or on national and/or sub-national policy dynamics (e.g. O’Riordan and Jäger 1996; Collier and Löfstedt 1997; Bulkeley and Betsill 2003; Compston and Bailey 2008). Although these levels make a hugely important contribution to the governance of climate change, there is still relatively little book-length material on the evolution of climate policies within the EU (but see Gupta and Grubb (2000); Deketelaere and Peeters (2006); Harris (2007)). This is rather surprising, as nowhere has the political debate about the governance of climate change been more dynamic and arguably more advanced than in the EU. Going back as far as the late 1980s, the EU has sought to play a strong leadership (or front-runner) role inter alia by fighting to secure international agreement on the Kyoto Protocol, adopting a large-scale greenhouse gas emissions trading system within its borders, and pledging to achieve the long-term goal of working to limit the global average temperature increase to no more than 28C above pre-industrial levels (Sbragia and Damro 1999). More recently, it has sought to advance debate about adaptation to some of the predicted impacts of climate change (such as droughts, floods, heat stress and sea level rise), identify new funding streams to help developing countries cope with rising temperatures (and thus feel more inclined to join international policy efforts), and employ innovative technologies such as carbon capture and storage. In fact, by the mid-2000s, the EU’s main executive body – the European Commission – claimed that tackling climate change constituted the central, overriding policy challenge facing Europe in the twenty first century (Oberthür and Kelly 2008; Environment News Service 2007). In 2008, it adopted a hugely complex package of climate and energy measures aimed at reducing emissions by 20% from their 1990 levels by 2020, centralising and toughening the emissions trading system, boosting the use of renewable energy, limiting emissions from new cars and funding new carbon capture and storage facilities. We contend that the EU’s efforts to govern climate change merit closer and more intensive examination for various reasons. First, the EU is a relatively large emitter of greenhouse gases, contributing around 10.5% of global emissions in 2006 (EEA 2008). Although it now emits less than the USA and China, and its share of global emissions is set to decline to less than 10% during the remainder of this century (COM (2005) 35 final: 3), the EU is – and will remain – an important cause of

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climate change for the foreseeable future. Moreover, depending on the assumptions made, the countries that made up the EU until 2007 (the EU-25) are responsible for 26%–28% of historical greenhouse gas emissions, compared, for instance, with 19%–21% generated by the USA (Dellink et al. 2008).3 In addition, because it is still heavily reliant on fossil fuels (many of them imported), any shift to less carbonintensive forms of energy will continually raise very complicated governance dilemmas. Second, the EU is an important player in the global politics of climate change. It expressed its ambitions to lead on climate change relatively early on and with considerable force. As early as 1991, the Commission claimed that the EU ‘owes it to both present and future generation to put its own house in order and to provide both leadership and example to developed and developing countries alike’ (quoted in Wagner 1997: 314). Since then, it has drawn on its bilateral links with developing countries and various ‘soft power’ resources to shape international policy making (Bretherton and Vogler 2006). Although analysts remain somewhat divided in their assessments of its ability to lead,4 there is fairly widespread agreement that it strengthened the FCCC (Haigh 1996: 182; Paterson 1996: 73–4; Wagner 1997: 313) and effectively ‘saved’ the Kyoto Protocol after the US government, led by George W. Bush, withdrew its support in 2001 (Bretherton and Vogler 2006: 110). The EU could be said to have led in at least three quite specific respects: by pushing for specific and time-bound targets; by implementing novel policy instruments and mechanisms (e.g. emissions trading and internal burden sharing); and by disseminating and promoting the application of guiding norms and principles such as the precautionary principle (Schreurs and Tiberghien 2007: 19).5 However, in order to be credible, leadership has to be backed by action, and here the EU’s performance has been far less exemplary (EEA 2008; Helm 2008: 218), particularly in sectors such as road transport and shipping, where emissions have been rising rapidly. One thing is clear: very much more will have to be done if the EU is to come anywhere near to achieving its reduction target of 20% by 2020, let alone the 30% it has pledged to achieve if other countries make comparable commitments beyond 2012 (EEA 2008). The political pressure on the EU to make its commitments credible has grown, particularly since the US government’s 2001 decision to withdraw from the Kyoto Protocol. Since then, the fate of the international climate regime – and with it the world’s climate change policy – has rested largely in the EU’s hands. If international policy is eventually deemed to have succeeded, the EU will rightly claim credit; but if it fails, the EU could do enormous harm to its own credibility and leave itself open to accusations that it led the international community down the wrong path. So when it comes to confronting the governance dilemmas associated with climate change, the stakes for the EU are very high indeed.

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Third, the EU plays a very important role in national and local political life in Europe. Over the past 50 years many important aspects of national politics, policy and administration have been steadily ‘Europeanised’ (Jordan and Liefferink 2004) by the EU; that is, re-shaped to fit EU-level norms. In the environmental sphere, most aspects of national policy are now made by or in discussion with the EU. In the sphere of energy and transport policies – two very significant sources of greenhouse gas emissions – the EU’s involvement is less significant but nonetheless important. In order, therefore, to fully comprehend national climate change policies in Europe, analysts have to examine those of the EU, since the two have become inextricably intertwined. In Chapter 3, we shall show that the Europeanisation of national climate change policies has been relatively recent (dating back only to the turn of the century), but since c.2000 has progressed remarkably rapidly. In 2008, the European Environment Agency (EEA) estimated that 80% of the climate policies and measures implemented at Member State level either were introduced in response to EU policies or have been reinforced by them (EEA 2008: 7). Even as recently as the late 1990s, most climate policy was made and implemented exclusively at the national level. This suggests that in their continual confrontations with different climate governance dilemmas, governors have progressively shifted the locus of governing from the Member State to the EU level – a shift that deserves thoughtful analysis. Finally, climate change represents a significant collective action problem in a world divided into separate states, each with very different historical responsibilities and response capabilities. To a large extent, these problem characteristics also appear in the EU. Thus, a small group of large states account for the lion’s share of emissions. In fact, two of the most populous states (the UK and Germany) account for around one-third of total greenhouse gas emissions from the EU-27. Italy and France account for around another quarter (11% each) and Spain and Poland are responsible for a further 8% each (EEA 2008: 13). In other words, six states account for around 70% of the total emissions. If we remember that the EU-15 states are generally much richer than those that joined after 2004, then it becomes more obvious why some analysts treat the EU as a microcosm of the international climate change problematique (Wagner 1997: 303).6 Because the EU was established to govern cross-border problems in Europe, some have argued that it could serve as a ‘social laboratory for the global future’ (Wynne 1993: 128) and a source of transferable lessons for other quasi-federal settings and regions. We return to this point in the concluding chapter. The emergence of climate policy in the European Union Existing accounts of the EU suggest that its climate change policy has evolved slowly and incrementally over the past 20 years. Prior to 1988, the EU’s

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involvement was, as outlined in Chapter 3, very limited indeed. In fact, the first EU institution to show any interest was not the European Commission, but its elected legislature, the European Parliament. However, at the time it was far too weak to do any more than identify it as a matter for the other EU institutions to respond to. The European Commission’s environment department – DirectorateGeneral (DG) Environment7 – commissioned scientific research on climate issues as long ago as the late 1970s, but lacked the political support from Member States to initiate common EU-level policies. Nevertheless, ongoing developments at the international level – namely the crystallisation of concern within international scientific networks – eventually encouraged it to develop more substantial policy proposals. The European Council’s 1988 declaration in Rhodes gave these internal developments high level political backing and, just as importantly, signalled the EU’s determination to adopt a leading position in the international governance of climate change. As this desire was phrased in such general terms and because its implications for the EU’s policies were arguably not that obvious to those involved, it was a stance to which just about everyone in the EU could sign up. At this point, therefore, the choices concerning climate change seemed relatively obvious and the associated dilemmas relatively mild. After 1988, this initial phase of agenda setting quickly gave way to a period of more determined policy initiation, strongly dominated by the Member States of the EU. Internal EU proposals developed quickly – with hindsight, perhaps too quickly – and certainly far quicker than in the area of ozone depletion, where the EU was lagging well behind the USA (Sbragia and Damro 1999; Wagner 1997: 312). In the Council, the appetite for common emission reduction policies grew among the ‘greener’, front-runner states such as Denmark, the Netherlands and Germany. However, when the Commission eventually tabled proposals for relatively strong EU-level policies (namely a common carbon/energy tax), it found itself blocked by a small but determined group of ‘laggards’ in the Council. In many ways, the Commission’s determination to throw all its energies into championing the (ultimately doomed) tax proposal (the EU had never before had fiscal powers) ‘overshadowed’ (Skou Andersen 2004: 143) a number of other more conservative, but potentially more achievable, policy options. Hence, although the EU played a significant part in securing the adoption of the FCCC, its own policy in 1992 remained largely symbolic, adding up to little more than the combined total of national policies.8 The process of European integration – that is, developing joint policies at EU level – had barely started. The following period, until 1997, was one of much more introspective and sober reflection on some of the potentially crippling economic costs of unilateral leadership. For a number of ‘non-’ climate reasons – the public backlash against the pace of European integration, manifest in the 1992 rejection of the Maastricht Treaty, for

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example (see Chapter 3) – the Commission found itself on the back foot and at loggerheads with the Council on a host of different matters. Some of the large states even pushed for the repatriation of existing EU environmental policy powers. That the EU was able to summon any enthusiasm for the post-FCCC negotiations was in large part due to the fact that a decline in greenhouse emissions, albeit largely due to ‘non-climate policy’ reasons relating to German reunification and energy market liberalisation in the UK, made the problem appear more tractable. The EU just about did enough to remain united (principally by adopting a burden sharing agreement – see Chapter 4 for details) and signed the Kyoto Protocol as a single coordinating bloc. In reality, this internal agreement had no legislative force. In fact, the Member States continued to operate on the basis of their own national targets and policies, with little or no EU-level coordination. After Kyoto, the EU was forced to adjust to a rapidly changing policy landscape, dominated by two issues: the US government’s withdrawal from the Kyoto Protocol process; and rapidly rising emissions from an enlarging EU. Still smarting from the carbon/energy tax debacle, the Commission now acted much more tactically, and waited for a window of opportunity to open before pushing for stronger EU powers. It also deepened its dialogue with a range of different civil society groups through a new arrangement known as the European Climate Change Programme (ECCP). So, when the right opportunities presented themselves, the Commission was ready to propose new policies, chiefly a voluntary agreement with car manufacturers in 1998 to limit emissions from new vehicles and proposals for what eventually (in 2003) became the Emissions Trading Directive (Oberthür and Kelly 2008: 12–3). These proved to be springboards for a much more active and dynamic period of EU policy making after c. 2000 and, eventually, the gradual Europeanisation of national climate policy. By 2005, events had moved on so much that the Commission started to believe that by leading the world on this issue, the EU could achieve many other goals, such as spurring technological innovation, increasing energy security and creating jobs. This is not to deny that some of its policy proposals after 2000 were weakened – sometimes significantly – by the Council, but for reasons that are elaborated upon in Chapter 3, Member States found it increasingly difficult to block progress and steadily more and more EU-level policies were adopted. It should also be noted that leading on climate change issues in international fora fitted with the EU’s wider geopolitical strategy, formalised in the 1993 Maastricht Treaty, of developing a more coherent foreign policy to project its ‘normative power’ globally, and to build alliances with developing countries while differentiating itself from the USA (Schreurs and Tiberghien 2007: 41). So, by the turn of the century, climate policy began, somewhat unexpectedly, to emerge as a new and important driver of the wider European integration process (Oberthür and

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Kelly 2008: 43). This was in sharp contrast to the 1980s and 1990s, when it was widely perceived to pose a threat to it. Political opportunism has always played an important part in shaping the EU’s thinking about climate change. For example, following their failure to adopt and ratify a unified European Constitution in 2005 (Benson and Jordan 2008), EU leaders desperately cast around for issues that they hoped would be better received by citizens than rather abstract projects like ‘better regulation’ and ‘the internal market’.9 A high point in the EU’s enthusiasm for stronger climate change powers came in 2008 when the Commission published its integrated package of energy and climate policies. As noted above, this was principally aimed at reducing emissions by 20%, but it also sought to boost the share of renewable energy to 20%, both by 2020. The package also reiterated an existing commitment to reduce energy consumption by 20% by 2020. Implementing this ‘20–20–20’ package will require massive changes to current practices in the EU; changes that will demand new choices to be made and new and much more challenging dilemmas to be confronted. For example, achieving the renewable energy target alone will require a doubling of existing generating capacities in little over a decade (EEA 2008: 7); new regulations on car emissions will require manufacturers to develop much more fuel-efficient vehicles; and new forms of financial and technological support will be needed to establish prototype carbon capture and storage facilities. The switch to a more collaborative mode of working at EU level did not, of course, necessarily mean that henceforth everything would run more smoothly. Far from it. When the EU institutions began to negotiate their way through the details of the Commission’s package, many of the old and still essentially unresolved conflicts quickly resurfaced. For example, the EU’s weekly newspaper European Voice (19–26.3.08: 11) wryly noted how the political desire for ambitious targets soon dissolved into ‘special pleadings and calls for exemptions, exceptions and delays’ as governments started to work out the real cost to their economies. None the less, the entire package – encompassing no less than six separate items of legislation – was adopted in December 2008. It was an astonishingly quick turn of events by the EU’s standards, but was only achieved by building in significant concessions to appease the more reluctant Member States. The limits to deeper harmonisation were also evident in relation to adaptation policy. In 2008, a joint report by the EEA, the EU’s Joint Research Centre (JRC) and the World Health Organisation (WHO) revealed that only seven Member States had adopted national adaptation strategies (EEA, JRC and WHO 2008). Other than issuing Green and a White Paper (in 2007 and 2009, respectively), which triggered internal debate but little concerted policy making, there were still no adaptation policies with legislative force at EU level (see Chapters 7 and 8).10 Evidently, the trend towards greater harmonisation and centralisation has its political limits. Nor does the adoption of the 20–20–20

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package necessarily imply that the policy choices around climate policy making have suddenly become simpler or the associated dilemmas any less perplexing. Nonetheless, by the mid-2000s it was at least possible to refer to an ‘EU climate change policy’ instead of 12, 15, 25 or 27 fairly loosely coordinated national policies. To conclude, the EU is now rightly perceived as a hugely important actor in climate policy making internationally, but especially in Europe. However, in order to fully appreciate why and in what manner it has become more involved in climate policy making, we have to explore the underlying choices made by governors and relate them to the prevailing context – the formal and informal institutions of the EU – in which they were made. These are important tasks, which we address in the next few sections. Comprehending the complexity of the European Union ‘Complex’ is a word that is greatly overused in academia but does seem very appropriate to the EU. For example, the EU possesses many characteristics of a federal state such as a common currency, an independent central bank, a single market and the world’s only supranational legislature – the European Parliament. It has some limited competences over fiscal and taxation issues, as well as defence, foreign policy and national security matters.11 It also has a flag and an anthem, but most European citizens have a much greater sense of allegiance to their own national flags and anthems. The EU is certainly not a ‘state’ in the classic Weberian sense of having the ultimate power to coerce; the capacity to apply violence or arrest citizens lies exclusively with the Member States (Hix 2005: 4). There is also no generalised EU tax system. The EU raises funds in part through levies and customs duties, but the vast majority of its revenue is raised by national governments. Consequently, it is effectively robbed of one of the most powerful instruments of governance (Weale 2009) – taxation – and, by implication, public spending. Finally, citizens only directly engage with one of its institutions (the European Parliament); the rest they relate to indirectly (e.g. the Commission) or, in the case of the Council of Ministers or the European Council, via their state representatives.12 Consequently, for many citizens, the EU appears remote, complicated and opaque. The EU is not yet – and may never become – a sovereign state with a central governor (or ‘government’) and all the other attributes of ‘actorness’ (Bretherton and Vogler 2006). A sovereign state appoints and/or runs most of its constituent parts. But the EU is to a large extent a creature of state control. Their influence is ‘institutionalised into the very fabric’ of the EU (Sbragia 1994: 28) ‘to an extent unknown in traditional federations’ (Sbragia 2000: 220). And yet, the operation of

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the EU cannot be simply reduced to a system of inter-state relations; non-state actors such as the Commission and the European Parliament have shaped the structure and internal operations of the EU. In an area like climate change, we have already noted how Member States have influenced the policy-making activities of the EU. At the same time, these common policies have gradually pervaded and deeply affected (i.e. Europeanised) their national policy-making activities. The interrelations between the various levels of the EU are therefore constantly and deeply interactive. They are what distinguish the EU from other supranational governance systems (Wallace 2005: 484) and give the dilemmas of governance, which are described below and in Chapter 2, a distinctive twist. With 27 Member States, several large institutions criss-crossed with a multitude of formal and informal networks, it is an open question as to who really ‘governs’ the EU. This is why this book is entitled ‘climate policy in the EU’ rather than ‘EU climate policy’. The large set-piece events such as the periodic European Councils that are regularly covered in the media give the impression that the EU is all about ‘high summitry’. But arguably, ‘the real essence’ (Hix 2005: 4) lies in the constant interactions between different actors at a more technical level (Richardson 2005: 8), for it is here that important policy choices are made and their associated dilemmas confronted. At any one point in time, it is never entirely clear who made a critical choice or where a particular policy originated from: ‘[i]ts multinational and neofederal nature, the extreme openness of decision making to lobbyists, and the considerable weight of national politico-administrative elites within the process, create an unpredictable and multi-level policy making environment’ (Richardson 2005: 5). But while it is relatively easy for any governor to shape the political agenda in Brussels, keeping a new issue on the table and securing agreement on it – what Zito (2000: 25) terms ‘agenda maintenance’ – can be a lot harder than at national level. In fact, absent a strong party political system and a cohesive core executive, ‘any well connected group of interests can block a policy initiative’ (Hix 2005: 231). Given these basic features, the term multi-level governance seems very apt. In the next section, we explore the act of governing in more detail. Governing and governance In the 1990s, scholars seized on the term ‘governance’ to make better sense of the situation that had arisen in many countries after the 1980s, when ‘big’ government had retreated under the pressure of neo-liberal reformers like Ronald Reagan and Margaret Thatcher (Rhodes 1996). Some have suggested that the turn from government to ‘governance’ was driven by big business and its desire to weaken the regulatory powers of the nation state (see, for example, Swyngedouw 2005). Others offered more prosaic explanations, including the financial crisis of the state

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in the 1970s and 1980s, and the associated ideological shift towards the market and ‘new public management’ (Pierre and Peters 2002). What attracts social scientists to the term ‘governance’ is its ability to ‘cover the whole range of institutions and relationships involved in the process of governing’ (Pierre and Peters 2002: 1). Clearly, ‘governance’ is not the same as government: whereas government centres on the institutions and actions of the state, the term governance allows non-state actors such as businesses and civil society to be brought into an analysis of societal steering. Governance is also not the same as governing. ‘Governing’ refers to those social activities that make a ‘purposeful effort to guide, steer, control, or manage (sectors or facets of) societies’ (Kooiman 1993: 2; Rosenau 1992: 4). ‘Governance’, on the other hand, describes ‘the patterns that emerge from the governing activities of social, political and administrative actors’ (Kooiman 1993: 2). It concerns ‘the ways and means in which the divergent preferences of citizens are translated into effective policy choices, about how the plurality of societal interests are transformed into unitary action and the compliance of social actors is achieved’ (Kohler-Koch 1999: 14) (emphasis added). In many ways, the word governance is ideally suited to a multi-levelled entity like the EU, which routinely engages in a great deal of ‘governance without government’ (Hix 1998: 40). In the next chapter we will argue that the EU is both complex and emergent; it is ‘always in the process of becoming – its constitution, institutions and policy remit have not reached, and may never reach, a stable equilibrium’ (Laffan et al. 2001: 73).13 To borrow from Peterson and Bomberg (1999: 53) and Weale et al. (2000: 22–3), we can say that the EU comprises formal and informal elements. The more formal features include the main EU institutions, the allocation of policy competences between administrative levels and policy sectors, the formal rules determining how decisions are made, and the distribution of financial resources within and between levels. The more informal ones include basic norms, which indicate what is acceptable and therefore expected. Crucially, both have been shaped by a multiplicity of earlier choices relating to things like the level of action, the instruments of policy and the means of enforcement. This brings us to the vexed question of agency. In their writings, Arts and van Tatenhove (2000) usefully refer to Giddens’ (1984) concept of structuration, which suggests that governors exercise agency when they make choices and confront dilemmas, but are embedded in institutionalised structures, i.e. governance. The challenge confronting governors (who provide the agency) is how best to choose among various courses of action. Unfortunately, this is more easily said than done. For instance, when it comes to the implementation and enforcement of collectively determined policies, some actors may favour voluntary mechanisms based on social control, reputation and group pressure, whereas others may prefer more hierarchical options overseen by government (Pellikaan and Van der Veen 2002). Similarly,

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those advocating more open and inclusive decision-making are often painfully aware that the satisfaction of these values may be at the expense of speedy or cost-effective decision-making (de Bruijn et al. 2002). As all choices generate similar lists of advantages and disadvantages, we submit that the very act of choosing routinely involves confronting dilemmas, nowhere more so than in the EU, which has an abundance of governors but no central government. Moreover, previous policy choices in relation to these matters are encoded in the governance structure of the EU (i.e. its formal and informal elements), which in turn provides a patterned structure in which new choices are made.

Policy choices and governance dilemmas Governing any policy problem requires governors to make policy choices between alternative courses of action. More specifically, it requires difficult choices to be made about the identification and definition of problems, about aims and objectives, about the selection and calibration of policy instruments, and about the division of the costs and benefits of governing amongst the governed, all in ways that are seen as legitimate. As these choices involve values that are seldom commensurate (and may well be sharply conflicting) and are subjected to time constraints, they normally entail governance dilemmas. A ‘dilemma’ is usually defined as a situation in which someone – in our case a governor – must choose between equally unpleasant alternatives (see, for example, Webster’s New World Dictionary).14 The fact that the various actors being governed typically subscribe to different framings of ‘the problem’ and vary in their perceptions of equity, effectiveness, transparency and democracy, makes the governance of something as scientifically and technologically complex as climate change immensely difficult. If – as suggested above – governing involves making difficult choices within a set of institutionalised structures, we need to know what kinds of choices these might be. In this book, we will investigate six particular types of choice: *

The choice of what problem to address: we have already noted that governing is a purposive activity, but precisely which problems does it seek to address? ‘Problems’ are of course not simply ‘out there’ waiting to be tackled. On the contrary, actors often engage in struggles to present (or ‘frame’) particular phenomena into problems that suit their pre-existing political interests or policy competences. Through these social processes, problems are ‘defined, structured, located within certain boundaries and given a name’ (Parsons 1995: 88). One of the most difficult choices confronting governors relates to which problem (or problems – given that they seldom emerge one at a time) to address amongst all those that concern the public (Dror 1971), how to define it and, following on from that, govern it. Having made that choice, other choices quickly loom into view. For example, which aspect and/or framing of ‘this problem’ should be tackled in relation to

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Andrew Jordan, Dave Huitema and Harro van Asselt the many other problems and problem framings that exist in the world? Policy makers often find themselves drawn to particular problems (or problem framings) because they appear to fit with the way in which they are confronting other problems. This in turn raises yet more issues. For example, who is deemed responsible for the emergence of this particular problem? Have they deliberately caused it or was it an unforeseen outcome of their otherwise legitimate activities? Such choices are associated with what we shall refer to as problem perception dilemmas. Although problem choices and their associated dilemmas may appear somewhat abstract, they are by no means trivial. As Peters and Hoornbeek (2004: 82) make clear, ‘if a “wrong” definition is adopted, it may mean that the ultimate “solution” … will be delayed’ or worse still, missed altogether. The choice of level at which to act: having worked out what problem(s) to focus on, governors have to decide at which level to act. Here, the main choice is often presented as between acting locally (i.e. decentralisation guided by the principle of subsidiarity) (see Chapter 2) or at higher levels (e.g. regionally, nationally (as in the EU) or internationally). There are several level and scale dilemmas buried away in this choice: greater local diversity may offer more opportunities for experimentation and bottom-up learning, but fewer opportunities for successfully implementing what is learned across space (a benefit corresponding to greater regulatory harmonisation). Local decision-makers may have more direct access to information, but localism runs the risk of ‘capture’ by local interests. In practice, the choice between levels is seldom a binary one; action may be required at several levels simultaneously. And it may not be an entirely open choice – governors typically have a stronger legal competence, or prior preference, to act at some levels than others. The choice of when and in what sequence to act: when do governors act? When they have conclusive causal proof that a problem is causing harm? Before the problem becomes irrecoverable? Or before others have acted? The timing and sequencing dilemmas invoked here are multiple, revolving around issues such as competitiveness (adopting potentially costly mitigation policies without knowing what others are doing can be hazardous, increasing the risk of ‘carbon leakage’15), ‘first-mover’ advantage (where developing new technologies such as wind power may lead to potentially lucrative export opportunities), and legitimacy (asking other countries – particularly poorer ones – to act first, may well be perceived as illegitimate). The choice of how to act: which modes and instruments of steering will governors select to address problems? The main choice here is between creating and imposing a set of enforceable social norms hierarchically (i.e. through the instrument of regulation), allowing them to emerge and disseminate via market-based instruments in markets, or relying on flatter and more network-based modes in which trust-based incentives play a more important role (Kjær 2004: 41–9). These are just some examples of what could be termed mode and instrument dilemmas. Choosing who wins and who loses: many policy interventions may aim to achieve a Pareto optimal improvement in which some groups are made better off and no one is made worse off. However, although governors are often loth to admit it, most policies invariably generate losers as well as winners (as do non-interventions). Therefore

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governors have to choose which costs and benefits to take into account, how to allocate them and whether and how any losers will be compensated. Judgements on these issues are intimately tied to considerations of policy effectiveness, fairness and legitimacy. Together, these constitute cost and benefit dilemmas. Choosing how to deliver policy results: once enacted, policies have to be implemented and enforced. The key choice in terms of implementation is whether to use more informal (i.e. less hierarchical) instruments without sanctions (e.g. reporting requirements) or more formal (i.e. more hierarchical) instruments with sanctions (e.g. fines) to secure the preferred policy outcomes. In practice, a balance has to be struck between the two, so that systems with clear penalties also develop less coercive elements, and vice versa. These are some examples of implementation and enforcement dilemmas.

Dilemmas are an inescapable feature of governing, which we take to be a ‘purposive’ and ‘goal-oriented’ activity (Rosenau 1992: 4) aimed at addressing collective problems. Dilemmas do not help to make the choices any easier. They certainly do not provide a directional structure that guides their own resolution. To make matters even more complex, the dilemmas may well be interdependent, i.e. the resolution of one in a particular way often has consequences for the resolution of others. For the sake of simplicity, we have introduced six main choices in the same sequence as they appear in typical rational-linear models of policy making. However, in this book we shall examine how they were confronted, by whom and in what sequence.

Exploring the paradoxes of EU policy making By looking at how policy choices have been made and dilemmas confronted, we hope to shed new light on some of the more paradoxical features of the EU’s behaviour identified in the existing literature. When – as in highly pressurised international negotiations – the political stakes are high, they can easily create misunderstandings. The first of these paradoxes can be easily stated: the EU appears anxious to lead on many international issues, including climate change, but is itself a relatively leaderless system of governance without government (Hayward 2008). How has this situation come about and what impact does it have on the way in which the EU governs climate change? For example, even those who support deeper political integration in Europe end up feeling slightly confused about who they are dealing with when they negotiate with such a multi-headed actor as ‘the EU’ (Bretherton and Vogler 2006: 110; Damro et al. 2008: 184) and whether its ‘common positions’ are really as fixed (or as common) at the Commission likes to claim (Vogler 1999: 37). Second, following on from this, the EU desperately wants to appear united in international fora, but struggles to remain so when difficult choices have to be made.

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History reveals that the EU will go to extraordinary lengths to achieve a common negotiating position in advance of an international negotiation. Having that common position gives it a sense of purpose and, it believes, greater negotiating power. It also makes it appear more state-like even though it is not a sovereign state. In the language of international relations theory, unity helps to give it ‘actorness’. But having adopted a common position, it is notoriously bad at behaving in a coordinated manner when negotiations commence, sometimes appearing as though it were an entirely separate ‘conference within a conference’ (Barston 2006: 87). Critics claim that this tendency complicates the already difficult task of pursuing international diplomacy, particularly when the EU continually insists on receiving special treatment (Benedick 1991) or wrangling with itself over what appear (at least to outsiders) to be fairly petty procedural matters. Those who are more sympathetic concede the following: that the EU’s external system of representation is ‘incredibly cumbersome’ (Macrory and Hession 1996: 140); that it can easily spend more time negotiating with itself than with other parties (Grubb and Yamin 2001: 274); and that it constantly changes its persona depending on whether the Commission or the Member States are taking the lead, raising doubts about who will eventually be responsible for implementing what the EU eventually takes on (Sbragia and Damro 1999: 55–6).16 On some occasions (the 2000 international conference of the parties in The Hague for example – see Chapter 3), the EU has completely disintegrated into a mass of competing actors (Oberthür and Ott 1999: 268), imperilling the course of the entire negotiation. Wrapped up in this paradox are choices regarding levels and scales, timing and sequencing, modes and instruments, and implementation and enforcement. Third, the EU appears to act in a rather hypocritical manner. Throughout the 1990s, for example, the EU sought to push the world towards common emission reduction targets, only then to institute its own internal burden sharing agreement under which Member States have entirely different targets. As Chapter 4 reveals, the EU’s interlocutors accused it of behaving hypocritically and introspectively, and of putting far too much emphasis on achieving internal harmony at the expense of securing collective agreement at the international level. Some observers felt it had ‘failed to communicate’ its special features to third parties during the pre-Kyoto negotiations (Oberthür and Ott 1999: 143). But others claimed that it was not simply prone to introspection, but all too willing to exploit international discussions to pursue European integration, regardless of the impact on the external players (Sbragia and Damro 1999: 57; Grubb and Yamin 2001). Either way, we are still left with a major puzzle: why did the EU – a governance system whose basic raison d’être is the achievement of greater internal harmonisation – find itself investing so much political capital in an internally differentiated set of targets – or in EU parlance, a ‘burden sharing agreement’? In order to unpack this paradox we examine the choices made in relation to costs and benefits, levels and scales and modes and instruments.

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There is a fourth and equally paradoxical feature of the EU’s approach to climate policy making: whereas the EU has set itself highly ambitious long-term emission reduction targets, its tool-box of policy modes and instruments to achieve them remains surprisingly bare (Jordan et al. 2005). There is, of course, the EU’s novel emissions trading system, but we shall show that this is still very much the exception to the rule. The EU essentially remains a ‘regulatory state’ (Majone 1994). This basic feature has, we contend, affected the way in which it handles the mode and instrument dilemmas associated with climate change. Thus for various reasons, voluntary agreements remain relatively under-utilised at EU level (Jordan et al. 2005) and the Commission’s one and only concerted attempt to adopt EU-level taxes ran into concerted opposition and was stymied, leaving this most ‘liberal’ of liberal organisations relying heavily on the ‘illiberal instrument’ of regulation (Weale et al. 2000: 453, 458–60). The implications of this feature for mode and instrument dilemmas are especially intriguing in an area like adaptation, which is not as amenable to a ‘one size fits all’ regulatory approach as mitigation. The fifth and final paradox relates to the perceived mismatch between ambition and reality. For reasons that are more fully explored in Chapter 2, the EU has been very forceful in pushing the international community to set ambitious targets and good at adopting internal policies with ‘lofty’ ambitions (Schreurs and Tiberghien 2007: 42), but until recently it has been less successful at implementing them – surely the acid test of international leadership (Vogler and Stephan 2007: 409). This paradox therefore directly addresses the EU’s handling of implementation and enforcement dilemmas. This is more than an internal concern, because critics seize on it to cast doubt on the EU’s sincerity and capability as a negotiating partner. In order to understand these five paradoxes analysts must – to re-state the core argument of this book – explore and understand the inner workings of the EU: its history, its system of governance and the evolving preferences of the various actors that operate within it. These things are difficult to pin down empirically and theoretically, not least because the EU is both highly expansive (encompassing many different areas of policy) and multi-levelled. In this book we shall employ the interlinked concepts of policy choices and governance dilemmas to try and cut through this complexity and hopefully arrive at a clearer understanding of why the EU has confronted the challenge of climate change in the way that it has. Plan of this book This book is about the policy choices that have been – and in the future could conceivably be – made in and by the EU in relation to climate change. Having identified the governance of climate change as our point of departure, explained the EU’s emerging role in the wider politics of climate change, and identified why its

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governing activities are so important – but also so paradoxical –we are now in a position to set out the main aims and objectives of this book. These are to: *

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Describe what climate change policies have been adopted by the EU over the past 30 years. What, for example, is the overall pattern of policies at EU level and in the Member States? How have policy developments at these two levels influenced one another (through processes such as Europeanisation), and how, in turn, have they been affected by international-level dynamics? Examine the policy choices that lay behind the design of these policies across the interlinked challenges of mitigation and adaptation. In order to deepen our analysis, we then explore a number of sub-areas of climate policy in much greater detail, namely renewable energy (Chapter 5), emissions trading (Chapter 6) and adaptation to climate change impacts (Chapters 7 and 8). These accounts reveal that important choices have already been made about the goals and instruments of policy extending through to c. 2020. For instance, to what extent have EU climate policies established common targets and approaches, or given leeway to Member States to operate unilaterally? One overarching issue which has proven to be especially problematic is that of burden sharing: how emission reduction commitments agreed internationally are distributed amongst the Member States. This is covered in Chapter 4. Finally, how has the balance been struck between trying to prevent future change (mitigation), and adapting to its effects (adaptation)? Chapter 9 draws together the main themes raised in these chapters. It reveals that the EU has made some hugely significant choices in these sub-areas in the past 20 to 30 years, but that many important dilemmas still remain to be confronted. Look forwards and explore how EU policy might evolve in the short to medium term (i.e. 2020–40). Conventionally, policy analysis tends to look backwards, but by using a combination of methods (which are summarised in Chapter 10) (e.g. empirical case studies, scenario-informed interviews with key policy makers and an interactive policy exercise on burden sharing), Chapter 11 investigates how climate change policies at the international and national levels might evolve after 2020. Drawing upon a set of four future scenarios, it explores what kinds of governance dilemma might conceivably arise and their associated choices. Could these dilemmas appear in the same form that they have taken in the past 30 years, or are they likely to appear in radically different forms and/or in a different order? Related to this, what are the key choices that will have to be made by future governors and in what kind of EU will they be operating? The future is of course inherently unknowable. Perhaps the only thing that can be said about it with any degree of certainty is that analysts are often very wrong in their predictions. However, many of the policies that the EU is developing now will endure beyond 2020. Therefore, thinking about the future is important, not least for those wishing to inform current policies to make them more robust and hence effective. How well prepared, therefore, is today’s EU to confront the range of possible future dilemmas and make the associated choices? These are some of the very many complex but urgent questions that are set out and explored in Chapters 11 and 12.

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In this book, therefore, we will be centrally concerned with documenting and exploring the interaction between important policy choices and the governance dilemmas that they have already posed (and in the future might conceivably pose), within the evolving governance structures of the EU. The next part of this book (Part II) puts these issues onto a broader institutional and historical perspective. Chapter 2 begins by detailing the six policy choices and their associated dilemmas. It then identifies and explores the main features of the EU and shows how they derive from previous choices. Finally, it sets out a number of broader theories of the EU, on the basis of which some theoretical expectations about the relationship between policy choices, governance dilemmas and the structures of the EU are identified. One of these argues that policy choices are rationally made by Member States to maximise their domestically derived preferences. The other argues that the structure of the EU institutionalises previous policy choices, which in turn constrain current and future policy choices. States, therefore, may appear to ‘make’ important choices but always in circumstances that are not necessarily of their immediate choosing. Then, Chapter 3 charts the development of climate policy in very broad terms, pinpointing some of the critical choices and dilemmas that are picked up and analysed in more detail in subsequent chapters. Notes 1. Strictly speaking, the term ‘EU’ was introduced by the Maastricht Treaty in 1993. But for the sake of convenience, we employ it throughout this book to describe the activities of the EEC and the EC. 2. In the terminology of the Intergovernmental Panel on Climate Change (IPCC), mitigation refers to an ‘anthropogenic intervention to reduce the sources or enhance the sinks of greenhouse gases’, while adaptation refers to an ‘[a]djustment in natural or human systems in response to actual or expected climatic stimuli or their effects, which moderates harm or exploits beneficial opportunities’ (Klein et al. 2007: 750). 3. In 2006, total greenhouse gas emissions in the EU-27, excluding net CO2 removals from land-use, land-use change and forestry, were 5143 Mt CO2e (EEA 2008). 4. See, for example, Yamin (2000), Gupta and Grubb (2000), and Gupta and Ringius (2001). 5. On some issues (e.g. targets), the EU has led internationally but on others (e.g. flexible mechanisms such as emissions trading), the USA has been the front-runner (Yamin 2000: 65; Gupta and Ringius 2001: 288). For further details, see Chapter 3. 6. However, some have argued that if the EU is to be seen as a source of transferable lessons, it should be remembered that it is a rather benign one (Wettestad 2000: 26). 7. The Commission is divided into Directorates-General, broadly equivalent to national government ministries. 8. Bergesen goes even further in arguing that the EU’s involvement was actually counter-productive (cited in Grant et al. (2000: 149)). 9. For instance, the great policy idea of the early 2000s – the Lisbon process (since re-christened the EU’s ‘Jobs and Growth’ agenda) – spectacularly failed to excite much popular interest or support. See also Chapter 3. 10. However, some policies such as the Floods Directive and EU Solidarity Fund were introduced in response to extreme weather events that many attributed to climate change. 11. It is somewhat perplexing that the EU’s influence is now probably strongest in precisely those policy areas where, historically, state control has been relatively slow to emerge – the environment, transport, etc.

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12. The Council of Ministers (or Council of the EU) is the principal decision making body (i.e. ‘governor’) in the EU and comprises representatives of the 27 Member States. 13. For a very different view, see Hix (2005: 22–3). 14. Although this definition is framed in negative-sum terms, dilemmas in principle also apply to zeroand positive-sum situations where governors are trying to maximise synergies. 15. ‘Leakage’ refers to an increase in emissions that occurs outside a given jurisdiction as a result of regulation within it. See Chapter 6 for examples of how this can occur. 16. Compare Macrory and Hession’s (1996) account of who was responsible for implementing the FCCC commitments with Sbragia and Damro’s (1999: 58) analysis of the EU’s collective Kyoto target. In both cases, the situation was initially quite ambiguous.

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Weale, A., G. Pridham, M. Cini et al. (2000). European Environmental Governance. Oxford: Oxford University Press. Wettestad, J. (2000). The complicated development of EU climate policy. In Climate Change and European Leadership, ed. J. Gupta and M. Grubb. Amsterdam: Elsevier, pp. 25–45. Wynne, B. (1993). Implementation of greenhouse gas emissions reduction in the EC. Global Environmental Change, 3(1), 101–28. Yamin, F. (2000). The role of the EU in international climate negotiations. In Climate Change and European Leadership, ed. J. Gupta and M. Grubb. Amsterdam: Elsevier, pp. 47–66. Yamin, F. and J. Depledge (2004). The International Climate Change Regime. Cambridge: Cambridge University Press. Zito, A. R. (2000). Creating Environmental Policy in the EU. Basingstoke: Palgrave.

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Part II The evolving governance context: the European Union

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2 Governing the European Union: policy choices and governance dilemmas andrew jordan, dave huitema, tim rayner and harro van asselt

Introduction This book seeks to understand how governors in the EU have responded to the threat of climate change. In this chapter, we first set out and explore the typical policy choices that have to be made when governors confront a major societal problem such as climate change. We then examine the EU and identify the formal and informal features of its governance system. Our argument here is that these features shed light on how the EU has made policy choices and confronted their associated governance dilemmas in the past. In order to understand how the handling of the dilemmas might be related to these features, we then turn to different theories of the EU. Although there is an abundance of different theories, a basic distinction can be made between those that are state-focused and those that are more process-focused. State-focused theories emphasise the importance of agency: the deliberate attempts made by states to steer the EU in their preferred direction. By contrast, more process-focused theories focus on the path-dependent nature of decision making, in which each choice sets the direction for (and constrains) future choices. In the concluding section we draw together the main threads of our argument and look forward to the next chapter, which starts to describe how climate policy has evolved in the EU.

Policy choices and governance dilemmas Chapter 1 explained that governing is a purposive activity, which involves making difficult choices between alternative options that are supported by different groups of actors who often have incommensurate values. Building on Bennett (1991), Pellikaan and van der Veen (2002), and Peters and Pierre (2006: 215–7), this section outlines these choices and their associated dilemmas in more detail.

Climate Change Policy in the European Union, ed. A. Jordan, D. Huitema, H. van Asselt, T. Rayner & F. Berkhout. Published by Cambridge University Press. © Cambridge University Press 2010.

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What is ‘the problem’? Problem perception dilemmas An important choice concerns ‘the problem’ to be confronted. Problems of course come in many different forms. In the public policy literature, references can be found to different types of problem. These range from relatively well structured ones that involve few governors and a small range of policy alternatives, to much more complex (or ‘wicked’) ones (Mitroff and Sagasti 1973) which are more unstructured, have few obvious solutions and involve many actors. Although taxonomies are useful and climate change is undoubtedly a hugely complicated problem, the real world of policy making is difficult to divide into these ideal types. This is because some attributes of problems are more objectively determinate, whereas others are more socially constructed (or ‘framed’) by human perceptions and judgements (Rochefort and Cobb 1994). Even when there is a degree of consensus around treating some situation as a ‘problem’, there will inevitably be multiple ways of seeing it, both in itself and with respect to other problems. In the sphere of climate change, these other problems include energy insecurity and economic competitiveness, but also human welfare (including ‘fuel poverty’1), accessibility and social cohesion (as affected, for example, by the availability of different modes of transport), etc. Governors do not, of course, always have access to sufficient knowledge about ‘problems’ to fully comprehend the causal inter-relationships between them. Deciding when there is enough information to act therefore constitutes an important dilemma in its own right (see timing and sequencing dilemmas, below). Related to that is the question of whether governors act decisively to identify what should be done (with the aim of giving clear signals to implementing officials and non-state actors such as businesses, but with all the attendant risks that this might raise) or more flexibly (to allow for policy goals to be revised when more is known about the nature of ‘the problem’). Furthermore, governors are often confronted with interlocking ‘problems’ at different scales. Therefore, the framing of the problem selected may directly affect the level at which it is confronted (see level and scale dilemmas, below) and vice versa. However, what most complicates the process of governing is not the absolute shortage of knowledge per se, but rather the tendency for different actors to draw on different knowledges to portray a ‘problem’ in ways that promote their vested interests or mesh with their existing policy powers (Edelman 1988: 20–2). In short, the ‘framing’ of a problem (Schön and Rein 1994) may differ greatly across those seeking to govern. Stone (2002: 191) suggests that framing affects the way in which a problem is defined and eventually addressed. For example, target groups who knowingly cause climate change can expect to be treated differently to those who have caused it accidentally or because they had no choice (think of the ‘subsistence emissions’ (Shue 1993) in developing countries, for example).

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This takes us to the issue of ‘agenda setting’ (Bachrach and Baratz 1970). The key argument here is that there are many problems (both latent and more visible) that compete for the attention of governors and that as analysts, we risk missing a great deal if we treat governing as an apolitical process of responding to problems as though they were ‘out there’ in the world, fully formed and demanding a response. Such competition is visible in the overall ‘agenda universe’ (all issues discussed between people and in the media), but also in the ‘systemic agenda’ (the issues that the public regards as being especially problematic) and the ‘institutional agenda’ (problems that are being actively addressed by governors) (Cobb and Elder 1972). The position of problems on these different agendas changes constantly. In environmental policy making, public attention has been attracted by particular ‘focusing events’ (Kingdon 1995) such as industrial accidents or ecological disasters, which more clearly reveal the underlying problems (Birkland 1998). Connecting the available governing responses (see mode and instrument dilemmas, below) to these events requires a certain degree of ‘policy entrepreneurship’ (Kingdon 1995). In the EU, this role has often been performed by non-state actors such as the European Commission and the European Parliament. At what level should governors act? Level and scale dilemmas In the previous chapter we noted that once governors have selected a problem to focus on, they must then decide at which level or scale to act. This choice has received increasing attention in the governance literature (Brenner 2001; Jordan 2001). A basic distinction is often made between the local, regional, national, international and global levels of governance. In terms of deciding the level at which to act, the most obvious choice is between acting locally (i.e. decentralisation guided by the principle of subsidiarity; see below) or at higher levels (e.g. nationally, regionally or internationally). In practice, governors may have more legal competence to act at some levels than at others, or the interconnected and cross-scale nature of problems such as climate change may call for simultaneous (but different) interventions at many different levels; in other words, multi-level governance. Moreover, embedded in all these choices are associated values such as flexibility (possibly more achievable at local levels), accountability (public engagement is often harder to organise at higher spatial scales) and transparency (possibly easier to achieve locally). There may be an associated dilemma in the sense that greater local diversity may offer more opportunities for learning, but fewer opportunities for successfully implementing what is learned across higher levels (i.e. harmonisation).

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When should governors act? Timing and sequencing dilemmas Assuming that governors know what problem they want to tackle, they still need to decide when and in what sequence to act. Governors in the EU are, as noted in the previous chapter, now under growing pressure to create the political ‘sense of urgency’ to support the policy interventions recommended by scientists. However, from an economic perspective at least, the introduction of a policy should be timed to maximise net social welfare. Identifying an optimal intervention sequence is fraught with difficulty, however, particularly in a large and complex area such as climate change. A policy that aims to reduce greenhouse gas emissions too quickly could, for example, increase abatement costs significantly if invested capital has to be retired prematurely. Delaying reductions, on the other hand, may raise the cost of future actions because investments that are undertaken now will last for decades and may therefore continue to pollute for a long time. Of course, these difficult decisions are also enmeshed with cost and benefit dilemmas (see below), in the sense that what is presented as a socially optimal choice may well create losers as well as winners. The ways in which timing and sequencing dilemmas arise and are confronted in more multi-levelled governance settings such as the EU are particularly interesting. They revolve around issues such as risk taking (moving first without knowing what others may do can be hazardous), profit making (where first movers may reap a potential economic advantage if their approach is eventually ‘scaled up’ to the EU or even the global level), and legitimacy (requesting some to act first or bear more of the costs may be viewed as illegitimate). An important choice, therefore, is whether to act in a more assertive and/or preventative manner, or wait for others who do not share the same problem framing and/or want more time to consider the scientific evidence before acting. The policy principle that is often invoked in these situations is that of precaution (O’Riordan et al. 2001), but this is commonly tempered by some consideration of the economic costs of (not) acting (i.e. cost and benefit dilemmas). The fact that the EU is embedded in a larger, international system of governance adds another dimension to all these calculations. By definition, leaders consistently act first, but difficult choices still have to be made about precisely when to lead and on what issues.

How should governors act? Mode and instrument dilemmas Traditional accounts of governance focus on the two most commonly known modes of governing, namely hierarchies and markets. Hierarchy works best when levels are well integrated from top to bottom, and where there are clear rules and standards to ensure that subordinate bodies act in a coordinated manner. Market mechanisms, on the other hand, assume that the ‘invisible hand’ of the market incentivises

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participants to coordinate. However, ‘the market’ is not a given – steps may have to be taken to create it (and thus the necessary ‘buyers’ and ‘sellers’) (Peters 1998: 298). These steps may well amount to an exercise in hierarchy that lies beyond the capacity of multi-polar governance systems such as the EU (Jordan and Schout 2006). To these two, more recent scholarship has added a third mode, namely networks. Coordination in networks is built on trust, rather than commands (hierarchy) or prices (markets) (Thompson 2003: 30), but in the hurly-burly of governing this may be a precious commodity. Governing is chiefly concerned with choosing the right mix of modes. In relation to climate change, the main dilemma associated with this choice is how to put together a package of specific policy instruments that maximises their respective strengths and minimises their weaknesses. In the EU, this dilemma has generated a great deal of animated debate going back as far as the 1980s. It became even more animated when, in the 1990s, governors at EU level came under political pressure from Member States to adopt non-legislative policy instruments such as taxes and voluntary agreements to address rising emissions. The main choice is typically between creating and imposing a set of enforceable social norms hierarchically through the instrument of regulation, allowing them to emerge and disseminate via market-based instruments, or deciding to rely on a flatter and more network-based format. The next chapter reveals that, even after 30 years of climate policy making, the EU is still wrestling with these choices, because each one is normally bound up with equally difficult choices about the timing and sequence and the level and scale of action. Who wins and who loses? Cost and benefit dilemmas Another important choice confronting governors concerns the kinds of costs and benefits to take into account when making decisions, how to allocate them across different social groups and whether (and if so how) to compensate any losers. Judgements on these issues are intimately tied to considerations of policy effectiveness, fairness and legitimacy. Policy theorists have argued that different types of policies generate different distributions of costs and benefits. A basic distinction can be drawn between distributive, regulatory and redistributive policies (Lowi 1972; Anderson 1984: 112–116). Distributive policies involve ‘the distribution of services and benefits to particular segments of the population’ (Anderson 1984: 113). Regulatory policies involve ‘conflicts between two groups or coalitions of groups, with one side seeking to impose some sort of control on the other side’ (Anderson 1984: 114). Finally, redistributive policies involve ‘the deliberate efforts by government to shift the allocation of wealth, income, property, or rights among broad classes or groups of the population’ (Anderson 1984: 115).

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It has been suggested that because these three types of policy apportion costs and benefits differently, they tend to produce different kinds of politics and hence patterns of governing. Thus distributive policies tend to favour a particular (often quite concentrated) group of actors such as industry, for example via state subsidies, the costs of which tend to be borne by a much larger and diffuse group of taxpayers. This makes the passage of such policies relatively easy compared with that of redistributive policies, which tend to create more clearly definable winners and losers. If the intended losers in redistributive policies are the ‘haves’ (rather than the ‘have-nots’), they have ample resources to resist such policies. Finally, the costs of regulatory policies tend to be borne by target groups (in the case of climate policy, greenhouse gas producers) whereas the benefits (e.g. of a tolerable climate) are diffused across the whole of society. It is therefore easier for those bearing the costs to mobilise themselves politically. Although this typology has been portrayed as rather deterministic (Sabatier 1991), it does remind us that winning and losing – the very essence of politics – is an inescapable aspect of governing. Is policy change secured? Implementation and enforcement dilemmas Selecting and enacting policies is one thing; implementing and enforcing them is an entirely different matter, particularly at the international level, where enforcement mechanisms tend to be relatively weak and/or non-existent. The EU has stronger implementation structures and enforcement mechanisms than most other supranational bodies, but as we shall see they are far from perfect. Some policy analysts argue for a top-down approach to studying the implementation and enforcement choices arising when governance is multi-levelled, whereas others adopt a more bottom-up one (Hill and Hupe 2002). This distinction is useful, because it helps to establish empirically who are the most significant governors and how they do – or in the future could – effect social change. However, the approaches are based on rather different ontologies. From a top-down perspective, the clarity of goals and the administrative strength of policy instruments are considered to be important requirements. By contrast, the bottom-up approach accepts that goals are ambiguous and implementation ‘gaps’ are the norm rather than the exception. Related to this, many comparative studies have identified the importance of ‘policy style’ in explaining policy effectiveness. Richardson (1982), for example, discusses the degree to which policy formation is centralised or de-centralised, and anticipatory or reactive. Other dimensions of policy style have since been added, including the degree of flexibility, accommodation, persuasion, formality and public participation (Brickman et al. 1985). Although we could continue this list, one dimension appears to stand above the rest: the extent to which governors seek to maintain ‘friendly’ relations with other actors. This takes us back to the issue of trust

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noted in the discussion of mode and instrument dilemmas. In a complex multi-level system such as the EU, we shall see that the relative power of the ‘top’ (the institutions of the EU) and the ‘bottom’ (the Member States) is also important, but by no means clearly differentiated. The potential interaction between policy choices and governance dilemmas For the sake of simplicity, we have presented these choices and dilemmas in a linear sequence. In reality, they may appear in a different sequence. For example, level and scale dilemmas can embody different problem framings if we accept that scale is – at least partly – a social construct. In other words, the way in which environmental problems are framed shapes the perception of scale. This notion has led some authors to study the politics of scale construction (Brenner 2001), highlighting how different vested interests try to frame problems in ways that ensure that they are allocated to their preferred level. In addition, because the different levels of action typically operate under different rules, the decision to allocate responsibility for dealing with a problem to a particular level may have far-reaching effects on who participates and who does not, and hence on the dilemma of who should bear the costs and/or enjoy the benefits. Similar links could conceivably emerge between timing and sequencing dilemmas and those surrounding the choice between different modes and instruments. For example, Gunningham and Grabosky (1998: 398) have introduced the concept of ‘instrument sequencing’ to make the point that where an initial instrument is judged unsuccessful, another more interventionist option could be introduced as part of an ‘escalation up the regulatory pyramid’. An example would be the move beyond voluntary agreements to the introduction of a carbon tax. Meanwhile, as we have noted, timing and sequencing dilemmas might well be interlinked with cost and benefit dilemmas. For example, moving ahead quickly to achieve ambitious long-term emission reduction targets may disrupt the status quo (and thus affect a greater number of winners and losers) much more significantly than a set of incremental adjustments. This in turn links back to problem perception dilemmas in the sense that costs are often overstated by the most directly affected parties such as large polluting industries. Finally, mode and instrument dilemmas could conceivably be related to implementation and enforcement dilemmas. For instance, regulation relies upon the presence of adequate administrative capacities. In searching for ways to improve implementation, governors might then find themselves gravitating towards even greater hierarchy (e.g. greater penalties) if performance dips. By contrast, networkbased modes (and their associated instruments) may play well with target groups, but may struggle to deliver sufficient policy impacts, especially when, as in relation to climate change, they require action across many different policy sectors.

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These are just some of the different combinations in which the choices and dilemmas could potentially appear in relation to climate change, hence the aptness of another popular understanding of a dilemma (in addition to that identified in Chapter 1) as ‘a position of doubt or perplexity’ or simply ‘a difficult situation’ (New Shorter Oxford Dictionary). In practice, choices and dilemmas do not appear in a vacuum, but rather in a system of governance that has been shaped by a myriad of previous choices. In Chapter 1 we argued that the EU’s system has both formal and informal elements. In the next section, we explore each in turn, indicating the relevant links back to the choices and the dilemmas. Governing in the European Union Making choices and handling dilemmas There is not a single method for making decisions – or choices – in the EU but a number of different ones (Sbragia 2003: 130; Wallace and Wallace 2007). Here we set out four:2 *

*

*

*

The classic Monnet or Community Method: this dominated the formative years of the EU and revolved around the Commission and the Council working together in a closed and technocratic manner to advance European integration ‘by stealth’. Named after Jean Monnet, one of the founding fathers of the EU, this method was built on the assumption that defining end points would generate disagreement and thus stifle European integration (Olsen 2007). It would, Monnet claimed, be far better to proceed on a more incremental basis, stealthily manoeuvring around dilemmas rather than confronting them directly (Majone 2006: 10). This method is now perceived to be in terminal decline (Majone 2006), having been formally excluded from two of the three ‘intergovernmental’ pillars of the EU in 1993.3 The Regulatory Method: sometimes known as the ‘new approach’ this method was strongly implicated in the pursuit of ‘negative integration’ from the mid 1980s – the removal of barriers to trade to create a single market in Europe (see below). It brings together the Commission, the Council and the Parliament in a more equal relationship. It is perceived to have worked well in relation to the first formal feature of the EU – trade liberalisation (see below) – especially via the harmonisation of standards for traded products. The Policy Coordination Method: also known as the Open Method of Coordination, this network-based method is increasingly applied in areas such as employment and social policy where there is a perceived need for greater harmonisation but the EU lacks competence and/or political support to govern hierarchically by regulating. The Intergovernmental Method: relies on intensive cooperation between national officials, with little or no involvement from the EU institutions. It has normally been applied to the most sensitive policy areas such as foreign affairs, energy, defence and fiscal policy. Although this may appear weak, its use is often a precursor to deeper EU involvement.

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The use of these methods broadly approximates to the distribution of competence across policy areas; in other words, the way in which level and scale dilemmas have been handled affects the way choices are made about modes and instruments. So, from a climate change perspective, environmental policy used to be made via the Community Method but has been deeply affected by the Regulatory Method as the EU has become more active in regulating the trade in energy-using products (see Chapter 3). Energy policy – an area where EU competence has tended to be weak and contested – has tended to evolve via the Intergovernmental Method, but is now being increasingly affected by the Regulatory Method as the Commission attempts to liberalise national energy markets (see Chapter 5). Finally, adaptation policy has tended to emerge via the Policy Coordination Method (see Chapter 7). Under each method the roles performed by different actors are somewhat different. Not surprisingly, actors tend to favour the method which maximises their importance. Thus the Parliament, by and large, prefers the Regulatory Method (where it can co-decide policy) rather than the Policy Coordination Method. Consequently, there is often a struggle to make new choices (and confront their associated dilemmas) via a particular method rather than others. It is worth noting that the debates over the ‘rules for deciding new rules’ (i.e. unanimity or qualified majority) are often much more heated in the EU than those relating to the substance of policy (Weale et al. 2000). This partly explains why the EU spends a great deal of time engaged in somewhat arcane – but politically very important – discussions over the legal base of a new policy proposal (for example, should it be single market or the environment?) (Hovden 1999), the correct decision-making rule (qualified majority or unanimity) and the prevailing method (e.g. whether the Regulatory Method applies, in which case the Commission enjoys a formal right of initiative and the Parliament co-decides). Very often, these sorts of issues are wrapped up in level and scale dilemmas (i.e. to what extent should the EU have a role?) as well as problem perception dilemmas (e.g. if the problem is ‘environmental’ then the EU’s environmental competence should be relied upon). In order to understand how specific choices are made, we need to understand how these methods are themselves embedded in wider systems of governance. In the previous chapter we described the EU as both a complex and emergent system of governance that comprises formal and informal elements. The more formal features include the main EU institutions, the allocation of policy competences between levels and policy sectors, and the rules determining how decisions should be made. The more informal ones include the basic norms that indicate what is acceptable and therefore expected. The remainder of this section relates these two elements to the way in which the EU has normally made choices and confronted dilemmas.

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Governance in the European Union: formal features The first thing to say about the EU is that it is, at heart, a liberalising organisation. This feature greatly affects the way the EU frames the problems it chooses to confront. Since the 1950s its core mission has been to facilitate the free movement of goods, services, people and capital across national borders – aims that in the EU are termed ‘the four freedoms’. This was seen as providing the ‘foundations of an ever closer union among the peoples of Europe’ – the quasi-mythical goal of the entire European integration project. The pursuit of the four freedoms was the aim of the Commission’s single market programme which was launched in 1985. Especially since then, finding ways to reduce barriers to trade has been widely perceived as the overriding problem frame in the EU, but especially within the Commission and the EU’s court, the European Court of Justice (ECJ). In turn, other governance dilemmas – relating, for example, to level and scale (see below) – have tended to be viewed through the prism of market liberalisation. For example, the Commission first became interested in international environmental policy making, not because of its substantive content, but because of the threat it posed to market liberalisation within the EU (Sbragia and Damro 1999: 55). Generally speaking, proposals for new internal policies and instruments that are framed in terms of market liberalisation are more easily adopted and implemented than those that do not. By contrast, EU policies which restrict trade are ‘always very carefully defined and bounded’ (Sbragia 2000: 223). Consequently, Member States have found it progressively harder to use instruments that hinder trade or, in the case of state aids, insulate their industries from economic competition. In areas of so-called positive integration,4 EU integration has generated many new rules (especially on product standards) than are often higher than the lowest common denominator of state interests (Hix 2005: 269). Although some of these are environmental rules, the EU remains centrally committed to the goals of market liberalisation and, ultimately, economic growth. One other point to note is that the EU’s decision to focus heavily on market-related issues was partly made on tactical grounds; its founding fathers saw it as a relatively uncontroversial – or ‘back door’ – method to bind Europe together after two world wars (Sbragia 2003: 119). The second formal feature of the EU is that despite the breadth and ambition of its liberalising agenda, it has a relatively narrow range of formal policy powers.5 In the past, Member States have addressed level and scale dilemmas by gradually giving the EU the legal power – or competence – to act in a number of specific policy areas. These areas cannot be expanded without their agreement – typically via a treaty revision – and many of them are shared with national governments. The EU only enjoys total (or ‘exclusive’) competence in a very small number of areas, chiefly trade and the single market. As treaty revisions require the unanimous consent of all

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states, adding new competences is much harder than is commonly supposed.6 This has meant that problem perception dilemmas tend to be handled in ways that build on, rather than depart from, existing competences. The fact that the EU has found it difficult in the past to move quickly into entirely new areas might affect the way in which new problems are framed. For example, in the next chapter we shall see how climate change was partly framed as a problem that could be addressed via the EU’s environmental and internal market powers. By contrast, welfare states and most aspects of land-use planning, energy, foreign and defence policy remain in national hands. This does not of course mean that these areas are completely immune from the EU’s influence. For example, Chapter 3 reveals that national energy policies have gradually been indirectly affected (or ‘Europeanised’ – see Chapter 1) by the EU’s environmental and competition policies. In the majority of policy areas – including climate-related ones such as transport, the environment and development aid – the situation is messier still, with competences being shared between the EU and the Member States. In these areas of ‘mixed’ competence, level and scale dilemmas have tended to be at their most acute. Where they have a bearing on the fulfilment of the four freedoms, the EU’s legal capacity to act has been stronger and thus policy making choices have tended to gravitate towards the European level. Where they do not (the energy or land-use planning aspects of environmental policy, for example), the level and scale of action has been more hotly debated. Level and scale choices tend to obsess those working within the EU, but for good reason. First, they affect what Weale et al. (2000) term the rules for determining rules. Generally speaking, in areas where the EU’s competence to act is strong, majority voting amongst states prevails and common policies tend to be adopted more quickly, but where it is weak (e.g. energy policy) decisions are subjected to the rule of unanimous voting and progress tends to be slower. Second, what occurs at one level affects cognate levels. Thus following an important ECJ ruling in 1971,7 once the EU is granted the competence to act internally, it also secures the power to act externally in international negotiations. Because of this ruling the Commission has been able to involve itself in the negotiation and adoption of many so-called ‘mixed’ agreements8 in a number of environmentally-related areas. However, the internal rules governing mixed agreements are still the subject of ongoing debate within the EU (Jupille and Caporaso 1998).9 When (as they did in the ozone case) international negotiations have a clear trade dimension, the Commission finds it easier to take control and internal EU decisions tend towards the majority view (Sbragia and Damro 1999: 59). When (as in the case of climate change) the trade dimension is less distinct and/or the issues under discussion impinge on core issues of sovereignty (e.g. energy supply) there is a ‘tendency to work at the level of the lowest common denominator’ (van Schaik and Egenhofer 2003: 4) of state

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preferences, with the Commission providing a support function. The vexed issue of external representation may not appear to be immediately relevant given that our focus is on internal EU policy developments. However, the two are, as noted above, very tightly coupled. Experience also suggests that the international policies that are eventually crafted via external actions do feed back through into internal policy making (i.e. the impact of EU laws in the Member States: ‘Europeanisation’). The third formal feature of the EU relates to the enormous strength and reach of its legal system vis-à-vis other supranational entities. Although it has no police or army as such, the ECJ has repeatedly affirmed that EU law enjoys legal supremacy over national law. Lawyers argue that these rulings have indirectly constitutionalised EU law (Weiler 1993), but in reality the EU still lacks a formal constitution. This legal ambiguity provides an opportunity for policy entrepreneurs to find links between new problems and existing competences in ways that expand the range of issues covered by the EU (Héritier 1999: 8). However, in spite of the EU’s legal force, the physical gap separating governors in Brussels from policy implementers within the Member States is far greater than it is in most of the national systems which make up the EU (Sbragia 2003: 114). Consequently, implementation and enforcement dilemmas remain highly pertinent in the EU in spite of the EU’s legal dominance (Olsen 2007: 246–51; Jordan 1999) (see below). Fourth, the EU has access to relatively limited financial resources in comparison to most federal states. The EU’s spending is capped at around 1% of total GDP in the Member States.10 Given that the vast majority of these funds are already allocated to agricultural, regional and research policy objectives, the scope for raising large amounts of new money to address new challenges like climate change is therefore rather circumscribed. Given that the politics of re-directing funds tends to be rather tricky, the Commission soon learnt that the best way to get things done was to issue regulations, the costs of which are borne not by the EU, but by other actors. Going back to the main policy types noted under the discussion of cost and benefit dilemmas (see above), the EU is a perfect example of a ‘regulatory state’ (Majone 1996). By contrast, its ability to deploy non-regulatory instruments has tended to be somewhat restricted, as was noted in Chapter 1. The aims of its regulatory activities are of course multifarious – breaking up monopolies, harmonising product standards, etc. – but are essentially aimed at one overriding ‘problem’: how best to liberalise trade. Fifth, the EU has relatively weak administrative capacities. The popular image of ‘Brussels’ is of a massive bureaucratic machine extending its tentacles ever deeper into national affairs. In practice, many of the people who work in the Council of Ministers (and also the Commission) are there to represent their national administrations. Of all the EU institutions, the Commission is the most European in its structure and outlook but it is small and highly dependent on the Member States for

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information, administrative support and financial resources. The fact that states have chosen to remain the main implementers of policy has meant that implementation and enforcement dilemmas in the EU have to be handled in ways that do not unduly disturb this balance of power. Another important and related feature of the EU is its lack of a coherent ‘core executive’. Its steering capacity is in fact divided between a number of different actors, each of which is internally divided into separate sectors that are in turn deeply penetrated by national and European influences. These actors are also territorially divided across space (the ECJ in Luxembourg, the Parliament in Strasbourg, the Council and Commission in Brussels, etc.) and time (they operate according to different policy cycles). The diffusion of leadership was part of a deliberate strategy to ensure that the EU remained leaderless (see Chapter 1). So, unlike state governments, the main initiator of policy – the Commission – has had to accept that its choices rarely determine the course of governing; many of its proposals are instead heavily amended by ‘an excess of entrenched veto players’ at the policy adoption and implementation stages (Hayward 2008: 8). How has the absence of concerted leadership affected the handling of governance dilemmas in the past? In terms of level and scales, it has meant that in order to develop policy in international settings, the Commission has had to find creative and flexible ways to work alongside the Member States. In an area of mixed competence such as climate change in which the main competences rest with the Member States (Bretherton and Vogler 2006: 106–7), the state holding the rotating Presidency of the EU takes the lead, supported by its predecessor and successor in a deliberately fluid and non-hierarchical arrangement known as ‘the troika’. The Commission merely operates in a supporting capacity (Groenleer and van Schaik 2007: 985). In Chapter 3, we shall show how some Presidencies have tried to exercise more international leadership through the troika (both internal and external) than others. In terms of timing and sequencing dilemmas, the absence of a stable core executive has meant that the EU is not as directly affected by electoral cycles as are states. None the less, the Commission cannot simply act when and how it wants. If it is opposed by powerful veto players it has to withdraw and wait for another ‘window of opportunity’ to open (Peterson and Bomberg 1999: 55). Finally, unlike most international organisations, the EU has a fully functioning parliament, but it is a fairly ‘weak parliament with strong powers’ (Weale et al. 2000: 454). Although its importance has grown spectacularly since the 1970s, it tends to operate in a fairly reactive mode (Hayward 2008: vii) and has not (at least yet) provided an effective forum in which party politics can flourish. In European elections, voters do not normally express a vote for parties fighting for power at the European level. Consequently, they tend to be ‘second-order national elections’ (Jachtenfuchs 2006: 164) dominated by national parties fighting over national

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issues. Nevertheless, in certain areas (such as the environment) it wields one particularly strong power, that of co-decision.11 With this, the Parliament has been able to make its presence felt (Weale et al. 2000: 455), but in other policy areas related to climate change (such as energy and foreign affairs), where co-decision does not apply, it has remained on the sidelines. Governance in the European Union: informal features Working alongside these formal features is a set of interconnected norms and conventions which have gradually built up over time. The first is the norm of economic and social cohesion. According to Article 3 of the Maastricht Treaty, the EU shall ‘promote economic, social and territorial cohesion and solidarity among Member States’. The idea that Member States should work together is very deeply engrained. It has been expressed in the adoption of particular modes and instruments (e.g. the Structural Funds to allow the poorer regions to ‘catch up’ with the rest) or (as in the climate change arena) elaborate internal burden sharing agreements to address cost and benefit dilemmas (see Chapters 3 and 4). These are important because European integration is supposed to be a positive sum process. We might imagine, therefore, that a new problem will be framed in ways that support this norm. Similarly, it could conceivably affect the handling of cost and benefit dilemmas, given the perceived need ‘to ensure that [policy] outcomes produce as few visible losers as possible’ (Peterson and Bomberg 1999: 58). The second is the norm of consensus. There are simply too many actors and policy-making venues for one single actor to consistently impose its will on the rest; there has to be agreement. Hence in a system of ‘governance without government’ (Richardson 2005: 21) all sorts of modes and instruments have had to be designed to manufacture and maintain consensus. These include burden sharing within the EU (see Chapter 4) and the troika system in international negotiations (see above). One of the prices paid for consensus, however, is the tendency to favour incremental change (Peterson and Bomberg 1999: 31), which has affected the handling of problem perception dilemmas. For example, in the past some states have fiercely resisted attempts to grant the EU greater competence over energy matters (see Chapter 5). Consequently, when a new energy-related policy problem appeared – namely, climate change – EU policy had to be justified on non-energy grounds. The third norm is that of flexible pragmatism. The EU is, as noted in the previous chapter, an emergent system of governance, founded on a series of treaties that build upon one another (Sbragia 2000: 223). Unlike a fully federated system, there is no clear constitutional blueprint or catalogue of competences demarcating ‘what level should do what’. In the early years, the Commission came to perceive this as a virtue and adopted the Monnet Method of integration (see above). But Majone (2006: 612)

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argues that it was never entirely clear whether the choices made to develop new EU policies were taken to ‘solve’ problems or to advance European integration. This ambiguity (Majone 2005: 219–20), he argues, can no longer be sustained in the face of growing public disenchantment with the EU. The fourth norm is that of undifferentiated integration. Wherever and whenever possible, the EU tries to work together as a single bloc. This norm largely persists,12 despite much talk about ‘flexible integration’ and ‘variable geometry’ (Warleigh 2000) under which some states pursue deeper integration than the rest. Although some states do of course enjoy limited opt-outs in some areas (there are even provisions in the Amsterdam Treaty that permit enhanced cooperation), undifferentiated integration remains the norm in the EU. We might therefore reasonably expect this to affect the handling of new timing and sequencing dilemmas. After all, new entrants are normally asked to sign up to the entire acquis communautaire13 rather than to ‘pick and mix’ from the existing treaties. Similarly, the EU tries to agree one common emission reduction target rather than 27 different ones. The fifth norm of is that of subsidiarity. This is derived from federal theory and stipulates that policy making should occur at the lowest effective level. It first made its appearance in the 1980s in the environmental part of the Single European Act (Jordan 2000). However, it was subsequently transformed into a more general policy norm in the 1990s, following the troubled ratification of the Maastricht Treaty. But what emerged from this debate about the level and scale of EU action was a particular interpretation of subsidiarity (Article 3b) which places a much higher burden of proof on the EU to demonstrate that action within its sphere of authority is more effective, than on states to justify the benefits of the status quo. Therefore it offers a way to handle level and scale dilemmas but in ways that are biased in favour of the state level. In practice, the great subsidiarity debate of the 1990s failed to halt the expansion of EU competences (Pollack 2000), although in the next chapter we shall see how some states seized upon it to try and restrict the development of new climate policies at EU level. The final norm is that of negotiated enforcement. As noted above, the EU confronts implementation and enforcement dilemmas from a position of some weakness. Formally speaking, the Commission is responsible for overseeing the implementation of EU law. But when – as is often the case (Jordan 1999) – it is not properly implemented, its enforcement powers are relatively weak. It cannot, for example, deploy its own police force to collect evidence or imprison national officials. The norm of consensus also comes into play; errant states are never disciplined too much or embarrassed politically (Peterson and Bomberg 1999: 55). Consequently, poor implementation in the EU remains a ‘safety valve’ to accommodate the simultaneous demands for unity and diversity in Europe (Olsen 2007: 246). It was partly because of these deficiencies that the Commission started

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to explore the potential of ‘new’ instruments in the 1990s, which, as we noted above, quickly triggered other mode and instrument dilemmas. Governing the European Union: different theoretical approaches By now, it should be clear that the formal and informal features of the EU very broadly correspond to the choices and the dilemmas. In many ways this is not entirely surprising: the features – being of a more structural nature – reflect the ways in which the EU has made fundamental choices and handled their associated dilemmas in the past. In this section, we explore these relationships from two contrasting theoretical positions to obtain an insight into the causal process at work. State-centred theories The most prominent state-focused account is Moravcsik’s (1998) liberal intergovernmental theory of the EU (for a summary, see Schimmelfennig (2004: 74)). This theory assumes that the EU is sufficiently similar to other international governance systems to be studied from an international relations perspective. It argues that throughout the history of the EU, Heads of State have pursued European integration in order to secure their national economic interests. States are assumed to be rational, self-interested actors that assimilate national societal demands at the domestic level, and then negotiate with other states at the European level to achieve the best possible outcome. States, therefore, are de facto the primary governors of the EU; they make the most important policy choices and handle the associated dilemmas in ways that maximise their domestic interests. Domestic groups seek to impose constraints on these choices to ensure they are aligned with their interests. Being larger and more limited in number, industrial interests generally find it easier to mobilise into cohesive and powerful pressure groups than those pursuing more diffuse aims such as environmental protection. States do their best to ‘keep the gate’ between national and international politics, but are generally unable to make concessions beyond these domestically determined preferences. This automatically drives choices (as expressed in policy outputs) towards the lowest common denominator of state preferences. Liberal intergovernmentalism suggests that the choices made by states in intergovernmental venues such as the European Council more or less determine the course of European integration. EU governance – by which we mean its formal and informal features – is therefore regarded as a direct consequence of state choices. Its main role is to reduce the transaction cost of negotiation and ensure that interstate commitments are credible and properly enforced. It also offers a convenient opportunity to shift contentious governance choices from the realms of domestic

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politics and up to the EU level, where they can be agreed upon and presented to domestic groups as a done deal. Moravcsik’s assumption is that because states are a priori in control of the integration process, Europeanisation broadly follows the path selected by Heads of State during the negotiation process. Overall, therefore, European integration proceeds as a ‘sequence of irregular big bangs’ (Moravcsik 1998: 4) rather than cumulatively and irreversibly through a series of much smaller, but self-reinforcing feedbacks. Generally speaking, the greater the perceived benefits of collaborating and the higher the risk of non-compliance by other actors, the more likely states will be to cede control to the EU (Moravcsik 1998: 486–7). Over the years, liberal intergovernmentalism has been subjected to a great deal of criticism (for sympathetic reviews, see Pollack (2001) and Jordan (2001); for an emphatic riposte, see Moravcsik (2008)). For instance, it assumes that states function as unitary actors, a view that arguably neglects their internal differentiation. Second, it overlooks the endogenous impact of EU membership on domestic preferences (see below). Third, although states are important, the EU has many levels, each inhabited by many different actors who are adept at finding ways to evade state control (Peterson and Bomberg 1999). Finally, it has been suggested that the exclusive focus on ‘big’ decisions blinds liberal intergovernmentalists to the more mundane policy-shaping activities that take place before and after the grand bargains have been struck. In other words, liberal intergovernmentalism stands accused of focusing exclusively on the venues where one would expect to find states acting rationally and coherently. None the less, liberal intergovernmentalism arguably remains a powerful and highly parsimonious ‘baseline theory’ of the EU (Schimmelfennig 2004: 74), against which new empirical findings and alternative theories should be assessed. Process-centred theories The most obvious process-centred theory to apply is that of historical institutionalism. It is historical in the sense that it tries to understand governing as a process that gradually unfolds over time. History ‘matters’ because the constant reproduction of events is encoded in the formal and informal features of governance, which in turn shape subsequent choices. It is institutional in the sense that institutions such as the Commission and the ECJ, as well as the secondary rules that they operate under, are assumed to have an independent causal role in society. They codify the flow of history and constrain the opportunities for future change by altering the way preferences are articulated. In contrast to liberal intergovernmentalism, historical institutionalism assumes that state preferences are: fluid (i.e. they evolve in the period between ‘big’ decisions); sector-specific (i.e. they depend on the institutional

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context of action); and affected by the steady expansion of the acquis and by EU bodies such as the Commission. Historical institutionalism therefore suggests that policy making is better understood as a cumulative process rather than a series of one-off events. What has happened in the past shapes future choices (Thelen and Steinmo 1992: 8). If, for example, we think about the ‘big’ treaty changes, states are seldom free to select de novo from a long list of preferred institutional forms, because their choices are shaped and their options limited by the policy choices (and policies) that have accumulated since the previous ‘big’ decision. On this view, the ‘big bangs’ simply codify what has already taken place. Actors, in other words, adapt to the various features of governance, ‘locking’ them in place. Moreover, these old features produce new politics (i.e. ‘policy feedback’) (Pierson 1993: 597) such that ‘new’ problems are framed in the light of ‘old’ ones. Think back to the links that were made above between the EU’s core mission – trade liberalisation – and the way it has handled new challenges such as energy insecurity and pollution. Moreover, societal adaptations made in the past (e.g. the construction of pollution control facilities or the development of national energy policies) affect the way new dilemmas are confronted because actors have an obvious incentive to stick with what they have already invested in, rather than strike out in new directions – a phenomenon that Pierson (2000; 2004) has termed ‘increasing returns.’ Consequently, policies and institutions tend to be ‘sticky’ in the sense that they persist long after they were designed as optimal responses to problems. Historical institutionalism argues that an accumulation of problems, a sudden focusing event or a political crisis are normally required to shift actors and systems of governance onto entirely new paths (Peters 1999: 68). Process-focused theories also tend to argue that actors alter the way in which they make choices to reflect what is appropriate in a given governance setting (Thelen and Steinmo 1992: 8). Thus, in the big set-piece events such as treaty re-negotiations, actors may perceive more to be at stake and/or wish to signal to domestic actors that their preferences are being safeguarded. But in the myriad committees in which policy dilemmas are routinely confronted, the norms of appropriate behaviour could be different, triggering a ‘selfpromoting dynamic of consent’ (Héritier 1999: 58). Pierson (1996) has pulled many of these diverse elements together. He argues that states are important when ‘big’ decisions are taken to create a new policy area – such as climate change – or EU organisation – the Environment Council for example. However, he then offers four reasons to explain why subsequent choices may generate unexpected and undesired outcomes. First, state governors normally have very short time horizons: politicians are under electoral pressure to agree to policies with short-term pay-offs and/or overlook events that generate no immediate effects. Second, state preferences are not immutable: historically, states regularly

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change their preferences as a direct result of their continuous involvement in the process of EU policy making (i.e. process and context matter). Third, supranational policy making is complex: state governors find it difficult to anticipate the long-term consequences of ceding power to the EU. Furthermore, just as adding new competences is difficult, altering existing EU policies may also be exceedingly difficult when there are many veto players. Finally, EU institutions such as the Commission and the ECJ are partly autonomous of states: they look for opportunities to behave entrepreneurially by exploiting gaps in state control to increase their autonomy (Héritier 1999: 58–9, 220). Process-focused theories have been critiqued on both empirical and theoretical grounds. First, they appear only to explain periods of stability (or at least slow change). Sudden deviations from this pattern are assumed away as the product of sudden, unpredictable and exogenous events. Second, they are not as elegantly or coherently set out as liberal intergovernmentalism; some have even claimed that they are not falsifiable and have low predictive power (Peters 1999: 75–6). Third, advocates concede that the underlying causes of gradual change need further refinement (Thelen 1999); critics on the other hand warn of excessive determinism (i.e. ‘things happened in the way that they did because they had to’) (Peters 1999: 75). Conclusions We began this chapter by noting that governing involves making difficult choices between alternative options supported by different groups of actors. We identified the main kinds of choice and explored their associated dilemmas. Then we argued that the EU is not a state in the classical sense but nevertheless engages in a great deal of governing. It certainly does not govern from a clear centre of ‘government’; on the contrary, it was consciously designed to be leaderless. If fifty years of European integration tells us anything, it is that quite a lot can be achieved without a central locus of sustained leadership. Throughout this process, the EU has continually engaged with the dilemmas identified in section two. Indeed, the point was made that the formal and informal features of the EU described in section three offer useful insights into how and why the EU has traditionally made fundamental choices and handled their associated dilemmas. What we hope to do in the remainder of this book is understand how the appearance of climate change has – or has not – altered the way in which the EU makes policy choices and confronts governance dilemmas. Proceeding in this way immediately begs some important questions, such as: to what extent were the choices made by governors shaped by the prevailing features of governance? Has climate change been confronted in much the same way as the EU has confronted earlier and related policy problems?

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In order to develop some expectations about answers to these and other questions, we set out two macro-theories of the EU (above). One of these argues that the main policy choices are rationally made by Member States to maximise their (domestically derived) preferences; the other argues that the prevailing system of governance significantly constrains these choices. Second, the theories explain the emergence of the EU slightly differently. State-focused explanations argue that governance in the EU emerges from the interaction between actors, but especially states. In process-focused explanations, the process of emergence has its own internal dynamic, which no single actor (or group of actors) can fully and consistently control. Before we start to describe how the EU has engaged with the issue of climate change (Chapter 3), it is important to emphasise that our focus on particular choices and dilemmas does not gainsay the importance of maintaining the underlying stability of the EU. All political systems have to be legitimate to remain stable, but the EU is often described as a ‘partial polity’ with a very fragile legitimacy (Wallace 2005: 484). The EU began as ‘an elitist project’, supported by an implicit and often quite ‘passive’ (Majone 2006: 616) acceptance among the public that European integration was an inherently ‘good thing’. According to Scharpf (1999) it has become far too reliant upon ‘output-oriented legitimacy’ while remaining short of ‘input-oriented legitimacy’. By that he means that it is too reliant on producing popular policy outputs instead of directly involving the public in its choices. This tendency was typified by the Commission’s heavy reliance on the Monnet Method (Héritier 1999: 7; Radaelli 1999: 759) and of governance ‘by committees’ (Wallace 2005: 488). It was also very evident in the Commission President Jacques Delor’s 1985 decision to use the single market programme – a strategic policy that sought to deliver the policy output of freer trade and, it was hoped, sustained economic growth – to re-energise political support for European integration after the ‘Eurosclerosis’ that had characterised the 1970s (Dinan 1999: 57). However, when coupled to the EU’s inability to spend large pots of public money, this inclination to rely upon technocracy makes the task of legitimising EU governance all the harder. In recent years, the permissive consensus in favour of deeper integration has been challenged (Hix 2005: 173) by a series of referendum defeats, declining turnouts in European elections and the rise of a variety of anti-EU political parties. There certainly appear to be few ‘Europe-wide policy discourses’ (Scharpf 1999) to motivate citizens to participate in, and feel an association with, EU governance. To say the least, this represents a challenging context in which to confront governance dilemmas in a ‘wicked’ problem area such as climate change. It also opens up another potentially existential ‘problem’ to add to all the others that governors have to consider when they confront problem perception dilemmas – how to ensure the stability and permanence of the EU itself.

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Notes 1. Fuel poverty has been defined as a situation in which households have to spend more than 10% of their income on fuel (Boardman 1991). 2. These four are the most pertinent to EU climate policy. Other modes include resource distribution (as exists in the Common Agricultural Policy (CAP) and regional policy – see above). 3. Namely, Justice and Home Affairs, and Common Foreign and Security Policy. 4. Positive integration relates to the making of new EU policies in areas such as the environment, consumer protection and social regulation to avoid states engaging in an unfair and potentially unproductive ‘race to the bottom’ (Scharpf 1999). 5. At least by comparison with other federal systems. 6. Think, for example, of the troubles surrounding the ratification of the Lisbon Treaty, which aims to provide the EU with the legal competence to act on energy matters (Benson and Jordan 2008). 7. The 1971 European Road Transport Agreement (ERTA) ruling (Case 22/70). 8. Mixed in the sense that they are ratified both by Member States (given the implications for areas of national policy making such as energy) and by the EU (because of the obvious links to environmental policy). ‘Mixity’ is a clear example of the complex and subtle intermingling of national and supranational elements in the EU (Weiler 1999: 131). As yet, there is no indication that states are willing to exclusively attribute all their powers over external environmental matters to the EU (Delreux 2006: 236). 9. The ERTA ruling extended the EU’s external competence in ‘one vast stroke’ (Macrory and Hession 1996: 123). However, because it did not specify which EU institution should take the lead, uncertainty prevails. 10. By contrast, government spending in the Member States accounts for around half their total gross domestic product (GDP). 11. Essentially, this allows it to veto (by an absolute majority) a legislative measure that cannot be agreed with the Council. 12. Largely because of the fear that too much flexibility might imperil the single market. 13. The entire body of EU law and policy that have been agreed at EU level. It includes the founding Treaties, all adopted legislation and ECJ judgements.

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Pierson, P. (2000). Increasing returns, path dependence and the study of politics. American Political Science Review, 94(2), 251–67. Pierson, P. (2004) Politics in Time. Princeton, NJ: Princeton University Press. Pollack, M. (2000). The end of creeping competence? EU policy making since Maastricht. Journal of Common Market Studies, 38(3), 519–38. Pollack, M. (2001). International relations theory and European integration. Journal of Common Market Studies, 39(2), 221–44. Radaelli, C. (1999). The public policy of the EU: whither the politics of expertise? Journal of European Public Policy, 6(5), 757–74. Richardson, J., ed. (1982). Policy Styles in Western Europe. London: Allen and Unwin. Richardson, J., ed. (2005). European Union, 2nd edn. London: Routledge. Rochefort, D. A., and R. W. Cobb (1994). The Politics of Problem Definition. Lawrence: University of Kansas Press. Sabatier, P. (1991). Towards better theories of the policy process. Political Science and Politics, 24, 147–56. Sbragia, A. (2000). The European Union as coxswain. In Debating Governance, ed. J. Pierre. Oxford: Oxford University Press, pp. 219–40. Sbragia, A. (2003). Key policies. In The European Union, ed. E. Bomberg and J. Peterson. Oxford: Oxford University Press, pp. 111–35. Sbragia, A. and C. Damro (1999). The changing role of the EU in international environmental politics. Environment and Planning C, 17(1), 53–68. Scharpf, F. (1999). Governing in Europe. Oxford: Oxford University Press. Schimmelfennig, F. (2004). Liberal intergovernmentalism. In European Integration Theory, ed. A. Wiener and T. Diez. Oxford: Oxford University Press, pp. 75–96. Schön, D. and M. Rein (1994). Frame Reflection. New York: Basic Books. Shue, H. (1993). Subsistence emissions and luxury emissions. Law and Policy, 15(1), 39–59. Stone, D. (2002). Policy Paradox. New York: Norton and Company. Thelen, K. (1999). Historical institutionalism in comparative politics. Annual Review of Political Science, 2, 369–404. Thelen, K. and S. Steinmo (1992). Historical institutionalism in comparative politics. In Structuring Politics, ed. S. Steinmo, K. Thelen and F. Longstreth. Cambridge: Cambridge University Press, pp. 1–32. Thompson, G. F. (2003). Between Hierarchies and Markets. Oxford: Oxford University Press. van Schaik, L. and C. Egenhofer (2003). Reform of the EU Institutions: Implications for the EU’s Performance in Climate Negotiations. CEPS Policy Brief 40. Brussels: Centre for European Policy Studies. Wallace, W. (2005). Post-sovereign governance. In Policy Making in the EU, 5th edn, ed. W. Wallace, H. Wallace and M. Pollack. Oxford: Oxford University Press, pp. 483–504. Wallace, H. and W. Wallace (2007). Overview: The European Union, politics and policy making. In Handbook of European Union Politics, ed. K. E. Jorgensen, M. Pollack and B. Rosamond. London: Sage, pp. 339–58. Warleigh, A. (2000). Flexible Integration in the EU. London: Routledge. Weale, A., G. Pridham, M. Cini et al. (2000). European Environmental Governance. Oxford: Oxford University Press. Weiler, J. (1993). Journey to an unknown destination. Journal of Common Market Studies, 31(4), 417–46. Weiler, J. (1999). The Constitution of Europe. Oxford: Cambridge University Press.

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3 The evolution of climate policy in the European Union: a historical overview andrew jordan and tim rayner

Introduction Having set out the main aims and objectives of this book (Chapter 1), and described the context in which important policy choices have been – or will in the future be – made in the EU with respect to climate change (Chapter 2), the main aim of this chapter is to summarise how European climate policy has evolved over time. The chief reason for doing this is to provide a clearer sense of the historical context in which choices were made in the five sub-areas of climate policy selected for more detailed analysis in Part II. The next section very roughly divides this history into six main time periods. The final section identifies some broad patterns and briefly relates them back to the main features – both formal and informal – of the EU’s governance framework.

The evolution of EU climate policy Pre-1988: the first stirrings of scientific concern Concern about global climate change dates back as far as the 1950s, but until the 1970s it was mainly regarded as a scientific issue with little if any policy relevance. The 1972 Stockholm Conference agreed to intensify scientific research, a task later taken up by the newly created United Nations Environment Programme (UNEP) (Sjöstedt 1998: 233). In 1979, UNEP and the World Meteorological Organisation (WMO) organised the First World Climate Conference (Pallemaerts and Williams 2006: 22). However, it conspicuously failed to attract any policy makers (Bodansky 2001: 24). In the EU, the Commission adopted a multi-annual research programme on climatology (OJ L12, 17.1.80: 24), aimed at investigating the underlying scientific issues rather than exploring its governance. Throughout the 1970s, a debate had raged between scientists over whether the climate was warming or even cooling (Rowlands 1995: 68–72). However, the overall way in which climate change was

Climate Change Policy in the European Union, ed. A. Jordan, D. Huitema, H. van Asselt, T. Rayner & F. Berkhout. Published by Cambridge University Press. © Cambridge University Press 2010.

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approached in the EU was essentially the same as elsewhere. In fact, if anything, the debate was more energetic in the USA than it was in Europe. These scientific discussions culminated in a major agenda-setting conference held in Villach, Austria, in October 1985. This helped to galvanise scientific thinking and concern and resulted in a resolution calling for climate change to be tackled via an international agreement (Pallemaerts and Williams 2006: 22). In Cobb and Elder’s terms (see Chapter 2), the issue of climate change was therefore beginning to move slowly from the broader systemic agenda to the institutional agenda of issues which directly concern policy makers. This was a period of heightened environmental awareness internationally and also a point at which the EU’s involvement in national environmental matters was beginning to accelerate, particularly after the adoption of the Single European Act in 1987. So it was not at all surprising that the various EU institutions jockeyed to respond to the Villach resolution. The European Parliament was the first to respond with a resolution (OJ C255 13.10.86) which, even at this relatively early stage (1986), fully recognised the cross-sectoral and a multi-level (i.e. ‘wicked’) nature of climate change. It followed up with the even more wide-ranging Fitzsimmons Report, which not only examined the scientific case for policy change, but also surveyed and assessed some of the available policy options, including improving energy efficiency and reducing deforestation. According to Jachtenfuchs (1996: 95), the report helped to turn climate change into a ‘political problem in the EU which required action’. It also identified some of the key choices to be made and began to unpack their associated dilemmas. By the mid-1980s climate change had, therefore, effectively arrived on the EU’s institutional agenda, provoking the need for new choices to be made. The Parliament had done a great deal to raise its profile within the EU but was (and still is) only one of many governors. Attempts made by the EU institutions to develop a common response to the closely related (but politically much more high profile) problem of energy insecurity had amounted to little following the global oil crisis in the early 1970s, so the prospects for developing a new, EU-level policy on climate change were not especially good. Crucially, the EU lacked the legal competence to involve itself in energy matters, and Member States were fiercely opposed to its becoming any more involved in what they perceived to be their own sovereign affairs. In any case, climate change was still being framed mainly as an atmospheric environmental problem, not an energy security one, so the scope for hitching climate change onto the back of energy policy was not great. This view was confirmed when energy prices fell dramatically throughout the 1980s and fears of energy insecurity subsided. Consequently, the Commission concentrated on doing what it was able to – namely, identifying ways to facilitate the four freedoms by liberalising national

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energy markets. This proved to be considerably easier to achieve given the EU’s relatively stronger competences over internal market issues (McGowan 2008: 4). Although efforts were made to develop energy efficiency policy, these tended to be declaratory only. For example, in 1986 the EU adopted a non-binding target of improving the efficiency of final energy use by at least 20% by 1995 (Haigh 1996: 159). When, in 1988, it became apparent that this would not be met, the EU began to develop more detailed policy programmes such as SAVE (on energy efficiency) and ALTENER (covering renewables), on which more will be said below. Although the pace of policy development in the EU remained slow throughout the 1980s, things were beginning to change more rapidly at the international level. Crucially, the main triggers were related to climate, not to energy security. In 1987, the US government issued a proposal to create an Intergovernmental Panel on Climate Change (IPCC). Established in 1988, the IPCC was a conscious attempt to institutionalise the rapidly developing debate about climate change by moving it out of scientific realms and into the international political system (Pallemaerts and Williams 2006: 22). Encouraged by the apparent success of the 1987 Montreal Protocol on ozone depletion, the Canadian government organised a world climate conference in June 1988 to debate the science and, importantly, the policy implications of climate change. Known as the Toronto Conference, it has been described as the ‘first major international gathering to have global warming as its principal foci’ (Rowlands 1995: 74). For the first time a global emissions reduction target was suggested, to be embodied in a new international convention. Unusually hot weather in 1988 (including serious droughts in the USA) was part of sequence of anomalously warm years, and seemed to confirm – at least to non-scientists – that the climate was indeed changing (Rowlands 1995: 75). It certainly did enough to convince policy makers to adopt what became known as the Toronto Target: a 20% reduction in CO2 emissions by the year 2005. In turn, this triggered a search for suitable policy measures (Bodansky 2001: 27), directly informed by the work of the newly established IPCC. In Brussels, the EU institutions quickly began to prepare their response. In July 1988, the Commission created an inter-service group to ‘elaborate … preliminary ideas’ about ‘possible Community action in respect of the “Greenhouse Issue”’ (COM (88) 656: para. 1). This fed into the Commission’s very first communication on climate change (COM (88) 656). Addressed to the Council, it was primarily a stocktaking exercise. Although it did not offer any firm policy recommendations and maintained that emission reductions were not a ‘realistic objective’ (quoted in Skjærseth (1994: 26), it was notable in at least two important respects. First, it effectively marked the commencement of formal climate policy making in the EU (COM (88) 656: para. 50). Climate change was, in other words, now firmly on the EU’s institutional agenda. Although no goals had been agreed, it opened the door to

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potential harmonisation in the future (Wynne 1993: 108–9). Secondly (and related to this) it demonstrated the Commission’s eagerness to be fully involved in policy making both within the EU and, perhaps even more importantly, in the emerging negotiations with other countries. The Commission’s communicaton (COM (88) 656) made no mention of any prior request from the Council for information; it appears to have been the Commission’s own autonomous response to the Toronto target (Wynne 1993: 108). Having fought hard to gain a seat for itself at other international environmental meetings including ozone depletion, it fully expected to be involved in climate policy making (Sbragia and Damro 1999). However, in its reply to the Commission’s communication the Council firmly underlined the need to respect the informal norm of subsidiarity, in terms of both internal and external policy making (COM (88) 656: Annex 6). In other words, although it accepted the Commission’s request to be involved at both levels, it would only be in ways that supported national decision making. So, even in these very early exchanges between the EU institutions, one can detect recognisable echoes of the very same leadership aspirations, policy choices and difficult governance dilemmas that complicate contemporary climate change policy making in the EU. 1988–1992: the EU’s first bid for international leadership In this phase, policy-making activities intensified greatly at all levels of governance. Following the European Council’s Rhodes Declaration in December 1988 (Wagner 1997: 304) (see Chapter 1), the Commission brought together the most directly affected DGs to explore appropriate policy options and instruments in more detail. Nevertheless, many of the most significant international initiatives continued to be made by particular Member States, rather than by EU institutions. For example, in November 1989 the Dutch government hosted the first high-level intergovernmental meeting in Nordwijk. This conference did not establish any concrete targets, but identified many of the key legal principles – such as states having ‘common but differentiated responsibilities’ – that eventually underpinned the FCCC (Pallemaerts and Williams 2006: 24). Just as importantly, it marked the emergence of two distinct political blocs, one pushing for firm targets and timetables according to the Montreal Protocol model (essentially the EU plus Canada and New Zealand), the other (namely the USA, Japan and the former Soviet Union) questioning the need for action because of uncertainties in the science (Bodansky 2001: 29) and stressing the need for ‘no-regrets’ policies.1 These two positions were subsequently played out in the Intergovernmental Negotiating Committee (INC) that had been established by the UN in 1990 to prepare an international climate convention. The hope was that this would be ready for signature at the June 1992 ‘Earth Summit’ in Rio (Pallemaerts and Williams 2006: 27).

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Following the Toronto meeting, a number of more environmentally ambitious states in Europe continued to force the pace by adopting domestic emission reduction targets. Sweden in 1988 was soon followed by others, including the Netherlands (1989) and the UK (1990) (Paterson 1996: 40). As one of the two largest emitters in the EU (see Chapter 1) and a long-time sceptic of EU involvement in environmental affairs, the UK’s pledge (made in May 1990) to stabilise its CO2 emissions at 1990 levels by 2005 (Haigh 2008: Release 33, 14.1–1) was particularly important. Denmark and Italy set similar targets the same month (Paterson 1996: 40; Schreurs and Tiberghien 2007: 32). By the autumn of that year, the majority of Member States had established national emission reduction plans and/or targets (Costa 2008: 534). Yet there remained no common EU target. Against this background, the Commission’s recommendation (made in March 1990) to consider a collective ‘1990 by 2000’ stabilisation target worked with the grain of evolving state preferences (Skjærseth 1994: 26–7). In June 1990 – a few months prior to the publication of the IPCC’s First Assessment Report – the European Council built upon these unilateral statements and called for the early adoption of EU ‘targets and strategies for limiting emissions’ of greenhouse gases (European Council 1990: Annex II: 22) (emphasis added). At the time, the EU was the only party to have even floated the idea of making reductions, even though it conspicuously failed to formally commit itself to achieving any or identifying any policy measures. Heads of State also pledged that the EU would ‘use more effectively its position of moral, economic and political authority to advance international efforts to solve global problems’ (European Council 1990: Annex II: 22). The EU’s leadership aspirations were, it seems, rapidly becoming more ambitious and more concrete. Building on good links with the Italian Presidency of the EU during the second half of 1990, the new Environment Commissioner (1989–1992) Carlo Ripa di Meana pushed the rest of the EU to adopt an ambitious policy stance in advance of the Second World Climate Conference, to be held in Geneva in November of that year (Grant et al. 2000: 122). A former Green MEP and an ardent integrationist, he believed that EU leadership in this area would deepen political integration within Europe as well as enhance the EU’s credibility overseas (Jachtenfuchs and Huber 1993: 43). The key question was whether his spirited bid for stronger EU powers would motivate a sufficient number of Member States. Initially, the Council and the Commission seemed keen to march in tandem. Both Ripa di Meana and the Commission President’s Forward Studies Unit saw climate change as an opportunity to demonstrate the EU’s identity as an international actor, a position supported by German and Dutch governments (Sbragia and Damro 1999: 66). Following the informal norm of consensus, the day before the Geneva conference, the Council organised its first ever joint meeting of energy and environment ministers to hammer

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out agreement. It reached a common position supporting Ripa di Meana’s bid to stabilise the EU’s collective emissions at 1990 levels by 2000. This institutional innovation was, as Sbragia (2000: 313) argues, part of a conscious attempt to expand the EU’s international presence by presenting a united face to the rest of the world. The EU freely admitted that other parties were not able to commit themselves to this objective but pushed on regardless. It also said that its pledge was contingent upon other parties (principally the USA) offering to do the same (Haigh 1996: 161). As Grubb (1995: 43) subsequently pointed out, it was actually not that ambitious: when combined, the unilateral targets set by the largest Member States would, if achieved, ‘almost suffice to achieve… stabilisation across the EU’. But it was still far more ambitious than other actors were offering, especially given that EU emissions were predicted to rise by up to 15% in this period under business as usual (Skjærseth 1994: 25). Most importantly of all, though, the Council requested the Commission not only to explore, but also formally to propose new policies to achieve the new stabilisation target. Climate change was, in other words, not just on the EU’s institutional agenda, but beginning to trigger concrete governance responses. However, underneath the EU’s common position at the Geneva conference were deep divisions between the greener Member States (e.g. Denmark, Germany and the Netherlands), which had stricter national targets, and the cohesion states (Greece, Spain and Portugal), which either had weaker targets or had none at all (for details, see Skjærseth (1994: 34) and Chapter 4). Significantly, the joint Council stabilisation commitment only related to targets and long-term aims, not to the ‘policies and measures’ (Article 3, FCCC) to achieve them (Oberthür and Kelly 2008: 7). Consequently, critics dismissed it as an ‘ambiguous supranational concoction’ (Wynne 1993: 110) which ‘took the place of internal [EU] policy for a long time’ (Pallemaerts and Williams 2006: 43). However, it served its immediate purpose which was to give a fillip to international negotiations, which were scheduled to start at the very first INC session in Chantilly in February 1991. Even more importantly for our purposes, slowly but surely it forced the EU to confront the vexed question of how far to align national policies to support it. Importantly, this shift in focus – from targets to policies and measures – required new choices to be made and dilemmas to be confronted. Thus far, the development of policy within the EU had proceeded ‘remarkably rapidly and smoothly’ (Skjærseth 1994: 27). There were a number of reasons for this. First, the majority of states continued to believe that harmonising targets would not necessarily require the harmonisation of national policies and measures. Second, the entry into force of the Single European Act in 1987 finally put EU environmental policy onto a solid legal footing and confirmed the EU’s somewhat ambiguous (see Chapter 2) role in external environmental negotiations. By the 1980s, the EU had also successfully identified a grand projet – the internal market programme – that united

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the Member States, and in which strong environmental protection was regarded as logical and necessary. Moreover, in 1988, the Environment Council finally secured agreement on the Large Combustion Plant Directive after years of bruising negotiations. The feeling – at least within the Commission’s DG Environment – was that its complex internal burden sharing agreement to address the acid rain problem (see Chapter 4) could be transplanted into the area of climate change. However, at the international level other parties remained at best only mildly supportive of the EU’s new stabilisation target and at worst ‘openly hostile’ to it (Yamin 2000: 49). Undeterred, in November 1990 the Commission produced a draft Community Action Programme to Limit CO2 Emissions (European Commission 1990). This claimed that the latest energy-economy model runs indicated that fulfilling the new target would in fact require a 15%–20% reduction in emissions. Conscious of a nascent cost–benefit dilemma, it added that such a reduction could be achieved at relatively low economic cost, a claim that Skjærseth (1994: 41) described as ‘quite optimistic’. The draft programme included a long list of policy ideas on topics as varied as renewable energy, energy efficiency and transport (Wagner 1997: 313). Over the course of the next few months, subsequent drafts were circulated around the Commission’s DGs. One of the Commission’s ideas, strongly supported by the Dutch Presidency in the second half of 1991, was to follow the acid rain example and – as noted above – adopt a directive that allocated emission reductions in a ‘top-down’ fashion. However, as explained in Chapter 4, this failed to secure support in the Council and was quickly abandoned (Haigh 1996: 163). Consequently, the focus shifted to other ways to allocate mitigation costs, for example via the Cohesion and Structural Funds (Jachtenfuchs and Huber 1993: 49) or an EU level carbon/energy tax. The latter was seen as being more market-friendly but it too ran into opposition from some Member States, the business community and even other DGs (Liberatore 1995). Industry in particular was fiercely opposed – The Economist reported that it was the most heavily lobbied proposal that the Commission had ever produced (quoted in Paterson (1996: 88)). These internal political difficulties were immediately seized upon by the US government, which claimed that the EU’s stabilisation target was nonsensical because it was not underpinned by common policies (Paterson 1996: 89). As the Rio Conference loomed into view, Environment Commissioner Ripa diMeana attempted to force a consensus by threatening not to attend if the EU failed to adopt strong internal policies and measures. Just prior to Rio, the Commission finally launched an integrated package of proposals. These covered four main areas (Haigh 1996: 164): *

*

A framework Directive to conserve energy and improve energy efficiency (within the existing SAVE programme); A Decision to support the development of renewable energies (ALTENER);

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A Decision concerning a monitoring mechanism for CO2 emissions; and A Directive to introduce a combined tax on the carbon/energy content of fuels.

The first three were relatively uncontroversial, but the fourth – even in a massively diluted form – ultimately proved far too radical for the majority of Member States to stomach. Because all four were based on Article 130 of the Single European Act, they had to be adopted on the basis of a unanimous vote.2 As the Council was effectively split down the middle on the centrepiece of the Commission’s package – the tax – the EU’s first bid for international leadership quickly began to unravel. When, on 26 May 1992, the Environment Council failed to agree the tax proposal, Ripa di Meana resigned in a fit of pique, leaving the EU delegation to travel to Rio with an ambitious stabilisation target but no internal policies and measures to deliver it (Skjærseth 1994: 32). However, all was not lost. Despite fears that a deal would prove impossible, during the final INCs, the UK (working unilaterally rather than with the EU) managed to agree a form of wording in Article 4 (‘commitments’) that enabled the US government to sign the FCCC in Rio (Johnson 1993: 79). Although widely criticised at the time for lacking strong, long-term targets, the FCCC did manage to establish a basis for continued negotiation (Sjöstedt 1998: 235). In large part this was testimony to the USA’s insistence on addressing the more ‘process-oriented’ elements such as scientific review, non-compliance and monitoring (Andresen and Agrawala 2002: 46), in addition to the EU’s forte: long-term targets and timetables. The EU signed and later ratified the FCCC even though it still lacked a coherent internal strategy to implement it, a situation that legal commentators described as ‘fluid and ambiguous’ (Macrory and Hession 1996: 56). In some respects it hardly mattered, because the FCCC did not contain any specific and binding targets. However, if and when the time came to add these, the EU and its Member States would have to agree who was responsible for what (Sbragia and Damro 1999: 56). In other words, although choices were made, the EU had merely delayed confronting crucial level and scale dilemmas. Before moving on to the third (post-Rio) phase, it is worth dwelling a little more on the third item in the Commission’s package: the monitoring mechanism for CO2 emissions. After the demise of the tax proposal, this effectively became the EU’s only climate policy (Haigh 1996: 166). In some respects, it did little other than transpose general reporting obligations into EU law ‘with no objective of harmonising national legislation’ (Pallemaerts and Williams 2006: 43).3 Significantly, however, the EU’s implementing legislation (Decision 93/389/EEC) also required Member States to ‘devise, publish and implement national programmes’. From the Commission’s perspective, this again helped to move the terms of the internal

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debate on from targets and towards the common policies and measures that could deliver them (Haigh 2005: Release 27, 14.3–1). Monitoring and reporting requirements, subsequently revised and strengthened in 1999 (Decision 93/389/EEC) and 2004 (Decision 280/2004/EC) have allowed the Commission to conduct ‘distance to target’ analyses, and raise the alarm if deficiencies in national programmes jeopardise EU targets. Interestingly, such detailed reporting requirements regarding policy measures and their effects are unusual in terms of general EU policy practice (EEA 2001). 1992–1997: coming to terms with a widening gap between targets and action In the wake of the Rio Earth Summit, hopes for strong EU (and therefore international) climate policies quickly receded. DG Environment’s former DirectorGeneral reported that the EU had arrived in Rio ‘in a state of considerable shock’ (Johnson 1993: 53). The failure of the tax proposal and Ripa di Meana’s departure had certainly sapped its enthusiasm. However, it had received a far worse blow on the very eve of the conference, when the Danish electorate voted down the Maastricht Treaty. While Europhilic politicians seized on the (then relatively unknown) informal norm of subsidiarity to allay fears that the EU was becoming too large and too involved in ‘national’ affairs, several Member States drew up ‘hit lists’ of legislation for repeal or possible repatriation to the national level (Jordan 2000). Very quickly environmental policy – and with it the fledgling policies on climate change – became the lamb which the then Commission President, Jacques Delors, seemed quite prepared to sacrifice to save the wider integration process. Given these circumstances, it was not entirely surprising that the EU’s internal climate change policies became bogged down after Rio. In fact, the situation became so bad that six of the greener Member States threatened to withhold their support for the EU’s ratification of the FCCC unless the rest dropped their opposition to the tax proposal. The UK (followed later by Germany) refused to be held to ransom and ratified it unilaterally. A ‘curious side show’ this may have been (Haigh 1996: 167), but it powerfully revealed the depth of the splits inside the EU. Thereafter, support for the tax proposal slowly fizzled out as the European economy slipped into a deep recession (Grant et al. 2000: 124). It was eventually withdrawn in 2002 (Haigh 2008: Release 33, 14.2–2), finally laying to rest Ripa di Meana’s dreams of international leadership. Meanwhile, two less controversial elements of his climate package – ALTENER and SAVE – fared little better. The renewable energy Decision (93/500/EEC – ALTENER) was adopted in 1993, but owing to Member State reluctance it included very modest targets and far less funding than the Commission had originally hoped for (see Chapter 5). Throughout the 1980s, the EU had adopted several pledges to

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increase the share of energy supply from renewable sources, including biofuels (Matláry 1997). Under the ALTENER Decision, more precise – but still indicative – targets were eventually established, which Member States were encouraged to take into account when framing their national policies. These included increasing the share of energy supply from renewables from 4% to 8% (1991–2005) and securing a 5% share of the road fuel market for biofuels.4 Turning to SAVE, the EU’s efforts to improve energy efficiency in fact dated back to the 1970s. The emergence of a new problem – climate change – appeared to give the Commission a new opportunity to move further into this area. It had ambitious plans for EU-level standards covering buildings, household appliances and vehicles, but in 1992 eventually proposed a broad framework-type directive, which simply required Member States to establish national energy efficiency programmes. As originally proposed, this directive would have contributed as large an emission cut as the carbon/energy tax (ENDS No. 222: 41). But even this was severely truncated to fit Member State demands for greater subsidiarity (Haigh 1996: 166). Detailed requirements covering the inspection of cars, homes and businesses were stripped out, no quantitative targets were set, and the content of the implementing programmes was left to the discretion of Member States (ENDS No. 252: 23). When SAVE I eventually expired in 1995, the Commission only managed to secure support for an extension by focusing it on traded products, where its competence to act was more secure (Grant et al. 2000: 128). Hopes that the USA might seek to emulate (or even better) the EU’s stabilisation target grew slightly in January 1993 when a Democratic President, Bill Clinton, assumed control of the White House (Schreurs 2004: 213). However, when the Republicans regained control of Congress in late 1994 it ‘virtually bur[ied] any hope of support for stringent climate policy in the US legislative branch’ (Oberthür and Ott 1999: 44). In July 1997, the Senate passed the Byrd-Hagel resolution, which made the USA’s ratification of any new climate agreement dependent on developing country participation. This certainly removed any lingering doubts in European minds that if there was ever to be an emissions reduction protocol under the FCCC, the EU would have to raise its game and lead the world towards it (Schreurs 2004: 215). But with much of the world still mired in recession, the only parties calling for new commitments were the small island states (Oberthür and Ott 1999: 44) – hardly a major force in international politics. With the energy tax proposal dead in the water, internal policy discussions in the EU would have probably remained dormant had the EU not committed itself at Rio to host the very first Conference of the Parties (COP) in Berlin in March 1995. Against expectations, hopes began to grow after the UK and Germany announced their readiness to cut their emissions in the period to 2010. This change of heart was a reflection of the fact that emissions in both countries (and thus the EU as a whole)

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were declining, albeit for non-climate policy reasons (see Chapter 1). As the primary host, Germany was under added political pressure to make the meeting a success. It was able to do so by exploiting its Presidency of the Council to work bilaterally with the developing states and environmental NGOs to put pressure on the USA and OPEC to sign what became known as the Berlin Mandate (Oberthür and Ott 1999: 46–7). This aimed to extend the lifetime of the FCCC beyond 2000 by calling for a protocol to be adopted at the December 1997 COP in Kyoto. Although this did not strike many commentators as much of an achievement, it did enough to keep things ticking along (Yamin 2000: 50). Given the difficult circumstances, Oberthür and Ott (1999: 47) have gone as far as to identify it as a pivotal but greatly overlooked moment in the development of the international climate regime. In June 1996 (and immediately prior to COP 2, held in Geneva in July), the Environment Council agreed to seek ‘significant overall reductions’ in emissions after 2000 (Environment Council 1996: para 8). This wording was important because prior to this, Member States had only countenanced the idea of a ‘limitation’ or ‘stabilisation’ of emissions (ENDS No. 257: 40). Even more importantly, EU environment ministers also resolved that following the publication (in 1995) of the IPCC’s ‘authoritative’ Second Assessment Report, global average temperatures ‘should not exceed 2 degrees above pre-industrial levels’ and that this target ‘should guide global limitation and reduction efforts’ (Environment Council 1996: paras. 3 and 6). Although the precise origins of, and scientific rationale for, this aim have been much debated (see, for example, Tol 2007), it has proved to be enduringly important for the EU. Although its emission reduction targets have changed since 1996, 2 oC has remained its overall long-term objective. None the less, in 1996 there remained very significant differences of opinion on its implications, with the greener states (now including the UK) favouring emission reductions, and France, Sweden and the cohesion states unwilling to go beyond the status quo (ENDS No. 257: 40). At COP 2, the Clinton administration announced that it was ready in principle to enter into quantified and legally binding emission reduction targets. However, this was subject to a massive proviso: it wanted as much ‘flexibility’ – through the inclusion of carbon sinks, ‘joint implementation’ and emissions trading – as possible. Although hugely relieved that the USA finally appeared to be coming on board, its calls for flexibility raised a new dilemma within the EU. Although in principle emission reductions are equally effective regardless of where they occur, the EU was deeply suspicious that opening the door to too much flexibility would dilute the ‘environmental integrity’ of the FCCC (Oberthür and Ott 1999: 188–9), and potentially allow large emitters to evade their responsibilities. Importantly, the US position introduced new concepts and instruments into the negotiation process, on which the EU then had to reach a common position. In an attempt to get to grips with these and other equally divisive issues (Oberthür and Ott 1999: 51), it created new

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internal coordinating machinery in the form of an Ad hoc Group on Climate Change, serviced by an Expert Group on Policy Measures (Oberthür and Ott 1999: 65–6). Their appearance indicated that the Council was becoming more deeply committed to new policy development than it had been prior to and immediately after Rio. These groups met monthly to review existing policies, explore new proposals and prepare common positions. But this framework nevertheless remained resolutely intergovernmental in nature; a request from the Commission for a formal mandate to coordinate the EU’s position during the Kyoto negotiations was firmly turned down by the Council (Oberthür and Ott 1999: 66). The new 2 oC target and associated pledge to make emissions reductions after 2000 immediately provoked the need for another choice: how to allocate them among the various Member States. During the autumn of 1996, the Commission tabled a number of ideas, but each one was rejected by the Member States, meeting first under the Irish and then under the Italian Presidency – two states with less progressive climate policies. Eventually, the Dutch Presidency commissioned its own experts to propose an equitable solution, which eventually became known as the Triptych Approach (see Chapter 4). With the Kyoto COP just around the corner, the EU found itself under intense pressure to do something which it had failed to do in the run up to Rio: agree an internal burden sharing arrangement. It finally achieved this at the March 1997 Environment Council meeting (Ringius 1999: 151). The Council’s suggestion that industrialised country parties should achieve a 15% reduction by 2010 confounded expectations and marked another landmark in the slow and stepwise development of EU and international climate policy. However, on closer inspection, when combined the individual Member State targets only achieved two-thirds – or about 9.2% (Oberthür and Ott 1999: 67) – of the 15% target. This was because only the Dutch, Austrians, Danes and Swedes fully accepted the figures contained in the Triptych model (ENDS No. 266: 48). So once again, the EU’s common position was more apparent than real. When the EU played what it perceived to be its new ‘trump card’ at the international negotiations (Oberthür and Ott 1999: 55), it reportedly received a rather cool response from other parties, some of whom doubted the authenticity of the -15% target. During the remainder of 1997, the members of the EU Troika (namely The Netherlands, Luxembourg and the UK) therefore had to work hard, using their links with the developing world to build a sufficiently large coalition around the idea of specific emission reductions for industrialised countries (Oberthür and Ott 1999: 63). Thus, although there is no denying that the EU had, by 1997, begun to play a leading role in international climate negotiations, whether it could actually deliver on its new promises remained a very moot point. Here, the Commission knew that it was starting from a very low base and so focused on areas where support from the Council was likely to be forthcoming. For example, during the 1990s various

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daughter Directives were added to the 1992 framework Directive (under the SAVE programme) on energy labelling of various traded products (92/75/EEC). These covered seemingly mundane things such as electric ovens, refrigerators and other large white goods (Haigh 2008: Release 33, 14–6–1). Although these were hardly the stuff of high diplomacy or international political leadership, regulations on traded products are very much the Commission’s forte and the EU was able to secure agreement on them fairly quickly. Of potentially far greater importance was the launch of the Commission’s strategy to reduce CO2 emissions from cars (COM (95) 689). Discussions on how to tackle emissions from road transport (one of the fastest growing sources of emissions) had started in the early 1990s (ENDS No. 252: 37–8; Wagner 1997: 319), but had run into concerted opposition from a very powerful network comprising vehicle manufacturers and suppliers (Wurzel 2002). The growing internal and external political pressure to develop credible internal policies emboldened the Commission and the Environment Council to confront this network with a package of policy measures designed to improve vehicle efficiency by 25% in ten years. The centrepiece was to be an innovative voluntary agreement between the Commission and vehicle manufacturers, eventually signed in 1998 (Haigh 2000: Release 17, 14.8–3/4). In spite of these achievements, the EU still had a significant ‘credibility gap’ on its hands, between what it was promising in international discussions and what it was capable of delivering by way of common policies and measures (Oberthür and Kelly 2008: 7–8). Indeed, EU policy still constituted little more than the sum of national policies; hardly a solid base from which to launch a fresh bid for international environmental leadership. 1997–2001: the EU’s second bid for international leadership After 1997, the debate about climate change inside the EU began to develop more quickly. This shift was facilitated by large and influential actors who were beginning to proclaim that the main discussion point was not the scientific basis of climate change, but the timing and stringency of policies to address it. For example, in May 1997, the CEO of oil giant BP announced that climate change could no longer be denied and pledged to invest more of his company’s resources in renewables (Rowlands 2000: 339). Soon after, other large oil companies made similar announcements (Oberthür and Ott 1999: 75). The very same month, a ‘New’ Labour government was elected in the UK, with a manifesto commitment to reduce CO2 emission by 20% by 2010. This target was on a par with pledges made by the new Red–Green coalition government in Germany. Significantly, these pledges went much further than their respective targets in the EU’s new burden sharing agreement and well beyond what Japan and the USA were offering prior to the

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Kyoto COP (COM (97) 481; Oberthür and Ott 1999: 88–92), by then only a few months away. Much has been written about the deal brokered at Kyoto (see, for example, Grubb et al. 1999; Oberthür and Ott 1999). Much of it argues that without concerted pressure from the EU, it would have been considerably weaker. It is true that in order to achieve the global -5% greenhouse gas emission reduction target for the period 2008– 12, the EU had to commit to achieving a -8% reduction (still far less, it should be said, than the -15% it had originally offered), whereas the USA and Japan accepted targets of -7% and -6%, respectively. These numerical targets were immensely important to the EU, as they fitted its traditionally regulatory approach to governing. So too was the right it secured to employ its internal ‘bubble’, or burden-sharing arrangement, to share out its -8% target among the Member States (Oberthür and Ott 1999 137, 141).5 However, the EU was also forced to make some very important compromises. These included: accepting the differentiated targets mentioned above (instead of common standards for all Annex I parties);6 agreeing to a larger basket of gases including hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6);7 accepting flexible mechanisms;8 adopting different baselines;9 and accepting multi-year averaging with compliance based on performance over a five-year period (2008–2012). So in the end, everyone came away from Kyoto with something (Andresen and Agrawala 2002: 47). The problem was that the deal was so fiendishly complicated and hedged around with conditions, that it would take everyone – including the EU – years to work out how to implement it. It also became painfully apparent that the deal done at Kyoto had not resolved the tensions between different governors within the EU. The immediate problem was that the EU had originally pledged to achieve a 15% reduction covering three gases, but had now agreed to achieve an 8% reduction covering six gases (COM (98) 353 final: 4–5), not to mention a complicated skein of rules governing the operation of the new flexibility mechanisms. As explained in Chapter 4, the new reduction target then had to be painstakingly re-allocated among the Member States, with only the UK willing to shoulder a greater cut. Thus, having confronted one set of cost–benefit dilemmas in the run-up to Kyoto, more quickly emerged. This was chiefly because no governor – not even the most unenthusiastic cohesion state – could possibly deny the need for new EU-level policies to meet the Kyoto target. Unfortunately, this was not a particularly propitious moment for the Commission to move ahead with proposals for ‘common and co-ordinated policies and measures’.10 Hitherto progressive states such as Germany were ‘on the retreat’ after Kyoto (Oberthür and Ott 1999: 148), as they began to contemplate the economic costs of taking early and ambitious action. Because of Kyoto, important choices nevertheless had to be made and the Member States were in no mood to allow the Commission to make them. It was deeply symptomatic that

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the new burden sharing deal was (in common with its predecessor) not based on a formal proposal from the Commission. The Commission eventually submitted its ideas for new policies in June 1999 (COM (1999) 230), nearly eighteen months after Kyoto. Despite growing evidence that emissions in the EU were beginning to rise again (COM (1999) 230: 2) and other than some preparatory work on a new emissions trading system and reminding states to ratify the Kyoto Protocol, it actually offered little of substance. The Commission said it had ‘already developed a wide range of policy initiatives’ in the past, only to find itself ‘confronted with deadlock in the Council’ or given resources ‘that are substantially less than required for a proper implementation’ (COM (1999) 230 final: 4; see also COM (2000) 88: 3). In these words, one can sense the feeling of frustration within the Commission. None the less, sticking with the policy status quo was not an option. For one thing, complex internal re-adjustments would eventually be required to absorb the new flexibility mechanisms. These were, the Commission helpfully pointed out, ‘fundamentally different’ from the way in which the EU had traditionally arranged its environmental policies (COM (1999) 230: 14). For another, new modelling work by the Commission again predicted that relevant emissions were expected to rise by between 6% and 8% relative to 1990 levels (COM (2000) 88: 3). However, the Commission continued to struggle to make progress ‘in the face of reluctance from the Member States to agree new policy measures’ (Collier 2002: 183). To make matters worse, a new line of conflict had opened up after Kyoto as some Member States woke up to the possibility that they might overshoot their burden-sharing commitments. The Environment Council – led by Germany – had previously agreed that Annex I countries should meet their targets primarily through domestic action (ENDS No. 290: 51). But during the spring of 1999, some Member States – chiefly the Netherlands and Sweden – began to fight for a much larger role for Kyoto flexibility mechanisms, in place of domestic action (European Voice 12–19.5.99: 12). By the end of 1999, the Commission’s initial suspicions that the US government’s real motive for introducing flexibible mechanisms was to bog down the international policy process started to look rather well founded. During the remainder of this phase, other events continued to test the EU’s determination to lead the world on climate change. On the agenda of COP 6 in The Hague (December 2000) were demands from the US government to allow credits for carbon sinks to be counted as emissions reductions, a demand strongly opposed by some EU states. Similarly bitter conflicts emerged around issues such as compliance and the provision of financial assistance to developing countries. When The Hague talks eventually collapsed (see Chapter 1), there were many recriminations as well a general feeling that the agenda had become far too big to negotiate in one sitting (Grubb and Yamin 2001). The USA was widely blamed for the collapse, whereas the President of the COP, Jan Pronk, famously identified the EU as ‘the

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only game in town’ (Bretherton and Vogler 2006: 108). In reality, the EU was itself partly to blame: its own internal coordination mechanisms had fallen into ‘disarray’ during the meeting (Vogler 2005: 840), owing in part to the French Presidency’s failure to successfully manage the Troika arrangement (Oberthür and Kelly 2008: 12) but also to the willingness of some Member States (allegedly the UK) to open up bilateral negotiations with the USA (Grubb and Yamin 2001: 263). A few months later, in March 2001, the newly elected Bush administration announced that it would not ratify the Kyoto Protocol, leaving the EU to confront a momentous timing and sequencing dilemma: whether to stick with the protocol ratification process or strike out on a new path. At the June 2001 Environment Council in Gothenburg, Ministers took the ‘momentous decision’ to opt for the former (Bretherton and Vogler 2006: 108). Even then, the Protocol could not enter into force unless one other major polluter – effectively either Russia or the USA – ratified it (Oberthür and Ott 1999: 305). In order to secure that, the EU would have to resolve its internal squabbles and reach out to these states in a spirit of constructive dialogue. Meanwhile, back in Europe the development of new internal policies continued to inch forward. For example, in March 1997 the Commission published plans to harmonise existing fuel tax rates, assuming that this would be easier than returning to the idea of a new EU-wide carbon/energy tax. Some hope. They were finally adopted six years later in 2003 (Directive 2003/96/EC) and ‘in a much weakened form’ (Haigh 2008: Release 33, 14.2–3). A Directive to reduce the landfilling of waste (and thus methane emissions) was adopted in 1999 but this was mainly motivated by waste management considerations (Oberthür and Kelly 2008: 40). Meanwhile, another Directive (2001/77/EC) was adopted to promote the use of electricity from renewable sources, but the national-level targets remained in the same indicative form as they had in 1992 (Haigh 2004: Release 26, 14.9–1). Although voluntary agreements with European, Korean and Japanese vehicle manufacturers reached in 1998 and 1999 promised to reduce average emissions from new cars, some questioned the wisdom of relying on private actors to govern themselves without the threat of sanctions (see, for example, WWF 2000). Moreover, emissions from the transport sector as a whole continued to rise. Confronted with the need to deliver on its own Kyoto commitment to keep the international policy process moving, in March 2000 the Commission announced a new, twin-track approach (COM (2000) 88 final: 4). The first track involved working closely with a broader range of actors, via a multi-stakeholder process known as the European Climate Change Programme (ECCP). During its first stage (2000–1), ECCP I identified 42 possible policies and measures. During its second stage (2001–3), many of these were worked up into concrete proposals (Pallemaerts and Williams 2006: 45) that were eventually adopted at EU level (see below). Second, the Commission pushed ahead with the establishment of an internal

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emissions trading scheme. As explained in Chapter 6, these efforts quickly culminated in the publication of a legislative proposal. 2001–2005: strengthening and extending the international policy framework Following the US withdrawal from mainline negotiations, the pace of international policy making began to pick up. At the resumed (or ‘bis’) COP 6 in Bonn (July 2001) parties agreed on some of the detailed aspects of the Kyoto Protocol (e.g. relating to the flexibility mechanisms, compliance and carbon sinks) and created new funds to assist developing countries. In order to secure agreement, the EU was forced to accede to demands (principally from Japan) for total flexibility (i.e. no cap on the amount of emissions reduction via flexible mechanisms) and for extra finance (from developing countries) (Schreurs 2004: 218). Environment Commissioner Margot Wallström tried to put a positive spin on these concessions, claiming that the EU had ‘shown the United States, our citizens, communities and NGOs that we could have an agreement without the US’ (ENDS Europe Daily 23.7.01). Later on in 2001, COP 7 (Marrakech) finalised most of the remaining operational aspects of the Kyoto Protocol, thus paving the way for ratification. The EU ratified as a single bloc in 2002,11 but this still left open the by no means insignificant matter of Russia’s involvement. The EU worked hard to induce the Russians to ratify by offering to support their (eventually successful) application to join the WTO (Douma 2006), thus demonstrating its growing capacity to function as a single actor across a range of interrelated international issues (Bretherton and Vogler 2006: 109). When Russia’s support had been secured, some seven years after the Kyoto COP, the Protocol finally entered into force – minus, of course, the USA.12 As the Council started to act more coherently across a wider range of climaterelated issues, the Commission found it easier to have its policy proposals adopted. Part of the reason was procedural: since the ratification of the Maastricht Treaty in 1993, the European Parliament had possessed stronger powers to co-decide new environmental policies with the Council. This added a whole new dimension to internal EU politics by making it harder for the Council to block new Commission proposals. In October 2001, the Commission launched three initiatives which marked a turning point in its ability to drive forward internal policy making. The first was a communication on the implementation of the first stage of the ECCP (COM (2001) 580). This claimed that, without new policies, greenhouse gas emissions in the EU would merely stabilise at 1990 levels, whereas the Kyoto Protocol required an 8% reduction. A list of areas in which it intended to develop new polices included transport and energy. Unlike some of its earlier communications, this one exuded much greater confidence, with specific timetables, estimated implementation costs and expected emission savings. The second was a Decision to ratify the

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Kyoto Protocol and thereby formalise the previously informal burden sharing agreement (see above). The third was potentially the most innovative of all: a formal proposal to establish an emissions trading system in the EU. In just four years, the Commission had convinced itself of the merits of emission trading, even though it was, as noted above and in Chapter 6, an alien concept to the EU. Again, procedural issues played a part: a significant aspect of its appeal lay in the fact that unlike a tax, which still required unanimity and could not count on support from the Parliament, emissions trading could be adopted by a qualified majority vote. The emissions trading Directive was eventually adopted just over two years later in 2003 and its first (pilot) phase of operation commenced in 2005. By the standards set by the carbon/energy tax proposal, it was astonishingly quick progress. A series of other Directives followed in its wake, all aimed at bolstering the EU’s repertoire of climate policies and measures. Admittedly, some of these were not entirely climate-focused: the Regulation (842/2006/EC) and Directive (2006/40/ EC) limiting the emission of fluorinated gases, for example, were principally intended to tackle ozone depletion. Some of them were also not especially novel or especially harmonised. For example, the Directive setting minimum standards for the energy performance of buildings (2002/91/EC) can be traced back to the SAVE programme. This sets out a common framework for national action rather than EUwide standards.13 Finally, some of them simply brigaded together existing statutes. For example, the 2005 framework Directive on energy-using products (2005/32/ EC) drew together a series of directives that had emerged from the SAVE programme. However, it is potentially highly expansive, covering any product traded in the EU that uses energy. Crucially, it is based on the EU’s internal market powers (Article 95) and allows new standards (e.g. for different types of light bulbs, and standby modes on electrical equipment) to be updated via the comitology procedure rather than policy making in the Council – a sure indication of the emerging trend towards deeper, faster and smoother harmonisation in the area of climate change.14 At the same time as the EU’s internal policy machine was finally moving into a higher gear, steps were also being taken to prepare for the end of the Kyoto Protocol’s first commitment period in 2012. In March 2004, Heads of State asked the Commission to identify new policy scenarios and conduct cost–benefit analyses to inform their longer-term thinking (COM (2005) 35 final). These eventually appeared in a Communication published in January 2005, the title of which – Winning the Battle Against Climate Change – expressed the same growing sense of confidence and purpose. This set out the EU’s blueprint for a post-2012 world. Future policy in the EU, it argued, should seek to: broaden participation in the international policy process (notably amongst rapidly industrialising states); encompass additional policy areas with an international focus and rising emissions (namely aviation and maritime transport); underpin the development of an

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international carbon market; promote adaptation to the impact of climate change, both in the EU and abroad; and enhance technological innovation (COM (2005) 35 final: 8–9). However, it conspicuously failed to mention the EU’s traditional forte: binding targets and timetables. Environment Commissioner Stavros Dimas explained that he did not want to ‘scare off other countries [by setting] targets at this moment’ (ENDS Europe Daily 9.2.05), even though environmental pressure groups wanted the EU to commit itself to a cut of at least 30% by 2020 (ENDS No. 361: 54). However, the Commission suggested that initial cuts of around 15% would be needed to begin to achieve the EU’s 2 oC target (see above). A few months later in March 2005, in an unprecedented move, the Environment Council overrode the Commission by calling on the EU to embrace ‘reduction pathways’ of 15%–30% by 2020 and 60%–80% by 2050 (ENDS No. 363: 59; Pallemaerts and Williams 2006: 47). The second of these was subsequently dropped by Heads of State at the European Council in late March 2005 (Deketelaere and Peeters 2006: 5), allegedly due to pressure from Austria and Germany (ENDS Europe Daily 23.3.05). But in endorsing the 2 oC target, they effectively committed themselves to doing at least that (ENDS No. 363: 59). In October 2005, the Commission re-launched its ECCP. ECCP II was asked to venture into a range of new policy areas including carbon capture and storage, adaptation and transport (Damro and MacKenzie 2008: 67). Until then, transport had only been marginally affected by EU action; the foray into adaptation policy was also striking given the EU’s relatively undeveloped competence to act in areas (such as land-use planning, transport and energy supply) that stand to be directly affected by future climate change (see Chapters 7 and 8). The Commission’s entry into this area of policy reflected a shift in its broader framing of the climate change issue, which acknowledged that however successful the EU’s mitigation efforts might be, key European interests would still be threatened by the unavoidable impacts already ‘in the pipeline’ (COM (2007) 354). By the time this phase gradually drew to a close, climate change had been transformed from an issue that governors in the EU struggled to agree upon, to one that seemed to dovetail with existing commitments to pursue ‘ecological modernisation’ (Weale 1993) – environmentally sensitive economic and technological development – as well as its foreign policy ambitions. On the face of it, the 2000s were not a particularly opportune moment for such a transformation. In this period, the EU underwent a hugely complicated enlargement, incorporating 12 countries of the former Eastern Bloc, which were on the whole considerably poorer than the EU-15 and – especially in the case of Poland – significant emitters of greenhouse gases. Elites in the Council and the Commission were also highly preoccupied with conventional political issues such as growth, jobs and competitiveness, powerfully symbolised by the high-profile Lisbon process of economic renewal and the

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associated ‘Better Regulation’ agenda, which had tended to reduce the scope and effectiveness of environmental legislation (Institute for European Environmental Policy 2005). However, a slow and steady transformation was nevertheless under way: one that was pregnant with many new and difficult dilemmas. 2005–2008: complying with Kyoto and preparing for the post-2012 period With the Kyoto Protocol ratified and in force, internal efforts to implement it had to be radically stepped up. These efforts were given a greater sense of urgency by the publication of the IPCC’s Fourth Assessment Report in 2007 (Pachauri and Reisinger 2007). On the face of it, the Panel’s main message – that climate change was occurring and will cause significant impacts – was not much different from earlier reports, but it was delivered with much greater confidence and political assertiveness. Developments in the underlying science gradually began to feed through into policy analysis. Around the same time, the UK Treasury published a review of climate change economics, which captured significant global attention (Stern 2006). That it was commissioned not by the environmental ministry but by the Finance Minister and future Prime Minister, Gordon Brown, showed how climate change was not just on the institutional agenda in Europe, but well and truly in the political mainstream. Its central message, that the costs of early and ambitious mitigation action were eminently affordable compared with the costs of damage that would be avoided in the longer term, spoke directly to a number of the dilemmas analysed in this book, and provided governors with a convincing way to frame a variety of interlinked problems. In the mid to late 2000s, the EU’s growing political determination to play a leading role in relation to climate policy was reinforced by other focusing events. The first was Russia’s decision in January 2006 to temporarily sever gas supplies from the state-owned Gazprom company to its neighbour, Ukraine. This event – which was replayed almost exactly three years later in 2009 – helped to focus attention on the need to improve energy security. Those supporting greater EU involvement in national energy decisions had been highlighting this need for years, but now found a much more receptive audience. The previous year (October 2005), the UK Presidency had organised an informal meeting of Heads of State at Hampton Court that called for a single energy market in Europe with a common grid, larger stores of gas and stronger climate change policies. This meeting was seen as a watershed moment in the long and hitherto fruitless quest for a common, EU-wide energy policy (McGowan, 2008). The perceived need for greater unity was confirmed by a second focusing event in 2008: the surge in oil prices to an all-time high of nearly US$150 per barrel. A third was the decisive public vote (in French and Dutch referenda) against the draft EU

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Constitution, which had been drawn up to improve governance in the EU and make it more democratically accountable (Benson and Jordan 2008). In the ensuing vacuum, energy appeared to offer the EU an opportunity to tackle a concrete policy challenge in a way that made sense to voters. Better still, it fitted with the EU’s existing priorities, namely market liberalisation, climate protection and technological renewal. Following the Gazprom crisis, the Commission therefore produced a slew of new energy proposals, including a Green Paper (March 2006) that identified a number of possible responses including boosting renewables and increasing energy efficiency (ENDS No. 374: 44). It marked a further significant development in the EU’s attempts to develop a common energy policy (McGowan 2008: 11). Later that year, the Commission followed up with an action plan on energy efficiency which aimed to reduce consumption by 20% by 2020 (COM (2006) 545). However, on closer inspection, this plan mostly concentrated on areas where the EU’s competence was already strong (e.g. product standards) or on implementing and updating existing legislation (ENDS Europe Daily 19.11.06). Meanwhile, states continued to disagree on more fundamental matters of common policy making, such as how to deal with the integrated energy monopolies in Europe (McGowan 2008) and whether to vest EU institutions with extra competences. These differences affected the text of the Constitution’s proposed replacement, the Lisbon Treaty, which provided an explicit legal basis for energy policy but preserved the unanimity voting rule (Benson and Jordan 2008). On energy efficiency, a 2007 European Parliament report accused the Commission and Member States of ‘a serious dereliction of duty’ (ENDS No. 407: 59) with regards to the slow pace of policy development. One of the key obstacles was state power: a significant minority of Member States were deeply opposed to deeper EU involvement on subsidiarity grounds and continued to under-implement existing laws (ENDS Europe Daily 20.6.08). Meanwhile, at COP 11 in Montreal (November 2005) those states that had ratified the Kyoto Protocol were finally able to celebrate its entry into force. Two years later, at COP 13 in Bali, they went one step further and agreed to draw up a new, post-2012 agreement. However, because of the continuing splits in the international community, talks had to proceed on two tracks: one following the so-called Bali Action Plan, in which the parties to the FCCC discussed future commitments, but with no specific level of ambition; the other a ‘Kyoto track’ in which parties to the Protocol focused on new cuts for industrialised countries which, since the Fourth Assessment Report, had been assumed to be in the region of 25%–40% by 2020. The hope was that the two would eventually converge at COP 15 in Copenhagen in late 2009. In 2007, the Commission issued another report under the 2004 reporting Decision (COM (2007) 757). This demonstrated that the EU was still off course to meet its Kyoto target. Noting that emissions from agriculture, waste processing and

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manufacturing were continuing to decline, the solution was partly framed in terms of targeting the transport sector, from which emissions were growing rapidly (COM (2007) 757: 8) owing to the failure of mitigation policies (in particular the voluntary agreement with car manufacturers). The EU therefore launched a new climate strategy, which sought to push internal policy making into an even more energetic phase. In Limiting Global Climate Change to 2 Degrees Celsius – The Way Ahead for 2020 and Beyond (COM (2007) 2), the Commission called for a range of new policies to support a 20% reduction in emissions by 2020 ‘to demonstrate international leadership’, rising to 30% if other states agreed to a post-2012 global deal. With this, it tried to bring EU policy into line with the recommendations of the IPCC and the Stern review. Arriving at these figures necessitated a great deal of internal horse-trading. Environmental groups and some Member States (e.g. the UK, Sweden and Germany) had demanded considerably more (around 30%) (ENDS Europe Daily 18.12.06) whereas some of the Eastern European states fought for considerably less. Within the Commission there were equally significant splits, with Dimas pushing for an unconditional cut of 30% and the Enterprise Commissioner, Guenter Verheugen, unwilling to accept any more than 15% in order to keep European businesses economically competitive (ENDS Europe Daily 24.11.06). In the end, the Environment Council compromised on a split 20%–30% target (ENDS Europe Daily 18.12.06), but even this far surpassed that offered by any other party. In a related document, An Energy Policy for Europe (COM (2007) 1), the Commission identified a range of other potentially far-reaching sub-targets relating to: *

*

*

*

Renewable energy: a binding target that 20% of total EU energy consumption should come from renewable sources by 2020 (corresponding to about 34% of electricity) (COM (2006) 848); Carbon capture and storage: twelve large experimental installations to be in place by 2015 and all new coal plants built before 2020 to be ‘carbon capture-ready’. Those built after 2020 would have to employ carbon capture and storage (COM (2006) 843); Biofuels: a binding target to ensure that they account for 10% of total non-aviation transport fuel consumption in the EU by 2020, the longer-term aim being to move to ‘second generation’ biofuels (see Chapter 5). Energy efficiency: a non-binding commitment to reduce the EU’s energy consumption by 20% compared to 2020. This will be achieved primarily through the implementation of an Action Plan on Energy Efficiency (see above).

The need for these four was framed in terms of climate change, energy security and, interestingly, also innovation. Commission President Manuel Barroso said they would prepare the EU for a ‘post-industrial revolution’: ‘[w]e have already left our coal-based industrial past’, he continued, ‘[i]t is time to embrace our low-carbon future’ (ENDS No. 384: 26).

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Just two months later, in March 2007, these proposals were endorsed by Heads of State meeting in the European Council under the German Presidency. In a meeting otherwise dominated by economic concerns and the fate of the proposed EU Constitution, the German Chancellor Angela Merkel was credited with having pushed Heads of State to accept that climate change had to be tackled ‘effectively and urgently’ (European Council 2007: 10). The final communique also underlined the ‘vital importance’ of the 2 oC target, which Heads of State regarded as a crucial pre-requisite for the emergence of the international carbon market that many European firms were increasingly anxious to exploit. Crucially – and in a very significant break from the past – they invited the Commission to address the dilemma of cost and benefits by proposing some burden sharing ideas (see Chapter 4). Finally, they also agreed that all industrialised countries should aim to reduce their collective emissions by 60%–80% by 2050 to avoid ‘dangerous levels’ of climate change – a figure broadly commensurate with the IPCC’s advice. In November 2008, the UK adopted legislation that enshrined the 80% target in domestic law. Achieving reductions of this magnitude will require nothing less than the virtual decarbonisation of the entire European economy: a challenge of bewildering proportions. In January 2008, the Commission completed its preparatory work and launched a package of proposals of unprecedented scale and complexity. Entitled 20, 20 by 2020 – Europe’s Climate Change Opportunity (COM (2008) 30), it encompassed a mixture of interconnected elements. The word ‘opportunity’ was deliberately used to refer to the expectation of future employment possibilities, technological innovation and greater energy security. The bulk of the reduction effort (some 21%) was to be delivered by a new phase of emissions trading, lasting from 2013 to 2020. However, unlike the 2003 Directive, the Commission proposed to address level and scale dilemmas differently by capping total emissions and allocating allowances centrally, rather than allowing the Member States to continue producing their own national allocation plans (see Chapter 6). For the ‘non-trading’ sectors lying outside the ETS (e.g. transport, agriculture and waste) which together accounted for 60% of EU emissions, reductions of 10% by 2020 from a 2005 baseline would have to be achieved according to the terms of a new ‘effort sharing’ Decision. Although more modest than the cuts expected in the ETS sector, it will be challenging, as many of those involved have not been directly targeted by climate policy before. Finally, the Commission proposed that the use of flexible mechanisms would be limited to 3% of 2005 emissions for most countries, but would increase drastically if the EU eventually adopted the 30% reduction target. Significantly, the whole system would, unlike its predecessors, be based upon a formula developed by the Commission (see Chapter 4).

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The Commission also played a key role in allocating the burden of fulfilling the new renewable energy target. As the target (20%) was significantly greater than the existing rate of use (around 8.5%), a significant step change in the adoption of renewable technologies such as wind and wave energy would be required. In yet another break with the past, the overall target and the national allocations (ranging from 10% for Malta and 49% for Sweden) was deemed to be mandatory, with financial penalties for non-compliance. Moreover, states that remain on track to meet their targets would be allowed to sell newly established tradable renewable certificates to those that are falling behind. The same Directive also proposed to establish a target to increase the share of biofuels in transport fuels by 10% – despite growing disquiet about their possible indirect effects on food production and even their capacity to deliver net emission reductions (see, for example, Royal Society 2008). Another proposed Directive set out a legal framework to enable, but not finance, new carbon capture and storage facilities. Finally, a new Regulation (proposed in December 2007) was tabled to replace the failed voluntary agreement with car manufacturers and achieve a 20% reduction in CO2 emissions from new cars by 2012. This seemed to confirm a shift away from softer modes of governance towards the kind of hierachical regulation that in the 1990s would have been deemed too heavy-handed. When these were formally launched, Commission President Barosso raised political expectations even higher by identifying climate change as ‘the ultimate political test for our generation’. He again invoked the Commission’s ‘ecologically modern’ framing of the package, which he promised would ‘create thousands of new businesses and millions of jobs in Europe’ (European Commission 2008: 1). Barack Obama’s 2008 election as US President offered renewed hope to those in the EU hoping for a strong deal in Copenhagen. During the US election, he had repeatedly pledged to reduce emissions to their 1990 levels by 2020 and establish a federal emissions trading system, although Congressional support was not guaranteed. Unusually, the Commission hoped to achieve first-reading agreement with the Parliament on the entire package by the end of 2008, so that it could be adopted in time for COP 15 in Copenhagen in late 2009. This was always going to be politically very difficult, but became even more so when the world economy started to slip into a deep and globally synchronised recession that made cost– benefit and timing–sequencing dilemmas in particular more acute. Predictably, some of the cohesion and Eastern European Member States fought for wholesale changes to make the entire package less economically burdensome. The Berlusconi government in Italy also proved an obstacle (ENDS Europe Daily 22.10.08). The French Presidency, however, forcefully pushed ahead in order to secure a quick agreement with MEPs, even though it meant foreclosing debate within the Parliament.

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Although Barroso said the package was ‘not a luxury the EU can forgo’ (ENDS Europe Daily 15.10.08) and the Parliament worked hard to maintain the overall level of ambition, eventually both institutions had to make big concessions to well-mobilised industrial lobbies. For example, the revised Emissions Trading Directive (2009/29/EC) was amended to grant more free allowances to sectors at risk of carbon leakage and delay full auctioning until 2025. Industrial plants and power stations covered by the scheme would be allowed to achieve up to 50% of their emissions reduction effort by buying overseas carbon credits, potentially undermining the incentives for domestic emissions reductions. As a sweetener to former Eastern Bloc Member States, 12% of ETS revenues would be used for a ‘solidarity fund’ to help finance their transition to cleaner energy production. For its part, the Effort Sharing Decision (406/2009/EC) was also amended to allow greater use of flexible mechanisms. Elsewhere, the proposed 2012 compliance deadline was put back to 2015 in the new law on car emissions (Regulation (EC) No 443/2009). By contrast, a strong renewable energy Directive (2009/28/EC) was adopted relatively quickly, despite concerted opposition from some states, albeit without the system of fines originally envisaged. The Parliament also secured a significant victory when it established a funding mechanism for a dozen new carbon capture and storage plants, supported by setting aside some of the proceeds from auctioning the ETS allowances. This was a considerable achievement: in the past, Member States have always fiercely resisted any attempt to influence how they spend their revenues. Although containing significant compromises, when judged against what had been achieved in the previous 20 years, the adoption of six major pieces of climate policy – four of them in less than a year – was a momentous development, especially given their politically contentious nature. In the end, all relevant actors seemed to accept that EU international credibility and prospects for a deal at Copenhagen depended on the package being adopted in its entirety. Having achieved that, the Commission started preparing for the December 2009 COP by issuing plans to raise new funds to pay for climate change mitigation and adaptation activities in developing countries. Securing their participation was seen as vital to achieve an international deal and the Commission’s plan was to do this by encouraging other wealthy countries to establish emissions trading schemes. The EU wanted developing countries as a whole to limit their emissions growth to 15%–30% below business as usual levels by 2020. Barroso’s message to the rest of the world deliberately played on Obama’s election winning slogan – ‘Yes, you can. Yes, you can also do what we are doing’ (The Financial Times 13–14 December: 9). However, 2008 closed with a sobering reminder of what was potentially at stake: the WMO announced that it would probably rank as the tenth warmest year since records began in 1850 (ENDS No. 408: 31).

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Conclusions This chapter has outlined the evolution of EU climate policy since the 1970s. Chapter 9 offers a more detailed reflection on the key choices made and dilemmas confronted. For now, it is sufficient to note that in comparison to some of the other, more straightforwardly ‘environmental’ areas of EU policy, the emergence of climate change policy has been relatively slow and step-wise. Level and scale dilemmas have repeatedly been handled in favour of the Member State level. Indeed, even referring to the EU’s actions before c. 2000 as ‘a policy’ almost certainly imputes them with far more coherence and strategic direction than is deserved. With the exception of the Commission’s monitoring function and its (relatively marginal) participation in international meetings, for the most part EU policy was an empty shell – an amalgam of national policies that had very little constraining effect. Even today, there is no mention to be found of climate change in the EU’s founding treaties.15 The EU may have repeatedly claimed the mantle of international leadership, but until the 2000s this did not extend to the selection and adoption of concrete policies and measures. Without an understanding of the EU’s inner workings, it does seem remarkable that such a complex and ambitious body of policy emerged at all, but emerged it has. In fact, the period since c. 2000 has witnessed the repeated emergence of policies and targets that are increasingly distinct from national ones. They encompass a wider array of instruments (e.g. market-based, informational, voluntary and of course regulatory) than has traditionally been the norm in EU environmental policy. In fact, so much EU policy has emerged since c. 2000 that for the majority of Member States, most if not all their national climate policy is made in, or in association with, the EU.16 In order to understand the choices behind these profound shifts in the level, instruments and implementation of policy, we now turn to examine the five sub-areas of policy, beginning with burden sharing. Notes 1. A no-regrets measure is one that has economic benefits, or at least causes no losses, as well as achieving a reduction in greenhouse gas emissions. 2. Things might have been different had the Maastricht Treaty (signed in December 1991 but not ratified until 1993) been in force. It extended qualified majority voting (QMV) to all environmental areas, but retained unanimous voting for tax and energy matters. 3. The UK, for example, resisted the Commission’s attempt to extend reporting to the emission of all greenhouse gases and become involved in evaluating any policies to reduce them (ENDS No. 222: 41). 4. ALTENER was extended in 2000, but its budget was again cut (Haigh 2007: Release 31, 14.4–2). 5. Under Article 4, climate change policy in the EU was effectively ‘nationalised’. That is to say, if the EU meets its overall target, then no Member State shall be deemed to be in breach (this is precisely why cohesion states – with their more liberal targets – were so keen on burden sharing) (Schreurs and Tiberghien 2007: 23). However, if the EU as a whole overshoots, then the Member States are responsible for their own emissions (see especially Article 4 (6)). Oberthür and Ott (1999: 141) have argued that the primary purpose of the bubble was to allow the EU to act as a single entity, not to achieve emission reductions in a more cost-effective manner.

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6. Annex I Parties include the industrialised countries that were members of the OECD in 1992, plus economies in transition, including the Russian Federation, the Baltic States and several Central and Eastern European States. 7. The EU was by no means united on this point. Some Member States (e.g. The Netherlands and the UK) favoured extending the basket (Oberthür and Ott 1999: 126). 8. The flexible mechanisms recognised by the Protocol include emissions trading, the Clean Development Mechanism and Joint Implementation (see Oberthür and Ott 1999). In response to concerns that such mechanisms could be used to evade domestic action, their use is meant to be ‘supplementary’ to emissions reductions achieved domestically. However, the exact meaning of the ‘supplementarity’ principle (incorporated in Articles 6, 12, 17) was ambiguous, and has been much argued over. 9. 1990 for the main three gases and 1995 for the rest (Oberthür and Ott 1999: 126). 10. A term used by the Commission to refer to actions that have been adopted at EU level and hence must be implemented by all Member States (COM (1999) 230). 11. But not without some controversy. The UK objected when the Commission sought to base the implementing Decision on Article 175 (2) (qualified majority voting) instead of 175 (1) (unanimous voting). The UK failed (ENDS No. 326: 52–3), but the incident underlined the acute sensitivity of the issues under discussion. 12. Australia too refused to ratify. 13. Even though it was heavily watered down to satisfy Member State demands for greater subsidiarity, it has been beset by implementation problems (ENDS Europe Daily 28.4.08). In late 2008, the Commission issued proposals to extend its application to all existing buildings undergoing a major renovation, but the Member States remained opposed to binding EU-level standards on subsidiarity grounds. 14. Comitology refers to decision making through committees consisting of Commission and Member State officials responsible for overseeing the implementation of EU legislation. 15. However, this will change if and when the Lisbon Treaty is ratified. 16. The EEA (2008: 7) has put the figure at around 80%.

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Part III Climate policy in the European Union: understanding the past

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4 Burden sharing: distributing burdens or sharing efforts? constanze haug and andrew jordan

Introduction The principle of burden sharing goes to the very core of climate policy in the EU. Burden sharing – or what Sbragia (2000: 315) terms ‘pollution federalism’ – is one feature of governance that differentiates the EU from other supranational bodies. This chapter focuses on the dilemmas that arise when emission reduction targets are assigned to Member States by governors operating at EU level. The question of how to strike a balance between stimulating emission abatement where it is most cost-effective while satisfying one of the EU’s principal norms, namely social and economic cohesion (see Chapter 2), has preoccupied governors since the 1980s. The accession of ten relatively poor new Member States in 2004 has made it even more salient. Lacasta et al. (2007: 218) have argued that, by altering the balance between richer and poorer states, this enlargement has made the EU even more of ‘a testing ground’ for transferable policy ideas and principles. Burden sharing has proven to be immensely difficult to govern. Over the past two decades, the EU has had not one, but several attempts at developing a durable burden sharing arrangement. The first dates back to 1991/1992 and failed miserably. The second attempt, in 1996/1997, produced an agreement prior to the Kyoto COP, but had to be re-adjusted a year later (see Chapter 3). The issue of burden sharing reared its head a third time in 2007/2008, when the Commission began to prepare its 20–20–20 package. This chapter begins with a brief review of the development of burden sharing in EU policy. It then analyses the key choices and associated dilemmas that have emerged in the course of governing. In the third part, the trade-offs and interlinkages between these dilemmas are discussed. The final part concludes the analysis and identifies some key themes that may dominate ‘effort sharing’, as it has recently been relabelled (COM (2008) 30 final), in the future.

Climate Change Policy in the European Union, ed. A. Jordan, D. Huitema, H. van Asselt, T. Rayner & F. Berkhout. Published by Cambridge University Press. © Cambridge University Press 2010.

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The main phases of policy development The early days: endorsement of the principle, but little progress with implementation It is sometimes assumed that EU environmental policy revolves around the establishment of common standards and targets, but in fact it contains a great deal of internal differentiation (Krämer 2000). The same applies to climate policy. The concept of burden sharing was already implicitly embedded in the policies of the 1980s, but it took another two decades for formal policies – and hence formal burden sharing agreements – to appear. Communications from the European Commission in 1990 and 1991 stressed that Member State targets should be based on their respective share of emissions and levels of economic development (Ringius 1999). In October 1990, the Joint Environment and Energy Council announced a common target to stabilise emissions at 1990 levels by 2000 (see Chapter 3), based on an internal round of checks that this objective could be attained. The appearance of a common target (as opposed to separate national targets) demonstrated the importance of the informal norm of economic and social cohesion noted in Chapter 2. Behind the apparent façade of common agreement, however, lay deep divisions between the various Member States, some of whom (e.g. Denmark, Germany, the Netherlands and Italy) had national emissions reduction targets stricter than the common position, whereas others (Greece, Spain and Portugal) had weaker ones or even none at all (Skjaerseth 1994). Moreover, the overall stabilisation target was not legally binding and hence did not directly raise the thorny issue of burden sharing.1 The Commission, encouraged by this agreement on a joint stabilisation target, was eager to move forward. One idea, pushed hard by the Dutch Presidency and the Commission in the second half of 1991, was to follow the example of the Large Combustion Plant Directive and develop an internal burden sharing agreement ‘topdown’; in other words, one based on a formal Commission proposal. Yet, as Haigh (1996: 163) notes, ‘experience of the long drawn-out negotiations on this directive should have given some warning of the difficulties inherent in this approach’. Perhaps not surprisingly, then, when it made such a proposal the Commission soon ran into concerted opposition – especially from the two largest emitters, the UK and Germany – and eventually abandoned it. Despite general agreement on the principle of burden sharing, no further progress was achieved until 1995. By then, the Commission had realised that the EU would not be able to assume a leading role in international negotiations without a new emission reduction target and an agreement on how to implement it internally. In September 1996, the Irish Presidency convened a meeting of national experts in Dublin at which the Commission proposed another burden-sharing arrangement,

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but this was again rejected by Member States (Ringius 1999). When the Commission returned with fresh proposals a month later, it was again rebuffed. With the Kyoto COP just over a year away, for the sake of EU and international climate policy, a way forward had to be found. Breakthrough in the run up to Kyoto: the Triptych approach Although a consensus was apparent on the general principle of internal differentiation, it was being continually and ‘radically undermined by the self-serving nature of all the proposals made to date, with formulae being selected to minimise the emission reductions required from their proponents’ (ENDS No. 263: 35). In view of these setbacks, during the first half of 1997 the Dutch Presidency commissioned academics from Utrecht University to come up with a solution – what eventually became known as the Triptych Approach (Blok et al. 1997; Phylipsen et al. 1998). The beauty of their approach was that it relied on a relatively simple set of indicators. Whereas identical targets were imposed on the energy-intensive industries (to alleviate competitiveness concerns), the other sectors were covered in a more differentiated manner (Phylipsen et al. 1998). For example, allocations were based on the assumption of converging per capita emissions in EU households by 2030, thus allowing poorer states an opportunity to increase their electricity production. With the Kyoto COP just months away, the EU found itself under enormous political pressure to do what it had spectacularly failed to do in the run-up to Rio: devise and adopt an internal burden sharing arrangement. It finally achieved this at the March 1997 Environment Council meeting, after many hours of negotiation (Ringius 1999: 155).2 The new agreement covered CO2, but also nitrous oxide and methane, and was underpinned by individual Member State targets. On closer inspection, however, when combined these targets only achieved a 9.2% cut, not the 15% reduction target the EU had set itself as a whole (Oberthür and Ott 1999). This was because only the Dutch, Austrians, Danes and Swedes fully accepted the figures contained in the Triptych model (ENDS No. 266: 48). Environment Ministers were also at pains to point out that the EU target of -15% was not a unilateral commitment, but ‘subject to acceptance of comparable commitments’ by other Annex I parties (ENDS No. 266: 48). Most importantly, ministers did not endorse any major new EU policies and measures to support the new targets. So in many ways the EU had only signed up to the most informal of ‘formal’ burden sharing agreements to achieve a declaratory target. The new burden sharing agreement did not find much favour amongst non-EU states. Pushing the concept of flat-rate commitments in the international negotiations while adopting a differentiated approach at home (Oberthür and Ott 1999) was condemned as a case of double standards. Despite these criticisms, the 1997 burden

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sharing agreement allowed the EU to press the other industrialised states into taking on relatively strong reduction targets at Kyoto. Without this pressure from the EU, the targets contained in the Kyoto Protocol ‘may well have been much weaker’ (Yamin 2000: 55). After Kyoto: adjusting and implementing the 1997 agreement After Kyoto, the EU was forced to formalise and adjust its internal agreement. The main reason was that the EU had pledged to achieve a 15% reduction for three greenhouse gases but had come back from Kyoto with a commitment to achieve an 8% reduction covering six gases (COM (98) 353 final).3 Despite fierce opposition from the cohesion states, the targets contained in the new burden sharing agreement adopted by the Environment Council in June 1998 were more narrowly bounded than they had been in the 1997 version, ranging between -21% and +27%, instead of -30% and +40%. Table 4.1 compares the targets agreed in 1997 and 1998 as well as the amendments originally suggested by the UK Presidency in the first half of 1998. It reveals that the UK was the only state to shoulder a greater burden. Germany and Austria fought for, and achieved, less stringent reductions. Meanwhile, the cohesion states agreed to less generous emission targets. The resulting deal was formalised by the 2002 Burden Sharing Decision (2002/358/EC), which was submitted to the FCCC secretariat, together with the EU’s instrument of ratification. Table 4.1 Required percentage change in greenhouse gas emissions, 1990–2010 Country

March 1997

UK Presidency proposal (1998)

Agreed allocation

Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg Netherlands Portugal Spain Sweden UK

−25 −10 −25 0 0 −25 +30 +15 −7 −30 −10 +40 +17 +5 −10

−20.5 −9 −22.5 0 0 −22.5 +23 +11 −7 −30 −8 +24 +15 +5 −12

−13 −7.5 −21 0 0 −21 +25 +13 −6.5 −28 −6 +27 +15 +4 −12.5

Source: ENDS No. 281: 46

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Having settled the issue of burden sharing until the end of the first Kyoto commitment period in 2012, the EU turned to address the equally tricky matter of how best to design (and implement) the necessary common and coordinated policies and measures (on which, see Chapter 3). The debate re-opens: effort sharing post-2012 As the end of the first commitment period approached, the debate about burden sharing re-opened, but in a rather more complicated form. First, the accession of ten new Member States in 2004 had increased the socio-economic differences within the EU: GDP per capita amongst the Member States now diverged by a factor of ten (European Commission 2008a). Second, the easy emission reductions achieved in the early to mid-1990s were fast running out; devising an agreement to allocate the burden of new cuts therefore appeared even more challenging. In contrast to the pre-Kyoto period (when a joint EU target and Member State allocations had been negotiated simultaneously), the 2007 EU emission reduction target of a 20% reduction by 2020 preceded the agreement on internal burden sharing. In the 20–20–20 package of proposals (see Chapter 3), the Commission included a draft Decision which, as noted above, relabelled burden sharing ‘effort sharing’. This reflected the Commission’s desire to frame climate change in a more positive manner.4 The draft package divided the relevant target groups into two parts, depending on whether they were inside or outside the EU ETS (for details, see Chapter 6). The draft Effort Sharing Decision only allocated national targets to those outside the EU ETS (dubbed ‘non-trading sectors’), which together were expected to cover around 60% of EU greenhouse gas emissions. With a proportionately higher abatement effort expected from those inside the EU ETS, the overall reduction expected of the ‘non-trading sectors’ to reach the overall 20% cut was about 10%, from a 2005 baseline (see Figure 4.1). By contrast to the 1997 agreement, the sole indicator used to allocate targets was relative GDP per capita. Within a band of emission limits ranging from -20% to +20%, the Commission proposed that Member States with below average GDP (e.g. Bulgaria) should reduce less than the EU average of -12%, whereas those above (e.g. Sweden) should do more (COM (2008) 17 final). The adoption of the 20–20–20 package After protracted negotiations, the effort sharing proposal was eventually adopted in December 2008. It provided Member States with far more flexibility in implementing their commitments than the initial proposal, but the basic principle of sharing efforts per Member State and the resulting targets remained the same. The

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Non ETS sectors –10% compared to 2005

27 member State targets, stretching from –20% to +20%

Figure 4.1 The basic architecture of the 2008 climate–energy package Source: European Commission (2008b).

Parliament sought to use its power of co-decision to amend the Commission’s proposal, with mixed results: while its calls for a more stringent compliance procedure were accepted, its proposed limits on the use of flexibility mechanisms were not. Finally, one crucial element of the draft Decision, the automatic readjustment of Member State targets to cope with a possible shift from a 20% to a 30% target, was dropped by the Council. This means that if the EU moves to 30%, the doors will have to reopen to yet more political negotiations on effort sharing. Burden sharing in the EU: a summary As the EU’s direct response to cost–benefit dilemmas, burden sharing has been heavily debated since the 1980s. As reduction targets have become more demanding and the EU more internally diverse, the political struggles to secure agreements have become much more pronounced. If and when the EU takes on more demanding targets, it will have to face ever more debate about distributing burdens (or ‘efforts’). The issue of burden sharing also demonstrates the strong interdependence between international and EU policy. Agreement among Member States on an EU burden sharing formula was a vital precondition for EU leadership in the Kyoto negotiations. The Triptych approach allowed the EU to push the international community beyond what threatened to be a lowest common denominator outcome. Since then, the need for credibility in post-2012 negotiations has triggered another round of internal discussions. Yet burden sharing is only one (admittedly important) aspect of EU climate policy making. Just as important is the vexed issue of ‘burden implementation’, itself strongly affected by the informal norm of negotiated enforcement. At the time of writing, the latest predictions suggest that the EU will implement its 1998 burden sharing agreement (and hence will meet its Kyoto Protocol target), but only by making use of flexible mechanisms (see Chapters 3 and 12).

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How were the governance dilemmas confronted? What was ‘the problem’? Unlike some of the other case studies in Part III of this book, the perceived need to abate greenhouse emissions across Europe appears to have been the primary problem framing in relation to burden sharing. But this problem frame was nevertheless strongly affected by another – namely, how to fulfil the EU’s underlying and long-held commitment to deeper European integration. So when climate change emerged on the international agenda in the 1980s, the EU – and particularly the Commission and Parliament – naturally perceived it as a collective challenge requiring an EU-wide response. Climate change thus provided another justification for deepening European integration, which the Commission and Parliament have traditionally regarded as the overriding solution to Europe’s problems. This framing of climate change as a collective problem was reflected in the Commission’s insistence that the EU should participate in the FCCC process as a party in its own right; a stance which eventually laid the ground for the much more specific ‘bubble’ provision in the Kyoto Protocol and the associated focus on common and coordinated policies and measures. Burden sharing also corresponds to one of the key informal norms of the EU, that of economic and social cohesion. It is the latest in a long line of policies and institutions, including the Structural and Cohesion Funds, that have been expressly designed to give effect to this norm. This framing also suited the vested interests of some states. For example, the cohesion states reacted very positively to the EU’s early involvement in climate policy in the late 1980s, as it allowed them to evince political concern for the issue without having to curtail their economic development or significantly reduce their emissions (Haigh 1996). By contrast, the larger and richer Member States saw in burden sharing an opportunity to lock the others into a collective response, thereby countering any potential for carbon leakage. This framing of climate change as a collective problem has remained relatively stable over time, despite changing conditions (for example, several enlargements) and deep political conflicts over the precise allocation of burdens. If anything, it became even more politically necessary in the mid-2000s, when the EU began to seek even more ambitious mitigation targets. Be that as it may, the fundamental principle of internal burden sharing – that the more capable should assume a larger share of the overall commitment – has not been seriously questioned since the early 1990s. In fact, it formed the analytical cornerstone of the 2008 climate–energy package. As noted above, this framing of climate change has had to cope with changing conditions. The Triptych Approach of 1996–7 was successful because it relied upon a set of relatively simple and easily understood indicators – population size,

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standard of living, fuel mix, etc. – even though the final allocation was the result of a political negotiation in the Council. With the 2008 package, the Commission opted for an even simpler approach, based solely upon ‘ability to pay’, measured in terms of Member States’ relative GDP per capita.5 Within the whole package, while some elements – notably the EU ETS Directive – emphasised cost-effectiveness considerations, the Effort Sharing Decision was squarely addressed equity concerns (COM (2008) 17 final). Whether this neat value separation represents the most optimal choice remains to be seen. Ellison (2008), for example, has argued that the large mitigation potentials in the transport and building sectors in Central and Eastern Europe are unlikely to be exploited by the 2008 climate–energy package, whereas their export-oriented industries will be forced to compete at a disadvantage under the EU ETS. Further dilemmas of this nature are likely to arise as the former cohesion states evolve into middle- and, in the case of Ireland, even high-income countries, to be replaced by the new Central and Eastern European states. The extent to which new effort sharing arrangements are able to cope with these internal dynamics is discussed further below. At what level was policy enacted? Over the past few decades, important choices about the level at which to pursue burden sharing have had to be made. These have been shaped in tussles between the EU institutions and the Member States. The Commission made an initial attempt to involve itself in burden sharing when it published draft proposals in 1991. However, the Member States firmly blocked it. The 1993 Monitoring Decision (93/389/EEC) subsequently enshrined a state-led approach to burden sharing and other policy development matters (Haigh 1996). The Commission made another bid to secure greater control during the Irish Presidency in late 1996, but was again firmly rebuffed. The Triptych Approach was eventually commissioned and utilised by the Dutch Presidency in the intergovernmental setting of the Environment Council and its associated committees. Throughout, the Commission remained ‘more [an] observer than anything else’ (interview, Phylipsen, 19.9.08). Things changed in the 2000s when the Member States chose to involve the Commission more fully, albeit within an intergovernmental framework. In the conclusions of the March 2007 European Council, the Commission was invited to initiate ‘in close cooperation with the Member States, […] a technical analysis of criteria […] to form the basis for further in-depth discussion’ (European Council 2007: 12) (emphasis added). With the publication of the draft proposal on effort sharing, the move from an essentially Intergovernmental Method of decision making to a more Regulatory one went a stage further. The highly sophisticated climate– energy package was supported by an impact assessment running to over 200 pages.

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In the course of the negotiations, the Commission fought to preserve the essence of its proposal, using the Copenhagen conference deadline to pull other governors (namely the European Parliament and the Council) around to its way of thinking. Therefore, the first thing to say about the handling of level and scale dilemmas is that the EU has begun to confront them in a more centralised fashion. In addition, its increasingly top-down approach (Member States were apparently barely consulted before the proposal was published and had little time to familiarise themselves with its complexity) would have been simply unimaginable in the late 1990s. Second, the procedure for setting targets and allocating burdens has changed since 1997. In the run-up to Kyoto, the only way to agree an EU-wide target was to confront the thorny question of burden-sharing (Ringius 1999). By contrast, in 2007 Heads of State declared an ambitious EU-wide reduction target without any prior discussion on how this would be divided internally (Sijm et al. 2007). During 2008, Member States did not directly contest the proposed targets (apart from an unsuccessful request by Hungary, supported by other Central and Eastern European Member States, to move the base year back to 1990; see Chapter 3), but instead focused on implementation modalities such as temporal flexibility, compliance procedures and access to external credits. Member States were aware that opening up the question of the overall target would be futile since ‘[i]t is a zero-sum game. If somebody wins, somebody else loses’ (interview, DG Environment official, 9.9.08). Third, it is worth mentioning that the adoption of the new ETS Directive constitutes another important step towards greater centralisation (see Chapter 6). The fact that 40% of greenhouse gas emissions are now capped directly at the EU level is a clear indication that a fundamental choice has been taken to move the locus of governing – and with it effort sharing – to a higher level.

When and in what sequence did governors act? Issues to do with the action of first-movers and late-comers have been very salient in the context of burden sharing. Reaching agreement has depended on progress being made on two main fronts: firstly, some Member States acting as front-runners in order to push the rest towards more ambitious EU targets; secondly, pressure deriving from decisions made – or about to be taken – at the international level, which the Commission also used in an attempt to strengthen its position internally. With respect to the first of these, in the run up to the 1992 Rio summit, a number of states unilaterally adopted greenhouse gas targets, thus driving the allocation of burdens. These pledges eventually formed the basis of the joint stabilisation target. It was assumed that they would be sufficient to achieve the EU’s overall stabilisation objective, even if other Member States increased their emissions.

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With respect to the second issue, the EU’s desire to shape the Kyoto negotiations is notable. Here, EU negotiators considered a prior common position on targets, backed up by an internal agreement on burden sharing, to be a sine qua non for success. But this took over a year to construct. It was only the decisions made at the March 1997 Environment Council that enabled the EU to propose an ambitious reduction 15% target and thus set the tone for the Kyoto negotiations. By moving first on the target issue, the EU enhanced its reputation for leadership. Analysts agree that the EU’s stance on targets was one of the more successful parts of its negotiating position (see Chapter 3). Less popular, however, was its insistence on the associated internal burden sharing agreement (the notorious ‘bubble’ – Article 4), which critics dismissed as a symbolic negotiating device (Oberthür and Ott 1999). Turning to more recent events, we see the same interaction between internal and external dynamics. With the declaration of the 20% by 2020 reduction target in 2007 and the adoption of the EU climate–energy package in 2008, EU governors again tried to push international policy by adopting a bold unilateral target and a set of measures to implement it. Again, the announcement of the target was preceded by at least two ambitious (albeit conditional) national emission reduction commitments: Germany pledging to cut emissions by 40% and Sweden by 25% from their 1990 levels by 2020. Despite its dilution in December 2008, the climate–energy package was nevertheless intended to signal the EU’s commitment to a strong deal at Copenhagen.

What modes and instruments did governors employ? In principle, the EU could have chosen to distribute burdens by using market mechanisms (such as the 1991–2 carbon tax) or by making adjustments to the EU’s regional and cohesion funds. However, these options (and their associated dilemmas) were rejected fairly early on. Formal norms were important here: the EU is essentially a regulatory state, with relatively modest financial resources and the most powerful administrative capacities held by Member States. Burden sharing therefore had to be conceived as an exercise in distributing burdens among states (as opposed to industrial sectors or regions in Europe). This general approach also fitted the state-centred and ‘targets-and-timetables’ logic of the emerging international climate policy regime. Initially, the burden sharing process was dominated by states working in the Intergovernmental Method and its outputs were relatively informal. Throughout the 1980s and 1990s, the Commission tried to become more involved as well as formalise the resulting agreements in EU law via the Regulatory Method, but failed repeatedly in its efforts. Non-state actors, especially academic experts, did of course

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contribute, most obviously the academics at Utrecht University. However, their expertise was introduced through, and modulated by, intergovernmental structures. Starting in the late 1990s, things began to change. The fact that the 1998 burden sharing agreement is, since the EU’s ratification of the Kyoto Protocol, binding under EU law demonstrates how burden sharing began to develop more hierarchical elements, with stricter enforcement provisions than the Kyoto Protocol (see below). Looking at developments since 2000, the trend away from an intergovernmental approach has continued, with far greater oversight from EU institutions, chiefly the European Commission. The 2008 discussions enshrined a more market-based approach to effort sharing, which fitted the trend towards greater EU involvement. In the negotiations on the 20–20–20 package, more flexibility in meeting targets was at the top of many Member States’ wish lists (see e.g. ENDS Europe Daily 5.6.08). The final Decision (406/2009/EC) accommodated these demands by allowing for the trading of emissions allocations between governments (outside the framework of the ETS),6 as well as the transfer of unused Member State quotas for the use of flexible mechanisms. How were the costs and benefits of governing allocated? Of all the dilemmas discussed in Chapter 2, this is the most pertinent to burden sharing, which seeks to reconcile equity and fairness concerns with the objectives of cost-effective emission reductions and the minimisation of competitiveness impacts. The normative idea that the cohesion states should receive preferential treatment was accepted quite early on. The Triptych Approach was based on an assumption of converging per capita emissions in EU households by 2030, so allowing poorer states sufficient headroom to increase their electricity production. Yet in the negotiations after Kyoto (see above), it was mainly the cohesion states that made concessions (shifting targets from +40% down to +27% emissions growth in the case of Portugal), whereas some of the northern Member States obtained weaker targets (Dessai and Michaelowa 2001). The extent to which the 1998 burden sharing agreement produced an equitable outcome in welfare terms (assuming its full implementation) has been subject to a number of economic analyses. The majority conclude that cohesion countries would have borne a disproportionate share of the abatement efforts. For example, Eyckmans et al. (2002: 1) posit that while the agreement fared better in terms of cost-effectiveness than one based on flat-rate targets would have done, ‘substantial differences in marginal costs persist’. In their view, Portugal and Spain received fewer emissions rights than they deserved. Although Böhringer et al. (2003) broadly arrive at the same conclusion, their country-by-country analysis paints a somewhat different picture. They suggest that Germany, Denmark, Italy and the UK should

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have received more allowances, and France, The Netherlands and Spain less (Böhringer et al. 2003). It is not clear to what extent evaluations like these informed burden sharing arrangements ex ante, but in preparing the 2008 climate–energy package, the Commission did draw heavily on various economic analyses.7 In the 2008 Effort Sharing Decision, the Commission opted for a much simpler approach than the Triptych framework. With GDP per capita as the only explicit indicator, ‘ability to pay’ has moved centre stage in determining reduction efforts in the non-ETS sectors, leaving other dimensions (e.g. abatement potentials and mitigation costs) aside. This is logical, since the industries (e.g. energy-intensive ones) that were singled out by the Triptych Approach for special treatment are now covered under the EU ETS. However, the EU’s attachment to this notion of equity undeniably creates inefficient outcomes in some cases. One example is Luxembourg, which received a -20% reduction target in the 2008 package owing to its high GDP per capita, but which struggles to hold down the relatively high level of emissions from its transport sector as a result of large volumes of transit traffic (Euractiv 2008a). One might also question whether a wealth-based approach to allocation sends out the signal to international partners that the EU desires. If GDP per capita was to form the basis for burden sharing in any post-2012 international agreement, the large emerging economies like China and India would probably be exempt from emissions reduction targets for many years to come. Finally, it is important to note how the notion of equity in burden sharing extends to the choice of the base year, since this determines the extent to which historical performance is taken into account. An early base year may be considered more equitable as it rewards early abatement. However, the choice of 1990 for the 1997/ 1998 burden sharing agreement, although it is consistent with the FCCC and the Kyoto Protocol, has none the less created considerable political difficulties within the EU. From the outset, rising emissions from the cohesion countries rendered the targets enshrined in the agreement almost unachievable. To some extent, the at best mediocre performance of these countries in meeting their commitments up to 2012 (EEA 2008) was thus predictable. A decade later, the Commission justified its decision to use 2005 as the base year mainly on the ground of availability of better data (European Commission 2008a). However, it was also an attempt to appease the former cohesion countries, who were being asked to take on substantially more ambitious reduction targets than they had been allocated in 1997 and 1998. With a 2005 baseline, their massive emissions increases over the last 15 years were partly omitted from the burden sharing equation. This angered the Central and Eastern European Member States, who felt that the emissions reductions they had achieved in the 1990s (by way of painful economic restructuring) were not being adequately credited. Their bid to revert to a

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1990 baseline failed, as it would have undermined the architecture of the whole package. Overall, the 2008 climate–energy package was a politically smart attempt to respond simultaneously to two important norms of EU governance: the norm of economic and social cohesion and the norm of consensus. It even managed to reassure greener Member States in Northern Europe, as their targets were mostly lower than the unilateral pledges they had previously made. In short, it was a classic European package deal. How were policy results secured? Providing sufficient flexibility to reach the targets set, while setting up adequate mechanisms to ensure they are implemented, are two sides of the same coin. Both have strong links to the global as well as to the Member State level, making implementation and enforcement a very complicated ‘three-level game’. Looking first at compliance, Article 4 of the Kyoto Protocol recognised the mixed competence of the EU in relation to climate change by specifying that the EU would bear joint responsibility for any failure to achieve its emissions reduction target together with the Member States. Consequently, the 2002 ratification Decision stipulated that the EU’s Kyoto reduction commitments would be ‘fulfilled through action by the Community and its Member States within the respective competence of each’ (Council of the European Union 2002). Henceforth, the EU-15 were subject to the standard infringement procedures under EU law if they did not meet their individual emission objectives, as well as the compliance procedures under the Kyoto Protocol (which would, however, only apply if the EU as a whole failed to reach its collective target). Meanwhile, the new Member States of Central and Eastern Europe remained outside the EU’s burden sharing agreement, bound only by their individual targets under the Kyoto Protocol and subject to its associated non-compliance procedures (Jacquemont 2005). The upshot, therefore, is that the EU Member States are subject to a stronger compliance regime than other Annex I parties. However, given the norm of negotiated enforcement, it is not significantly stronger. So, even if it is blatantly obvious that a Member State will overshoot its target, the Commission can only take action after 2012. By then, the EU-15 would be guilty of non-compliance under the Kyoto Protocol. The Commission has sought to anticipate this problem by employing the Policy Coordination Method, using the European Environment Agency’s annual assessments of emission trends to ‘fame’ or ‘shame’ particular states (see, for example, EEA 2008). Another important dimension is the ability of ‘underperforming’ Member States to make use of the Kyoto Protocol’s flexibility mechanisms to fulfil their

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commitments. In spite of efforts by some Member States to restrict their use (see Chapter 3), what constitutes an acceptable ratio between domestic efforts and supplementary actions in the period to 2012 remains rather unclear. The Protocol stipulates that any international emissions trading should be ‘supplemental’ to domestic action (Article 17); relevant EU legislation (such as the so-called Linking Directive (2004/101/EC)) does not go beyond this qualitative statement.8 At the time of writing, ten EU-15 Member States look set to take advantage of this ‘safety valve’, covering about 3 percentage points out of the EU’s 8% reduction target (EEA 2008). Whether such a large amount is truly ‘supplemental’ to national policy efforts remains questionable, to say the very least. The Effort Sharing Decision adopted a more explicit approach to defining the limits on the use of international credits up to 2020. However, the caps in the final text (Decision 406/2009/EC) effectively do away with the principle of supplementarity, at least in the effort sharing domain. According to the Commission’s proposal, Member States would have been allowed to use international credits up to 3% of their 2005 emissions every year, corresponding to around one-third of the required total reduction effort. In the final stages of the Council negotiations, this threshold was increased by a further percentage point for 12 Member States that claimed to be shouldering a particularly heavy burden.9 This caused an outcry among environmentalists, who thought that 3% was already too high (see, for example, Euractiv 2008b). It is indeed hard to see how this outcome squares with the IPCC’s latest findings, repeatedly endorsed by EU Heads of State, which suggest that emissions reductions of between 25% and 40% by the industrialised countries are necessary by 2020, in addition to emissions limitation efforts in the developing world (Barker et al. 2007). Various dilemmas relating to timing and sequencing and costs and benefits are clearly proving difficult for the EU to resolve. The compliance provisions of the Effort Sharing Decision reflected the Commission’s eagerness to address emission reduction failures before the end of a commitment period. The Commission’s draft proposal had required Member States to comply with annual interim targets derived from a linear pathway towards their 2020 commitment – with the implication that failure to meet these interim targets could result in infringement proceedings. This provision proved controversial among Member States, who argued that annual targets, even together with the suggested 2% ‘borrowing’ option from their emissions allocation of the subsequent year, did not account for excesses due to natural variations, such as an abnormally cold winter (interview, Dutch government official, 22.7.08). The final text of the Decision therefore retains the binding annual targets but also contains a number of concessions. First, the cap on ‘borrowing’ was increased substantially from 2% to 5%, with additional hardship provisions in the event of ‘extreme meteorological conditions’ in the years 2013 and 2014. Second, the option to transfer excess

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emission allocations between Member States (note the informal norm of economic and social cohesion) as well as the relaxed caps for the use of international credits, provided additional flexibility. On enforcement, however, the Decision does go further than the initial proposal (which had relied solely on the regular infringement procedure), owing mainly to amendments made by the European Parliament. Now, the regular procedure is supplemented by a mechanism for ‘corrective action’. Thus, emissions reductions that are not achieved will not only have to be made up in the following year, but will also be multiplied by a penalty factor of 1.08. This equates to a penalty factor of 1.5 over a five-year period, somewhat tougher than Kyoto’s factor of 1.3 (ENDS Europe Daily 18.12.08). In addition, non-compliant Member States must submit ‘corrective action plans’ to the Commission, indicating by when and with which policy measures they intend to get back on track. Looking back across the dilemmas Looking back across the six dilemmas, it appears that although some are much more pertinent than others, in allocating burdens governors have been forced to grapple with all of them. The crucial issue of distributive equity – specifically, how to allocate the costs and benefits in a cross-national sense – is very much the ‘headline’ dilemma. That the EU was able to negotiate burden sharing agreements, prior to the Kyoto and Copenhagen summits respectively, demonstrates that the EU as a whole can identify a key climate policy dilemma and take steps to confront it. Most striking of all was the way in which the EU made choices about the appropriate level and scale of policy making. Indeed, the evolution of its burden sharing framework typifies the increasing harmonisation of mitigation policy that has occurred, particularly in the 2000s. Whereas it seemed almost impossible in the 1990s to agree on an EU-wide target without first negotiating the reduction targets of every Member State in a ‘bottom-up’ fashion,10 by 2007/2008 a common ambition level had been adopted ‘top-down’ i.e. before the relative contribution of Member States had been resolved. Moreover, the fact that the Member State targets in the Effort Sharing Decision were not fundamentally contested is strikingly different from the discussions in 1996–7, where negotiators rejected a ‘mechanical formula’ in favour of political negotiations in the Council (Ringius 1999: 146). The immediate reasons for Member States’ ready acceptance of the 2007–8 targets lay in the bundled nature of the whole package (i.e. if states ‘picked and mixed’ the whole thing could have failed) as well as the time pressures stemming from the international diplomatic process. However, the underlying reason was that several crucial policy choices had become less politically charged after states had vested EU institutions with more and more steering functions.

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The increasing harmonisation of national policy is also apparent in the way in which level and scale dilemmas were confronted. Think, for example, of the way in which the Commission retained a firm grip on the negotiations after 2007 and then compare it with the burden sharing discussions in the 1990s, where it struggled to be heard at all. In 2008, the Commission tabled a sophisticated policy package that overwhelmed Member States with its level of detail and complexity. Although the Commission drew some criticism for forcing Member States to start negotiating before they had fully grasped the complexities of the proposal (interview, Dutch official, 22.7.08; interview, Slovakian official, 26.8.08; interview, Hungarian official, 28.8.08), the intellectual rigour of its work was never called into question. This more top-down approach may well be the only way to operate in an EU of more than 27 Member States; so long, that is, as the Commission is accepted as an ‘honest broker’. A second and potentially even more difficult challenge relates to the handling of implementation and enforcement dilemmas. The 20% or 30% emissions reductions envisaged up to 2020 will be challenging to deliver even with the various flexibility options. However, the means to enforce this commitment among Member States have barely increased. The situation is not very different under the global climate regime, where parties can (theoretically at least) easily shirk their responsibilities. Yet in the EU, implementation and enforcement dilemmas are especially relevant. By making climate change one of its top policy priorities, the EU has visibly put its reputation on the line, both externally and internally. Failure to live up to (current and future) burden sharing agreements commitments would not only undermine its aspirations to be a global climate leader, but may also call into question its own governance framework. Given the prevailing norm of negotiated enforcement, it remains doubtful whether an EU compliance framework including harder ‘sticks’ will emerge in the foreseeable future. Conclusions This chapter has examined how governors have gone about the crucial task of distributing mitigation efforts among EU Member States over the past two decades. The principle of burden sharing, building on the informal norm of social and economic cohesion, was present at the birth of EU climate policy in the late 1980s. The 1997 and 1998 burden sharing agreements, building on the Triptych Approach, were the first formal manifestations of this principle. The 2008 climate– energy package addressed the question of burden sharing up to 2020 in new ways, resulting in some marked differences to the situation that had prevailed in the 1990s. So although it has appeared in different forms and been addressed in different ways, the basic, underlying dilemma of how to allocate costs – or burdens – has never really gone away, however sophisticated the devices developed to address it.

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This takes us to the matter of governance dilemmas. All six dilemmas have continually appeared and reappeared throughout the course of the past 20 years. Regarding problem framing, the EU’s perception of climate change as a collective challenge created the need for burden sharing in the first place. If the question of climate change had been deemed to fall within the exclusive competence of Member States, burden sharing would have remained an exclusively intergovernmental matter. Instead, the EU was perceived to have a role and ever since the Commission has steadily become more and more deeply involved. This is intimately tied to the choice of level at which to operate. Here, a clear shift to greater EU control occurred between the 1990s and the mid- to late 2000s. What was essentially an intergovernmental affair had, by 2008, given way to a much more pluralistic process involving not only the Council, but also representatives from the Commission and the European Parliament. In the language of modes and instruments, the Intergovernmental Method has gradually given way to steering via the Regulatory Method. In terms of mode and instrument dilemmas, the market-based mechanisms included in the 2008 climate–energy package, in the form of government-togovernment emissions trading between Member States in the non-ETS sectors, could be interpreted as a shift away from burden sharing as a purely regulatory activity. From the perspective of timing and sequencing dilemmas, internal burden sharing has been affected by progress made at the international and national levels. Attempts by particular Member States to set the ambition level for the rest of the EU coupled to time pressures emanating from the international level have strongly impacted the EU’s decision of when and in what sequence to share burdens. In turn, the question of which criteria and base year to employ provoked further dilemmas in relation to the distribution of costs and benefits. By including in its 2008 package indicators likely to appeal to different country groupings, the Commission was able to design a politically acceptable agreement which ensures that the key governors remain in a problem-solving instead of a bargaining mode. Finally, implementing the agreed allocation raises a host of additional implementation and enforcement dilemmas. The 2008 climate–energy package (and especially the question of the balance between domestic mitigation efforts and use of external credits) has moved this dilemma centre stage in policy discussions. Before concluding, it is important to consider how far lessons learned in relation to burden sharing are applicable to global climate policy. On the one hand, GDP per capita in the EU currently differs by a factor of more than ten. This is a much greater difference than among the group of countries that are party to the Kyoto Protocol. That the EU has been able to negotiate several burden sharing agreements in such a setting could be interpreted as an indication that success is possible at the international level, although the extent of commitment and trust in the EU’s relatively

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mature governance framework is much higher than it is in other political settings. However, whether the wealth-based distribution of targets used in the EU’s latest burden sharing agreement provides a suitable blueprint for international discussions is very doubtful. The notion that countries such as Bulgaria and Romania are allowed to increase their emissions by up to 20% until 2020 is certainly likely to appeal to developing countries that are currently under pressure to accept binding emission limitations in the post-2012 period. In order to bring these on board, financial side-payments may be necessary, corresponding to a level of funding that the EU has been unable to draw upon to address its own internal differences. It also needs to be borne in mind that industries in all EU-27 countries are subject to obligations under the emissions trading scheme. It would be a highly unexpected success if Brazil, China, and some other rapidly industrialising countries were able to agree to even remotely equivalent obligations under a post-2012 climate agreement. Finally, what of the future? Given that burden sharing has become established as a fundamental governing principle in the EU, it is quite likely that future mitigation policies will continue to rely on similar distributive arrangements. Assuming that the basic climate architecture as endorsed in the 2008 climate–energy package remains in place, the degree to which the EU ETS is extended to other sectors will determine the extent to which the burden sharing principle – at least as it has been presented in this chapter – is replaced by a more market-based approach. Furthermore, as low-cost mitigation options become increasingly scarce in some Member States, the criteria for burden sharing may have to embrace other criteria, such as mitigation potentials and estimated cost. Finally, the pressure to extend the principle of burden sharing to adaptation may well grow as the impacts of climate change are (unequally) felt across Europe. Currently, the EU has a Solidarity Fund but it is relatively small and very much an instrument of last resort (see Chapter 7). Acknowledgements The authors thank the following for assisting in the research underpinning this chapter: Kornelis Blok, Michal Danhelka, Erwin Mulders, Aleksandra Novikova, Dian Phylipsen, Verena Ommer, Helena Princova, Eduardo Santos, Kornel Varsanyi, Timme van Melle, Stefan Vergoote and Jørgen Wettestad. Notes 1. Nevertheless, the ‘concept [of differentiated action] was there’ (Haigh 1996: 173). 2. Apparently, the deal was brokered by the Danish Environment Minister, Svend Auken, not the Presidency (at the time, The Netherlands) or the Commission (Ringius 1999: 151). 3. It also had to adjust to the choice of 2012 as the end of the first commitment period (instead of 2010).

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4. According to Wynne (1993: 110), the Commission’s 1991 proposal did not refer to ‘burden sharing’ either, but merely to the ‘Sharing out of Emissions of the CO2 Stabilisation Target’. 5. However, the draft climate–energy package as proposed by the Commission already included re-adjustments for three countries for which the cost of meeting their effort sharing targets proportional to GDP was considerably higher than EU average (interview, DG Environment official, 9.9.08). 6. The Decision provides for the unlimited transfer of overachieved emission reductions to other Member States. Transfers of part of a country’s annual emissions that are not backed up by excess reductions are capped at 5%. 7. These are laid out in its impact assessment (European Commission 2008a). 8. This allows the emission reduction credits arising from Joint Implementation and Clean Development Mechanism projects to count towards an installation’s target under the EU ETS (see Chapter 6). 9. Clean Development Mechanism credits for this additional 1% will have to come from projects located in least developed countries or small island developing states. 10. EU policy thus added up to no more than the combined total of national policies.

References Barker, T., I. Bashmakov, L. Bernstein et al. (2007). Technical summary. In Climate Change 2007: Mitigation. Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, ed. B. Metz, O. R. Davidson, P. R. Bosch, R. Dave and L. A. Meyer. Cambridge: Cambridge University Press. Blok, K., G. J. M. Phylipsen, and J. W. Bode (1997). The Triptych Approach, Burden Sharing Differentiation of CO2 Emissions Reduction among EU Member States. Discussion paper for the informal workshop for the European Union Ad Hoc Group on Climate, Zeist, the Netherlands, January 16–17, 1997.Utrecht: Utrecht University. Böhringer, C., G. W. Harrison and T. F. Rutherford (2003). Sharing the burden of carbon abatement in the European Union. In Empirical Modeling of the Economy and the Environment, ed. C. Böhringer and A. LöSchel. Heidelberg: Physika, pp. 153–81. Council of the European Union (2002). Council Decision 2002/358/EC of 25 April 2002 Concerning the Approval, on Behalf of the European Community, of the Kyoto Protocol. Brussels: Council of the European Union. Dessai, S. and A. Michaelowa (2001). Burden sharing and cohesion countries in European climate policy: the Portuguese example. Climate Policy, 1(3), 327–41. Ellison, D. (2008). On the Politics of Climate Change: Is there an East-West Divide? Working Paper No. 181. Budapest: Institute for World Economics. EEA (European Environment Agency) (2008). Greenhouse Gas Emission Trends and Projections in Europe 2008. EEA Report 5/2008. Copenhagen: European Environment Agency. ENDS (Environmental Data Services Ltd) (various years). ENDS Report. London: Environmental Data Services (ENDS) Ltd. ENDS Europe Daily (various years). London: Environmental Data Services (ENDS) Ltd. http://www.endseuropedaily.com/articles/index.cfm Euractiv (2008a). EU environment ministers at odds over climate plans. Euractiv, 6 June 2008. Euractiv (2008b). Mixed reactions as Parliament approves EU climate deal. Euractiv, 18 December 2008. European Commission (2008a). Impact Assessment Document Accompanying the Package of Implementation Measures for the EU’s Objectives on Climate Change and Renewable Energy for 2020, SEC (2008) 85/3. Brussels: Commission of the European Communities.

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European Commission (2008b). Questions and Answers on the Decision on Effort Sharing, MEMO/08/797. Brussels: Commission of the European Communities. European Council (2007). Presidency Conclusions. Brussels European Council 8–9 March 2007. Brussels: European Council. Eyckmans, J., J. Cornillie and D. van Regemorter (2002). Efficiency and Equity in the EU Burden Sharing Agreement. Working Paper Series no. 2000–02. Leuven: Katholieke Universiteit Leuven, Centrum voor Economische Studien. Haigh, N. (1996). Climate change policies and politics in the European Community. In Politics of Climate Change: A European Perspective, ed. T. O’Riordan and J. Jäger. London: Routledge, pp. 155–85. Jacquemont, F. (2005). The Kyoto compliance regime, the European bubble: some legal consequences. In Climate Change Policy, ed. M. Bothe and E. Rehbinder. Utrecht: Eleven International Publishing, pp. 351–407. Krämer, L. (2000). Differentiation in EU environmental policy. European Environmental Law Review, 9(5), 133–40. Lacasta, N. S., S. Dessai, E. Kracht and K. Vincent (2007). Articulating a consensus: the EU’s position on climate change. In Europe and Global Climate Change: Politics, Foreign Policy and Regional Cooperation, ed. P. G. Harris. Cheltenham: Edward Elgar, pp. 211–33. Oberthür, S. and H. Ott (1999). The Kyoto Protocol. International Climate Policy for the 21st Century. Berlin: Springer. Phylipsen, G. J. M., J. W. Bode, K. Blok, H. Merkus and B. Metz (1998). Triptych sectoral approach to burden differentiation: GHG emissions in the European bubble. Energy Policy, 26(12), 929–43. Ringius, L. (1999). Differentiation, leaders, and fairness: negotiating climate commitments in the European Community. International Negotiation, 4(2), 133–66. Sbragia, A. (2000). Environmental policy. In Policy-making in the European Union, ed. H. Wallace and W. Wallace. Oxford: Oxford University Press, pp. 293–317. Sijm, J. P. M., M. Berk, M. G. J. den Elzen and R. A. van den Wijngaart (2007). Options for Post-2012 EU Burden-Sharing and EU ETS Allocation. Report No. 500102009. Bilthoven: Netherlands Environmental Assessment Agency. Skjaerseth, J. B. (1994). The climate policy of the EC: too hot to handle? Journal of Common Market Studies, 32(1), 25–46. Vogler, J. (1999). The EU as an actor in international environmental politics. Environmental Politics, 8(3), 24–48. Wynne, B. (1993). Implementation of greenhouse gas emissions reduction in the EC. Global Environmental Change, 3(1), 101–28. Yamin, F. (2000). The role of the EU in climate negotiations. In Climate Change and European Leadership: A Sustainable Role for Europe, ed. J. Gupta and M. Grubb. Dordrecht: Kluwer Academic Publishers, pp. 47–66.

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5 Renewable energies: a continuing balancing act? roger hildingsson, johannes stripple and andrew jordan

Introduction The promotion of renewable energy sources (RES) has been on the systemic agenda in some European countries since the 1950s. Since the 1990s, it has moved on to the institutional agenda in many more countries, attracted by the expected potential to mitigate climate change, improve energy security, and provide new opportunities for industrial development and job creation.1 At EU level, the path towards greater policy coordination has been a long and winding one. Despite the wave of enthusiasm for a stronger EU role in energy policy noted in Chapter 3, only the responsibility for market liberalisation – and for some science, technology and innovation aspects – currently resides at the EU level. This has made the deployment of RES primarily a matter of national energy policy. So, although there are widely thought to be strong and ‘compelling reasons for setting up an enabling framework to promote renewables’ in the EU (COM (2006) 848: 3), disagreements over its specific design look set to persist, not least because it could limit the freedom to pursue energy policy goals, a right currently enjoyed by the Member States. The struggle to balance multiple objectives has frustrated the development of an EU-level RES policy since the 1970s. With hindsight, it is clear that policy has been driven by two main objectives, which in turn have flowed from rather different problem framings. One objective has been to increase the share of renewables in the energy mix in order to meet both energy security and environmental goals, making the fastest possible deployment of renewable energies the key task. The other has been how best to develop an internal energy market in the EU, making the harmonisation of RES policy goals and mechanisms the key issue (in order to ensure compatibility with liberalised energy markets). In a continuing attempt to balance these two objectives, EU RES policy has tended to evolve in a stepwise fashion, via a series of indicative targets. More recently, rising concerns about

Climate Change Policy in the European Union, ed. A. Jordan, D. Huitema, H. van Asselt, T. Rayner & F. Berkhout. Published by Cambridge University Press. © Cambridge University Press 2010.

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energy insecurity and climate change have forced the EU to seek greater policy coordination in the context of more integrated energy markets. Both these issues can, the Commission claims, be addressed simultaneously through the diversification of energy supply, transitions to renewable energy systems and the liberalisation of energy markets (COM (2007) 1). This chapter analyses how the interplay between these issues has affected the evolution of renewable energy policy at the EU level over the past 30 years. The next section briefly presents a historical overview, divided into three main phases of development. The third section analyses how the EU as a whole has confronted the governance dilemmas posed by the perceived need to develop a common RES policy. The fourth section looks across all six dilemmas and tries to establish what has most affected the EU’s handling of them. The concluding section draws out some recurring themes and explores important future challenges in this key sub-area of climate change policy. The main phases of policy development The energy mix in Europe has been changing slowly in recent decades. Of all primary energy sources, renewable energies have enjoyed the highest growth rate since 1990. In 2005, RES accounted for 8.6% of the final energy consumption in the EU compared with 5.3% in 1995 (EEA 2008; COM (97) 599). However, when viewed against the latest EU targets (12% by 2010 and 20% by 2020; see Chapter 3), performance has been rather less impressive, and well short of predicted future potentials (see, for example, Krewitt et al. 2007; Resch et al. 2008). Although renewable electricity generation has increased significantly in absolute terms, owing to rising electricity demand it still accounts for only 14% of gross electricity consumption in the EU. Large-scale hydropower makes up the lion’s share of this total, but its potential is now considered to be almost fully exploited. Wind and solar energy have experienced tremendous growth over recent years, whereas biomass still represents the ‘sleeping giant’ (COM (2006) 849: 19). In the transport sector, biofuels – the renewable alternative to fossil fuels – only account for around 1% of the total fuel consumption in the EU (COM (2008) 19). At EU level, the promotion of renewable energy has, before the advent of the 20– 20–20 package, been mostly regulated via the Renewable Electricity Directive (2001/;77/EC) and the Biofuels Directive (2003/30/EC). Renewable heating and cooling, although it holds the greatest potential for further RES deployment, is still largely a matter of Member State control. The Renewable Energy Directive (2009/ 28/EC) that was adopted as part of the 2008 climate–energy package brought these three strands together into one regulatory framework with the overall objective of increasing the total RES share in the EU to 20%, and raising the proportion of

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biofuels to 10% by 2020 (see also Chapter 3). The following sections highlight the historical background to this state of affairs. 1970s – 1980s: the oil shock as an early impetus The two oil crises of the 1970s marked the dawn of modern energy policy and offered an initial impetus to support renewable energies. The first, following the 1973 Arab–Israeli war, was caused by market collusion by the oil producing states and high levels of dependence in importing countries. The second (in 1979) followed the Iranian revolution and the ensuing war between Iran and Iraq. These crises triggered a worldwide search for new sources, to improve energy security and to safeguard against future supply-side shocks. Many industrialised countries focused their attention on exploiting domestic coal resources, natural gas deposits, nuclear power and, to some extent, renewable energy sources. Financial support for energy research and development (R&D) was introduced in most countries in this period. Budgets grew significantly from the mid 1970s, but dropped again in the 1980s as oil prices fell (IEA 2007a). However, even in their heyday, most R&D budgets were directed primarily towards nuclear and fossil fuel technologies, whereas the support for RES was relatively insignificant. Despite this, progress was made in terms of demonstrating the potential of RES technologies such as wind, solar and biomass energy. The Member States that spent most heavily on these activities were Denmark (Meyer 2003; Hvelplund 2005) and Germany (Jacobsson and Lauber 2006). At the same time, then non-members of the EU (such as Sweden and Finland) introduced similar R&D support structures, particularly for biomass energy (Nilsson et al. 2004; Jacobsson 2008). Ever since, although the specific modes may have varied markedly over time, political support for renewable energy in these countries has remained higher than the EU average (Ericsson et al. 2004).2 As national policies evolved, the EU was gradually drawn into acting. In 1974 the Council approved a set of indicative energy objectives that gave priority to energy security concerns and adopted an action programme for the ‘rational utilisation of energy’ (OJ C153, 9.7.75: 2–6). This had no direct relevance for the development of renewables, but entailed a recommendation to support R&D activities to ensure ‘that traditional forms of energy are better exploited and, in the long term, replaced by new sources of energy’. However, Member States jealously retained their control over their respective national energy supplies. The outcome, therefore, was a very loose form of interstate cooperation, using communicative instruments aimed simply at reviewing progress in relation to common but essentially weak energy security objectives. These were subsequently revised in 1980 (after the second oil crisis) (OJ C149, 18.6.80: 1) and 1986.

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Internal market concerns rise up the agenda It was not until the mid-1980s, however, that renewable energy became more firmly established as a policy priority in the EU. In 1986 the Council approved a Commission proposal on New Community Energy Policy Objectives for 1995 (COM (85) 245), which stated that ‘new and renewable energy sources in place of conventional fuels should be substantially increased, thereby enabling them to make a significant contribution to the total energy balance’ (OJ C241, 25.9.86: 1, emphasis added). In terms of problem framing, the main purpose was still to address energy insecurity, but the integration of national energy markets also started to emerge as a new objective (McGowan 2008). A Recommendation (88/349/EEC) in 1988 focused on ‘developing the exploitation of renewable energy sources’ in the EU. However, these and other declarations tended to be just that, and should therefore probably be regarded as symbolic. Although investment programmes such as Joule and Thermie provided financial support for ‘non-nuclear energies’, they were too small in scale to make a significant difference to the status quo (OJ L98, 11.4.89: 13–17; OJ L185, 17.7.90: 1–15). Thus, EU-level RES policy remained rather inchoate (see Table 5.1).Growing environmental concerns (e.g. climate change) started to have an effect in the early 1990s, at the same time as the emphasis of national energy policy was shifting from supporting technological development to the promotion of market deployment of renewables. While financial support for energy technology innovation continued (albeit at a reduced rate), a diversity of market-supporting mechanisms for renewables was introduced in a few pioneering countries. The first scheme for feed-in tariffs3 was introduced in Portugal (1988), followed by similar schemes in Germany (1990), Denmark (1992) and Spain (1994) (Meyer 2006). In the same period, Scandinavian countries introduced energy/carbon taxes and investment subsidies (Ericsson et al. 2004; Nilsson et al. 2004, Jacobsson 2008). The uneven development of these mechanisms led to renewed calls for greater coordination at the EU level. The fledgling European renewable energy industry in particular claimed that a ‘common, stable policy framework to foster market penetration of RES’ was urgently needed (European Renewable Energy Council 2004). Thus, uneven policy developments at Member State level facilitated the evolution of a common EU-level RES strategy. In 1993, the first specific EU-wide initiative for renewable energy was introduced. Known as ALTENER (COM (92) 180), it set out to double the share of renewables to 8%, triple the electricity generation from RES and increase the market share for biofuels to 5% by 2005 (also see Chapter 3). However, given the backlash at the time against further climate policy integration (see Chapter 3), it contained no binding targets and – because of opposition from key Member States – was given less funding than the Commission had originally

2006–

1998–2006

1991–1997

… and gas crises. Post2012 negotiations.

Single Market (1985). Internal Energy Market (1988) Energy market 1995 Energy White Paper. liberalisation (in UK, 1996 Electricity Market Sweden). Feed-in Directive. 1997 RES laws (1988–1994) White Paper. Kyoto Protocol (1997). 2001 RES-Electricity Rising oil prices Directive. 2001 State Aid. 2003 Biofuels Directive

1986–1990

2007 European Council 20% targets. 2008 Climate–energy package. 2009 RES Directive

Energy policy objectives (1974, 1980) 1986 Energy policy objectives

Oil crises (1973, 1979)

1974–1985

Institutional milestones

External events

Period

‘Triad’ of:Energy security Climate change Competitiveness ‘Triad of energy policy objectives’: Energy security Climate change Competitiveness ‘Triad of: Energy security Climate change Competitiveness

Energy security (and internal market)

Energy security

Main energy policy objective(s)

Table 5.1 The evolution of EU renewable energy policy 1974–2008 Type of EU-level coordination

RES market promotion; 20% by 2020

RES market promotion: 12% by 2010

Regulatory Method

Regulatory Method

R&D on ‘new energy Intergovernmental sources’ R&D on ‘nonPolicy Coordination nuclear energy’ Method (Joule, Thermie) R&D support to RES Policy Coordination (e.g. Altener) Method: indicative targets

Policy emphasis

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hoped for. Hence, it merely offered EU support for various demonstration projects to be matched by private and national public financing. Although implemented via a regulatory instrument (Decision 93/500/EEC) and adopted via the Community Method, it functioned more in accordance with the Policy Coordination Method (see Chapter 2). Post-1995: recognition of three inter-connected problems By the mid 1990s, renewable energy had come to be regarded as a solution to at least three interconnected problems. These were formally identified in a Commission’s White Paper on Energy Policy (COM (95) 682) as: (1) finding more environmentally benign sources of energy; (2) enhancing the security of energy supplies; and (3) improving economic competitiveness. Ever since, this triad of problems, and their associated policy objectives, has been repeatedly cited. To meet these objectives, the White Paper proposed, among other things, an EU-level strategy for renewable energies. Among the EU institutions, the Commission has been the most consistent supporter of a common RES policy, believing that it could support EU climate policy (see Chapter 3) and dovetail with the ongoing drive towards energy market liberalisation (see below). By contrast, the European Parliament has been more concerned to ensure that the evolution of an internal market in energy does not hamper the deployment of RES. The idea of a common RES strategy certainly seems to have emanated from the Parliament (Lauber 2005: 204), which in a 1995 resolution advocated an action plan to advance the EU’s involvement (EP 216/788). Around this time, the Commission was preparing for the Kyoto COP and renewable energy was again identified as potentially fulfilling a prominent role in lowering carbon emissions (COM (97) 196; COM (97) 481). In addition, the accession to the EU (in 1995) of Austria, Finland and Sweden bolstered the existing coalition of states advocating renewable energy, namely Denmark and Germany. In 1997, the Commission adopted a White Paper entitled Energy for the Future: Renewable Sources of Energy (COM (97) 599). This set out an indicative objective of doubling the share of renewables to 12% of primary energy consumption by 2010, and identified a range of measures to meet it as part of a joint effort between the EU and Member States. With hindsight, this formally marked the birth of EU RES policy, albeit without legal or regulatory underpinnings. A range of new legislative initiatives and reinforcements of existing EU policies (e.g. research, agricultural and regional policy) were also endorsed. But overall, the Policy Coordination Method remained dominant. This is illustrated by the strong emphasis devoted to the ‘Campaign for Take-Off’, which was an integral part of the 1997 White Paper. Introduced in 1999, this was an EU-wide effort to promote the RES targets via the informal dissemination of best practices. Using the Policy

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Coordination Method was relatively uncontroversial in this respect since it did not impinge on the exclusive competence enjoyed by Member States in this area (energy was still not mentioned in the founding treaties). As explained in Chapter 3, it was not really until the first half of the 2000s that a legislative framework started to emerge in the form of the RES-E, Biofuels, Energy Taxation and Combined Heat and Power (CHP) Directives, respectively. As one of the first legislative products of the 1997 White Paper, the 2001 Renewable Electricity Directive (2001/77/EC) in particular helped to secure the EU’s involvement. Crucially, it set out indicative national targets for the consumption of renewable electricity for 2010 and established some guiding principles, such as those on ‘guarantees of origin’, the evaluation of administrative procedures and grid access. With regard to the nature of the targets, the Commission, supported by the Parliament, had originally preferred them to be binding, but owing to Member State opposition had to settle for indicative ones instead. These targets were calculated on the basis of a common objective to increase the share of renewable electricity to 22% by 2010 (21% after the 2004 enlargement), consistent with the overall 12% RES target contained in the White Paper. Although a few Member States managed to lower their national targets, the Commission was successful in persuading the majority to accept higher ones than they had originally aimed for (Rowlands 2005). On the crucial point of how far to harmonise national policy mechanisms, however, the Commission did not entirely have its own way. DG Energy had been ‘keen on harmonisation’ (Rowlands 2005: 971) for some time and both the Green and White Papers on RES (COM (96) 576; COM (97) 599) were clearly ‘deregulationist in inspiration’ (Lauber 2005: 204). A least-cost approach that ‘let the market forces function to bring down the costs for producing renewable energy as rapidly and as far as possible’ (COM (97) 599: 19) was broadly consistent with the development of the internal market and thus the obvious direction to proceed in. This view was most clearly expressed in a working paper published in 1999 (European Commission 1999) that revealed the Commission’s preference for an EU-wide tradable green certificate scheme.4 This position, although it was supported by some Member States (such as the UK and Italy), was strongly opposed by those operating with feed-in tariffs (such as Germany and Spain), as well as the RES industry and the European Parliament. The Commission eventually called on the ECJ to resolve this disagreement. In 2001, the Court issued its final judgement on the Preussen Elektra vs. Schleswag case (Case C-379/98) relating to the compatibility between the first German feed-in law and EU state aid rules.5 However, this failed to resolve the issue. The fierce debate between advocates of these two systems eventually forced Energy Commissioner Loyola de Palacio to tone down the Commission’s support for tradable certificates in drafting the RES-Electricity

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Directive. Thus, the 2001 Directive did not harmonise national support schemes, but contained provisions that could eventually facilitate future harmonisation, for example by entitling the Commission to propose a harmonised scheme after a progress review of existing schemes (Article 4). Thus, the level and scale dilemma was effectively side-stepped. This controversy demonstrates how Member States have managed thus far to resist the harmonisation of national support mechanisms. After the Article 4 review (COM (2005) 627), the Commission abstained from proposing a harmonised scheme and instead argued for the coordination and optimisation of national schemes, while continuing to prepare for greater harmonisation in the future. None the less, EU policy has put pressure on Member States to change their support policies. Most have tried to improve their existing measures and optimise their level of support (European Commission 2008a), for instance by adjusting their feed-in tariffs. The new German feed-in law is one such example (Langniß, Diekmann and Lehr 2009). Others such as Ireland and France have replaced previous tendering systems with feed-in tariffs. Finally, some countries (e.g. Denmark and Sweden) have striven to align their systems to the Commission’s preferred mechanism (i.e. green certificates). In Denmark, the ECJ case on German feed-in tariffs created additional pressure for reform (Meyer 2006; Agnolucci 2008), albeit relieved after 2001. This indirect ‘Brussels effect’ (Agnolucci 2008: 148) is an example of subtle and indirect Europeanisation. Renewable energies in the 2008 climate–energy package In January 2007, as part of what became the 20–20–20 package, the Commission issued a Renewable Energy Roadmap (COM (2006) 848), proposing a new 20% target for the share of total energy from renewable sources by 2020 and series of new legislative initiatives (see Chapter 3). At the point at which the European Council approved the 20% target in March 2007, the principle of differentiated mandatory national targets was largely undisputed. It is possible that at that time Heads of State were unaware of the full implications of the targets their countries would be assigned, or if they were, were content to pass on the implementation problem to their successors. However, the inclusion of mandatory national targets in the Commission’s draft of a new RES Directive (COM (2008) 19), largely based on GDP per capita (see below), proved highly contentious. The debate provoked by this proposal again indicated that basic disagreements over possible harmonisation of national policies and mechanisms had still not been resolved (Toke 2008). States with the most ambitious targets, such as the UK (a 15% target share for energy from renewable sources – up from just 1.3% in 2005), not surprisingly pressed for as much flexibility in implementation as possible (i.e. interstate and

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cross-border trade in ‘guarantees of origins’). The final text of the Directive (2009/ 28/EC) provides for flexibility only in terms of ‘statistical transfers’ between Member States, meaning that those countries overachieving their indicative target trajectory will be able to transfer their excess to others. Furthermore, joint projects and coordinated support schemes, such as the bilateral integration of green certificate markets (Söderholm 2008b), were introduced as eligible measures for achieving the targets set. Guarantees of origins will be used only for disclosure in target accounting, not as certificates for cross-border trade. Hence, although bottom-up coordination is allowed, the possibility of a fully harmonised support scheme seems as remote as ever. Controversy also surrounded the sustainability criteria for biofuels. Despite fierce opposition from NGOs and the European Parliament, the biofuels target (10% renewable transport fuels in all Member States) survived. Criticism centred on the problems associated with first generation biofuels (e.g. agro-ethanol and biodiesel). In response, the new directive gave priority to second generation biofuels and renewable energy supply for electric and hydrogen vehicles, while also addressing the sustainability and indirect land-use impacts of biomass fuels.

How were the governance dilemmas confronted? What was ‘the problem’? This section discusses how problem framings have changed over time and the impact this has had on the formulation of policy objectives. As noted above, renewable energy has been articulated as a solution to a range of contemporary problems including energy insecurity, environmental pollution and poor economic competitiveness. But over time, the relative salience of these three has varied. In the early years of the EU, the development of nuclear power capabilities secured a great deal of political attention, out of which emerged the EURATOM treaty in 1957. However, as noted above, the two energy crises in the 1970s triggered a worldwide search for alternative sources of energy including renewables. At this point, securing affordable energy supplies was the overriding problem framing. The ‘Limits to Growth’ debate amongst environmentalists sought to draw attention to the potential future role of more renewable (and less environmentally damaging) energy sources. This conflation of energy security and rising environmental concerns was briefly conducive to the early development of RES. For some Member States, they represented an attractive alternative to imported fossil fuels. But for the majority, they were only ever viewed as an adjunct to nuclear power (e.g. France and Sweden), domestic coal (e.g. Germany and the UK) and natural gas. Over the course of the 1980s, however, world energy prices fell and the enthusiasm for renewables dipped.

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In the 1990s, climate change concerns began to grow and energy and carbon taxation was introduced in some Member States (but not at EU level) to encourage efficiency measures and investments in RES. However, relatively low energy prices meant that the appetite for RES remained relatively weak in most EU states. In the mid 2000s, energy security re-turned as a major policy objective in the light of rising world market prices for energy (notably oil), gas crises in Europe and predicted ‘supply-side crunches’ (IEA 2007b). RES suddenly began to enjoy a renaissance and awareness of potential economic and social benefits grew. Although energy security and environmental concerns have motivated national efforts to accelerate renewable energies, advancing a common policy framework at EU level has to be seen against the backdrop of the EU’s longer-term ambition to integrate European energy markets and promote competition within them. As noted in Chapter 2, new problems were thus viewed through the prism of existing competences, namely the EU’s commitment to the four freedoms. Although energy was not originally actually in the Internal Market White Paper (COM (85) 310), the Commission turned its attention to the liberalisation of energy markets as early as 1988 (COM (88) 238). At that time, Energy Commissioner Cardoso e Cunha played an important role as a policy entrepreneur (Nylander 2001: 298). In 1991, he masterminded the development of a far-reaching proposal on common rules for an internal market in gas and electricity (COM (91) 548) aimed at opening up national markets to independent generators and distributors, for example by establishing ‘third party access’ (in effect, a kind of ‘negative integration’ process; see Chapter 2). In so doing, the Commission managed to ‘reconcile the principles of supply security and market liberalisation’ (McGowan 2008: 94) by reframing electricity as ‘an open market commodity’, the trade in which could be facilitated ‘through neoliberal deregulation’ (Nylander 2001: 297). This formed an additional rationale for stronger EU policy intervention in national energy affairs, and helped to unite the various parts of the Commission, which had hitherto pursued somewhat different approaches. For example, whereas DG Energy was informed by traditional views on electricity supply as a public service issue, deregulationist ideas were dominant in DG Competition (Nylander 2001). Even more importantly, the proposal implied the need for a level playing field upon which RES could compete with traditional energy sources. At what level was policy enacted? Although energy policy has traditionally been an issue of national competence, the contents of the 2008 climate–energy package and the Lisbon Treaty indicate that an EU energy policy is nevertheless emerging. Greater coordination and harmonisation has, however, only been reached through a very slow and stepwise coordination of

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national energy policies. Importantly, climate change concerns have helped to accelerate this trend, but were not the main cause of it. The seeds of a common RES policy are to be found in the 1997 White Paper and the RES-Electricity and biofuels Directives. Prior to 1997, energy insecurity concerns were simply not acute enough to trigger the development of a more coordinated approach. The emergence first of environmental (1970s) and then of more specific climate change (1980s) concerns helped to galvanise support for greater EU involvement, but only generated weakly coordinated policies (e.g. ALTENER). It was not until the Commission creatively exploited the internal market objectives of the founding treaties (see above) that sufficiently strong political support for deeper harmonisation emerged. In one sense, then, an underlying choice has gradually been made to develop RES policy at EU level. Common policy objectives have been adopted of a progressively more binding nature. However, the debates surrounding the choice of policy mechanisms and the Commission’s 2008 climate–energy package demonstrated the continuing salience of level and scale dilemmas. So, although the harmonisation of support mechanisms is regarded as a long-term objective of EU RES policy, the Commission still considered it too early to push harder on this matter, given the significant variations in resource availability and institutional capacity among Member States (European Commission 2008a). In many ways, the new RES Directive (2009/28/EC) can be understood as a half-way house between national control and deep harmonisation. For example, the efforts to advance a standardised ‘guarantee of origin’ regime very much implied a first step towards, and in many respects a prerequisite for, an EU-wide renewable certificate trading scheme (Bodlund et al. 2006). The Commission proposed not one but two approaches to trade: one intergovernmental (state level), the other cross-border (firm level) (Johnston et al. 2008). However, owing to opposition from countries with feed-in systems, only the interstate approach was retained in the Directive. Hence, although the provision for ‘statistical transfers’ between Member States and for joint support schemes will allow for bottom-up coordination of national policies, it does not amount to deep harmonisation. When and in what sequence did governors act? As already noted, pioneering Member States such as Denmark, Germany, Sweden and Finland have benefited technologically and economically from moving first. However, choosing to act earlier than the rest is not something that should be taken lightly. An important lesson to be learned from the pioneers is that developing renewable energy is a long-term and evolutionary process that requires enduring policy support (Jacobsson and Lauber 2006: 271). It is precisely for these reasons

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that some Member States decided to hang back until the situation was clearer. The innovation systems literature (see, for example, Hekkert et al. 2007; Bergek et al. 2008) has identified the need for a set of critical enabling factors. Government policies (e.g. R&D funding, demonstration programmes, investment subsidies and knowledge creation) seem to have been the single most important factor behind, for example, the strong development of wind power in Germany (Jacobsson and Lauber 2006). Similarly, studies of wind power in Denmark (see, for example, Meyer and Koefoed 2003; Meyer 2006; Agnolucci 2007) and biomass energy in Sweden and Finland (see, for example, Ericsson et al. 2004) emphasise the importance of policy support and political stability. There are important implications here for the way in which governors confront other governance dilemmas. Different support mechanisms appear to be more appropriate at some development stages than others. For example, Resch et al. (2007) concluded that investment grants are suitable for immature technologies, whereas feed-in tariffs are most effective during the interim stage of market introduction. By contrast, premium feed-in tariffs or quota obligations based on tradable certificates are appropriate ‘once the markets and technologies are sufficiently mature and market size is large enough to guarantee competition among the market actors and competition on the conventional power market’ (Resch et al. 2007: 42). There are implications here for the choice between modes and instruments. So while Policy Coordination Methods were probably more appropriate during the early phases of technological and institutional learning, a common EU-based policy framework came to be regarded as necessary to ensure that RES makes a significant contribution to meeting emission reduction targets. What modes and instruments did governors employ? Seen from an EU perspective, governing renewable energy is a significant challenge. One might even ask whether an EU RES policy is even viable when only the market liberalisation dimension – and some elements of science, technology and innovation policy – are truly an EU competence. Ever since the mid-1990s, EU policy has been decisively shaped by the deregulatory thrust of the internal market programme. This has led to an intensive debate over which model the EU should adopt. On the one side, the Commission remains deeply concerned that national RES policy measures do not negatively affect the liberalisation of energy markets. On the other side, advocates of RES have been more concerned that the completion of the internal energy market does not hamper the deployment of renewables. This demonstrates how conflicts surrounding instrument choice often reflect conflicting perceptions of the nature of underlying problems.

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In general, two main strategies have been used to promote renewable energy technologies: ‘technology push’ measures that support technological innovation and development; and ‘demand pull’ policies that support the commercialisation and diffusion of RES. Early EU policies concentrated on ‘soft’ coordination via harmonised technological R&D policies to push new renewable energy technologies onto the market. Although this fostered early technological learning, it failed to increase the deployment of RES significantly. In the 1990s, governors at the national level therefore introduced market-supporting mechanisms to stimulate demand and pull renewables into the market. These included: (1) feed-in tariffs; (2) quota obligations based on tradable green certificates; (3) tendering systems; and (4) incentive-based systems (taxation, subsidies). Of these four, feed-in tariff systems and tradable green certificate schemes have proved the most popular.6 In practice, both have their pros and cons and can, if designed properly, effectively promote renewables in cost-effective ways (Hvelplund 2005; van der Linden et al. 2005; Ringel 2006). However, a range of studies (see, for example, Held et al. 2006; Resch et al. 2007), including some sponsored by the Commission (COM (2005) 567; European Commission 2008a), have indicated that well-adapted feed-in tariffs result in the ‘fastest, lowest-cost deployment of renewable energies’ (Mendonca 2007: xix). The main reason is that they provide more stability and hence greater investor security (Mitchell et al. 2006; Held et al. 2006). In addition, Scandinavian countries have introduced taxation incentives and subsidies (Nilsson et al. 2004). Finally, other countries have introduced tendering systems, but these have proved to be rather unsuccessful at stimulating new investments (Resch et al. 2007) and have recently been replaced by feed-in tariffs (Ireland and France) or quota obligations (the UK). By contrast, renewable heating and cooling policies are mostly neglected in the Member States (with some exceptions7), whereas the most enthusiastic promoters of biofuels (i.e. Austria, Germany and Sweden) have introduced full or partial exemption from excise duties as well as mandatory blending obligations (COM (2006) 845). To conclude, although EU RES policy does not intrinsically require harmonisation (a state of affairs that some Member States have fought hard to preserve), it has none the less contributed to a de facto convergence in national support mechanisms. The Commission’s 2008 progress review (European Commission 2008a) provided little reason to depart from the status quo. The Commission certainly did not push hard for further harmonisation during the development of the new RES Directive. This decision was generally taken for pragmatic reasons, to forestall Member State opposition so as to reach agreement in time for the Copenhagen COP (Toke 2008). However, the perceived need to choose whether and how far to harmonise support mechanisms has not gone away.

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How were the costs and benefits of governing allocated? Until the 2000s, EU policy makers did not have to directly confront cost–benefit dilemmas because most policy continued to be made at the national level. However, once the choice to develop policy at EU level had been made, things began to change. As with the effort sharing Decision discussed in the previous chapter, the basis for allocating national RES targets under the 2009 Directive proved to be highly contentious, given that deployment potentials differ so much among the Member States. In the end, targets were determined by using a methodology that included a flat rate increase in renewables for each Member State of 5.5% and an additional increase based on each country’s GDP per head (European Commission 2008b). A cap was applied to prevent any Member State from having to deliver over 50% of its energy mix from renewable sources. EU-level RES policy has also tried to render national support mechanisms more effective and economically efficient. From an EU perspective, the dominant support mechanisms delegate responsibilities from the state to the private sector and shift the burden of support costs from state budgets (i.e. taxpayers) to energy consumers. This is particularly true when it comes to the power sector, which is better able to pass through costs to its customers (for the experience with emissions trading, see Chapter 6). This distributional feature has, however, been largely overlooked in the debate about the merits and demerits of different support mechanisms. Tradable certificates are often presented as though they are the most market-oriented measure. As Hvelplund (2005) has helpfully pointed out, this neglects the fact that competition also takes place in price-based feed-in systems. In fact, both systems are market-based; the difference lies in the means used to determine prices and quantities (see Table 5.2). The European energy industry is still divided on this matter. The independent RES industry has emphasised the opportunities that it thinks will flow from the development of more diversified energy systems, including economic growth, job creation and improved energy security. By contrast, major electricity suppliers and

Table 5.2 Determination of price and quantity in different renewable energy support schemes

Price determination Amount determination Source: Hvelplund (2005)

Quota-based model (e.g. tradable green certificates)

Price-based model (e.g. feed-in tariffs)

Market and political Political

Political Market

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energy-intensive users have generally subscribed to the view that the high cost of investing in new RES requires more cost-effective and market-based solutions. These contrasting views reflect two opposing perspectives on issues such as competitiveness and market efficiency. So while the power industry has raised competitiveness concerns on the basis of prevailing market conditions for established energy suppliers, the RES industry has called for greater competition in existing markets. In the first view, cost-effectiveness becomes a main concern; in the second, concerns about fair access to energy markets and addressing existing distortions in the energy market are more prominent. These views relate to wider issues such as investor security in slightly different ways. Thus long-term contracts (guaranteed minimum price) in feed-in systems are thought to expose investors to lower financial risks than tradable certificate schemes (as certificate prices are inherently volatile). This problem is thought to be more serious for independent small investors than for established power utilities. Hence, the RES industry has mostly advocated the use of feed-in tariff schemes, whereas the power industry has tended to prefer tradable green certificates (Grädler 2008; Toke 2008). As certificate schemes are widely regarded as being better at promoting competition between different RES technologies (see, for example, van der Linden et al. 2005), the Commission has generally endorsed them on the grounds of compatibility with the operation of liberalised energy markets. This may also go some way to explain why countries that have deregulated their electricity markets earlier than the rest (e.g. the UK and Sweden) have generally been the most enthusiastic supporters of certificate schemes, whereas countries that have not (e.g. Germany and Spain) have opted for feed-in tariffs and have tended to oppose certificates. It would thus appear that, in RES policy, the choices about levels and scales, modes and instruments, and costs and benefits are tightly interconnected. How were policy results secured? Overall, states have varied greatly in their implementation of EU RES policy (see, for example, COM (2006) 849). Whereas some have been effective in implementing the RES-Electricity and Biofuels Directives, others have only barely complied and some have actively resisted them. Regarding biofuels, substantial disagreements on the cost-effectiveness, sustainability and greenhouse gas balance of first-generation types has clearly hampered implementation (Deurwaarder 2005; Di Lucia and Nilsson 2007). Otherwise, the key barriers have tended to be of a more economic and institutional nature (see, for example, McCormick and Kåberger 2007). Administrative rules and procedures for licensing and planning new RES as well as grid access issues have proved to be especially troublesome (Reiche 2005; IEA 2008).

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In the first decade of the twenty-first century, the EU has tried to confront some of the implementation and enforcement dilemmas associated with these barriers. For example, the 2001 RES-Electricity Directive obliged Member States to evaluate how well their regulatory frameworks facilitated compliance. They were also required to streamline administrative and legal procedures (e.g. planning requirements) to ensure that rules are objective, transparent and non-discriminatory. Furthermore, it stipulated that operators of transmission and distribution systems should guarantee access to the grid for renewable electricity generators.8 This meant that grid capacity could not be cited as a reason to deny access and states that fail in this regard could be brought before the ECJ. The 2001 RES-Electricity Directive also introduced a set of national targets for 2010, which together amounted to a common objective. The Commission intended these to be mandatory to drive forward implementation, but owing to opposition from Member States had to settle for indicative targets (Rowlands 2005). Although these are easier to comply with, the Commission has repeatedly been able to use them as a justification for legal action against Member States (notably Italy) failing to transpose the Directive. The Directive further obliged Member States to regularly report progress in meeting these targets and the Commission to assess whether this was compatible with the overall EU objective. If Member States fail to comply with their targets with ‘unjustified reasons’, the Commission was entitled to present ‘appropriate proposals’, e.g. mandatory targets. However, the Commission hesitated to do this until the draft RES Directive was issued in 2008. Growing concern about climate change and energy insecurity, coupled to ongoing problems with the implementation of previous policies, has, however, begun to push the EU to choose stronger implementation and enforcement measures. The 2009 RES Directive (2009/28/EC) thus contains mandatory targets for the Member States, albeit with some flexibility in meeting them. It sets out an indicative trajectory towards 2020 for each country and provides for regular reviews to encourage compliance. By 2010, Member States have to issue national action plans outlining ‘adequate measures’ to meet their targets, with additional progress reviews every second year. The targets are legally binding, implying that infringement proceedings can be initiated against Member States that fail to fulfil them. The informal norm of negotiated enforcement (see Chapter 2), however, suggests that non-complying Member States will most likely simply be obliged to submit amended plans to remedy any shortfall in the previous period. Thus, although the Directive reduces the scope for negotiated enforcement, it lacks really stringent enforcement mechanisms such as financial penalties (unlike the revised EU ETS; see Chapter 6). Hence, concerns over poor implementation and enforcement may well continue to bedevil future RES policy.

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Looking back across the dilemmas EU RES policy has been a long time in the making. As with climate policy in general, it has been characterised by slow, stepwise progress from fairly loose forms of cooperation towards a common policy framework. On a general level, this process can be viewed as an exercise in managing energy systems transformations: from early technological learning through to commercialisation on a large scale. In order to spur and subsequently manage this transition, governors at Member State level have employed different targets and support mechanisms to encourage a range of technologies at varying stages of development. From the perspective of governors in Brussels, it has been a considerable challenge to make this patchwork of policies work coherently and effectively. This would not have been such a pressing issue had the EU not embarked on developing a single market in energy. The drive to create an internal energy market provided the initial spur to harmonise these arrangements, one that was later supported by the EU’s desire to address energy insecurity and climate change. This is not to say that other concerns, namely energy security and climate change, have not also been salient in this sub-area of policy. Until relatively recently, however, they were not deemed important enough to justify deeper European coordination. If anything, integration was held back by Member States’ unwillingness to harmonise in areas that were not directly linked to the internal market. Therefore, what emerged were rather loose forms of cooperation. It was not until the liberalisation of European electricity markets in the latter half of the 1990s that a clear EU-level rationale for harmonising national RES policies emerged. Integration started with electricity distribution and then extended into some aspects of national support mechanisms for renewables. The Commission’s ability to develop a truly harmonised framework has, however, been hampered by conflicts within and between the EU institutions, Member States, the environmental movement and industrial interests. In essence, the overriding governance challenge is how to strike the right balance between the three main policy objectives of energy security, market liberalisation and climate change mitigation. The internal energy market has provided the primary justification for deeper coordination and is the dominant ‘problem’ that EU RES policy seeks to address. This explains why the Commission has continued to advocate harmonisation in the general sense, without coming down firmly in favour of one particular model or mechanism. Nevertheless, the debate concerning different models of RES policy harmonisation refuses to die down (see, for example, Munoz et al. 2007; Söderholm 2008a). The use of feed-in tariff systems has always sat rather awkwardly with the conventional wisdom that tradable quota schemes are the most cost-effective and market-oriented

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mechanism to deploy RES (see, for example, Hepburn 2006; van der Linden et al. 2005). However, such schemes have only recently been introduced (e.g. in the UK) and, thus far, have been plagued by teething problems (Mitchell et al. 2006). Such issues have on several occasions forced the Commission to postpone further harmonisation (COM (2005) 627; European Commission 2008a). The 2009 RES Directive (2009/28/EC) contains further steps towards harmonisation – mandatory national targets, streamlining of regulatory standards and administrative processes – but not yet with respect to national policy mechanisms. Harmonisation therefore remains a long-term objective but, until the internal energy market is fully operational, different RES support schemes look set to coexist. Conclusions This chapter has outlined the historical development of EU policies to coordinate the promotion of RES. Loose forms of interstate cooperation have gradually given way to deeper forms of coordination and regulatory harmonisation. The process started slowly via the Policy Coordination Method of supporting R&D. This proved critical for securing the early acceptance and legitimacy of subsequent policy interventions. The birth of a more explicit EU RES policy dates from the mid-1990s, when the first specific EU-wide initiative for renewables (ALTENER) was introduced. This was followed by the first comprehensive EU RES policy strategy (the 1997 White Paper). In many ways, renewable energy and climate change policies developed contemporaneously in the EU, but for energy policy the key driver has been EU internal market concerns, not increasing fears of an impending climate catastrophe. Resolving the governance dilemmas triggered by the quest for a common RES policy has not been easy. The EU’s powers have developed slowly because energy supply remains a key area of national interest. RES policy is currently directed at achieving three different objectives (competitiveness, energy security and climate change mitigation) while satisfying competing values (market efficiency and costeffectiveness versus effectiveness in increasing renewable energy generation). Reconciling them has required governors to perform a series of significant balancing acts. Concerns about energy insecurity and climate change have given the promotion of renewable energy a strong push at the national level, but have not, at least until the mid 2000s, carried the same weight at the EU level. Instead, the dominant ‘problem’ in the EU has been how to liberalise and unify national energy markets. This explains both the Commission’s preoccupation with issues to do with electricity generation and its efforts to advance regulatory harmonisation of national support mechanisms. The debates triggered by the 2009 RES Directive brought these ongoing issues back into sharp focus. However, compared with the early 2000s, the additional presence of energy insecurity and climate change concerns

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made it considerably easier for the Commission to make the case for more ambitious and, perhaps even more crucially, binding targets. Continued liberalisation and integration of national energy markets may eventually pave the way for harmonisation not only of energy market regulations, but also of national support mechanisms. Whether such an expansive, spill-over type logic (Haas 1958) will result in a fully harmonised ‘one-size-fits-all’ framework remains to be seen, but the circumstances do look more propitious than they did in the late 1990s. Energy security and climate change mitigation have recently been articulated as important policy concerns across Europe. The Stern Review (Stern 2006) argued that national energy supplies have to be effectively decarbonised in a generation. However, we still do not know whether it is possible to roll out RES at such a speed and across such vast scale, not to mention in ways that are politically legitimate and ecologically sustainable in broader terms. One thing, however, is certain: deploying more RES will require substantial policy and institutional reforms at national and EU level. Hence RES policy looks set to continue provoking awkward governance dilemmas now and for the foreseeable future. Acknowledgements The authors thank the following for their assistance in the research underpinning this chapter and aspects of Chapter 11: Anca-Diana Barbu, Andreas Barkman, Marcus Carlsson Reich, Dörthe Fouquet, Thomas B. Johansson, Tomas Kåberger, Niels Ladefoged, Jürgen Salay, Pierre Schellekens and Karina Veum. Notes 1. See Chapter 2 for a discussion of the difference between systemic and institutional agendas. 2. Historically, RES policy has developed most strongly in the Scandinavian countries, Austria, Germany and Spain. These countries now have the highest shares of RES in their energy mix and have given long-standing policy support. 3. Feed-in tariffs work by fixing the price paid to renewable generators for electricity. 4. Where an obligation is imposed to generate or use a certain amount of green energy, certificates can be used to demonstrate compliance. Where they are tradable, the obligation can be met by buying actual electricity with green certificates, or the certificates alone. 5. DG Competition argued that the German model was incompatible with EU state aid rules, although feed-in tariffs were not expressly specified as state aid (Lauber 2005). The ECJ did not, however, support the Commission’s view that fixed feed-in tariffs violated state aid rules (Johnston et al. 2008). 6. In 18 Member states the main support mechanism is feed-in tariffs or feed-in premiums (pricebased). In seven Member States, tradable green certificates/quota systems (quantity-based) have been introduced (European Commission 2008a; IEA 2008). 7. For example, the Swedish CO2-tax and Danish combined heat and power policies have effectively promoted a surge in renewable district heating, whereas Austrian investment subsidies have resulted in high shares of domestic biomass energy combustion and solar thermal energy. 8. The Commission, with support from the European Parliament, proposed provisions for ‘priority access’ for renewable generators, which in the RES-Electricity Directive was changed by the Council to ‘guaranteed access’ (Lauber 2005). The 2009 RES Directive provides for both.

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References Agnolucci, P. (2007). Wind electricity in Denmark: a survey of policies, their effectiveness and factors motivating their introduction. Renewable and Sustainable Energy Reviews, 11(5), 951–63. Agnolucci, P. (2008). Factors influencing the likelihood of regulatory changes in renewable electricity policies. Renewable and Sustainable Energy Reviews, 12(1), 141–61. Bergek, A., S. Jacobsson., B. Carlsson, S. Lindmark and A. Rickne (2008). Analyzing the functional dynamics of technological innovation systems: a scheme of analysis. Research Policy, 37(3), 407–29. Bodlund, B., L. J. Nilsson, C. Hedenström and N. Andersson (2006). Electricity Certificates as Multi-Purpose Tools. Paris: CIGRE. Deurwaarder, E. P. (2005). Overview and Analysis of National Reports on the Biofuel Directive: Prospects and barriers for 2005. ECN-C–05–042. Petten: ECN. Di Lucia, L. and L. J. Nilsson (2007). Transport biofuels in the European Union: the state of play. Transport Policy, 14, 533–43. EEA (European Environment Agency) (2008). Energy and Environment Report 2008. EEA Report 6/2008. Copenhagen: European Environment Agency. Ericsson, K., S. Huttunen, L. J. Nilsson and P. Svenningsson (2004). Bioenergy policy and market development in Finland and Sweden. Energy Policy, 32(15), 1707–21. European Commission (1999). Electricity from Renewable Energy Sources and the Internal Electricity Market, SEC (99) 470. Brussels: Commission of the European Communities. European Commission (2008a). The Support of Electricity from Renewable Energy Sources. Accompanying Document to the Proposal for a Directive of the European Parliament and of the Council on the Promotion of the Use of Energy from Renewable Sources. Commission Staff Working Document, SEC (2008) 57. Brussels: Commission of the European Communities. European Commission (2008b). Impact Assessment Document Accompanying the Package of Implementation Measures for the EU’s Objectives on Climate Change and Renewable Energy for 2020, SEC (2008) 85/3. Brussels: Commission of the European Communities. European Council (2007). Presidency Conclusions, Brussels European Council, 8–9 March. 7224/1/07 REV 1. Brussels: European Council. European Renewable Energy Council (2004). Renewable Energy in Europe. Building Markets and Capacity. London: James & James. Grädler, B. M. (2008). Guarantees of Origin as Interface Between National Support Schemes. A Market Design for Renewable Energy Certificates. Unpublished Masters Thesis, Institute for Environmental Studies, Vrije Universiteit Amsterdam. Haas, E. B. (1958). The Uniting of Europe. London: Stevens. Hekkert, M. P., R. A. A. Suurs, S. O. Negro, S. Kuhlmann and R. E. H. M. Smits (2007). Functions of innovation systems: a new approach for analysing technological change. Technological Forecasting & Social Change, 74, 413–32. Held, A., M. Ragwitz and R. Haas (2006). On the success of policy strategies for the promotion of electricity from renewable energy sources in the EU. Energy and Environment, 17(6), 849–68. Hepburn, C. (2006). Regulation by prices, quantities, or both: a review of instrument choice. Oxford Review of Economic Policy, 22(2), 226–47.

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Hvelplund, F. (2005). Renewable energy: political prices of political quantities. In Switching to Renewable Power: A Framework for the 21st Century, ed. V. Lauber. London: Earthscan, pp. 228–45. IEA (International Energy Agency) (2007a). IEA Energy Technology R&D Statistics, http:// www.iea.org/Textbase/stats/rd.asp, accessed 3 April 2009. IEA (International Energy Agency) (2007b). World Energy Outlook 2007. Paris: IEA. IEA (International Energy Agency) (2008). Deploying Renewables: Principles for Effective Policies. Paris: IEA. Jacobsson, S. (2008). The emergence and troubled growth of a ‘biopower’ innovation system in Sweden. Energy Policy, 36(4), 1491–508. Jacobsson, S. and V. Lauber (2006). The politics and policy of energy system transformation: explaining the German diffusion of renewable energy technology. Energy Policy, 34(3), 256–76. Johnston, A., K. Neuhoff, D. Fouquet, M. Ragwitz and G. Resch (2008). The proposed new EU renewables directive: interpretation, problems and prospects. European Energy and Environmental Law Review, 17(3), 126–45. Krewitt, W., S. Simon, W. Graus et al. (2007). The 2°C scenario: a sustainable world energy perspective. Energy Policy, 35(10), 4969–80. Langniß, O., J. Diekmann and U. Lehr (2009). Advanced mechanisms for the promotion of renewable energy: models for the future evolution of the German Renewable Energy Act. Energy Policy, 37(4), 1289–97. Lauber, V. (2005). European Union policy towards renewable power. In Switching to Renewable Power: A Framework for the 21st Century, ed. V. Lauber. London: Earthscan, pp. 203–16. McCormick, K. and T. Kåberger (2007). Key barriers for bioenergy in Europe: economic conditions, know-how and institutional capacity, and supply chain co-ordination. Biomass and Bioenergy, 31(7), 443–52. McGowan, F. (2008). Can the European Union’s market liberalism ensure energy security in a time of ‘economic nationalism’? Journal of Contemporary European Research, 4(2), 90–106. Mendonca, M. (2007). Feed-In Tariffs: Accelerating the Deployment of Renewable Energy. London: Earthscan. Meyer, N. I. (2003). European schemes for promoting renewables in liberalised markets. Energy Policy, 31(7), 665–76. Meyer, N. I. (2006). Influence of government policy on the promotion of wind power. International Journal of Global Energy Issues, 25(3/4), 204–18. Meyer, N. I. and A. I. Koefoed (2003). Danish energy reform: policy implications for renewables. Energy Policy, 31(7), 597–607. Mitchell, C., D. Bauknecht and P. M. Connor (2006). Effectiveness through risk reduction: a comparison of the renewable obligation in England and Wales and the feed-in system in Germany. Energy Policy, 34(3), 297–305. Munoz, M., V. Oschmann and D. J. Tabara (2007). Harmonization of renewable electricity feed-in laws in the European Union. Energy Policy, 35(5), 3104–14. Nilsson, L. J., B. Johansson, K. Åstrand et al. (2004). Seeing the wood for the trees: 25 years of renewable energy policy in Sweden. Energy for Sustainable Development, 8(1), 36–50. Nylander, J. (2001). The construction of a market: a frame analysis of the liberalization of the electricity market in the European Union. European Societies, 3, 289–314. Reiche, D. (2005). Handbook of Renewable Energies in the European Union. Case studies of the EU-15 States, 2nd edn. Frankfurt: Peter Lang.

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Resch, G., T. Faber, R. Haas et al. (2007). Recommendations for Implementing Effective & Efficient Renewable Electricity Policies – Report of the IEE project OPTRES. Vienna: Vienna University of Technology. http://www.optres.fhg.de/, accessed 15 August 2008. Resch, G., A. Held, T. Faber et al. (2008). Potentials and prospects for renewable energies at global scale. Energy Policy, 36(11), 4048–56. Ringel, M. (2006). Fostering the use of renewable energies in the European Union: the race between feed-in tariffs and green certificates. Renewable Energy, 31(1), 1–17. Rowlands, I. H. (2005). The European directive on renewable electricity: conflicts and compromises. Energy Policy, 33(8), 965–74. Söderholm, P. (2008a). Harmonization of renewable electricity feed-in laws: a comment. Energy Policy, 36(3), 946–53. Söderholm, P. (2008b). The political economy of international green certificate markets. Energy Policy, 36(6), 2051–62. Stern, N. (2006). The Economics of Climate Change. Cambridge: Cambridge University Press. Toke, D. (2008). The EU Renewables Directive: what is the fuss about trading? Energy Policy, 36(8), 3001–8. van der Linden, N. H., M. A. Uyterlinde, C. Vrolijk et al. (2005). Review of International Experience with Renewable Energy Obligation Support Mechanisms. ECN report C-05–025. Petten: ECN.

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Introduction This chapter focuses on what has arguably become the linchpin of EU climate policy, namely emissions trading. In January 2005, the EU adopted a ‘cap-and-trade’ emissions trading system (ETS), through which a certain emission cap was set and a fixed number of emission allowances distributed among the various Member States. Remarkably, despite encountering some significant problems (see Chapter 3), European governors have not lost faith in this instrument, even though it was originally ‘imported’ from the USA. On the contrary, even more now depends on its performance – not least the EU’s credibility in international climate politics – than when it was first adopted. The system is undeniably innovative. Prior to 2005, only a few countries had experimented with emissions trading and no one had ever attempted to employ it at a supranational level. Consequently, the EU’s struggle to make this ‘alien’ instrument (Sbragia 2000: 296) work in the manner outlined in economic textbooks could provide lessons for those seeking to implement emissions trading at a global level (Delbeke 2006). In theory, emissions trading offers a more cost-effective means to achieve a given environmental target than regulation. In practice, however, the ultimate design and implementation of all policy instruments depends on the interaction between political factors, including the actors involved and their interests, as well as the prevailing system of governance (Bressers and Huitema 1999). This chapter begins by providing a brief overview of emissions trading, starting with its theoretical precepts, and then moving on to how and in what form it was adopted and implemented in the EU. It then analyses the emergence, development and implementation of the EU ETS from the perspective of the governance dilemmas described in Chapter 2. Then it draws together the main threads of the argument in order to identify the factors that have most strongly affected its design, functioning and performance. The final section offers some concluding thoughts about how and why this alien instrument became the very centrepiece of EU climate policy.

Climate Change Policy in the European Union, ed. A. Jordan, D. Huitema, H. van Asselt, T. Rayner & F. Berkhout. Published by Cambridge University Press. © Cambridge University Press 2010.

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The main phases of policy development The origins of emissions trading The idea of tradable permits can be traced back to Coase’s (1960) early work on the relation between dilemmas of collective action and property rights. Since then, economists have further developed and advocated the use of tradable permits as a policy instrument, particularly, following Dales (1968) and Montgomery (1972), in environmental policy. Compared with traditional forms of regulation, emissions trading is assumed to have a number of advantages. These include its greater costeffectiveness; the spur it gives to technological innovation; the flexibility it offers for reducing emissions; and its greater democratic legitimacy, which is related to the smaller number of simple, key policy decisions that need to be made (see, for example, Ackerman and Stewart 1987; Hahn and Stavins 1991; Keohane et al. 1998). Emissions trading has also been compared to taxation, another market-based instrument that puts a price on emissions. With a tax, polluters have flexibility in adjusting their emissions to a level where the marginal costs of abatement are equal to the tax rate. Under emissions trading, on the other hand, it is the total amount of emissions that is capped, and the price adjusts accordingly (Ekins and Barker 2001). Hence, emissions trading enjoys an important advantage over taxation: greater predictability in achieving a pre-defined environmental objective. But how it compares to taxation in practice depends on the precise method for allocating emission allowances: where these are sold to polluting firms (‘auctioning’), emissions trading will more closely resemble taxation than when they are given away for free (Ekins and Barker 2001; Howe 1994). The first practical experiences with emissions trading were gained in the USA in the 1970s and 1980s under what was known as the ‘acid rain programme’ (Ellerman et al. 2000). According to Voß (2007: 335), a group of ‘policy entrepreneurs’ favouring market-based instruments helped to generate the political support needed to get it off the ground. This programme has been hailed as a great success in terms of achieving emissions reductions, saving costs and inducing technological innovation (see, for example, Ellerman et al. 2003). However, Driesen (2005) argues that its impact on the level of innovation has been somewhat exaggerated. Furthermore, part of the success of the programme can be ascribed to other factors, such as the widespread availability of low-sulphur coal (for example, due to railroad deregulation) (Ellerman et al. 2000). Given this positive experience in the USA, it was not entirely surprising that the US government advocated its use in international climate discussions (see Chapter 3). For example, a provision was made for the voluntary use of ‘joint implementation’ in the FCCC, allowing countries to cooperate in emission reduction projects. In the negotiation of the Kyoto Protocol, emissions trading was eventually included at the

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insistence of the USA (Depledge 2000). The Protocol also provides for project-based emissions trading between industrialised and developing countries through the Clean Development Mechanism and among industrialised countries through Joint Implementation. At the time (and as noted in Chapters 3 and 4), the EU was deeply suspicious of the US government’s motives, believing that it wanted to undermine the environmental integrity of the Protocol, but reluctantly accepted what became known as ‘flexible mechanisms’ in order to secure its participation. However, in the following years it radically and quickly changed its view of emissions trading. The emergence of emissions trading in Europe After first mentioning emissions trading in a 1998 communication (COM (98) 353), the Commission released a Green Paper in 2000, expressing its desire to set up an EU-wide trading system (COM (2000) 87). This document was heavily influenced by consultant reports prepared by the UK-based Foundation for International Environmental Law and Development and the US-based Center for Clean Air Policy (Skjærseth and Wettestad 2008: 81). Subsequent stakeholder consultations, which covered the detailed aspects of emissions trading, were organised in the context of the first phase of the Commission’s European Climate Change Programme (see Chapter 3). At the end of 2001, the Commission published a formal proposal for an Emissions Trading Directive (COM (2001) 581). After intense, but relatively rapid inter-institutional negotiations, the Directive was adopted in 2003 (2003/87/EC). Emissions trading formally commenced in the EU on 1 January 2005, just over seven years after the signing of the Kyoto Protocol. Given its initial opposition to the policy instrument, the EU’s rapid conversion has been viewed as a significant volte-face (Damro and Méndes 2003). However, it was not quite as radical as is sometimes suggested. Various Member States (e.g. Denmark and the UK) had already gained experience with their own emissions trading schemes prior to the start of the EU ETS, and others had begun to examine the scope for doing so (Ellerman and Buchner 2007). Finally, the EU had itself already endangered the ‘integrity’ of the Kyoto Protocol by fighting for its own preferred form of flexibility, namely the internal ‘bubble’ for burden sharing purposes (see Chapter 4). After the launch of the Commission’s proposal in 2001, several Member States quickly objected to certain aspects. Whereas some, including the UK and Germany, envisaged a voluntary scheme, the majority were in favour of a mandatory one (Skjærseth and Wettestad 2008: 107–13). The UK was particularly concerned about the compatibility between the proposed EU-wide scheme and its existing domestic system, whereas German opposition was influenced by the concerns expressed by its industries, which preferred the existing domestic voluntary agreements.

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To address these and other concerns, a number of concessions were made, such as the inclusion of an opt-out and force majeure provisions1 (for the UK), and the possibility of ‘pooling’ allowances (for Germany). These concessions were necessary to secure the support of the EU’s two largest emitters, but did not significantly alter the Commission’s preferred design. Although the European Parliament subsequently proposed many amendments, it eventually accepted a scheme that was ‘essentially similar’ to the Commission’s initial proposal (Knill and Liefferink 2007: 139). A plausible explanation for the Parliament’s acquiescence was the ‘atmosphere of increasing political urgency’ surrounding the whole climate change debate at that time (Skjærseth and Wettestad 2008: 134). The 2003 Emissions Trading Directive The Directive placed a ceiling on the total emissions from all covered sectors in Member States; this ceiling was linked to the EU’s emissions target under the Kyoto Protocol. Member States were required to implement the Directive in two distinct stages: a preliminary phase that lasted from 2005 to 2007 (Phase I), and a mandatory phase from 2008 to 2012 (Phase II). It covered large energy-intensive industries (including those in the iron and steel, glass, cement, pulp and paper sectors), as well as oil refineries and large combustion plants. In total these added up to over 10 000 installations across the EU-25, together accounting for almost half of the EU’s CO2 emissions. Operators of these installations were required to hold an emissions permit, issued by national authorities, allowing them to emit a certain quantity of greenhouse gases. Permits were only granted if the national competent authority was convinced that the operator in question would be capable of monitoring and reporting on its emissions. Unlike the Kyoto Protocol, the Directive covered only CO2 emissions, but included a provision to bring in other greenhouse gases at a later stage. Perhaps the most important aspect of the scheme was that the total quantity of allowances allocated to installations (the cap), and the manner of their distribution were primarily determined by the Member States, according to procedures laid down in the Directive, not by the Commission. According to changes made during the policy making process, Member States were obliged to draw up National Allocation Plans and submit them to the Commission for scrutiny. The Commission checked to confirm that these plans were consistent with each state’s Kyoto targets2 and that they did not result in competitive distortions between Member States or contravene EU state aid rules. Given the opposition from both Member States and industry to the idea of auctioning allowances (Skjærseth and Wettestad 2008: 123), free allocation, based on historical emissions (‘grandfathering’), emerged as the standard approach to allocation. Governments, however, were

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allowed to auction 5% of their allowances in the first phase and 10% in the second. Finally, the Directive contained strict penalties for non-compliant installations.3 The Directive was subsequently amended through the adoption of the ‘Linking Directive’ (2004/101/EC). This connected it to the Kyoto Protocol’s other flexibility mechanisms, the Clean Development Mechanism and Joint Implementation, from which ‘external credits’ could be obtained. In the negotiation of this Directive, quantitative limits on the use of these credits from 2008 onwards emerged as a sensitive issue. Allowing the use of external credits would, it was claimed, increase the scope for reducing greenhouse gas emissions cost-effectively (Klepper and Peterson 2006). On the other hand, those favouring tighter restrictions on their use pointed to the need to reduce emissions domestically, as well as the risk that an influx of the (generally cheaper) external credits might depress the European carbon price.4 Whereas the European Parliament and environmental NGOs were in favour of tighter restrictions, Member States were generally opposed. The final text largely reflected the preferences of Member States, although the Commission won the right to review the caps set by the Member States to ensure that the use of flexibility mechanisms was at most ‘supplemental’ to domestic action. This criterion, while currently undefined (see Chapter 4), leaves the door open for future EU involvement in the matter. The Parliament also managed to insert some qualitative restrictions into the final text governing the use of credits from certain types of Clean Development Mechanism projects.5 Moving towards implementation Member States needed to prepare themselves for the implementation challenge well before the formal launch of the EU ETS in 2005. First, adequate monitoring, reporting and verification systems had to be put in place. Second, even though data availability was still low (Ellerman et al. 2007), Member States had to draft their National Allocation Plans and decide on their total national allocations, as well as the allocations to particular installations. At the same time, the European Commission was under great pressure to swiftly review these plans, to ensure the whole process remained on track. In the very early stages of the EU ETS, carbon prices remained quite high (Reilly and Paltsev 2005). However, after the release, in April 2006, of the verified emissions data covering the very first year of operation (i.e. 2005), prices dramatically plummeted. Actual emissions turned out to be much lower than the allocations handed out to all the installations (Ellerman and Buchner 2007), and this lowered the demand for allowances. Although many observers pinned the blame on Member States for being overly generous in their allocations (e.g. Open Europe 2007), actual abatement efforts by the installations may also have been a factor. Ellerman and

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Buchner (2008: 285) argued that ‘abatement of 85 million tons or about 4% … seems not unreasonable given the independent economy-wide data’, while adding that this ‘is arbitrary and must remain so until better data and more careful assessments can be made’. Kettner et al. (2008), however, doubted that the EU ETS had had any abatement effect. To conclude, although there is uncertainty about what the Directive has actually delivered, few doubt that there was some overallocation in the early stages, given the ‘disastrous’ combination of modest cuts close to ‘business as usual’ and inflated projections of future emissions growth (Egenhofer 2007: 456). The first analyses of the National Allocation Plans in Phase II (see, for example, Betz et al. 2006) indicated that some Member States had again been relatively lenient, but not as much as in Phase I. One reason was that Member States now had to show more clearly that their total allocation for the period 2008–2012 was in line with their Kyoto targets under the EU’s burden sharing agreement. Second, Member States were obliged to use more objective projections, based on verified emissions data from 2005 (Egenhofer 2007). Third, the Commission took a more active supervisory role and even forced a number of Member States to resubmit their National Allocation Plans. This eventually led to reduced emission ceilings (Ellerman and Buchner 2007). In both phases there was a notable lack of coherence between what different Member States were willing to allocate to individual installations within their jurisdictions. Even though the Commission had provided guidance, many plans diverged in several respects, including: their main allocation method; the treatment of new entrants and closures in the scheme; and the use of external credits. Analyses also pointed to the fact that, for several reasons (industry opposition, technical complexity), only a few Member States auctioned their allowances, although the number did increase in Phase II (see, for example, Betz et al. 2006). The popularity of grandfathering and the inherent differences between and within Member States inevitably sparked complaints about the efficiency and fairness of the whole scheme (see, for example, Böhringer and Lange 2005; Grubb and Neuhoff 2006). The emergence of a revised scheme In January 2008, the European Commission released a proposal to revise the 2003 Directive (COM (2008) 30), which sought to address some of the problems encountered in the first two phases and prepared for a third (i.e. post-2012) phase. The revised Directive (2009/29/EC), agreed as part of the 20–20–20 package in December 2008 (see Chapter 3), drastically changed the design of the EU ETS, and in particular the way that emission allowances would be allocated. First, the EU ETS cap would be centrally determined for the trading sectors from 2013 onwards, thus ending the practice of Member States setting their own caps. The centralised

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cap would decrease annually in a linear fashion, with a view to achieving a 21% emission reduction in the trading sectors by 2020 compared with 2005. Furthermore (but with some exceptions), a shift to full auctioning for the power sector from 2013 was envisaged, given the sector’s proven ability to pass on additional costs to its consumers. For other sectors, this shift would be more gradual, with full auctioning by 2027. At least half of the revenues from auctioning are to be used for mitigation and adaptation purposes. A second noteworthy change was that (sub-) sectors that are deemed to be at ‘significant risk of carbon leakage’6 were made eligible for 100% free allocation in the period 2013–2020.7 In the event that a successor to the Kyoto Protocol is agreed at Copenhagen, the Commission will have to evaluate whether further measures are necessary to protect these industries. Possible measures include the adjustment of the level of free allocation and the inclusion in the ETS of importers of products produced by the sectors considered to be at risk. Finally, the proposal contained provisions regulating the access to external credits to cope with uncertainty surrounding the eventual shape of international policy post-2012. How were the governance dilemmas confronted? What was ‘the problem’? Emissions trading was perceived as a response to at least three problems in the EU. The most obvious was climate change. Traditional regulatory policy instruments had conspicuously failed to reduce greenhouse gas emissions in the 1990s (see Chapter 3). The Commission was blocked when it tried to introduce an EU-wide carbon/energy tax in 1991–2. The unanimity requirement for all fiscal measures allowed sceptical Member States (lobbied hard by powerful domestic energyintensive industries) to kill the proposal. Other potentially available instruments, such as voluntary agreements, had only been partly effective at reducing greenhouse gas emissions at the national level (see, for example, Jordan et al. 2003). With the need to find a common instrument to deliver the Kyoto reduction target becoming more pressing, attention turned to emissions trading. Although the concept originally came from the USA, it was perceived to have a number of advantages, including its cost-effectiveness, flexibility and alignment with the single market programme. Crucially, because of treaty changes introduced in the 1990s, most environmental proposals, including emissions trading, could be adopted by a qualified majority vote (Skjærseth and Wettestad 2008: 75), thus overcoming the procedural factor that had derailed the tax proposal. One policy entrepreneur in particular – DG Environment – latched on to emissions trading and sold it hard to other governors. The key point came in the late 1990s, when a group of advocates in DG Environment managed to convince the then Environment Commissioner, Ritt

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Bjerregaard, and important business associations of the necessity for an EU-wide scheme (Skjærseth and Wettestad 2008; Braun 2009). After years of general suspicion towards emissions trading (Jordan et al. 2003), they even managed to win over environmental NGOs. Against all the odds, the instrument was therefore adopted. A second and equally important problem that emissions trading appeared to simultaneously address was how to create and maintain a single market in Europe (see Chapter 2). Other DGs in the Commission were keen to ensure that any responses to the new problem of climate change worked with the grain of the single market. As one Commission official subsequently explained, ‘[i]t was imperative for the EU to act in a coordinated way and not to allow the EU’s “internal market” and liberalised energy markets to be fragmented into 25 national variations of emissions trading’ (Vis 2006: 59). Finally, emissions trading offered a response to a third problem – how to effectively expand the EU’s international presence. In the 1990s, the Maastricht Treaty established a common foreign policy (see Chapter 2), but with climate change the EU suddenly found a concrete policy area in which it could show international leadership. Initially, emissions trading was seen as a price worth paying for the USA’s participation in the Kyoto Protocol. After the US government’s withdrawal in 2001, the EU seized on emissions trading as a means to persuade other countries, notably Russia, Canada and Japan, of its commitment to the Kyoto Protocol. The ETS therefore became a matter of international diplomacy: a way to demonstrate the EU’s commitment to the treaty and thus induce other major emitters to join in with international efforts. At what level was policy enacted? The ETS provides a good example of the ongoing dilemma of whether to act at the supranational or the national level. On the one hand, the 2003 Directive established many aspects at EU level, including the choice of which sectors and gases to include, and the criteria governing the content of the National Allocation Plans. In addition, the Commission provided additional guidance for drafting the allocation plans, and had the authority to suggest revisions, or even reject them. On the other hand, Member States insisted that many important decisions should be taken at the national level. Probably the most important of these related to the total quantity of allowances to allocate and distributing allowances between sectors and installations. These were vital since they affected the distribution of costs (see below). We can see, therefore, how the choice in relation to levels and scales also influences the ability of (different) governors to influence the distribution of costs and benefits of acting.

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During the negotiation of the 2003 Directive, the division of responsibilities with regard to cap setting proved to be an especially controversial issue. Whereas the Commission favoured a decentralised approach, the Parliament preferred greater centralisation in order to ensure the scheme’s overall environmental effectiveness. Eventually, the Parliament agreed to let the Member States decide on the allocation of emissions allowances, on the condition that all the caps would be calibrated to help fulfil the EU’s Kyoto commitments (Skjærseth and Wettestad 2008). Especially in Phase I, this condition was not satisfied (see, for example, Grubb et al. 2005). Given the divergence between individual National Allocation Plans, one of the key messages to emerge from Phase I was the need for increased harmonisation on a number of issues, including cap setting, allocation methods, and how to deal with new entrants and closures (see, for example, Åhman et al. 2007). In other words, the perceived need to secure policy implementation (see below) shaped the choice of levels. None the less, even in the areas where harmonisation formally took place, such as the definition of ‘combustion installations’, there was a marked variance in how different Member States implemented EU requirements (Del Río González 2006). The revised Directive (2009/29/EC) increased the level of harmonisation by transferring the authority to set caps to the EU level, by providing common definitions and by harmonising allocation methods. Using the conceptualisation of Del Río González (2006), the EU ETS appears to have moved from a situation of ‘soft harmonisation’ in Phase I, to one of ‘relative harmonisation’ in Phase II, and more ‘absolute harmonisation’ in the revised Directive. The ending of the National Allocation Plan process suggests that Member States will only play a relatively minor role in future allocations. Although the EU ETS might thus appear to be moving ratchet-like in the direction of greater harmonisation, there are likely to be strong countervailing tendencies (Bailey 2007: 440). For instance, Member States could attempt to protect their domestic industries by arguing that they are at significant risk of carbon leakage and therefore deserve free allowances. Already in the negotiations, Member States sought to do just this by influencing the criteria for the determination of (sub-) sectors ‘at risk’ (ENDS Europe Daily 20.11.08). Another example concerns the proceeds of auctioning. In the negotiation of the revised Directive, Member States fought to retain their right to determine how any revenues collected from auctioning allowances are spent (ENDS Europe Daily 4.7.08). The compromise adopted was to grant Member States the right to specify how the proceeds are to be used, but to require them to earmark at least half of the revenues for climate-related purposes. Although these are but two examples, they show how level and scale dilemmas are likely to remain pertinent, at least in the third phase of the EU ETS. The choice of which level to act at essentially boils down to a straight trade-off between the criteria of free trade, dynamic efficiency and environmental

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effectiveness on the one hand (all pointing to the need for greater harmonisation), and the consideration of national circumstances on the other (suggesting less harmonisation) (Del Río González 2006). Although the use of auctioning in the new Directive suggests that the balance is tipping towards the former, it may tip back if and when Member States fight to protect their national interests through the provisions on carbon leakage or in the design of national auctioning processes. When and in what sequence did governors act? The introduction of emissions trading in Europe required another set of dilemmas to be confronted, relating to when and in what sequence to act. In this regard, the key choice to be made by Member States was whether to act in advance of, or after, the implementation of an EU-wide scheme. Emissions trading had been discussed in several states in the 1990s, including Sweden and the Netherlands. Although these two did not set up their own systems, two others – Denmark and the United Kingdom – did, somewhat ahead of the European Commission’s plans. The Danish scheme was established in 1999 and operated between 2001 and 2004. It closely resembled the design of the EU ETS in that it was mandatory, only covered CO2, and allocated allowances for free. The main difference was that it only covered large electricity producers (Lauge Pedersen 2007). The experience gained with running this scheme allowed Denmark to play an important part in shaping the Directive (Skjærseth and Wettestad 2008: 113–14), although it is not clear to what extent the EU ETS was influenced by the design of the Danish scheme. According to Lauge Pedersen (2007: 109), the Danish trading scheme ‘is likely to have contributed to the smooth implementation of the Emissions Trading Directive in Denmark’, as it allowed the relevant authorities to gain a first mover advantage in setting up the necessary legislative and administrative frameworks. Meanwhile, between 1999 and 2002, the UK government established a domestic voluntary emissions trading scheme, which ran until 2007. It was adopted after a group of powerful companies formed an Emissions Trading Group to lobby the government. As Nye and Owens (2008: 11) explain, ‘the longer-term regulatory interests of a small number of powerful companies dominated the policy agenda … pushing through a relatively weak and complicated programme that had little to offer mainstream business’. The group included the oil giant BP, which had already set up its own trading scheme. These companies did not like the tax – the Climate Change Levy – that the government had established in 2001 and instead pushed for what they perceived to be the least-worst alternative: a nationwide emissions trading scheme (Smith 2004). The UK scheme was attractive to UK firms, as it enabled them to secure extra financial resources for efficiency measures, and allowed them to be compensated for their Climate Change Levy payments.

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The UK case indicates that acting first may not necessarily be the best choice; hanging back and waiting for the rules of the game to crystallise can also be advantageous. This can be seen mainly in the policy fit between the UK and EU schemes, which is far from perfect (Sorrell 2003). Differences include the degree of compulsion (mandatory vs. voluntary); the scope and coverage (in terms of sectors and gases); and the implementation period. Although the UK government attempted to influence the design of the EU ETS so as to enhance the fit between the two, it was only partially successful (National Audit Office 2004). Despite these discrepancies, the national scheme at least helped to prepare British policy makers for the EU’s involvement (Nye and Owens 2008). In sum, both the Danish and UK trading schemes were crafted when the design of the EU ETS was still inchoate. It is unclear to what extent the Danish experience has influenced the design of the Directive. What is clear is that the UK failed to ensure that the design of the EU ETS fitted its preferences. Nevertheless, both countries seem to have benefited from their early experiences with the policy instrument in terms of ensuring the timely implementation of the 2003 Directive (Skjærseth and Wettestad 2008: 162). What modes and instruments did governors employ? Choices in relation to modes and instruments are not made in a vacuum, but rather in the context of political interests and a prevailing system of governance. So in the case of the ETS, although the Member States were able to choose much more freely among the available selection of instruments, the EU ended up adopting emissions trading after the other options (i.e. a tax and voluntary agreements) were essentially closed off. Having become the principal focus of EU mitigation policy, the appearance of the ETS has arguably made the EU less regulatory in its approach – at least in the environmental sphere. But does the ETS really represent a significant shift away from hierarchy? On closer inspection, the answer to this question has to be no, because the ETS comprises a mix of different modes of governance (Buchner et al. 2007). Whereas the hierarchical mode is still prevalent at the EU level (e.g. the use of a Directive to implement emissions trading, backed by an ‘enforcement package’ to guard against non-compliance), the allocation process at the Member State level has been characterised as ‘an extended dialogue between the government and industry’ (Ellerman et al. 2007: 344), implying a more network-based mode of governance with the Commission playing the role of network manager (Jordan and Schout 2006). In fact, the appearance of the ETS at EU level has helped to create new networks of actors interested in (and hoping to influence) its operation as well as that of the wider carbon market (Voß 2007: 340).

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The design of the EU ETS was thus the product of a whole host of choices between different instruments and between different modes of governing within them. These choices rendered the instrument more acceptable than the main alternatives, including traditional forms of regulation and taxation. The hierarchical aspects, including the mandatory cap and sanctions included in the Directive, secured the support of environmental groups and others concerned with the environmental integrity of European climate policy. At the same time, the Directive provides the flexibility of a market-based instrument, thereby addressing the concerns of several industries and Member States. National circumstances were further taken into account by delegating the important task of drawing up allocation plans to the individual Member States. How were the costs and benefits of governing allocated? Ex ante analyses by the European Commission predicted that emissions trading at EU level would be more cost-effective than Member States implementing their own national policies. However, they also noted that an ineffective allocation of allowances could lead to economic inefficiencies (Vainio and Zapfel 2006). This raises the question of what constituted the ‘best’ way to allocate allowances. From the point of view of allocative efficiency, economists have a strong preference for auctioning (Cramton and Kerr 2002; Hepburn et al. 2006). Free allocation, on the other hand, is argued to be at odds with other goals such as avoiding competitive distortions between Member States and ensuring cost-effective emission cuts (Böhringer and Lange 2005). Why, then, did the Directive put such a strong emphasis on free allocation? One of the main explanations is to be found in how the various allocation methods were perceived to affect the overall distribution of costs and benefits. Ellerman et al. (2007) argue that, because of its perceived compensatory effect, the idea of free allocation gained wide support from both Member States and industries. Auctioning, on the other hand, was perceived to concentrate the costs on the most polluting industries (cf. Svendsen 2005). That is why certain industry representatives argued forcefully against auctioning in the discussions preceding the 2001 launch of the Commission’s proposal (Skjærseth and Wettestad 2008: 83). It could be argued that the level of free allocation in the 2003 Directive was a way to ‘buy’ acceptance from these players (Kuik and Oosterhuis 2008: 208; Braun 2009). Other ex ante analyses assumed that trading sectors would be able to pass on the opportunity costs resulting from the EU ETS to their customers (Kuik and Oosterhuis 2008).8 However, this really only held true for the power sector, which is not exposed to international competition. When Member States handed out most allowances for free, this sector secured significant windfall profits (Sijm et al. 2006).

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In response, some Member States increased their share of auctioning in Phase II (Betz et al. 2006). Furthermore, the 2009 Directive acknowledged this concern by singling out the power sector as the first to move to full auctioning. With the power sector being able to pass through the costs of participation in the ETS, these were primarily borne by energy consumers, including energy-intensive industries, both within and outside the ETS. Even though allowances were allocated for free, these industries argued that owing to strong competitiveness pressures they were not able to purchase the additional allowances they needed or achieve the necessary additional energy efficiency. Second, they argued that they were not able to pass on the costs to consumers. Third, they faced an increase in electricity prices as a consequence of the EU ETS (van Asselt and Biermann 2007). To what extent these competitiveness concerns were legitimate remains unclear. In Phase I, the (over-) allocation of free allowances as well as the presence of long-term electricity contracts provided them with sufficient shelter (Kuik and Oosterhuis 2008). The new Directive addresses these concerns through compensating measures for sectors at risk of leakage. Finally, the perceived costs of the ETS for industries also played a role in the implementation phase, and in particular the development of the National Allocation Plans. Large emitters sought to avoid the anticipated costs of the ETS by lobbying for as many allowances as they could. The generous allocations handed out in Phase I certainly raised suspicions that Member States had been unduly influenced by industry lobbyists (Anger et al. 2008). The overallocation within Phase I automatically increased the burden carried by non-ETS sectors, as they became more responsible for achieving the Kyoto targets. In their discussion of the Phase II plans, Betz et al. (2006: 381) found that ‘the non-trading sectors [had] to bear a disproportionately high share of the reduction efforts’, with the exception of the UK. In other words, the EU ETS can also be seen as having had indirect redistributive impacts (cf. Anderson 1984) on actors outside the system. How were policy results secured? Given that the EU ETS is not a ‘pure’ market mode of governance, there was never an intention to rely solely on the ‘invisible hand’ to secure policy change. Some hierarchical oversight – a ‘visible foot’ as it were – was always deemed necessary to ensure that: the allowances traded correspond to a certain amount of emission reductions; market power is not abused (by, for example, selling or buying allowances in large amounts); and, in cases of non-compliance, appropriate sanctions are in place. It is thus not surprising that enforcement measures of a more hierarchical nature were included in the 2003 Directive. These included ‘naming and shaming’, offsetting excess emissions in subsequent trading periods, and financial penalties.

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In addition to these sanctions, the Directive made Member States responsible for putting in place a system for monitoring, reporting and verifying emissions. Furthermore, the Commission was assigned several enforcement tasks, including scrutinising the National Allocation Plans, controlling the enforcement duties of Member States, and starting infringement procedures as and when necessary (Peeters 2006). Overall, compliance with the substantive requirements of the 2003 Directive was good. This can mostly be explained by the generous emission allocations and the subsequent (2006) collapse in the carbon price which, together, made it far easier to comply with the scheme at low cost. However (and especially in Phase II), the improved performance of the EU ETS can be related to the Commission’s increased enforcement role. In late 2006, the Commission rejected almost all the National Allocation Plans it had received on the grounds that the emission reductions they entailed were not in line with Member States’ targets under the EU burden sharing agreement and so small as to threaten the viability of the entire scheme. Even though the final Phase II budgets did not appear to lead to significant emission reductions (Betz et al. 2006), it is undeniable that without the Commission’s interventions these budgets would have been considerably greater (Egenhofer 2007). Looking back across the dilemmas The previous section has outlined how different governors in the EU perceived and then confronted the governance dilemmas. The difference between the pure, ‘textbook’ form of emissions trading and the EU ETS can be explained by looking at what choices were made in the face of these dilemmas. These choices were in turn influenced by the EU’s wider system of governance, as well as by the actions of various governors. With respect to the former, the instrument choice for emissions trading was undoubtedly influenced by that the fact that the ETS could be adopted by a qualified majority vote. By contrast, the unanimity requirement associated with all taxation measures has greatly constrained their adoption in all areas of EU environmental policy (see Chapter 3). Furthermore, policy entrepreneurs within the Commission played a catalytic role by convincing other potential veto players that emissions trading addressed a number of perceived problems in the EU. With regard to the main governors and their political interests, two factors warrant discussion: the role of (sectoral) interest groups; and the tension between EU and Member State control. In the process of establishing an emissions trading scheme, interest groups will invariably attempt to influence its design, as they do in relation to all instruments. These lobbying efforts are well known (Svendsen 2005; Anger et al. 2008). They ensured that grandfathering was chosen as the main allocation method in the first phases, despite economists – and the Commission – pointing out

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that auctioning was a far better alternative. Furthermore, lobbying efforts at the national level resulted in generous allocations, which greatly reduced the economic efficiency of the entire scheme (Anger et al. 2008), and shifted the burden of achieving emissions reductions onto the non-trading sectors.9 Lobbying efforts by interest groups cannot, however, fully explain the choices made by governors. Another influential factor was the need to balance the optimal design of a trading scheme at the EU level with Member State interests. The design of the ETS reflects the desire by EU institutions to ensure a basic level of harmonisation. The more harmonised aspects include its scope and coverage, and its provisions on non-compliance, monitoring, reporting and verification. At the same time, Member States tried to maintain flexibility to ensure the scheme met their national interests. Areas in which Member States obtained considerable discretion include cap-setting and allocation, as well as the use of external credits. In addition, Member States have an obvious self-interest in ensuring that their domestic schemes are compatible with the EU’s scheme. This is true not only for the states that moved early (such as the UK and Denmark), but also those that had to subsequently engineer a good fit between the EU ETS and their pre-existing mitigation policies. With the revised Directive, the role of Member States in the implementation of the ETS has arguably decreased, although they are likely to play a role in designing national auctioning processes and determining the sectors at risk of leakage. Conclusions After several decades of theoretical discussion and experimentation with different types of emissions trading scheme, the EU established the world’s very first supranational scheme in 2005. Although the USA was the first country to deploy emissions trading, the EU has now taken on the mantle of international leadership. Driven by the practical need to identify cost-effective ways to reduce emissions to comply with the Kyoto Protocol, EU institutions, Member States and non-state actors eventually embraced emissions trading to such an extent that it is now the very linchpin of EU climate change policy. The first phases of the EU ETS are commonly regarded as a period of ‘learningby-doing’. The generous allocations handed out in Phase I, and their subsequent effects on the carbon price, provide some salutary lessons on how not to handle some of the most salient governance dilemmas. In Phase II, the immediacy of the Kyoto targets limited the room for making mistakes. Beyond 2012, the new scheme is expected to play a vital part in achieving the EU’s internal 2020 target. In this regard, the revision of the 2003 Emissions Trading Directive addresses many of the teething problems encountered in the first two phases by centralising key decisions on cap-setting and distributing allowances. However, it remains to be seen whether

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Member States are genuinely willing to transfer more power to the EU institutions to ensure the environmental integrity and efficiency of the entire scheme. This chapter has sought to explain how ‘textbook’ ideals are shaped by political processes taking place within a wider system of governance. In the design, adoption, and implementation of emissions trading in Europe, governors were confronted with a host of governance dilemmas. First, various – but by no means mutually exclusive – rationales led to the adoption of the ETS in its current, rather hybrid form, which blends hierarchical, network and market-based modes of governing. Second, choices made in relation to the level and scale of action produced a complicated division of competences between the EU and Member States; one which appears to be moving ineluctably towards greater centralisation. Third, in terms of timing and sequencing, Member States that acted ahead of the EU derived some first-mover advantages, even though the policy fit between the domestic and European schemes was not perfect, as evidenced by the adjustment problems experienced by the UK. Finally, important choices were made that affected the distribution of costs and benefits of the ETS. Of these, the most significant was the initial choice to allocate allowances for free instead of auctioning them. The way in which these governance dilemmas were confronted was affected by the interaction between the EU’s system of governance and more political factors. As an environmental matter, the adoption of emissions trading did not require unanimity in the Council – a barrier that has always held back attempts to deploy fiscal instruments at EU level. Furthermore, lobbying by interest groups contributed to the acceptance of the instrument and influenced its design and implementation. Finally, finding a balance between the desire of EU institutions to craft an optimal instrument and Member States’ wish to account for their differing national circumstances influenced the overall extent of harmonisation. Although governors have had to make a series of tough choices in the past, many dilemmas have not been solved; rather, they look set to continually emerge, albeit in different forms and at different times. One of the most salient choices concerns the overall division of competences between the EU institutions and Member States. The dilemmas associated with this choice loomed large during the negotiation of the 2009 Directive. The dilemma of how to distribute costs and benefits will also remain on the table for a long time. As long as there are powerful political actors who perceive that the EU ETS might impose significant costs on them, attempts will be made to influence its design and implementation. Acknowledgements The author thanks the following for their assistance in the research underpinning this chapter and aspects of Chapter 11: Thomas Bernheim, Christian Egenhofer,

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Henrik Hasselknippe, Catrinus Jepma, Sanjeev Kumar, Karsten Neuhoff, Joachim Schleich, Jos Sijm and Jon Birger Skjærseth. Notes 1. These allow Member States to issue more allowances in the case of unexpected events, subject to the Commission’s agreement. 2. Under the EU burden sharing agreement (see Chapters 3 and 4). 3. These are €40 and €100 per tonne of CO2 emitted in excess of what is allowed in Phases I and II, respectively. Furthermore, in the next year, the operator of an installation would also need to surrender an amount of allowances equal to the excess emissions. 4. For a discussion of arguments for and against the use of external credits, see Woerdman (2001). 5. The use of credits from nuclear power and land-use and forestry projects is prohibited, whereas their use from large hydropower projects is conditional on them meeting certain requirements. 6. As noted in Chapter 1, carbon leakage generally refers to an increase of emissions in less regulated countries that can be related to reductions in countries with more stringent climate policies in place. Carbon leakage can occur, for example, through a shift of consumption of carbon-intensive goods towards cheaper import substitutes, resulting in more carbon-intensive production in other jurisdictions, or through relocation of industrial production to regions without a carbon price. 7. The determination of the (sub-) sectors at risk will be made by the Commission. 8. Although the idea that free allowances still impose costs may seem counterintuitive, see Sijm et al. (2006) for an explanation. 9. Asymmetries in information played an important role in this regard because ‘governments had little choice but to rely heavily on voluntary submissions from industry’ (Ellerman et al. 2007: 340).

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7 Adapting to a changing climate: an emerging European Union policy? tim rayner and andrew jordan

Introduction This chapter examines the EU’s attempts to develop a coherent policy on adaptation to the impacts of climate change. The term ‘adaptation’, although it lacks a widely accepted definition, is taken to refer to public policies, practices and projects that moderate the damage caused by and/or exploit the opportunities associated with climate change (EEA 2007a). A wide range of policy sectors are likely to be affected, including water, agriculture, forestry, fisheries, biodiversity, insurance, transport, energy, tourism and health (EEA 2004, 2007a), all of them critically important to the long-term economic, environmental and social well-being of the EU. For example, reduced water availability, wind damage and higher temperatures are likely to have a detrimental effect on agricultural production. Increases in the frequency and intensity of extreme events such as storms and floods could cause damage to infrastructure, with knock-on impacts on the financial services and insurance sectors. Even damage outside the EU could have significant effects, reducing the supply of primary resources (COM (2007) 354 final) and/or triggering an in-flow of migrants (High Representative and European Commission 2008). Whereas mitigation efforts have been successfully coordinated at national, European and international levels, the locus of adaptation decisions is often more local, that is amongst the most directly affected actors and institutions (Klein et al. 2007). In the face of considerable uncertainties surrounding the spatial and temporal incidence of future climate impacts, as well as the diversity of regions and national institutional arrangements, a ‘one size fits all’ approach is regarded as neither necessary nor desirable. However, local decisions are enabled and constrained in important ways by governance frameworks at higher levels, be they national or supranational. Moreover, key policies in a range of sectors significantly at risk from climate change are already made at EU level. Given the ongoing tensions between the EU and Member States in relation to task allocation issues (see Chapter 2), these

Climate Change Policy in the European Union, ed. A. Jordan, D. Huitema, H. van Asselt, T. Rayner & F. Berkhout. Published by Cambridge University Press. © Cambridge University Press 2010.

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distinctive features of the adaptation problematique make level and scale dilemmas particularly pointed. Related to this is another dilemma: who should act? Will public authorities lead or can civil society actors be relied upon to adapt themselves? The answer to this question, and the kinds of public policy measures that flow from it, depend in turn on the overall framing of the adaptation problem. This is another running theme in this chapter. Finally, we highlight the dilemma of who should pay for adaptation, given that some governments may struggle to address the fiscal difficulties arising from future climate impacts (Mechler et al. 2010). The remainder of this chapter is structured as follows. The next section gives an overview of the origins, development and characteristic features of adaptation policy at national and EU levels. In the third section, the processes of policy design and adoption are examined from the perspective of the six governance dilemmas outlined in Chapter 2. The final section draws together the main threads of the argument and identifies the factors – both general and specific – that have most strongly affected the design and functioning of the EU’s adaptation policy. We show how, given the institutional constraints pertaining in the EU, climate policy ‘mainstreaming’ has emerged as the preferred ‘solution’ to the EU’s adaptation needs, but how its progress has been slow. This theme is explored further in the specific case of water management in Chapter 8. The main phases of policy development One of the stark messages of the IPCC’s Third Assessment Report was that climate change was already happening, and that due to time lags in natural systems, no amount of mitigation can ever prevent it entirely (Watson et al. 2001). This warning was reinforced in the IPCC’s Fourth Assessment Report (Klein et al. 2007: 748). ‘Adaptation’ can take multiple forms, occur at different levels of governance, and in different policy sectors, presenting governors with a range of possibilities. Measures can be classified according to their: timing (anticipatory, concurrent, reactive); intent (autonomous, planned); spatial scope (local, widespread); and form (technological, behavioral, financial, institutional, informational) (Smit and Wandel 2007). A wellknown typology distinguishes between ‘building adaptive capacity’ – generally considered to include elements such as economic wealth, technology, infrastructure, information, knowledge and skills, institutions, etc. – and ‘taking adaptive action’ (West and Gawith 2005), with the latter assumed to follow the development of the former. To complicate matters, the projected impacts of climate change remain highly uncertain. According to the Commission, while impacts will be felt across the Continent, Southern Europe and the entire Mediterranean Basin, mountainous areas (especially the Alps), coastal zones and Arctic regions of the EU stand to be

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most significantly affected (COM (2007) 354 final: 5). These impacts are likely to exacerbate existing socio-economic inequalities (European Commission 2007a) and test prevailing governance systems to their limit. Not surprisingly, governors and societal actors at a range of governance levels have started to develop adaptation policies (Swart et al. 2009). What is still not clear is the extent to which deliberate interventions need to be made by governors at national or supranational levels (‘planned adaptation’), and how far adequate responses will emerge independently among affected actors and communities at more local levels (‘autonomous adaptation’). Policy development at national level Although both mitigation and adaptation action is required by the FCCC, the policies adopted throughout the 1990s tended to concentrate on the former (Swart and Raes 2007: 289–90).1 When adaptation was discussed in international fora, it was mainly in the context of developing countries, widely perceived to be more vulnerable to climate change impacts (Schipper 2006). In many parts of the world, but particularly in Europe (Swart and Raes 2007: 289), adaptation remained a ‘taboo’ subject (Pielke et al. 2007), even discussion of which could, it was feared, undermine the prospects for strong mitigation policies (Schipper 2006; GagnonLebrun and Agrawala 2007). Adaptation was only fully recognised as a legitimate problem for public policy making in all regions when the weight of scientific evidence began to suggest that some climate change was, as noted above, unavoidable. The IPCC Third Assessment Report constituted a landmark in this respect, helping to usher in what has been termed a more ‘realist’ perspective (Klein and MacIver 1999). Thus, in the 2000s, the need for adaptation gradually came to be recognised as a policy objective among industrialised and industrialising countries alike, and National Communications to the FCCC were routinely including assessments of climate change impacts and vulnerability (Gagnon-Lebrun and Agrawala 2007). However, these communications revealed that governments were treating the need for adaptation with different degrees of urgency and with differing emphases. Some states famed for their ambitious mitigation policies (notably Germany) (see Chapter 3) were noticeably slower at developing adaptation policy frameworks (Gagnon-Lebrun and Agrawala 2007) than some of the supposed laggards, such as Spain. Although such self-reporting by states provides only a crude indicator, it shows that the political attention devoted to adaptation issues is just as variable as it is in relation to mitigation. Furthermore, interesting differences in emphasis across regions are observable. For example, within the Mediterranean region, Italy and Slovenia

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appear to have no actions to cope with extreme events, whereas Greece reports the most (Massey and Bergsma 2008). As of 2009, eight Member States had published national adaptation strategies: Finland (in 2005), Spain (2006), France (2007), and Denmark, Germany, Hungary, The Netherlands and the UK (in 2008). Five more were preparing strategies, but 14 had yet to start (European Commission 2009a). The origins of EU adaptation policy Adaptation policy at EU level has tended to develop in the wake of national policies and then in a relatively piecemeal fashion. In contrast to mitigation, the advantages of EU-level action were not immediately clear in the 1990s. Given the ‘taboo’ on the issue noted above, there were certainly no obvious policy entrepreneurs in the Commission willing and able to push for the EU to be given a more active role. Governors at local levels who were keen to develop stronger adaptive responses by networking with their counterparts in other Member States struggled to secure EU financial support (Interview, Bryan Boult, Hampshire County Council, 22.10.08). In general, coordination was lacking at EU or even national level. It took a series of high-profile focusing events (see Chapter 2), such as the 2002 floods in Central Europe and the 2003 heatwave (Swart et al. 2009), to prod the Commission into acting. At a ‘flood summit’ held in August 2002, the Danish Presidency and Commission together took the view that the affected Member States should not be left to cope with over €15 billion worth of damage. Within two weeks, the Commission proposed the creation of a new emergency instrument to mobilise financial assistance.2 With unanimous support from Member States and the European Parliament, the EU Solidarity Fund was established by a Council Regulation (2012/2002) and started work in 2004. The Fund provides financial aid for emergency measures in the event of natural disasters – including floods and fires, but not droughts – causing direct damages above €3 billion at 2002 prices (or 0.6% of gross national income). Payments from the Fund are limited to covering non-insurable damages. The Floods Directive, discussed in Chapter 8, also originated from this sequence of events. Since 2006, consideration has also been given to setting up a permanent EU rapid reaction force to deal with forest fires that regularly rage through Southern Europe (Barnier 2006). Whether these developments can be classed as adaptation policy, or ad hoc responses to emergencies that may or may not be related to climate change, is a moot point. The development of a more concerted EU-level adaptation policy accelerated, however, under the Dutch and UK Presidencies in late 2004 and late 2005, respectively. Both states regarded themselves as leaders in the field (Swart et al. 2009). The conclusions of the December 2004 Environment Council cited a European Environment Agency report (EEA 2004) which claimed that the impacts

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of climate change were already being felt across different parts of Europe. The need for adaptation was also mentioned in the Commission’s 2005 Communication, Winning the Battle Against Global Climate Change (see Chapter 3), which stressed that even achieving the 2 °C warming target would not obviate the need for significant adaptation efforts across the globe, and highlighted the fact that only a few Member States had examined the need for adaptation policies. It also warned that, because private insurance might not adequately cover the associated damages, governments could eventually be forced to step in. The debate on a European policy response subsequently evolved in a specially convened impacts and adaptation working group in the second ECCP, launched in October 2005 (see Chapter 3). The emergence of EU adaptation policy No Member State objected to the EU becoming involved in adaptation policy on the grounds of principle (Entec 2008). On the contrary, many saw the ECCP as a useful forum in which to develop and exchange new knowledge, and to allow the Commission to catch up with thinking in some of the leading Member States (see also Chapter 8). Policy in some of the most climate sensitive sectors (e.g. agriculture, water, biodiversity, fisheries, and energy networks) was already harmonised at EU level, so the idea of additional EU involvement had an obvious logic. Because incorporating new adaptation goals into these sectors would require extensive involvement from the associated DGs, representatives from these were invited to join relevant ECCP meetings. Meanwhile, awareness grew in DG Environment that piecemeal solutions developed at national level might lead to problem displacement across borders, as had been witnessed when flood defence measures enacted in Germany led to flooding in The Netherlands. So, despite earlier misgivings that focusing on adaptation might detract attention from the EU’s emphasis on strong mitigation, DG Environment – encouraged by a number of the more active Member States – gradually came around to the idea that securing a more prominent role for the EU was not just logical, but necessary. Meanwhile, support for a stronger EU role was also growing within civil society and at lower levels of governance. For example, local authorities in the Eurocities network used the ECCP as a platform to lobby for an ‘adaptation directive’, which they saw as a means to guarantee adequate financial support from complacent national governments (Cowan 2006; interview, Chitra Nadarajah, ESPACE Project Manager, 7.8.08). However, the reaction from leading Member States such as the UK and the Netherlands made it clear to DG Environment that an adaptation directive would be regarded as overly prescriptive and was therefore ‘not a goer’ (C. Cowan, pers. comm.), leading it to rely on the Policy Coordination Method.

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The deliberations of the ECCP impacts and adaptation working group were intended to inform a Commission green paper. When eventually published in June 2007, this identified four key ‘pillars’ of future EU action: (1) Developing adaptation strategies and ‘mainstreaming’ them into existing EU policies and funding mechanisms. (2) Integrating adaptation policy into the EU’s dealings with non-EU states. (3) Supporting research and ensuring it is taken up in policy making. (4) Involving European society, business and public sector in the preparation of future adaptation strategies (COM (2007) 354 final: 14).

For the most part, it sought only to identify options for further discussion, but the absence of strong commitments disappointed some stakeholders (Entec 2008). Some ideas that had appeared in early drafts were noticeably absent. For example, plans to make adaptation measures an ‘integral part’ of the EU budget ‘with their own committed appropriations’ (European Commission 2007b: 21–22) were dropped. Similarly, references to the role of adaptation in ongoing agricultural policy reforms were toned down after discussions within the Commission. Other critics, while acknowledging the Commission’s lack of competence in the area, expressed disappointment that more emphasis had not been placed on the importance of strong spatial planning in preserving healthy ecosystems and improving adaptive capacity (see, for example, Institute for European Environmental Policy 2007). In terms of pillar three, DG Research has funded several large academic research projects which focus on adaptation, including ADAM (see Preface). Networks of local and regional government planners and regulators have also been active, using such means as the Interreg programme3 to fund their own capacity-building efforts through initiatives such as ESPACE (European Spatial Planning: Adapting to Climate Events) and BRANCH (Biodiversity Requires Adaptation in Northwest Europe under a Changing Climate). Monitoring bodies such as the EEA and the OECD have also become increasingly active as shapers of an emerging adaptation policy discourse (see, for example, EEA 2007a, b; OECD 2008). Among industry groups, the insurance sector has been by far the most active, given its obvious exposure to the risks associated with climate change (see, for example, Association of British Insurers 2007). Under pillar (4), an additional stakeholder and expert engagement effort in the form of a proposed European Advisory Group was quietly neglected in favour of policy development through a new Adaptation Task Force within the Commission (led by DG Environment’s Water Unit), charged with turning the Green Paper into a White Paper. However, none of these efforts represented a significant departure from the status quo, leaving pillars (1) and (2) (‘mainstreaming’) as the main focus for future EU policy efforts.4 While DG Environment officials were satisfied that the existing

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provisions of the Water Framework Directive were already conducive to mainstreaming (interview, Lars Mueller, European Commission, 30.7.08) – a claim that is examined in Chapter 8 – in other areas revision of legislation, such as the Energy Performance of Buildings Directive, was considered necessary (Centre for European Policy Studies 2008). In terms of funding mechanisms, climate change objectives were declared to have been already mainstreamed into the Community strategic guidelines for rural development for the period 2007–13. Commitments were also made to integrate both mitigation and adaptation concerns into the Cohesion Fund (COM (2008) 301/4). The Green Paper also noted the possibility of developing wholly new policies, but did so in a rather brief and non-committal manner. The main candidates identified included integrating national insurance markets (which was already an aspect of the internal market programme), reviewing the functions of the EU Solidarity Fund (see discussion of costs and benefit dilemmas, below) and exploring the possibility of ‘innovative financing arrangements’ to support the most vulnerable states and sectors (COM (2007) 354 final: 20). EU policy beyond the Adaptation White Paper The publication of the Green Paper significantly raised awareness of the adaptation agenda across the Commission. Other DGs were subsequently engaged by DG Environment in a fresh round of discussions to inform the development of the White Paper. Although formally led by DG Environment, this would have to be signed off by the whole Commission and be subject to a full impact assessment process. This raised the stakes considerably and made for more complex and time-consuming negotiations (European Voice 5–11.3.09: 2). When it emerged in 2009, the White Paper contained no radical initiatives, promising instead to prepare the ground for a more comprehensive strategy after 2013 (COM (2009) 147 final). To this end, all sectoral policies would be reviewed, and the development and exchange of knowledge and best practice fostered by a new Clearing House mechanism. Separate papers were issued on health and water, coastal and marine issues, while DG Agriculture produced its own document (European Commission 2009b). Arguably, this was symptomatic of internal differences that, despite all the discussions since 2005, the Commission was unable to resolve. How were the governance dilemmas confronted? What was ‘the problem’? The more mitigation-focused chapters in Part III have shown how ‘the problem’ of climate change has been viewed alongside other perceived ‘problems’, including

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economic competitiveness and energy insecurity. In these areas, the tried and tested ‘solutions’ developed by the EU have included the completion of the internal market programme and deepening integration on foreign policy issues. In the adaptation sphere, things have played out rather differently. No immediate concern, akin to energy insecurity, has spurred policy development, and nor has adaptation been viewed by EU institutions as an area in which public support for deeper European integration can be fomented. On the contrary, adaptation has mainly been seen as a national issue by the majority of Member States. Moreover, the possibility of ‘autonomous adaptation’ by societal actors irrespective of governmental steering raises the question of how far adaptation should even fall within the remit of national governments, let alone EU public policy. Not surprisingly then, there has been little appetite within DG Environment to repeat the carbon/energy tax fiasco by trying to use the adaptation issue to ‘creep’ into new policy areas. Moreover, it has been far too busy servicing international and EU mitigation policy to significantly advance adaptation policy. With the possible exception of insurance, adaptation has not been seen as directly affecting the movement of traded products. Therefore, the single market dimension of adaptive planning (and hence the perceived need to harmonise national approaches) has not been nearly as obvious as it has in relation, say, to renewable energies (Chapter 5) or energy-efficient products (Chapter 3). This is not to deny that there is a market dimension to adaptation, however. The Stern Review (prominently cited in the Green Paper), for example, lists uncertainty and imperfect information, missing and misaligned markets and financial constraints as three main barriers to ‘adaptive capacity’ (Stern 2006: 411). However, to date the crossborder dimensions of this have not emerged strongly, although a Commission Communication on Water Scarcity and Drought (COM (2007) 414 final) hinted at possible future legislative responses to water scarcity, including an extension of the Energy-Using Products Directive to water-using devices, a new law on the water performance of buildings and an expansion of the EU efficiency labelling scheme to promote water-efficient products. Although the links to cohesion and environmental policy could in principle be clearer, framing the adaptation problem in such terms is not necessarily straightforward. Regarding cohesion, the policies of DG Regional Policy have to a large extent been underpinned by a model of economic competitiveness in which environmental factors are not prominent. Regarding environmental policy, linking adaptation to key areas of legislation such as biodiversity raises a potential dilemma in that if climate impacts are seen to reduce the value of existing protected areas, pressure may grow to ‘de-designate’ some sites and allow them to be developed. Awareness of such implications may have lain behind the apparent reluctance of DG Environment to lead on the issue of adaptation sooner than it did.

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Even among specialists there are fundamental debates about the locus, aims and instruments of adaptation. Berkhout, for example, argues that adaptation policies could address up to seven different objectives, including: informing the potentially vulnerable; assisting in the provision of early warning and disaster relief; providing incentives for appropriate investments and enabling adaptation; mainstreaming ‘climate proofing’5 of public policy (in cases where the state either provides collective goods or has a regulatory or ownership role); planning and regulating long-term infrastructural assets to reduce future vulnerabilities; regulating adaptation ‘spillovers’ (to prevent the most vulnerable social groups bearing new social and economic risks); and compensating for the unequal distribution of climate impacts (Centre for European Policy Studies 2008). Four of these objectives can be found Adaptation Green Paper. However, three of them play a less prominent role: facilitating adaptation in the market; regulating spillovers; and compensating for the unequal distribution of climate impacts (Centre for European Policy Studies 2008: 5–6). This pattern was broadly repeated in the White Paper. Part of this pattern is related to the governance system of the EU, namely its preference for ‘liberalisation by regulation’, limited financial resources and relatively weak capacity for (re)distributive policy (see Chapter 2). Hence the Commission has largely focused on what is most feasible: sharing information (via Policy Coordination Methods) and pledging to develop existing policy areas (e.g. agriculture, regional policy, environmental protection) in ways that take heed of adaptation. Interestingly, the White Paper never precisely defines adaptation. However, the overall objective of the EU’s Adaptation Framework is said to be ‘to improve the EU’s resilience to deal with the impact of climate change’ (COM (2009) 147: 7). The importance of overcoming market failures and preventing autonomous adaptation from leading to ‘mal-adaptation’ – shifting the impacts or exacerbating the problem in another area, country, sector or social group – are also heavily stressed as justifications for policy intervention. The results of DG Environment’s consultation on the Green Paper highlighted some interesting discrepancies between the Commission’s framing of the adaptation ‘problem’ and those of other actors. Over half of respondents felt that it did not focus on the right things (Entec 2008). One specific area of concern was that of migration – be it across Member State borders or from third countries – a topic on which neither the Green nor White Papers had much to say. It is also not an area in which the EU enjoys strong competence.6 However, in March 2008, a paper on the international security dimension of climate change, prepared jointly by the Commission and the EU’s High Representative for Foreign Affairs, Javier Solana, was presented at the Spring European Council. It raised the alarming prospect of millions of environmental migrants by 2020, and recommended ‘considering … the further

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development of a comprehensive European migratory policy, in liaison with all relevant international bodies’ (High Representative and Commission 2008: 10). It remains to be seen whether Solana’s apparent attempt to use adaptation policy to expand the EU’s role in such matters finds support among Member States.

At what level was policy enacted? The previous section demonstrated that adaptation lacks a stable and settled ‘problem framing’ in Europe: even experts disagree about what exactly policy should address. This disagreement about problems and problem framings has become closely tied to the way in which the EU has handled level and scale dilemmas. In many ways, the most significant barrier to the development of supranational adaptation policy in Europe has been the unwillingness of many actors (including but by no means wholly restricted to states) to allow the EU to intrude into policy issues that are mainly or wholly under state control. For example, although spatial planners can play a significant role in adaptation – think of the siting of certain infrastructures on river and coastal flood plains for example – such a logic has not yet convinced national governments that an EU dimension is warranted. This is despite the fact that many existing EU policies (e.g. the Strategic Environmental Assessment Directive) and programmes (transport and rural development for example) are intimately bound up with national land-use planning practices (Wilson and Piper 2008), but often conflict with one another (EEA 2007c). The protection of European soils offers a further example, where despite its potential to further both mitigation and adaptation goals, several Member States have not been prepared to countenance a proposed directive (European Environment Bureau 2009). The Commission, strongly backed by the Parliament (European Parliament 2008), has certainly begun to stress the need for a stronger EU-level policy. Its Green Paper made a case for deeper EU involvement on several grounds: (1) adaptation has cross border implications (flooding, for example, shows little respect for political borders), and efforts should be co-ordinated in a cost-effective manner; (2) certain sectors are largely integrated at EU level through the single market and common policies and it makes sense to integrate adaptation goals directly into them; (3) investments made through EU funding mechanisms could be vulnerable to climate impacts; (4) solidarity among Member States is necessary to ensure that the poorest are protected; (5) knowledge and experience developed nationally should be shared; (6) the EU should show leadership globally, especially in relation to mainstreaming (COM (2007) 354 final: 12). None of these were elaborated or justified in much detail and arguably only numbers (2) and (3) really provided the Commission with a solid rationale for additional EU action. Consequently, the

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Commission has decided to concentrate on mainstreaming adaptation into existing policies rather than develop new ones. When and in what sequence did governors act? In adaptation policy making, this dilemma has manifested itself in several ways. Firstly, it is related to the relationship between mitigation and adaptation. Put crudely, should Europe concentrate its efforts on limiting climate change by strong mitigation, or adapting to its consequences as they unfold?7 The former implies early and decisive action to de-carbonise societies; the latter could involve the early adoption of adaptive measures or might simply add up to a series of highly reactive actions. As noted above, the EU has mainly concentrated on mitigation policy, but as the scientific understanding of impacts developed and the demands from nonstate actors for greater state involvement grew, it gradually developed a policy response. However, unlike mitigation policy, the desire for a stronger EU role has been relatively subdued, even within DG Environment. Second, in the EU system in general, Member States often have to make a difficult choice between ‘going it alone’ or waiting for the Union as a whole to act and then following in its wake (see Chapter 2). In the area of adaptation, these typical leader–laggard dynamics have not been particularly evident, at least thus far. The actions taken by ‘lead’ Member States, such as the UK and Finland, have certainly helped to push the EU to act (interview, Abigail Howells, ex-European Commission, 21.7.08), but do not appear to have reaped them a significant ‘firstmover advantage’ (although arguably it strengthened their hand in resisting the idea of a directive). This is because adaptation does not share the same cross-national characteristics as mitigation policy areas such as renewable energy or emissions trading, where a policy approach can be more easily ‘scaled-up’. One issue area in which cross-border implications might arise would be if state aids offered by one Member State (e.g. to protect vital energy generation facilities from flooding, for example) were perceived to undermine the functioning of the single market by discriminating unfairly against industries in other Member States. This does not, however, appear to have been a problem thus far. Thirdly, timing and sequencing dilemmas also manifest themselves in terms of the relationship between key policy making cycles. For example, in implementing the Water Framework Directive, Member States had a ‘window of opportunity’ in 2008 to conduct a ‘climate check’ of their draft River Basin Management Plans. Once adopted, these plans – and the investments that follow on from them – will be difficult to revise. Chapter 8 explains why this opportunity was missed. A further aspect has been the importance of synchronicity – or lack of it – between policy cycles as a factor constraining the advancement of adaptation policy at the EU level.

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The impact assessment accompanying the White Paper makes clear that an important range of potential options was discarded at an early stage, including ‘any option implying substantial changes in EU financing schemes, which cannot be foreseen under current multi-annual financial framework, as well as any option implying preempting post 2013 (sic) multi-annual financial framework’ (European Commission 2009a: 37). The apparent inability to challenge current investment patterns or decisively commit to future spending evident in both these examples raises the danger of ‘lock-in’ to unsustainable practices. What modes and instruments did governors employ? There are a whole host of different modes and instruments that EU governors could – in theory – employ to address the adaptation challenge. However, the sheer breadth and multi-sectoral nature of the agenda and array of instruments on offer makes it difficult to generalise with respect to how mode and instrument dilemmas have been addressed. In an attempt to reduce the complexity, some analysts (e.g. OECD 2008; DEFRA 2008; West and Gawith 2005) have started by identifying a range of generic ‘adaptation options’ (see also Burton 1996). These include: bearing losses; sharing losses (through private insurance or relief from public funds); modifying threats (e.g. through flood control measures); preventing effects (through structural/technological measures), etc. (OECD 2008: 88). Identifying precisely which instruments to use requires more specific information on the timing and magnitude of impacts as well as the range of potential adaptation strategies in an affected sector. In some respects, the decision to pursue adaptation policy at more local levels has meant that mode and instrument dilemmas are being more acutely felt at lower levels of governance than in Brussels. At EU level, the choice has been very much conditioned by external exigencies. So rather than attempt to act in a hierarchical, regulatory or strongly redistributive way, the Commission has opted for (or been obliged to adopt) a much looser, network-oriented mode of governance, akin to the Policy Coordination Method. This may conceivably evolve into more formalised systems of information sharing, benchmarking and peer reviewing (COM (2009) 147 final). However, in the short term, the Commission looks set to continue focusing on the mainstreaming of adaptation issues into existing (and new) policies and funding operations, and encouraging Member State governments to do likewise. This (highly conditioned) choice is not surprising given the uncertainties surrounding future impacts, the novelty of the whole subject of adaptation and its strongly local character, all very much strengthened by the political importance of the informal norm of subsidiarity. In the back of many governors’ minds is, of course, the legal issue of competence and whether granting the EU greater

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competence over internal adaptation matters could open the door to requests to harmonise many cognate areas of internal policy making (specifically, spatial planning and infrastructure development) as well as external policy making (remembering that greater internal competence leads inexorably to greater external competence in international negotiations – see Chapter 2). The focal point of many of these sensitivities has been the issue of whether the EU should (eventually) adopt an ‘adaptation directive’ that requires states to draw up national adaptation strategies and submit them to the Commission for review (European Commission 2009a). As already noted, supporters believe that it would help to coordinate efforts better and force less advanced governments to offer more support to local authorities. In many cases, public authorities are better able to encourage adaptation than markets, which may be preoccupied with very short-term issues (Stern 2006: 412). Opponents, on the other hand, feel that it would be unnecessary, that it would be overly prescriptive on issues where key trade-offs should be decided locally, and could open the door to future ‘competence creep’. So, once again, it is evident that the way in which mode and instrument dilemmas have been confronted has been inextricably intertwined with the way in which the EU has engaged with level and scale and problem perception dilemmas. How were the costs and benefits of governing allocated? EU adaptation policy is – as noted above – so inchoate that it seems rather premature to consider how perceptions of costs and benefits might have affected policy choices. Although the EEA and some national authorities have started to collate information about the costs and benefits of adaptation interventions, in comparison with emissions trading or renewable energy the overall picture remains far from complete and a whole series of methodological issues remain unresolved (EEA 2007b; European Commission 2009a). Nevertheless, at the very least a wariness about committing to large-scale spending in the absence of more certain knowledge of impacts, within the context of existing budgetary constraints, can be noted. The White Paper states that priority should be given to adaptation measures that would generate net social and/or economic benefits irrespective of uncertainty in future forecasts (no-regret measures), and to measures that are also beneficial for mitigation (COM (2009) 147 final). Although the emerging evidence strongly suggests that the ‘net’ impacts of climate change on Europe are likely to be relatively modest compared with those on many developing countries, there may well be strong distributional effects, with southern states likely to be hardest hit. Moreover, fears are growing that some governments may struggle to address the fiscal difficulties arising from future climate impacts (Mechler et al. 2010). This is likely to encourage the most badly

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affected states to continue pushing for a common, EU-wide response (there is a direct parallel with the cohesion states’ support for EU-wide mitigation policies) via common mechanisms such as the Solidarity Fund. The Lisbon Treaty’s new ‘Solidarity Clause’ (Article 188r), which states that the EU and its Member States ‘shall act jointly if a Member State is (…) the victim of a natural or man-made disaster’, appears to move in this direction. However, scepticism has been expressed about the willingness of EU governments to share costs (ENDS Europe Daily 15.4.09). According to the Committee of the Regions (2007), the Solidarity Fund has proven inadequate at supporting disaster-hit regions. It argues that drought relief should be eligible for support from the Fund and urges the Commission to consider lowering its damage threshold for assistance from €1 billion or 0.5% of gross national income. In an attempt to address some of these failings, the Commission’s Green Paper raised the possibility of ‘innovative financing arrangements’ to support ‘the implementation of coordinated adaptation strategies, especially in the most vulnerable regions and sections of society in Europe’ (COM (2007) 354). For its part, the White Paper merely promised to continue exploring such options. However, although it might serve to raise the profile of the EU and present it in a favourable light to national publics, any decision to boost the Solidarity Fund raises a significant dilemma of ‘moral hazard’ and mal-adaptation. The concern of some critics is that the availability of post-disaster solidarity funding may discourage governments from taking necessary preventive measures that would constitute a sounder long-term allocation of resources. The Commission has indicated that it is aware of this dilemma, by expressing its readiness to examine all requests for aid following droughts so long as it ‘is not the indirect result of inefficient water management and that appropriate drought management plans are in place’ (COM (2007) 414 final: 9). Critics claim that, rather than providing post-disaster relief, a more appropriate and efficient function for the Fund would therefore be to act as a reinsurance mechanism for national and regional insurance pools covering public infrastructure, relief payments and cultural heritage protection (Hochrainer et al. 2010). In theory, competitively priced insurance products would send accurate signals to the market about the economic cost of climate risks. Firms and households would respond by ‘climate-proofing’ their operations (to reduce premiums) or, if the premium is considered too high, by relocating to a less risky area (OECD 2008: 103). However, insurance cover is by no means universal in all Member States (Bouwer et al. 2007) and insurers may overcharge for climate risks or refuse to cover some actors. Therefore, public policy measures may eventually be required to overcome these market imperfections (OECD 2008).

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How were policy results secured? Given its embryonic state, it is still too early to analyse the implementation and enforcement of an ‘EU adaptation policy’. Indeed, to the extent that many adaptations are being taken autonomously by private actors we might conclude that policy implementation is not yet as big a challenge as it is for mitigation policy. Certainly, adaptation policy lacks the discipline imposed by international treaty commitments, compliance with which can be – and is being – evaluated. The White Paper proposed a framework to encourage, rather than enforce, implementation in Member States. Specifically, an Impact and Adaptation Steering Group, made up of representatives from the Member States involved in the formulation of national and regional adaptation programmes, is intended to help develop the EU strategy and consider the appropriate level at which action should be implemented. Initially, the group is due to focus on monitoring progress made in strengthening the knowledge base, in particular setting up the Clearing House mechanism (COM (2009) 147 final). Despite adaptation being at such an early stage, a number of potential challenges are already identifiable with regards the mainstreaming agenda. The White Paper and associated impact assessment stress the need for a review between 2009 and 2012 in each policy area of how policies could be re-focused or amended to facilitate adaptation. This should pay attention to how any proposed measures impact upon and interact with policies in other sectors (COM (2009) 147 final: 8). Adaptation options, it is said, will vary by sector and in some cases will require financing. Although understanding of how current EU policies enable and/or constrain adaptive planning at lower levels is relatively undeveloped, it is becoming clear that mainstreaming is by no means an easy matter (Biesbroek et al. 2009; Urwin and Jordan 2008; Acclimatise and Hampshire County Council 2007). It is certainly not an administratively light activity, and nor does it avoid having to confront politically sensitive implementation and enforcement dilemmas. If the rather disappointing experience with environmental policy integration at EU level is anything to go by (Jordan and Lenschow 2008), effective climate policy integration (i.e. mainstreaming) could well be a very long haul. For now, the extent of mainstreaming achieved at EU level appears rather variable.8 The EU’s Common Agricultural Policy is regularly accused of fostering mal-adaptation by, for example, encouraging the cultivation of water-intensive crops in dry areas (see, for example, de Pous 2009). Environmentalists expressed disappointment that the ‘Health Check’ of the CAP reform (COM (2007) 722) was not used as an opportunity seriously to address the effects of agriculture on rural ecosystems, the resilience of which is seen as critical to successful adaptation (Birdlife International 2008). In the area of energy, the 2007 Green Paper noted that the Commission has a role, and that its Strategic Energy Technology Plan will

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consider adaptation. The Commission has started work on revising the relevant regulatory framework to include an adaptation dimension. Turning to regional policy funding instruments, here the EU has somewhat more developed implementation mechanisms. After the Commission has taken a decision on the ‘operational programmes’, the Member States and regions then have the task of implementing them, in other words selecting the thousands of projects, then monitoring and assessing them. All this work takes place through management authorities in each country and/or region. However, most of the project-level funding decisions are made by sub-national, not EU authorities and, while their spending programmes are subject to Commission approval, ‘there is little evidence …. that [the Commission] … is attempting to use this power to ensure that a larger share of the funds is … used in direct support of the Union’s policy to fight climate change and adapt to its effects’ (Adelle et al. 2008: 59). This takes us back to some of the level and scale dilemmas noted above. Looking back across the dilemmas The most salient dilemmas confronting governors have centred on how the EU should frame the overall adaptation problematique and at what level to act. In terms of the former, adaptation lacks a stable and widely agreed framing. The links between adaptation and some of the problems that have done such a lot to drive mitigation policy making – for example, energy insecurity and public disenchantment with the EU – have not been evident. Adaptation is certainly difficult to present to the public as a ‘big idea’ around which future European integration can be organised. In some respects, it has been pushed aside in favour of efforts that deal with the mitigation side of the climate change conundrum. In a multi-level governance system that has only two main levels, the EU and the national, the handling of level and scale dilemmas has to a large extent boiled down to a straight choice between the two. For a number of fairly immediate reasons, the Member States have been generally unwilling to permit EU institutions to interfere in what they perceive to be ‘domestic’ matters, such as land-use planning. However, their reluctance is by no means absolute. In some areas – funding for post-disaster assistance, for example – there has been much greater agreement that the EU should have a role: witness the remarkably rapid birth of the Solidarity Fund. The reliance on mainstreaming into existing areas of competence and information sharing is a symptom of this reluctance. It also reflects the unwillingness of some of the sectoral DGs to see a more radical overhaul of the EU budget, which might remove funds from ‘vulnerable’ or carbon-intensive investments and earmark them for adaptationrelated ones. DG Environment has therefore navigated problem perception and level and scale dilemmas by proceeding cautiously towards an EU adaptation policy, ever

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conscious that to be more ambitious in this area risks diverting precious political, administrative and economic resources from its strategically important mitigation work. Thus, the delay to the Commission’s adaptation White Paper until after the agreement of the 20–20–20 package is arguably not surprising. The way in which the EU has confronted these two dilemmas has, to a large extent, preconditioned its engagement with the other four: *

*

*

*

Timing and sequencing: the EU has concentrated on mitigation, to a large extent leaving Member State policy makers and civil society actors to deal with adaptation; Modes and instruments: in the face of myriad possible instruments, the EU has opted to concentrate on mainstreaming adaptation into what it is already doing (i.e. producing sector-specific legislation and disbursing sectoralised funds); Costs and benefits dilemmas: a small EU role to date has meant less pressure on the overall budget (itself a political hot potato). It also means that the EU does not have to get involved in the messy politics of allocating costs and benefits to particular groups (c.f. the intense political battles over car emissions, emissions trading and renewable energy). Implementation and enforcement: with little adaptation policy to implement, this dilemma has not had to be directly confronted. It is possible that stronger international or national pressure to develop stronger adaptation goals and targets may emerge, but in the meantime, the Commission is concentrating on improving monitoring and encouraging the exchange of knowledge and best practice.

Conclusions In the 2000s, the EU gradually expanded the ambit of its climate policy to include adaptation. Despite this, and when set against the progress made on issues such as renewable energy and the ETS, adaptation hardly constitutes a fully-fledged, coherent sub-area of EU climate policy. Some commentators have understandably argued that since all policies have the potential to affect in some way the EU’s vulnerability to climate change or ability to adapt, ‘it is not yet clear where the field of “EU adaptation policy” starts and where it ends’ (Centre for European Policy Studies 2008: 6). None the less, the fact that adaptation has its own policy-making processes that have produced first a Green and then a White Paper speaks in favour of treating it as a specific sub-area, albeit one with rather blurred edges. Moreover, the title of this chapter suggests that it remains an ‘emerging’ area of policy, which has evolved in the wake of national adaptation policies. Consequently, it is misleading to think of EU policy ‘Europeanising’ national policy in this case; the two have co-evolved. What has enabled and what has constrained the development of EU adaptation policy? The enabling factors can be summarised as follows. First, increasingly firm scientific evidence has moved adaptation onto the EU’s institutional agenda. Second, a number of high-profile focusing events such as the 2002 floods and the

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2003 heatwave have played an important role in catalysing policy development, even though it is difficult to link them directly to climate change. Before 2005, policy responses at EU level took an ad hoc and piecemeal form. Thereafter, EU adaptation policy grew in a more concerted manner. Third, the underlying belief (principally in the Commission) that climate change is another policy area in which the EU should act together (note the informal norm of economic and social cohesion) has been important. Although future impacts are likely to be felt differentially (and hence trigger different national and regional responses), adaptation has important cross-national implications that imply a role for some supranational coordination. With the EU enjoying competence in so many areas that stand to be affected by climate change, it is logical that the Commission should have some role in this endeavour. Fourth, action by ‘leaders’ has generated interest in adaptation issues, encouraging the Commission to pursue greater harmonisation lest interstate differences became too pronounced. Among the factors that have constrained the development of policy, apart from the DG Environment’s somewhat limited administrative capacity, concern that action on adaptation could ‘dilute the message’ about the necessity of early and forceful mitigation should be noted. Within DG Environment, nervousness that adapting to climate change might jeopardise hard-won policy gains, particularly in the field of biodiversity conservation, should also be borne in mind. Elsewhere in the Commission, the better established DGs, particularly DG Agriculture, have tried to keep policy ambitions in check (see European Voice 5–12.3.09: 2). Consequently, policy (as expressed in the Green and White Papers) has not heavily impinged on core areas of EU activity, such as agriculture and budgetary affairs. Opposition from some states has also constrained further harmonisation, and led to more reliance being placed on Policy Coordination Methods that do not allow EU institutions to dictate policy to Member States. The Policy Coordination Method is suited to this task because individual Member States are not nearly so reliant on one another to achieve policy results in relation to adaptation as they are for mitigation, for example through the ETS. For mitigation, common working is essential to reach common targets; for adaptation, it is important but arguably not vital. Finally, the continuing scientific uncertainties surrounding the precise incidence of impacts have provided an excuse for delay in responding. As a final concluding observation, it is striking how policy development with respect to adaptation and mitigation has remained largely separate. In future, the EU will be faced with the task of consolidating a more integrated portfolio of climate policies, exploiting synergies between its adaptation and mitigation actions (such as dedicating the proceeds from emissions trading auctions to adaptation expenditure, as is provided for under the revised ETS directive) and reconciling them all with ever-present concerns over subsidiarity and global competitiveness. What form this

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integration takes, and to what extent solidarity between the most and least negatively affected will be possible given prevailing financial constraints, remains to be seen. These issues are picked up and further explored in Chapters 11 and 12. Acknowledgements The authors thank the following for their assistance with the research underpinning this chapter and aspects of Chapter 11, in many cases involving interviews: David Baldock, Peter Berkowitz, Bryan Boult, Laurens Bouwer, Caroline Cowan, Peter Gammeltoft, Abigail Howells, Andre Jol, Joanne Linnerooth-Bayer, Chitra Nadarajah, Thomas de Lannoy, Aurore Maillet, Lars Mueller, Claudia Olazabel, Jake Piper, Guenther Raad, Elizabeth Wilson, Ronan Uhel, Sonja van Renssen, Paul Watkiss and Karin Zaunberger. Notes 1. Article 4.1 of the FCCC and Article 10 of the Kyoto Protocol oblige parties to formulate and implement measures to facilitate adaptation to climate change. 2. Previously, there had been no EU civil protection fund; competence for such matters has traditionally resided with Member States. 3. This initiative, financed under the European Regional Development Fund (ERDF), aims to stimulate interregional cooperation. 4. Since the focus of this book is on the internal governance of the EU, we do not investigate its dealings with third countries here. 5. Ensuring the sustainability of investments over their entire lifetime taking explicit account of a changing climate is often referred to as ‘climate proofing’. 6. It falls between the first and third pillars of the EU. 7. For an in-depth treatment of the relationship between adaptation and mitigation, see Hulme and Neufeldt (2010). 8. The water sector is covered in Chapter 8.

References Acclimatise and Hampshire County Council (2007). What Policies Present Barriers to Adaptation in the UK and the Netherlands? ESPACE Project Extension Action 1b: Final report. Southwell: Acclimatise. Adelle, C., M. Pallemaerts and D. Baldock (2008). Turning the EU Budget into an Instrument to Support the Fight against Climate Change. SIEPS Report No. 4. Stockholm: Swedish Institute for European Policy Studies. Association of British Insurers (2007). Insuring our Future Climate: Thinking for Tomorrow, Today. London: Association of British Insurers. Barnier, M. (2006). For a European Civil Protection Force: Europe Aid. Report by Michel Barnier. http://ec.europa.eu/commission_barroso/president/pdf/rapport_barnier_en.pdf, accessed 8 May 2009 Biesbroek, G. R., R. J. Swart, W. G. M. van der Knaap (2009) The mitigation – adaptation dichotomy and the role of spatial planning. Habitat International, 33, 230–7. Birdlife International (2008). CAP Health Check: The Environment Gets a Placebo Treatment. http://www.birdlife.org/news/extra/europe/health_check.html, accessed 20 May 2009

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Gagnon-Lebrun, F and S. Agrawala (2007). Implementing adaptation in developed countries, Climate Policy, 7, 392–408. High Representative and European Commission (2008). Climate Change and International Security. Paper from the High Representative and European Commission to the European Council, S113/08, 14 March 2008. Brussels: Council of the European Union. Hochrainer, S., J. Linnerooth-Bayer and R. Mechler (2010). The European Union solidarity fund: its legitimacy, viability and efficiency. In Assessing Adaptation to Extreme Weather Events in Europe, ed. Z. Kundzewicz and R. Mechler. Special edition of Mitigation and Adaptation Strategies for Global Change (in press). Horrocks, L., J. Mayhew, P. Watkiss, A. Hunt, T. Downing (2006). Objective Setting for Climate Change Adaptation Policy. Report prepared by AEA Energy and Environment, Metroeconomica, SEI for Defra. http://www.ukcip.org.uk/index.php? option=com_content&task=view&id=482, accessed 8 May 2009. Hulme, M. and H. Neufeldt (2010). Making Climate Change Work for Us: European Perspectives on Adaptation and Mitigation Strategies. Cambridge: Cambridge University Press (in press). Institute for European Environmental Policy (IEEP) (2007). An Overview of Issues in the Upcoming Green Paper on Adaptation to Climate Change. Brussels: Institute for European Environmental Policy. Jordan, x. and y. Lenschow (2008). Author to supply reference please. Klein, R. W. and D. C. MacIver (1999). Adaptation to climate variability and change. Mitigation and Adaptation Strategies for Global Change, 4(3–4), 189–98. Klein, R. J. T., S. Huq, F. Denton et al. (2007). Inter-relationships between adaptation and mitigation. In Climate Change 2007: Impacts, Adaptation and Vulnerability, ed. M. L. Parry, O. F. Canziani and J. P. Palutikof. Cambridge: Cambridge University Press, pp 745–77. Massey, E. and E. Bergsma (2008). Assessing Adaptation in 27 European Countries. IVM Report No. W-08/20. Amsterdam: Institute for Environmental Studies. Mechler, R., S. Hochrainer, A. Aaheim et al. (2010). A risk management approach for assessing adaptation to changing flood and drought risks in Europe. In Making Climate Change Work for Us: European Perspectives on Adaptation and Mitigation Strategies, ed. M. Hulme and H. Neufeldt. Cambridge: Cambridge University Press (in press). Organisation for Economic Cooperation and Development (OECD) (2008). Economic Aspects of Adaptation to Climate Change Costs, Benefits and Policy Instruments. Paris: OECD. Pielke, R., G. Prins, S. Rayner and D. Sarewitz (2007). Lifting the taboo on adaptation. Nature, 445(7128), 597–8. Schipper, L. (2006). Conceptual history of adaptation in the UNFCCC process. Review of European Community & International Environmental Law, 15(1), 82–92. Smit, B. and J. Wandel (2007). Adaptation, adaptive capacity and vulnerability. Global Environmental Change, 16, 282–92. Stern, N. (2006). The Economics of Climate Change. Cambridge: Cambridge University Press. Swart, R. J. and X. S. Raes (2007). Author to supply missing reference please Swart, R. J., G. R. Biesbroek, S. Binnerup et al. (2009). Europe Adapts to Climate Change: Comparing National Adaptation Strategies. Report No. 01/2009. Helsinki: Partnership for European Environmental Research (PEER). Urwin, X. and Q. Jordan (2008). Author to supply complete reference please. Watson, R., D. J. Dokken, M. Noguer et al. (2001). Climate Change 2001: Synthesis Report, Contribution of Working Groups I, II, and III to the Third Assessment Report of the

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8 Adaptation in the water sector: will mainstreaming be sufficient? eric massey, dave huitema, andrew jordan and tim rayner

Introduction The previous chapter highlighted the concept of mainstreaming and its emerging importance in EU adaptation policy. In this chapter, the implications of this agenda for a specific policy sector – water – are examined. In spite of its economic roots, the EU has in fact been confronting issues associated with the governance of water for over three decades. In fact, water quality constituted one of the very first priorities identified by EU environmental policy makers. In common with some of the other policy areas we have examined, the European Commission has been somewhat handicapped by the lack of a clear legal mandate to regulate. At first, this problem was partially resolved by framing water quality problems as threats to the common market and/or public health, which gave rise to a somewhat uneven pattern of intervention. In the late 1990s and early 2000s, however, the increased competence of the EU in environmental matters permitted a thorough overhaul of the water acquis, from which emerged an entirely new approach, pursued through the Water Framework Directive (2000/60/EC) and separate legislation on floods (Directive 2007/60/EC). At the time that the water acquis was rapidly developing, climate change was not a prominent concern at EU level. In fact it was only with the creation of the ECCP II in 2005 (see Chapter 7) that the implications of climate change began to be seriously explored by water experts in the EU. By 2007, the EU’s Green Paper on Adaptation (COM (2007) 354 final) had framed the response not in terms of new legislation, but in terms of the mainstreaming of climate change concerns into existing water policies. The rest of this chapter is set out as follows. After a brief history of EU water policy, we explore the way in which the EU and its Member States, when constructing the water policy framework, have sought to confront each of the six governance dilemmas identified in Chapter 2, and how adaptation concerns were later incorporated. In the final sections, we look across all the dilemmas and analyse which ones most shaped the current situation. Where possible, we attempt to analyse these

Climate Change Policy in the European Union, ed. A. Jordan, D. Huitema, H. van Asselt, T. Rayner & F. Berkhout. Published by Cambridge University Press. © Cambridge University Press 2010.

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interactions through the lens of adaptive governance, that is, one that acknowledges the uncertainties surrounding natural resources management and strives to build resilience into the resource system (see Huitema et al. 2009). Our analysis shows that current adaptation efforts address some of the shortcomings of the water acquis, but that they do not yet correspond to the ideal of adaptive governance. The main phases of policy development It is easy to forget that Europe’s rivers were very heavily polluted in the 1960s and 1970s, after decades of industrialisation. Water quality was one of the initial priorities of EU environmental policy, as set out in the first environmental action programme launched in 1973 (Benson and Jordan 2009). Although these beginnings were modest, EU policies quickly expanded to address a host of different issues, including surface and ground water quality as well as flood protection and prevention. The 1970s – 1980s: water pollution rises up the European agenda As public disquiet about, and scientific evidence of, the detrimental effects of water pollution grew, the EU responded by setting a series of quality standards. The 1975 Directive on Drinking Water (75/440/EEC) and the 1976 Directive on Bathing water (76/160/EEC) attempted to set EU-wide standards for water quality, as well as the level of pollutants emitted into water bodies. As EU environmental policy lacked a firm basis in the founding treaties (see Chapter 3), the Commission had to rely heavily on Articles 100 and 235 of the Treaty of Rome, which allowed it to act to further single market aims. Thus these two Directives were justified on the grounds that they removed trade barriers and avoided distortion of competition arising from the existence of multiple standards, as well as helping to ensure public health (Kallis and Nijkamp 2000: 2). Ultimately, while the environmental effectiveness of these Directives has been questioned, they did at least provide the foundations for later policies that were stricter, legally more secure and better coordinated with other interventions (Kallis and Nijkamp 2000). The 1990s: the Commission exploits its stronger legal mandate By the mid-1980s, public concern over the continued deterioration of water bodies (surface, ground and coastal) due to increased pollution loads had grown (Benson and Jordan 2008). The adoption of the 1987 Single European Act provided a firmer legal basis for developing new and revising old EU water policies. The Commission was subsequently asked by the Member States to address the

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shortcomings of existing legislation. Whereas the first Directives had tended to set environmental quality standards for different kinds of water, attention began to shift towards ‘controlling emission levels as a means of achieving the desired standards’ (Kaika 2003: 4). Awareness grew that the two issues were linked and should be confronted in an integrated manner, with a particular focus on managing pollution from agricultural production and urban wastewater systems. Four new and more complex Directives emerged in this phase: a revised Drinking Water Directive (98/83/EC); the Urban Waste Water Treatment Directive (91/271/EEC); the Nitrates Directive (91/676/EEC); and the Directive on Integrated Pollution Prevention and Control (96/61/EC). These were primarily geared towards achieving environmental quality standards by targeting point and non-point sources by means of fairly prescriptive regulatory approaches. Member States were required to finance the necessary monitoring, reporting, enforcement, and infrastructure upgrades through their national budgets. Not surprisingly, this financial burden was not well received, although in some cases additional EU funding was made available. By the early to mid-1990s, EU water policy had burgeoned from a handful of directives to a myriad of rules and procedures – often conflicting and overlapping – covering different types of water body (Kaika 2003; Grimeaud 2004; Benson and Jordan 2008). Not surprisingly, questions soon arose regarding the mounting costs of implementation, estimated at some €150 billion for the Urban Waste Water Treatment Directive alone (Kallis and Nijkamp 2000: 6). Invoking the principle of subsidiarity (see Chapter 2), Member States began to put forward a range of environmental, political and economic arguments for reform (Kallis and Nijkamp 2000). In essence, EU legislation was not seen to account sufficiently for either natural or economic variations across Europe. Southern Member States forcefully argued that existing policies focused too much on water quality, a problem that was of less concern for them than quantity issues. Other Member States (principally the UK) continued to argue that standards for emissions into water bodies should not be harmonised, but should reflect the absorptive capacity of receiving water bodies, on the grounds that larger bodies (e.g. an estuary) could absorb more pollutants than smaller ones. As well as protesting to the Commission, Member States quietly ‘underimplemented’ policies they objected to. These tensions were particularly apparent in the way in which Member States went about implementing the Nitrates Directive. By 1997, some six years after it entered into force, not a single country was fully compliant, and 13 were the subject of Commission infringement proceedings (Kallis and Nijkamp 2000). Mounting concerns about the costeffectiveness of EU policies led more and more actors to advocate the use of new environmental policy instruments such as taxes and voluntary agreements (see, for example, Jordan et al. 2003).

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These developments coincided with efforts to make EU environmental policy more consistent with the Lisbon Agenda’s focus on jobs, growth and economic competitiveness (Benson and Jordan 2009), and associated calls for ‘Better Regulation’ (COM (2002) 278). As Grimeaud (2004) argues, the emergence of the Water Framework Directive stemmed not only from the perceived need to manage water in a clearer and more coherent manner, but also from the wider pursuit of Better Regulation at EU level. The reformation of the water acquis can be traced back to 1995, when the Environment Council and the European Parliament first asked the Commission to develop new legislation with the goal of ‘rationalizing all the directives related to water and to increase public awareness about water resources’ (Kaika and Page 2003: 315). After five years of arduous negotiations between the Parliament, Member States and the Commission, the Water Framework Directive was finally adopted in 2000. It stipulates that water should be managed under the principle of integrated water resources management at the level of river basins and sub-basins, with the aim of ensuring that different types of water body achieve ‘good status’ by 2015 (Article 4). Previously, the EU would have set harmonised standards, but in the Water Framework Directive more governance functions were devolved to river basin authorities that were required to develop ‘River Basin Management Plans’. These plans are to be reviewed and updated on a six-year cycle. The first cycle was due to be completed in 2009. Where a river basin crosses national boundaries, the Directive stipulated that a transboundary authority should be created to manage it. Not all governance functions were devolved, however. Several polluting substances (mainly the more toxic and persistent ones) continued to be regulated by the Commission. The need to conserve adequate supplies drove what is arguably one of the Directives’s most important innovations: the introduction of water pricing. Pricing has the potential to act as an incentive for actors to use water resources more sustainably, the Directive’s overarching objective. According to the Directive, Member States are required to ensure that the price charged to water consumers – such as for the abstraction and distribution of fresh water and the collection and treatment of waste water – reflects the true costs. Although some countries had long experience with the use of such instruments, many others did not. In one sense, the development of the Water Framework Directive was an exercise in regulatory simplification, in that it combined a number of existing directives in one overarching framework, moved the authority for regulating certain substances down to a lower level, and allowed Member States to permit derogations (i.e. to delay the achievement of standards). But it also sought to respond to a number of wider concerns: that the water acquis was inflexible and overly prescriptive; that it failed to exploit the potential of new instruments or incorporate the views of

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stakeholders; and that it was not sufficiently cost-effective (Kallis and Nijkamp 2000; Kaika and Page 2003; Grimeaud 2004). 2005–2009: the rise of climate change concerns Despite the fact that the Water Framework Directive marked a significant departure from the status quo, it has been criticised on a number of grounds (see Galaz 2005). First, given that it is meant to be the EU’s flagship water legislation, water quantity issues are conspicuously absent. Second, it does not address extreme water events such as floods or droughts. Third, it makes no mention of climate impacts on water resources. Between 1998 and 2002, there were more than 100 major floods, causing some €25 billion worth of damage and resulting in 700 fatalities (COM (2004) 472 final). The most devastating of these occurred along the Elbe and Danube rivers in August 2002 (European Parliament 2005). In response, environment ministers called on the Commission to develop more proactive policies to help societies better withstand future flooding events. The resulting Communication on Flood Risk Management and Prevention (COM (2004) 472 final), while not directly attributing the problem to climate change (it pinned more of the blame on poor land-use planning such as over-construction in flood plains), identified climate change as a factor that will gradually exacerbate future flooding. By 2007, this Communication had evolved into a Directive (2007/60/EC), giving EU water management, to some degree, a quantity dimension. In many respects the structure of the Floods Directive is similar to that of the Water Framework Directive, in that it adopts a river basin management approach and aims to manage flood risks at that scale through the establishment of ‘flood risk management plans’. These plans must be developed by the river basin authorities – if Member States desire, the same as the ones established under the Water Framework Directive – and submitted to the Commission every six years. The first completed plans are due in 2015. Under Article 9, they have to be co-ordinated with the implementation of the Water Framework Directive from the second River Basin Management Plans. In line with the integrated river basin approach, the Floods Directive also requires Member States to coordinate their flood risk management practices in shared river basins, including with third counties, and to avoid taking measures that would increase flood risk in neighbouring countries. Again, public participation is supposed to play a role in reviewing the plans. The EU’s role in addressing water scarcity and drought is somewhat less developed. The European Environment Agency’s report Impacts of Europe’s Changing Climate was one of the first to take an EU-wide view, concluding that ‘water availability will [as a result of human-induced climate change] change over Europe in the coming decades’ (EEA 2004: 5). More detailed information was, however, in short supply. For this reason, national water directors (the highest ranking officials in

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Member State ministries of water management) requested the Commission’s Joint Research Centre to conduct a more detailed study outlining climate change predictions and scenarios. The need to highlight impacts on the hydrological cycle and to identify Europe’s most vulnerable areas, with the aim of informing subsequent policy responses, were singled out as key priorities (JRC 2005). Whereas southern Member States have lobbied hard for water scarcity and drought issues to be addressed by a separate directive – their hope being that this would eventually lead to the provision of EU funding – northern Member States have generally argued that the Water Framework Directive was already sufficient (ENDS Europe Daily 3.9.07). The result of these differences was a classic EU compromise: a non-binding Communication on Water Scarcity and Drought (COM (2007) 414 final) which called on Member States to fully implement the Water Framework Directive, while remaining cognisant of how water resources would be allocated and consumed in a changing climate. However, as noted in Chapter 7, if implementation of the Directive fails to adequately address these concerns about quantity, the Commission has raised the possibility of a future programme of legislation to manage the demand for water. How were the governance dilemmas confronted? Having sketched out the evolution of EU water policies, we now turn to the way in which governors have confronted the various governance dilemmas identified in Chapter 2. Regarding problem framing, it is noticeable that concerns over climate change and adaptation came, arguably, too late to have much of an impact on EU water policies, which have essentially been directed at addressing ‘non-’ climate problems. Regarding level and scale dilemmas, the introduction of the ‘basin’ and the ‘sub-basin’ as specific governance levels, and the division of tasks across authorities here, the Commission and the Member States, is noteworthy. In terms of the modes and instruments of governance, EU action – as far as water quality is concerned – is dominated by regulation, which is partly intended to enable the use of communicative and economic policy instruments at lower levels of action. As for water quantity, in the area of flooding, EU action involves the establishment of an information exchange system between the Member States, a flood risk communication system with EU citizens, and the provision of funds to address the consequences of major disasters (see Chapter 7 for an account of the EU Solidarity Fund). In terms of drought, the EU has remained relatively inactive because of disagreements between the Member States over the need for dedicated legislation. What was ‘the problem’? The Commission initially developed its competence in the water field by claiming that EU-wide legislation was needed to facilitate the achievement of a single market

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and/or protect human health. Since 1987, the EU’s involvement has been formally sanctioned by the Single European Act. The current policies on water quality, as embedded in the Water Framework Directive, frame the problem in terms of a deviation from a natural ecological state or, when that state is not attainable, a deviation from the maximum ecological potential of a water body. Rather than letting the desired level of water quality be decided by way of an open decisionmaking process, the Directive assigns an important role to experts (ecologists, hydrologists, etc.) in setting the relevant goals. Experts determine how to classify the water body under consideration, using established guidance documents (produced at the EU level) that describe which natural state should be attained. This reliance on expert-led decision making is a recurring theme throughout the Directive. For example, determinations about the cost-effectiveness of certain measures and their general acceptability are to be made using cost-benefit analysis, a method that again places experts centre stage. As already noted, in the late 1990s and early 2000s the Commission devoted more of its energies to consolidating and simplifying the existing water acquis. The preamble of the Water Framework Directive trumpets the importance of integrated water resources management and of stakeholder and citizen involvement. These words ring relatively hollow, however, when one realises that the very parts of the Water Framework Directive that were intended to address water quantity concerns turned out to be too controversial, and had to be dropped from the legislation as finally adopted (the Floods Directive is an attempt of sorts to patch the resulting hole). In Member States where quality and quantity issues were already being addressed in an integrated way, the Water Framework Directive thus arguably implied a step back. Similarly, it should be borne in mind that stakeholder and citizen participation is expected to occur at a relatively late stage of the decision-making process and in effect goes no further than the provision of information. With regard to the manner in which climate change has been perceived in the framing of water legislation, it is noticeable that the Water Framework Directive has been geared around ‘non-’ climate problems. In many ways, climate change has not (yet) hugely affected the priorities of the water sector. Chapter 7 noted that adaptation policy is still a relatively inchoate field, often characterised by quasiphilosophical debates about key terms and approaches. In the EU, it has been viewed by the majority of Member States as a largely national issue; in fact, one in which governance by non-governmental actors is expected to play an important role. In the field of water policy, the EU’s powers had been hard won over a number of decades. As the most fundamental reform of the acquis (the development of the Water Framework Directive) was effectively already completed when EU adaptation policy began to develop, the next best thing was to plug remaining gaps

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(through, for example, the Floods Directive or the Communication on water scarcity and drought) and mainstream the entire acquis with a climate dimension. As noted in the previous section, work by the EEA and JRC identified the need for better evidence on impacts from climate change on the hydrological cycle and to identify Europe’s most vulnerable areas as key tasks. From 2005, an ECCP working group on impacts and adaptation was asked to ‘identify good practice in the development of adaptation policy and foster learning (…) and explore a possible role for EU adaptation policies’ (ECCP II 2006: 2). Drawing on the 2005 JRC study, it highlighted three areas that are likely to be most affected by climate change: the water cycle; water quality; and management of water resources (ECCP II 2006). The group’s report stressed that adaptation would be needed to address issues of flooding, water scarcity and drought, and water quality. However, it offered welcome reassurance that the processes of integrated water resource management embodied in the Water Framework Directive, including its stepwise and cyclical ‘ecosystemsbased’ approach, were well equipped to handle the challenge without the need for additional legislation. In other words, the group effectively recommended mainstreaming, a concept that, as noted in Chapter 7, was emerging as the principal focus of EU adaptation policy more generally. Given its prominence in policy discourse, it is therefore interesting to consider the basis on which mainstreaming could in principle take place. There are a number of goals in the Directive relating to aquatic ecology, unique and valuable habitats, drinking water resources and bathing water. Once established, they are assumed to remain constant until 2021, when there will be an opportunity for revisions to be made. However, this is to assume a rather static environmental context, unaffected by climate change. A concerted approach to mainstreaming should therefore arguably involve reopening the debate on long-term water goals in the context of climate change uncertainties. However, there appears to be little appetite for this among the Member States and the Commission. This issue is picked up again in the discussion on implementation below. At what level was policy enacted? As many of Europe’s largest rivers are transnational in nature, attempts to address water quality issues typically have to engage with collective action problems and significant power asymmetries between upstream and downstream nations. The history of water policy demonstrates how these issues have increasingly been addressed at EU level, although more so in relation to quality than quantity.1 The Water Framework and Floods Directives are both based on the idea that different types of problem have a ‘natural’ level at which they should be addressed, where there is a ‘fit’ (Young 2002) between the problem and the level at which it is being

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handled. More concretely, under the Water Framework Directive the idea is to develop policies at the basin and sub-basin level, leaving only the most persistent and dangerous chemicals to be regulated at EU level. The Member States therefore continue to play an important role, as it is they who determine how the waters in their territories are subdivided into sub-basins, and how the Directive is implemented in them. They are also responsible for monitoring and reporting to the Commission on behalf of the basin organisations in their territories. The EU’s approach reflects orthodox thinking among water experts as expressed in the concept of integrated water resources management. This concept emphasises the river basin as the most ‘natural’ level for water policy. As Schlager and Blomquist (2000: 1) observe: ‘[f]or the last 25 years, prescriptions of the water policy literature have centred upon two themes. The first is that “the watershed” is the appropriate scale for organising water resource management (…). The second is that since watersheds are regions to which political jurisdictions almost never correspond, and watershed-scale decision making structures do not usually exist, they should be created’.

Since the early years of the twenty-first century, however, a number of scholars of water governance have challenged this orthodoxy, suggesting that a division of tasks and ‘nesting’ of institutions is necessary (see, for example, Karkkainen 2004; Meinzen-Dick 2007). Other scholars have started questioning both the feasibility and desirability of unitary river basin authorities (Biswas 2004) and have instead proposed cooperation across boundaries as the key variable in explaining policy effectiveness (cf. Falkenmark et al. 2004; Mostert 2009). They posit that the boundaries of river basins are not necessarily clear or ‘natural’. Still further, some suggest that a patchwork of institutions at various overlapping levels may actually be more practical and advantageous from an environmental perspective than a unitary river basin authority, essentially because of the possibility of reorganising it according to the task at hand and the flexible use of economies of scale (see, for example, Imperial and Hennessey 1999; Ostrom and Janssen 2002; Conca et al. 2006). Despite the message that collaboration across levels and scales is important, Member States have set up river basin and sub-basins in ways that deliberately do not trespass across national boundaries. Although, as we have already shown, climate change concerns arrived too late on the policy agenda to make much of an impact on the formulation of EU water policy, there have been calls to remedy this. Many (but not all) Member States have taken steps to alter their water resource management policies to cope with predicted future climate impacts. By 2006, countries such as the UK, Germany and The Netherlands had a number of water-related adaptation measures in place. With adaptation rising up national political agendas, the Commission released a Green Paper in 2007 and a White Paper in 2009 (see Chapter 7), accompanied by a staff working paper

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specifically focused on water (European Commission 2009), justifying greater EU involvement. EU institutions (especially the Commission and the Parliament) have justified their involvement in adaptation policy in general on the grounds that it will increase solidarity by ensuring that the poorer, more disadvantaged Member States are able to respond and recover from climate change-related events such as floods. However, neither the Green nor the White paper explicitly mentioned how this would be achieved. One obvious route is via existing EU funds. The Commission’s 2004 Communication stipulated that the EU’s Structural Funds could be used to pay for flood prevention and protection infrastructure, research, and reconstruction and redevelopment efforts (COM (2004) 472 final). Moreover, as Chapter 7 described, as a result of the 2002 floods, the EU created its Solidarity Fund to provide financial support to communities following natural disasters. Although the EU has acknowledged that most adaptation activities are to be developed and implemented at Member State, river basin and sub-basin level, the Commission has argued that there has to be adequate ‘political coherence’ across these activities such that adaptation efforts are ‘co-ordinated in a cost-effective manner’ and that good practices are shared in a timely and consistent approach (COM (2007) 354 final: 13). The Commission’s role is that of a promoter and coordinator of national adaptation actions, essentially via the Policy Coordination Method. An issue that arises, however, from allocating responsibility to the level of river basins and sub-basins is the adequacy of the communication between authorities at this level and their respective Member State governments. River basin authorities must submit management plans to their national governments, which then pass them to the Commission. The extent to which Member State governments review them to check for consistency and continuity appears to vary. In some cases they are simply bundled together and forwarded to Brussels with no oversight (interview, Ecologic, 6.2.09). Consequently, information about adaptation actions that straddle river basins and regions may not be shared between the various Member States concerned. To some extent the Commission is cognisant of this issue, and used the Adaptation White Paper to stress that information on adaptation should be shared across levels and boundaries. However, although Member States and river basin authorities could in principle draft their plans jointly before submitting them to Brussels, the Commission has not yet taken concrete steps to encourage this. When and in what sequence did governors act? As noted in Chapter 7, the Commission has tended to develop adaptation policy in the wake of a number of more advanced Member States. In the water sector, the Commission also came under political pressure from leading Member States to become more involved (interview, German Environment Ministry official, 12.11.08).

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For example, the German Presidency of 2007 hosted a two-day international symposium to move the debate forward (Ecologic 2008).2 Although there were no concrete policy outcomes, this meeting concluded that the EU should build on existing EU water legislation by mainstreaming it with a climate change dimension (BMU 2007). Many Member States, most notably the UK, The Netherlands and Germany, had implemented adaptation policies prior to the 2007 Green Paper. Moreover, as early as 2002, the topic was already on national policy agendas (Massey and Bergsma 2008). By 2006, every Member State had reported to the FCCC Secretariat that it was making efforts to adapt its water sector. Despite this, the range of policy actions being undertaken varied greatly across the stages of the policy cycle, with the majority of states reporting that they had identified areas requiring further adaptive measures. For those states that had reported implementing adaptation policies, they varied from hard measures (e.g. flood defence mechanisms) to softer approaches aimed at increasing adaptive capacity (e.g. scoping studies and flood risk mapping). Looking specifically at issues of timing and sequencing within the existing legislation, the Water Framework Directive sets out a strict schedule for implementation. The goals set in the first River Basin Management Plans must be achieved by 2015, unless there are reasons for a formal ‘derogation’ (which must then be explained to the Commission). Although the ability to permit derogations has introduced greater flexibility into the Directive, by 2015 all waters should achieve ‘good status’. By 2021, after a review and recalibration of the River Basin Management Plans in 2015, the targets have to be met and the Water Framework Directive is supposedly more or less ‘over’. However, climate change is predicted to affect water systems up to and long after 2021. The Commission has made it clear that the 2015 River Basin Management Plans must take into consideration climate impacts – though it is not yet specified how and the requirement is not legally binding – and that such impacts cannot be used as a justification for any derogations (ENDS Europe Daily 27.4.09). The situation after 2021 is even less clear. Even if all water bodies were to have achieved good status, the climate will continue to change. At present, the Water Framework Directive does not specify how policy makers should respond. Under the Floods Directive, Member States are expected to have performed preliminary risk assessments by 2011, and to update them every six years thereafter. By 2013 and 2015, flood hazard maps and flood management plans, respectively, are to be created and updated every six years. The Water Framework Directive and the Floods Directive are slightly different in that the former assumes a fixed substantive target and stipulates the time frame within which it should be achieved. The Floods Directive, on the other hand, does not set a fixed target; it merely sets out a procedure for identifying and communicating flood risks. With a less onerous

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process than the Water Framework Directive, it is likely that less resistance will be encountered to updating the results if the risks alter because of climate change. What modes and instruments did governors employ? It is well known that the EU mostly functions as a regulatory state, which in principle corresponds to the use of hierarchical modes of governance. Regulation has also been the main instrument of choice in EU water policy since the early 1970s although, in more recent times, a more differentiated pattern of use has started to emerge. In the realm of water quality, the Water Framework Directive has been described as an exercise in ‘multi-modal governance’ (Moss 2004) because it contains regulations in the classical sense (prescribing certain water quality standards), mixed with some organisation building (the river basin authorities), some ‘self-steering’ (in the sense that the goals must be developed locally), participatory decision making and the use of economic instruments (i.e. for cost recovery). However, the participatory ambitions of the Directive are relatively modest, as the planning process is, as noted above, mainly the business of scientists and government-appointed experts. The same low ambition level is apparent in relation to the principle of cost recovery. When the Directive was adopted, many Member States stated that they would only apply it very selectively (European Environment Bureau 2001). In the realm of water quantity, the underlying assumption appears to be that adaptation will to a large extent occur autonomously, or through Member State-level investment or regulation. Heavy reliance is placed on market-based modes of governance, with Member States and the Commission having the role of ‘market facilitator’ in the sense of making information available (risk maps, etc.) to enable autonomous adaptation. However, as Chapter 7 noted, DG Environment has mooted the possibility of new EU-level legislation to manage the demand for water. Furthermore, the EU sees an additional role for itself in arranging for solidarity between countries with high and low risk profiles. Progress on this issue has been slow, however, and the Solidarity Fund can only be called upon for flood disasters that meet certain minimum standards for economic disruption (see Chapter 7). Attempts to go further have been resisted by the Member States thus far. How were the costs and benefits of governing allocated? Chapter 7 argued that EU adaptation policy is still so inchoate that it seems rather premature to begin analysing how perceptions about the distribution of costs and benefits have affected the making of particular policy choices. However, there is an implicit assumption (exemplified by the appearance of the Solidarity Fund) that some

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of the costs of adaptation will be shared between Member States, even if, perversely, richer Member States appear to have received a disproportionate share of the funds (Hochrainer et al. 2010). Similarly, there is an assumption that private actors will do a great deal of ‘governing’ themselves, for example via the insurance sector. The way in which this dilemma is eventually confronted will be strongly affected by the uncertainty surrounding the future rise in temperature. Although there are predictions showing how costs and risks change according to temperature (see, for example, Stern 2006), they have not been calibrated to the river basin level. Moreover, there is no mention in the White Paper of how the costs of these impacts might be distributed across either river basins or Member States. Thus there remains the need for more comprehensive climate predictions and risk assessments at this scale to ascertain what the potential costs may be. This is why the Commission and the EEA have both pushed for better scientific information to guide future policy choices (cf. European Commission 2009). However, the question of how the costs are split remains unanswered. Considering that the impacts will probably be very locally specific, and that EU water legislation relies on river basin authorities, the obvious choice might be to devolve the costs to Member States. Under this assumption, though, regional disparities over the ability to pay may come into play, with poorer regions again asking for financial assistance. One idea being floated is to employ the cost recovery principle (interview, German Environment Ministry official, 12.11.08) to generate the necessary funds, but this would do little to even out regional disparities. How were policy results secured? The EU’s limited financial resources imply that it must depend on the Member States to secure policy implementation and compliance. Whereas, in the past, deviations from prescribed water quality targets required prior approval from the Commission, the Water Framework Directive allows Member States (or their river basin authorities) to apply derogation themselves, subject to subsequent approval. Supervision from the Commission in such a system will be relatively light, and dependant on several factors, including clear guidelines for Member State reporting and possibly help from civil society actors to alert the Commission to shortfalls in implementation. This review process is also supposed to ensure that climate change is mainstreamed in River Basin Management Plans. A 2008 policy paper of the Common Implementation Strategy for the Water Framework Directive (Anonymous 2008) declared that climate change should be considered in the first cycle of plans and that a ‘climate check’ be conducted on the programme of measures therein. This check should focus on which measures enhance and which weaken adaptive capacity,

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which are ‘no-regrets’ or win–win, and which might be less robust in the face of climate change. However, in the absence of any guidance to river basin authorities on how this should be done, the opportunity to climate check the first cycle of plans was effectively missed (ENDS Europe Daily 27.4.09). Guidelines for integrating climate change into the second and third cycles of plans has been promised. By offering no concrete guidelines, river basin authorities are in effect free to choose whether and how they wish to go about ‘mainstreaming’. As Chapter 7 noted, although mainstreaming is very much in vogue, it is by no means entirely unproblematic or administratively undemanding. This leaves a critical plank of EU adaptation policy looking rather flimsy. A close look at the reporting obligations associated with River Basin Management Plans reveals that the Commission is expected to run a compliance check to see whether all the requirements under Annex VII of the Water Framework Directive have been met. Interestingly, this annex does not include an ‘adaptation check’ in its deliverables. Under Article 18, the Commission is to conduct a survey of the plans and offer suggestions for improvements, but given the lack of any defined yardsticks of ‘good’ adaptation it may be hard pressed to offer substantive guidance. Therefore, how the Commission will fulfil its role as both a promoter and a coordinator of adaptation policy in the EU remains a moot point. Two other issues are important when looking at how the EU has handled implementation and enforcement dilemmas, namely public participation and cost recovery. First, we have already noted that the provisions on public participation are weak. In addition, as Galaz (2005) shows, interpretation of them varies across Member States. There is certainly no mechanism to enforce any particular type of participation. Although this is consistent with the principle of subsidiarity, it reinforces concerns about how far the EU is able to implement and enforce mainstreaming. Second, with respect to cost recovery for water usage, the Commission’s hands are also tied. Although the Water Framework Directive obliges Member States and river basin authorities to take this principle into account (and the Green and White Papers state that it would be a valuable tool for adaptation), Member States can exempt certain water activities (e.g. irrigated agriculture) from being charged if they feel it would be economically burdensome (European Environment Bureau 2001). Looking back across the dilemmas All six dilemmas featured in the EU’s governance of water policy, but those relating to level and scale, modes and instruments and implementation and enforcement have been particularly decisive. Firstly, it should be recognised that the EU has a rather complex role in this field (it has strong competence in one area (water) and

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much less in the other (adaptation). This dichotomy has made it hard for the EU to mount a concerted governance response. It could have chosen a ‘pure’ adaptation approach, framing ‘the problem’ as a distinct climate change issue requiring new EU-level policies under the heading of a new comprehensive adaptation policy. However, following such an approach would have brought the Commission into conflict with some Member States which, as Chapter 7 showed, remain very reluctant to cede control over issues such as local-level planning to the EU. On the other hand (and given the EU’s extensive competence over water resource management issues), it could have opted to overhaul the existing acquis so that it more adequately addressed predicted climate impacts. This too was unrealistic. The EU had just completed one long and arduous round of reforms, culminating in the Water Framework Directive. Moreover, the scientific understanding of how climate change might affect hydrological cycles was simply not detailed enough to justify such an approach. Thus, recognising the need for adaptation but cognisant that they were not in a position to fully force the issue, the Commission sought to frame adaptation primarily as an add-on to the existing acquis. Following the Floods Directive and the Communication on Water Scarcity and Drought, no new legislation is anticipated. The current preference for mainstreaming can be seen as a product of the Commission’s awkward position: straddling the two stools of water management and adaptation. By opting for a soft and open style of mainstreaming, the EU is in effect devolving the locus of adaptation policy to the Member State (and river basin) level. This neatly side-steps the politically fraught dilemma of whether to redesign the water acquis all over again, and devolves the politics of (and associated cost and benefit dilemmas associated with) funding adaptation measures to the national level. It also frees up the Commission to concentrate on its main priority: mitigation. Of course, the Commission retains some oversight (being able to steer and coordinate action where necessary through the enforcement of current directives and perhaps even benchmarking mainstreaming activities), but given the prevailing norm of negotiated enforcement, this is unlikely to constitute a highly directed form of governance. Thus, although mainstreaming is entirely in keeping with the principle of subsidiarity, this chapter has shown that using it to effect adaptation in the water sector is by no means unproblematic. First, current legislation implicitly suggests that adaptation should effectively have been ‘achieved’ by 2021, when all relevant waters attain ‘good status’. This may well turn out to be unachievable, not least because of climate change impacts. Second, there are no implementation guidelines or yardsticks governing mainstreaming. Instead there are simply many statements across the spectrum of EU policy documents and institutions stating that adaptation ‘should be’ an integral part of water resources management. Third, the Commission

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has given no indication on how it will monitor or enforce adaptation mainstreaming. For example, will it entail a legally binding ‘climate check’ of river basin management plans? Fourth, at present there is no explicit commitment to a research agenda to combine data on climate impacts and hydrological cycles in particular river basins, only statements that such knowledge should eventually be generated. This task could help define potential adaptation strategies, but for the time being is seen as solely a responsibility of the Member States. Thus, the real dilemma for governors is that if the EU pursues mainstreaming in an ad hoc manner, this rather ‘soft’ style of governance may prove ineffective at delivering hard and enduring results. This may, in time, oblige governors to reach into the tool-box for harder and more direct instruments. Finally, it must be kept in mind that although these problems may simply be related to the novelty of the subject and will eventually be dealt with, the prospects for adaptation are directly linked to the overall performance of the existing water acquis. As we have seen, the Water Framework Directive has its own problems, begging the question: can the EU implement the Water Framework Directive and pursue a robust adaptation via policy mainstreaming? Conclusions In this chapter we have analysed EU policies and the handling of governance dilemmas in the water sector implicitly from the perspective of adaptive governance. There are two different ways of looking at the results of our analysis, one tending towards a ‘glass half full’ view, another suggesting that the ‘glass’ is ‘half empty’. The more positive view would focus on the way in which the problems of previous EU policies have historically been solved by the introduction of new legislation. The principle of subsidiarity has been given a greater emphasis, and public participation requirements have been introduced so that EU policies can develop more active public support. Although climate concerns arguably came too late to be considered more explicitly and extensively, the six-year planning cycle under the Water Framework Directive should provide opportunities for recalibrating goals in response to evidence emerging from the second cycle onwards. In addition, the issue of flooding is starting to be addressed at EU level by the provision of risk information to the market and by the creation of a system of communication between Member States during emergencies. The more gloomy view acknowledges the accomplishments that have been made in terms of water legislation, but also points out that the static definition of water quality embedded in the Water Framework Directive potentially works against climate change mainstreaming. Moreover, the idea that adaptation to climate change will be largely autonomous if risks are communicated properly is suspect, especially

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when government funds are being amassed to compensate for any flood damages. As Chapter 7 noted, when investors count on a public sector bailout in the event of flooding, there is a danger of moral hazard, leading to mal-adaptation. Land-use planning could have to play an important role here, but the Floods Directive does not address this and many local authorities struggle to resist economic pressures to develop in flood prone areas. In the face of these shortcomings, ‘climate checks’ of the River Basin Management Plans is at best only a stop-gap solution. Finally, whereas the idea of placing responsibilities for water issues at the river basin level is more or less conventional wisdom among EU governors, it is challenged by those who feel that it is better to develop the capacity to collaborate across levels and to spontaneously reorganise along the scale of emerging problems. Time will reveal which of these two views is the more correct. Apart from the fact that the idea of adaptive governance entails various normative positions, which may or may not be justified, the speed and severity of climate change effects in the water sector will also be important. If such changes are rapid and severe, there is good reason to assume that the current set of EU regulations will not suffice, even in the short term. Acknowledgements The authors thank Thomas Dworak and Julian Wright for their assistance in the research underpinning this chapter. Notes 1. There is also a plethora of bilateral and multilateral treaties and collaborations on water issues outside the framework of the EU (Dinar et al. 2005). 2. The 2002 Elbe floods had driven this issue up the domestic agenda and German policy makers were keen to see it taken up at EU level. In particular, they wanted to explore the implications of failing to mitigate and/or adapt and explore potential policy responses (interview, Ecologic consultant, 29.10.08; interview, German Environment Ministry official, 12.11.08).

References Anonymous (2008). Policy Paper Climate Change and Water: Common Implementation Strategy for the Water Framework Directive. http://www.wrrl-info.de/docs/ wrrl_climatepolicypaper2008.pdf, accessed 2 June 2009 Benson, D. and A. Jordan (2008). Understanding task allocation in the European Union: exploring the value of federal theory. Journal of European Public Policy, 15(1), 1–20. Benson, D. and A. Jordan (2009). Environmental policy. In European Union Politics, ed. M. Cini and N. Perez-Solorzano Borragan. Oxford: Oxford University Press (in press). Biswas, A. K. (2004). Integrated water resources management: a reassessment. Water International, 29, 398–405. Bundesumweltministerium (BMU) (2007). Time to Adapt: Climate Change and the European Water Dimension. Berlin, Bonn: German Federal Ministry for Environment, Nature Conservation and Nuclear Safety.

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Conca, K., F. Wu and C. Mei (2006). Global regime formation or complex institution building? The principled content of international river agreements. International Studies Quarterly, 50, 263–85. Dinar, A., K. Kemper, W. Blomquist, M. Diez, G. Sine and W. Fru (2005). Decentralization of River Basin Management: A Global Analysis. Working Paper Series No. 3637. Washington, D.C.: World Bank. ECCP II (European Climate Change Programme II) (2006). Water Management Sectoral Report, European Climate Change Programme: Working Group II – Impacts and Adaptation. http://ec.europa.eu/environment/climat/pdf/eccp/impactsadaptation/ water.pdf, accessed 9 May 2009. Ecologic (2008). Impacts of Climate Change on Water Resources: Adaptation Strategies for Europe. Report for the German Federal Environment Agency. Berlin: Ecologic. ENDS Europe Daily (various years). London: Environmental Data Services (ENDS) Ltd. http://www.endseuropedaily.com/articles/index.cfm European Commission (2009). Climate Change and Water, Coasts and Marine Issues. Commission Staff Working Document accompanying the White Paper Adapting to Climate Change, SEC (2009) 386/2. Brussels: Commission of the European Communities. European Environment Agency (EEA) (2004). Impacts of Europe’s Changing Climate: An Indicator-Based Assessment. Copenhagen: European Environment Agency. European Environment Bureau (EEB) (2001). EEB Handbook on EU Water Policy Under the Water Framework Directive. Brussels: European Environmental Bureau. European Parliament (2005). The Adequacy of EU Action on Flood Protection, Focusing on the European Commission’s Recent Proposal, Briefing Note No. PE373.582. Brussels: European Parliament. Falkenmark, M., L. Gottschalk, J. Lundqvist and P. Wouters (2004). Towards integrated catchment management: increasing the dialogue between scientists, policy-makers and stakeholders. Water Resources Development, 20(3), 297–309. Galaz, V. (2005). Does the EC Water Framework Directive Build Resilience? Resilience and Freshwater Initiative Policy Paper 1. Stockholm: Swedish Water House. Grimeaud, D. (2004). The EC Water Framework Directive – an instrument for integrating water policy. Review of European Community and International Environmental Law (RECIEL), 13(1), 27–39. Hochrainer, S., J. Linnerooth-Bayer and R. Mechler (2010). The European Union solidarity fund: its legitimacy, viability and efficiency. In Assessing Adaptation to Extreme Weather Events in Europe, ed. Z. Kundzewicz and R. Mechler. Special edition of Mitigation and Adaptation Strategies for Global Change (in press). Huitema, D., E. Mostert, W. Egas et al. (2009). Adaptive water governance: assessing the institutional prescriptions of adaptive (co)management from a governance perspective and defining a research agenda. Ecology and Society, 14(1), 26. http://www. ecologyandsociety.org/vol14/iss1/art26/, accessed 9 May 2009 Imperial, M. T. and T. Hennessey (1999). Environmental governance in watersheds. Collaboration, public value and accountability. Paper presented at the 21st Annual research conference of the Association for Public Policy Analysis and Management, Washington D.C., 4–6 November 1999. Jordan, A., R. Wurzel, and A. Zito (2003). New environmental policy instruments: an evolution or a revolution in environmental policy? Environmental Politics, 12(1), 201–24. JRC (Joint Research Centre of the European Commission) (2005). Climate Change and the European Water Dimension. Report for the European Water Directors No. 21553. Ispra: Joint Research Centre.

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9 The evolution of climate change policy in the European Union: a synthesis andrew jordan, dave huitema, harro van asselt and tim rayner

Introduction This chapter looks back across the broader historical context (Chapter 3) and the five sub-areas of mitigation and adaptation policy (Chapters 4–8), and reviews how and why policy in the EU has evolved as it has. More specifically, it describes what kinds of policies have been adopted and examines the choices that most informed their design. The next section returns to the six broad phases of policy development that were originally introduced in Chapter 3. It summarises these phases and briefly relates them to some of the main findings of Chapters 4–8. The third section explores which governance dilemmas were provoked by the choices that emerged in these six phases, and examines how they were confronted and by whom, in relation to the formal and informal features of the EU introduced in Chapter 2. After that, it views these patterns from the perspective of the two main theoretical approaches originally outlined in Chapter 2. Finally, this chapter draws conclusions and makes links to the next part of the book (Chapters 10 and 11), which looks forward to climate policy beyond 2020. The evolution of climate policy in the EU The six main phases of policy development In the phase up to 1988, climate change was mainly discussed in scientific rather than policy circles. The Commission eagerly responded to the Toronto conference in 1988, publishing a Communication (COM (88) 656) which, although it did not offer any firm recommendations, still marked the commencement of formal policy making in the EU. Although policies relating to climate change were put in place – at both the Member State and EU levels – their primary purpose was not related to climate protection climate per se, but rather to other environmental matters or energy insecurity.

Climate Change Policy in the European Union, ed. A. Jordan, D. Huitema, H. van Asselt, T. Rayner & F. Berkhout. Published by Cambridge University Press. © Cambridge University Press 2010.

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From late 1988 until mid-1992, policy activity intensified greatly as the EU made its first bid for international leadership. This took the form of a Commission proposal for a common EU-wide stabilisation target (to return to 1990 emission levels by 2000), which the Council was able to adopt – albeit only by glossing over rather large cracks between individual Member State views on issues such as whether the target should be mandatory or declaratory, and supported by common implementing policies or not. Therefore, although policy choices were made, some important dilemmas were deliberately not confronted. None the less, the common stabilisation target gave the Commission the extra impetus it needed to propose an integrated policy package to achieve it. However, these proposals – and in particular the combined tax on the carbon/energy content of fuels – were judged to be out of step with the political mood of the times (essentially pro-subsidiarity and economic growth) and were therefore systematically stripped of legislative content by the Council. By mid-1992, the upper echelons of the Commission even seemed prepared to offer environmental policy – and with it its fledgling policies on climate change – as a sacrificial lamb to appease a growing chorus of criticism of European integration. The next phase (1992–1997) opened with the EU struggling to secure internal agreement on the implementation of the FCCC but closed with it adopting a highly ambitious collective emission reduction target of -15%, raising the question of what had happened in the intervening period. Pressures emanating from the international level were certainly important. The EU had to deliver on its stabilisation commitment and one of the largest Member States, Germany, was anxious to make a success of the FCCC’s first COP, scheduled to be held in Berlin in 1995. Within the EU, emissions began to tail off and, following the publication of the IPCC’s Second Assessment Report, the two largest emitters – the UK and Germany – came under greater domestic political pressure to offer emission reduction targets. The outcomes of the internal ‘leader–laggard’ dynamics in the EU, as manifest in the June 1996 resolution of the Environment Council, were a commitment to the 2 °C target, an unspecific pledge to secure an enabling protocol at the international level, and a wish to see other major emitters commit to significant overall reductions in their emissions after 2000. The latter objective quickly provoked a need for new policy choices to be made within the EU, principally how to allocate the presumed emissions reductions amongst the then fifteen Member States (i.e. burden sharing). Furthermore, it also encouraged the EU to address the yawning credibility gap between what it had asked of other major emitters and what it was capable of delivering itself by way of common and coordinated policies and measures. The June 1996 Environment Council’s resolution marked a significant political tipping point in national, EU and, eventually, international policy (Oberthür and Ott 1999: 116). Prior to that point, EU climate policy had been strong on rhetoric but very

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short on substance. As the ‘1990 by 2000’ stabilisation target could mostly be achieved through existing national level commitments, there was no need for an explicit burden sharing agreement. And with no new burdens to deliver, there was ipso facto no need for EU policies. What therefore passed for ‘EU policy’ could remain little more than the sum of national policies. In the next phase (from c. 1997 to c. 2001), the EU had to confront many new challenges, particularly those arising from the Bush administration’s March 2001 decision not to ratify the Kyoto Protocol. The majority of Member States remained unwilling to agree to new EU policies, despite having signed up to the explicit burden sharing agreement, subsequently enshrined in EU and international law. Some new EU-level policies were adopted during this phase, but often in areas only tenuously connected to the Kyoto Protocol (e.g. the landfilling of waste). Nevertheless, the EU pressed on, pushing other major emitters – including Japan and Canada – to follow suit. Within the EU, the Commission tried to up the ante by initiating discussions on a host of promising new areas (such as EU-wide emissions trading) with a wider array of stakeholders in a new forum created for the purpose, the ECCP. In the phase from c. 2001 until c. 2005, Commission proposals for internal policies finally began to emerge and take root, nourished by a surge of public concern about climate change, more confident and alarming scientific warnings from the IPCC and leadership from national politicians (such as Tony Blair in the UK). In this period, proposals for an emissions trading scheme were adopted, and a new phase of the ECCP was launched. All this took place against the (potentially highly unfavourable) backdrop of the EU’s largest ever enlargement in 2004 (when it absorbed – in one fell swoop – ten new and predominantly quite poor states from Central and Eastern Europe) and attempts to advance the Commission’s Lisbon process, which mainly focused on jobs, competitiveness issues and economic growth. Since 2005, the EU has concentrated its energies on complying with its Kyoto target and shaping a new international agreement for the period after 2012. These developments have to be set against the backdrop of a strengthening scientific and economic case for immediate and sustained mitigation, powerfully delivered in the IPCC’s Fourth Assessment Report (2007) and the UK’s Stern Review (2006). The EU’s response was to translate its earlier pledge to consider an emissions cut of between 15% and 30% into a formal commitment to achieve a 20% reduction (or 30% in the event of global agreement on a successor to the Kyoto Protocol). This was backed up with a complex and politically ambitious package of new policy proposals encompassing renewable energy (including biofuels), car emissions, emissions trading, and carbon capture and storage. Although virtually all the Commission’s proposals had to be heavily watered down to assuage Member

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State fears about their potential cost during what was a period of intense global economic recession, they were adopted not only together in one package but also in record time. With the newly elected Obama administration anxious for the USA to re-engage with the global emissions reduction effort, by the end of the sixth phase in 2008–9, the EU had managed to maintain its leading position in international politics. The other important development in this sixth phase was the Commission’s attempt to develop EU policy in the emerging area of adaptation. This reflected a shift in the broader framing of the climate change issue – one that acknowledged that the world is already committed to a range of potentially severe impacts because of past emissions.

Looking back across the phases Looking back across these six phases, it is evident how important international drivers – particularly the discussions within the UN, directly informed by the work of the IPCC – have been in shaping the evolution of climate policy in the EU. Throughout, EU policy has co-evolved and become inextricably intertwined with the international climate regime. There have been many instances when the perceived need to implement international rules (or simply to present a credible position in an upcoming international meeting) forced it to develop internal targets and/or policies faster and further than it would otherwise have done. The 2 oC target was, for example, announced just prior to the second COP in 1995, at which the then Clinton administration in the USA announced that it was willing to entertain the idea of emissions reduction targets. There are also instances when the EU had to absorb new concepts (e.g. flexibility) and instruments (e.g. emissions trading) that had been brokered at the international level but were ‘alien’ (see Chapter 5) to its formal and informal features. Equally, there are just as many prominent examples of the EU shaping international rules (on targets for example, and on the rules permitting ‘bubbling’ or burden sharing), actively supporting the ratification of the Kyoto Protocol or clarifying the rules governing its implementation. The constantly evolving dynamic between these two levels is crucial to a fuller understanding of both EU and international climate policies. As important as it was, however, we do not discuss it in any further detail in this chapter. Rather, our chief concern is to understand how the dilemmas that fed into and emerged from this multi-level dynamic have – or have not – been confronted by various governors working within the EU to coordinate EU-Member State targets and/or policies. Drawing on the governance patterns described above and the more detailed analyses contained in Chapters 4–8, the next section identifies which governance dilemmas emerged and how the EU confronted them.

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Confronting the dilemmas of mitigation and adaptation What was ‘the problem’? Underpinning climate change’s metamorphosis from a fringe to a mainstream issue have been constant advances in scientific understanding. For a long time, the debate among climate scientists hinged on whether climate change was or was not happening, and the attribution of any observed and forecast changes to human interference. The growing consensus amongst scientists that it was happening and was indeed linked to human activity has helped to shift climate change from the ‘agenda universe’ (i.e. all those issues that are regularly discussed in the public sphere, including the media), onto the EU’s ‘institutional agenda’ (i.e. those problems that are being actively confronted by governors). The emergence of climate change as a recognised ‘problem’ is therefore rooted firmly in the work of scientists. However, the accumulation of scientific evidence alone was not enough to move the policy making process forward, beyond the agenda setting or problememergence stage and into the realms of policy development and implementation. The chronology outlined above suggests that in Europe a political tipping point was passed around 1996. This was quickly followed by a phase change in policy making after c. 2000. Crucially, the burst of policy activity from that time was only really possible after the ‘problem’ of climate change had begun to be framed differently against the constantly changing backdrop of potentially related ‘problems’ and available ‘solutions’. Chapter 2 argued that the critical choice of which ‘problem’ to address arises most forcefully in the initial, agenda setting stage of the policy process. Loosely following Kingdon’s (1995) model of agenda setting (see Chapter 2 for details), policy entrepreneurs – individuals who are willing to invest considerable time and resources in developing and/or linking individual policy options to particular problems – do appear to have had a decisive influence in shaping the way in which the EU confronted problem perception dilemmas. By framing problems, building coalitions and exploiting new institutional venues, these entrepreneurs constantly established and re-established connections between policy solutions and problems. What precisely were these problems and solutions? The problems that have been perceived to be confronting the EU over the past 30 years have included not only climate change but also (and at varying points in time) energy insecurity, poor economic competitiveness and the perceived need to secure public support for EU integration in general. The EU’s overriding solution has tended to be ‘more European integration’, delivered mainly through the technocratic pursuit of policy outputs that fulfil the four freedoms. Liberalisation is very much the EU’s default

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solution to all policy problems, anchored in its market building and market correcting competences, and effectively ‘hardwired’ into the Commission. The linkages that were made between the range of problems and this single solution were not necessarily obvious or self-evident, as shown by the connections that emerged between seemingly unconnected issues such as the operation of the internal market, the improvement of water quality and the exploitation of renewable energy sources. Nor have they always worked for the good of EU climate policies. For instance in the early 1990s, stronger EU climate policies were sacrificed by the then Commission President, Jacques Delors, on the grounds that they might disrupt the Commission’s single market programme by infuriating Member State governments and disenchanting their citizens. Ironically, in 2005, the opposite happened: climate change was prominently championed by Commission President Barroso as a policy priority that would allow the EU to restore its somewhat shaky legitimacy and get the European integration process back on track after the two referendum votes against the draft EU Constitution. What mattered was that these slightly counterintuitive combinations of solutions and problems were able to attract political support, and thus open a window to policy change. Political support for stronger climate change policies certainly increased sharply in the early to mid-2000s. This was partly a product of the political leadership shown by the likes of Blair, Merkel and Sarkozy, working to the steady drumbeat of new scientific information. However, equally important were the various focusing events that were connected, either by the public or by policy makers, to climate change. Looking back across the case study chapters, these included the oil crises of the 1970s, the 2006 and 2009 Gazprom conflicts and the alarming peak in oil prices in 2008. Some of them were completely unexpected and largely exogenous: the 2002 floods in Central and Eastern Europe, for example. However, others were endogenous: the ‘no’ votes against the Maastricht Treaty and the draft Constitution, for example, signalled how far the permissive consensus in support of the EU’s primary solution (i.e. deeper European integration via market liberalisation) had begun to break down. Before moving on to the next dilemma, we should also note a remarkable difference between mitigation, where EU policy developed rapidly after c. 2000, and adaptation, where progress has been slower and yet to be consolidated by policy entrepreneurs or focusing events. There are, as noted in Chapter 7, still various factors inhibiting the development of an EU-wide approach. Much, however, hinges on the connections – or lack thereof – between available policy solutions and perceived adaptation problems. In many cases, the ‘problem’ of adaptation is not (yet) perceived to be sufficiently pressing to require a concerted policy response at national, let alone EU level. Indeed, there is a lively debate amongst specialists about very basic aspects, including definitions, objectives, indicators and

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appropriate instruments. Almost by default, at least until major budgetary decisions are taken in the context of a post-2013 multi-annual financial framework, adaptation is being framed by EU-level governors as a problem that will mostly resolve itself via ‘autonomous’ actions and mainstreaming, with only the lightest of regulatory touches. Arguably, the only problem framing that had led to significant policy development at EU level by the time of this writing is connected to the norm of social and economic cohesion, as expressed in the name given to the chief funding instrument: the Solidarity Fund. At what level or scale was policy enacted? The past few decades have witnessed a steady trend of harmonisation with respect to mitigation policies. Especially in the areas of burden sharing and emissions trading, the Commission has expanded its influence over a range of issues, including the setting of emission caps and the allocation of national targets. In the area of renewable energy, the EU’s involvement has been more tentative, but there has nevertheless been a slow movement towards greater harmonisation, which was, as noted in Chapter 5, functionally related to the evolution of a single market in energy. How and why has this harmonisation of national mitigation policy at a new (i.e. EU) level come about? It was certainly not on the basis of a single choice or decision, but rather an accumulation of choices across the various sub-areas covered in Chapters 4–6. Although the EU first expressed its desire to lead on climate matters in the late 1980s, for a long time it struggled to adopt a common emissions reduction target, and the necessary common and coordinated policies and measures to achieve it. Here, one can see how the norm of flexible pragmatism was at one and the same time constraining (there is still no EU treaty-based commitment to climate protection) and also enabling (in the sense that it allowed policy entrepreneurs to exploit windows of opportunity e.g. in relation to emissions trading or the funding of carbon capture and storage). Because the EU was consciously designed to be ‘leaderless’, its climate policy only really advanced when a particular leader – such as the Presidency – either pushed others to make a critical policy choice in favour of greater EU-level action (e.g. the burden sharing agreement of 1996, or the adoption, in one fell swoop, of the climate–energy package in 2008), or ‘piggy-backed’ it on other policy projects (for instance, the Commission’s focus on the regulation of traded products during the 1990s and early 2000s). At the heart of level- and scale-related choices in the EU has always lain the essentially contested issue of competence. The relative narrowness of the EU’s competences (specifically in relation to energy and fiscal measures) has undoubtedly limited its ability to respond quickly and (especially at the international level) act coherently. Adding new competences by amending the treaties has – as predicted

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in Chapter 2 – proven to be extremely difficult. But by getting a ‘foot in the door’ when international negotiations first started, the Commission secured for itself the right to be involved in internal and external policy development; a right that is now pretty much taken for granted. And as noted above, the Commission soon learnt how to align its climate change proposals to the functional dynamic of market integration in the energy sector. Working in tandem with the EU’s desire to confront climate change as a single market issue, one can also detect the influence of the informal norms of economic and social cohesion and undifferentiated integration. The primary purpose of burden sharing – a functional corollary of a common target – was not, after all, to support international policy or enhance the cost-effectiveness of mitigation inside the EU, but to allow the EU to act together (Oberthür and Ott 1999: 141). Wherever and whenever possible, the EU has tried to work together as a single bloc at the international level, even when (as in the case of the internal ‘bubble’) it required its negotiating partners to make special arrangements in international law to cope with the EU’s unique structure. Again, there are interesting differences between the way in which level and scale dilemmas were confronted across the challenges of mitigation and adaptation. In relation to mitigation (and certainly where burden sharing and the ETS were concerned), many governors were anxious to ensure the EU’s involvement in international negotiations. There have always been some Member States pushing to go further and faster than the majority, while others preferred to hang back. When faced with these tensions, the EU’s natural response was to follow the norm of consensus among the main governors. When this clashed with the norm of undifferentiated integration, the EU developed new instruments such as the system of internal burden sharing and the solidarity fund agreed in December 2008 to attenuate centripetal forces which, if left unaddressed, could have ripped the EU apart. As far as adaptation was concerned, most governors believed that the national (and indeed local) level was the most appropriate level for action, typified by the strong preference for loose, networked forms of governing such as policy mainstreaming and information sharing. When and in what sequence did governors act? Issues of timing and sequencing are perennially important in all multi-levelled governance systems. In the case of EU climate policy, they have manifested themselves in at least two distinct, but interrelated forms: (1) whether to act quickly (meaning aggressive ‘mitigation’) or delay action in the belief that adequate adaptation will be possible; (2) whether to act at EU level before or after Member States have acted. The links back to level and scale dilemmas should already be immediately apparent.

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In terms of the first form (1), governors operating at the EU level have chosen to enact mitigation policies first, leaving common adaptation policy to emerge in their wake. There were several interconnected reasons for this. The dominant perception of these two problems (see problem perception dilemmas, above) suggests a role for the EU in mitigation (where there are obvious interconnections between the internal market and the governance of tradable products such as cars and other energy using devices), but a predominant role for Member States in adapting to impacts (which tend to manifest themselves most strongly and immediately at more local levels). It was also a function of the Commission’s relatively weak administrative capacities as well as a political hesitancy (noted in Chapters 7 and 8) about making unwarranted intrusions into what Member States perceive to be their sovereign affairs. Moreover, the pursuit of the adaptation agenda, acknowledging as it did that environmental quality will be affected by climate change impacts regardless of what is done to mitigate, was seen by some in DG Environment as potentially jeopardising hardwon victories on water and biodiversity policy (see Chapters 7 and 8). With respect to the second form (2), it can be observed that (and as also noted under level and scale, above), before c. 2000 it was the Member States and not the EU instsitutions that acted first. Once EU involvement begins, however, it easily becomes self-reinforcing, although the extent to which this occurs depends in part on how far Member States have developed different policies in a given area. The emissions trading scheme and renewable energy policy provide contrasting examples in this respect. Few Member States had developed emissions trading systems, but many were already in the business of stimulating renewable energy sources, with well-established mechanisms in place, reflecting national energy policy approaches and enjoying domestic political support. It was clearly more straightforward to reach agreement on a common EU policy on emissions trading than it was on renewable energy policy. Obviously, what also matters is the degree to which EU-wide industries are involved. If such industries exist in a particular sub-area and trade with one another, the push for European harmonisation can be expected to be greater. This partly explains why the idea of an EU-wide emissions trading system to level the playing field between potentially different national systems quickly gained political support, whereas EU-wide measures to support adaptation at the local level have not. It may also explain why strenuous efforts are now being made by the Commission to enter the renewable energy sub-area as part of the wider drive to liberalise and integrate national energy markets. What modes and instruments did governors employ? There are marked differences between the size of the respective tool-boxes at Member State and EU levels. Generally speaking, Member States have a much

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more extensive range of instrument options from which to select. Consequently, the instrument choices that they make (and their associated dilemmas) tend to be somewhat more open-ended than those that their opposite numbers in the Commission have before them. Chapter 5 demonstrated that when (as in the subarea of renewable energy), the choice is wider, governors have a tendency to select different combinations of instruments. The chapters in Part III also reveal that EU-level climate policy still exhibits a heavy reliance on regulatory instruments. Even the ETS is, as noted in Chapter 6, more of a hybrid of hierarchical and market-based modes of governing. In this case, the EU now deploys a market-based instrument but within the ‘shadow of hierarchy’. Meanwhile, the EU’s ability to spend money to improve energy efficiency (e.g. SAVE), boost renewable energies (e.g. ALTENER), or help critical sectors adapt, has generally been much more limited. The Solidarity Fund is an interesting exception, but it is mostly intended to offer emergency support, rather than achieve proactive change. In many ways it is an instrument of last resort, to be used when all other modes and instruments have failed. Finally, there were again distinct differences between the modes and instruments used in relation to mitigation and adaptation. One of the key themes of Chapter 7 was the almost complete absence of regulation at EU level. On the contrary, the main modes and instruments of EU (and to an extent also national level) policy are considerably more network-based. How were the costs and benefits of governing allocated? Chapter 2 made a basic distinction between different types of policy instrument, notably distributive, regulatory and redistributive. Policy theory suggests that these generate different patterns of governing, particularly with respect to the handling of cost and benefit dilemmas. In the EU, the choices made in response to these dilemmas have been strongly interlinked with those regarding modes and instruments. Thus, regulatory policies – the EU’s forte – have tended to generate diffuse benefits and concentrated costs, and hence trigger opposition from target groups. There are strong indications in the preceding chapters that over the last decades the EU has been hugely pre-occupied with governing the costs and benefits arising from its myriad of regulatory activities. This has mostly been done indirectly and at the level of Member States, via a series of increasingly formal and essentially hierarchical burden sharing arrangements. These have – as with international discussions more generally – proven immensely difficult to construct, but once created have kept the EU focused and united. However, as EU climate policy has matured and the political stakes have risen, the focus has changed somewhat from allocating burdens between Member States in an irregular and broad-brush manner (i.e. via periodic

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burden sharing agreements), which has tended to conceal the precise identity of winners and losers from public scrutiny, to allocating them much more directly between and within different sectors via particular instruments such as the Emissions Trading Directive or the 2008 Regulation on Car Emissions. Crucially, the identity of those most likely to win and lose from the application of these instruments has tended to be more obvious in advance, which in turn has triggered opposition from prospective losers. In 2007–8, car manufacturers and energyintensive industries, for example, lobbied national political leaders extremely hard (and with notable success) during the passage of the climate–energy package. In many ways, this trend towards more oppositional forms of politics is symptomatic of the deeper shift in EU climate policy away from intergovernmental policy making to quasi-federal governance. It also reveals the EU’s liberal economic inclinations: market-based modes of governing have, for example, become more prominent. If and when the EU ETS is extended to cover more emissions, the burden sharing process (as outlined in Chapter 4) will lean even more in such a direction. Turning to distributive policies, interesting links have emerged between the manner in which the EU has handled cost–benefit dilemmas, and its basic repertoire of modes and instruments. The fact that the EU has a relatively limited budget has meant that until recently, costs and benefits were not perceived in a particularly distributive manner. However, it would be wrong to assume that the choices associated with distributive policies are likely to remain this unimportant. For example, the fact that some emissions allowances will be auctioned in Phase III of the ETS and some of the proceeds earmarked for specific purposes – including climate change mitigation and adaptation, but also social policy – could generate new and much more oppositional forms of politics around the way in which they are spent at Member State level. The intensive discussions on the funding of carbon capture and storage facilities in 2008 (Chapter 3) or the allocation of resources from the Solidarity Fund (Chapter 7) may be harbingers of a different type of governing in the future. At the same time, environmental pressure groups are beginning to exert more political pressure on the EU to align its entire budget (including, crucially, the funds earmarked for ‘non-’ climate activities such as agriculture and regional development) with its climate policies (Hale and Singleton-White 2007; Adelle et al. 2008). As and when this debate advances, new and difficult cost and benefit dilemmas will arise. Finally, so long as the EU continues to be denied the competence to tax and spend like its Member States, its ability to engage in classical forms of redistributive governing will remain heavily truncated (although, of course, its regulatory and distributive policies will continue to have redistributive effects). However, the norm of social and economic cohesion has, in a sense, forced the EU to redistribute burdens indirectly (i.e. without recourse to the collection and disbursement of public money) via the more hierarchical instrument of burden sharing.

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As with the other dilemmas, there have been notable differences between mitigation choices and adaptation choices. In relation to mitigation (and especially burden sharing), Member States have been viewed as the key governors (and hence the chief ‘target groups’) in debates about common targets and policies. The corollary of this was a certain level of competition between individual Member States with respect to the design of allocation criteria (for a flavour of these, see Chapter 4). As EU policy matured and specific instruments were used, costs and benefits began to be calculated in a more finely grained manner. Some target groups undeniably underestimated the cost of some of the EU’s early policies, but they are no longer so docile, as demonstrated by the extensive lobbying efforts against various elements in the Commission’s climate–energy package. In relation to adaptation, reliable information about the costs and benefits of governing is still lacking, although it will grow if the EU takes on a greater role or the stakes are perceived to rise. What is clear, though, is that a kind of implicit choice has been made that Member States and/or the private sector should bear the costs of any mal-adaptation, not the EU. The creation of the Solidarity Fund acknowledges – to some degree – that the risks (and associated costs) should not be spread too unevenly but, as noted above, it remains an instrument of last resort. How were policy results secured? Climate policies have become increasingly ambitious in the past 30 years, but the chapters in Part III suggest that although some incremental change has occurred, improvements in the EU’s implementation and enforcement powers have not developed at a commensurate rate. In one important sense, they have not had to: thus far, emission reduction goals have, as will be further explained in Chapter 12, mostly been met, so there have been no implementation deficits or gaps demanding a political response. However, ‘success’ in this respect can in large part be accounted for by the tendency for targets to be set at an undemanding level. In this sense, if implementation and enforcement dilemmas can be said to have been confronted, it has been in a rather roundabout and, at least as far as environmentalists and many scientists were concerned, deeply unsatisfactory manner. To be fair, the Commission has always been acutely aware of this and has repeatedly sought to establish more demanding goals and stronger implementation and enforcement mechanisms, but found itself repeatedly blocked by Member States (note, here, the interaction between the handling of level and scale and implementation and enforcement dilemmas). Lacking the support of Member States, the Commission resorted to using more networked forms of governance, principally the Monitoring Decisions (backed up by the EEA’s regular progress reports), to gently ‘name and shame’ states. Although this ended up being the EU’s only politically acceptable

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choice to confront implementation and enforcement dilemmas, it is (as noted in Chapter 4) remote, indirect and reactive. How much longer can the EU go on governing in this roundabout way? The failures in the past to attain (non-binding) targets in relation to renewable energy, car emissions and energy efficiency indicate the likely existence of a range of latent implementation and enforcement dilemmas in the system waiting to emerge and be confronted. There are, though, signs of a growing willingness to adopt a more direct, proactive and ‘hands-on’ approach; somewhat stronger implementation and enforcement mechanisms were certainly inserted in the 2008 climate–energy package. Binding targets were added to the new RES Directive, for example, and the revised ETS Directive introduced centralised cap setting. The new Regulation governing car emissions also provided for a system of fines, albeit much weaker than initially proposed. However, given the EU’s relatively weak administrative capacities and the informal norm of negotiated enforcement, it remains to be seen how effective these will be, so long as the EU is at a structural disadvantage in relation to its Member States. Finally, as there is virtually no EU-level policy beyond commitments to mainstreaming, it seems rather premature to discuss how implementation and enforcement dilemmas have been confronted with respect to adaptation. To the extent that they have been confronted, the EU’s engagement has been rather indirect. Thus far, the Commission has concentrated on improving monitoring, mainstreaming its existing policies with a climate dimension and facilitating the exchange of best practices via the Policy Coordination Method. None the less, Chapters 7 and 8 sounded a note of caution against assuming that mainstreaming is inherently free of implementation problems. Theorising the governance of climate change In Chapter 2, various potential links were drawn between the governance features of the EU and the handling of the six main dilemmas. In this section, these are examined from two contrasting theoretical positions to see if they offer any additional insight into the causal processes underlying the patterns described above. State-centred theories State-centred theories assume that states are the principal governors of the EU. No matter what the dilemma is, they make the key choices. Moreover, they do so in a rational and self-interested manner, assimilating national societal demands and then negotiating with other states at the European level to achieve the best possible outcome for their constituents. The ongoing development of EU climate policy

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since the late 1970s exhibits many examples of states acting rationally in key intergovernmental venues such as the European Council and the Council of Ministers. A key early event was the Rhodes European Council in 1988, at which Heads of State announced their readiness to collaborate on global environmental issues. Thereafter, the Commission became steadily more involved, but only ever in a supporting function. The main choices were continually made by states, bargaining among themselves. The more environmentally ambitious (or ‘leader’) states such as The Netherlands, Denmark and Germany were under the greatest domestic political pressure to respond. Initiatives – such as the 1989 Noordwijk meeting or the 1995 COP in Berlin – were therefore consciously taken by them to force the pace of European collaboration. The less ambitious (or ‘laggard’) states, meanwhile, saw EU involvement as a means to offset their own rising emissions or lever more resources from the EU. Those that were somewhere in the middle – the UK, for example – were prepared to accept a role for the EU, but only when and where it suited their economic interests, and on a basis that did not unduly constrain their freedom to make future choices. From a state-centred perspective, the congruence between state preferences was a necessary condition for the EU’s involvement (Groenleer and van Schaik 2007: 988). When they were strongly incongruent (i.e. essentially in the period before c. 1996), EU policy developed slowly and only ever in relation to long-term targets. The EU-level targets that were agreed by states before 2000 (such as the 1990 by 2000 stabilisation target and the -15% reduction target in 1997), were specifically designed to have no substantive impact on Member State policies. In effect, they were no more than amalgams of national targets, with a great deal of leeway built into them. When the Commission proposed common policies to implement them, they were either blocked by the Council or eviscerated of challenging targets. This is partly why so many commentators both inside and outside Europe questioned the ‘value added’ of EU action. The primacy of national action was deliberately codified in Article 4(6) of the Kyoto Protocol. This proclaims that if the EU meets its collective target, then no individual Member State will be in breach, regardless of its individual performance, but if the bloc as a whole overshoots, then individual Member States will be held responsible for their own emissions. The buck, in other words, stops with states. This legal arrangement (and the one that pertained in relation to the FCCC in 1992) generated a great deal of animated discussion among lawyers (Macrory and Hession 1996; Sbragia and Damro 1999: 58), and caused some confusion among third parties, who questioned why the EU was involved at all. However, its involvement suited the interests of some Member States and was pushed through. By contrast, when – after 1996 – key Member States decided that they wanted to achieve substantive and verifiable emissions reductions (be it for political, economic

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or energy security reasons), adherents of state-centred theories would contend that it was chiefly because they suited their domestically derived preferences. In the mid1990s, Germany and the UK in particular became more desirous of ambitious reduction targets, partly because their own emissions were declining – albeit because of domestic ‘gratis’ effects – and partly because they sensed that those who led would reap economic and political advantages. Their choice with respect to the timing and sequencing of their actions facilitated the collective -15% reduction target, which in turn allowed the EU to push for an ‘environmentally credible’ Kyoto Protocol. Once the Council had convinced itself of the economic and technological merits of leading, Commission proposals for common and coordinated policies and measures were treated more seriously. By then, the EU’s involvement was perceived rather differently: it offered a means to improve the credibility of inter-state commitments, while preserving the integrity of the internal market. By 2000, the Commission had also realised that, in order to extend its influence, it had to be more pragmatic, more consultative and more mindful of state preferences – in other words, of working with the grain of state preferences rather than against them. By the mid 2000s, the Council and the Commission’s preferences had effectively converged and by the 2000s were almost diverging again. For example, in 2005 the Environment Council adopted a set of targets that were more challenging than the Commission was capable of proposing (see Chapter 3). It is impossible to fully understand the governance of climate change in the EU without considering international factors. Even as early as the 1980s, it was evident that climate policy making would eventually evolve into a complex, ‘three-level game’ (Putnam 1988). This could, in principle, have created new opportunities for the EU institutions to extend their influence, but Member States were very careful to prevent this from happening. The Commission was not, for example, permitted to formally participate in the intergovernmental committees that negotiated the FCCC (Vogler 1999: 31). In addition, in spite of repeated requests for a formal mandate to represent the EU in international climate negotiations, the Commission was forced (by Member States) to play second fiddle (Delreux 2006: 239; van Schaik and Egenhofer 2003: 3; Bretherton and Vogler 2006: 107). Member States continue to take the view that the Council should lead, given the potential impact that any future EU policies might have on politically highly sensitive areas of national policy such as energy and taxation. Nowadays, the EU’s so-called ‘common position’ is hammered out by the Presidency of the Environment Council prior to international negotiations. Sometimes, the Presidency is too overworked to cover everything, so a particular state (or group of Member States) takes the lead on a specific issue such as adaptation or international financing (Vogler 1999: 36; Delreux 2006: 244; van

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Schaik and Egenhofer 2005: 8). When the international negotiations commence, the EU’s common position is continually revised during closed meetings of the troika (see Chapter 2). Although the Commission participates in all these activities, the ‘tendency [is] to work at the level of the lowest common denominator of state preferences’ (van Schaik and Egenhofer 2003: 4). Officially, the Parliament should be consulted, but the Council is not obliged to follow its recommendations (Groenleer and van Schaik 2007: 985). It is also the Council that decides on the ratification of all international environmental agreements, although again the Parliament is consulted. This prevents the EU institutions from being able to bounce states into international agreements. As the intensity and complexity of international diplomacy grew in the 1990s, rather than giving the Commission the lead, the Member States continually refined these essentially intergovernmental arrangements to ‘keep the gate’ between the three main levels of governance: international, EU and national. For example, in 1990 the Council organised the first ever joint meeting of energy and environment ministers to thrash out an agreement on the stabilisation target (Sbragia 2000: 313). When the FCCC negotiations commenced, individual Member States at first submitted their own proposals with very little prior coordination by the Council (Oberthür and Kelly 2008: 8). By 1995, new internal coordinating machinery – an ad hoc group on climate change – was created to maintain a tighter grip on internal discussions (Oberthür and Ott 1999: 65–6; van Schaik and Egenhofer 2005: 8), and the Environment Council’s coordinating role was further enhanced (Oberthür and Kelly 2008: 8). With respect to internal policy development, the same pattern of state control has been evident. For example, Chapter 4 documented how the Commission’s attempts to become more directly involved in internal burden sharing were repeatedly rebuffed. Burdens were allocated ‘bottom up’ – i.e. on the basis of what states were willing to offer – and the EU level target adjusted accordingly. The Council only invited the Commission to become more involved in the mid- to late 2000s, chiefly to enhance the credibility of the more ambitious commitments that states were increasingly eager to adopt. States have also been very careful to retain control over important aspects of energy and taxation policy. This ensured that the early policies on energy efficiency and renewable energy comprised ‘broad frameworks and “soft instruments”’ (Collier 2002: 190). Even today, there are no binding EUlevel energy efficiency targets and all decisions on fiscal matters require a unanimous decision in the Council. The Parliament has really made its presence felt much later (i.e. after c. 2000). As a co-legislator in the policy process it was able to secure several important amendments to the 2008 climate–energy package (see Chapter 3), although in this case it was forced to bow to the French Presidency’s demands not to be too ambitious, lest it jeopardise the chances of securing an agreement at the first reading.

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In general, states have successfully ensured that EU policies contain sufficient discretion and flexibility to cope with changing economic and political circumstances. This can be seen in, for example, the discussions concerning supplementarity (see Chapter 3), the operation of the Linking Directive (Chapter 5), the allocation of emissions allowances in the emissions trading scheme (Chapter 5) and the operation of the 2008 Burden Sharing Decision (Chapter 4). On the occasions that the EU institutions tried to push states into accepting stronger common policies, the Council refused to be browbeaten. Before Rio it refused to accept the Commission’s tax proposal; after the signing of the FCCC, it systematically eviscerated Environment Commissioner Ripa di Meana’s climate package of all constraining elements. The 2008 climate–energy package was also watered down to secure the support of the newer states from Southern and Eastern Europe. Even high-profile directives that the Commission managed to push through – such as the one on emissions trading in 2003 – were significantly amended to satisfy the Council (see Chapter 6). To conclude, although climate policy has evolved greatly over the last three decades, there is plenty of compelling evidence to suggest that it was mainly guided by choices consciously made by states operating in intergovernmental venues. This pattern of governing continually pushed EU policies down to the lowest common denominator of state preferences. When target setting and policy development progressed, it was due to pressure from particular states (either individually or through the framework of the Presidency of the Council). In terms of mitigation, the German Presidencies of 1995 and 2007 engineered significant advances in EU policy; for adaptation, the Dutch and UK Presidencies of 2004 and 2005, respectively, made important breakthroughs. Especially before c. 2000, climate policy developed far more slowly, predictably and unevenly than had become the norm in other areas of EU environmental policy. In contrast to these other areas, it is very difficult to detect the presence of a strong, underlying functional logic connecting the single market process to the development of common climate policies. Similarly, there has been no automatic link from the development of EU-level targets to the agreement of common policies and measures; at least, that is, until states were prepared to countenance one. Process-centred theories At first blush, the state-centred account of what has happened in the last 30 years does seem very persuasive. It offers a parsimonious explanation of why policy in this field developed so slowly for about 20 years and then suddenly underwent a phase change around c. 2000. In explains why EU climate policy unfolded rather differently from other areas of EU environmental policy, where gaps in Member

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State control and unintended consequences have been the norm (Fairbrass and Jordan 2004). It does so by emphasising the various ways in which states deliberately excluded the EU institutions from the intergovernmental venues in which critical choices were made. However, process-centred theories draw attention to a number of other aspects of the story that are either overlooked or actively underplayed by state-centred approaches: (1) the origins of state preferences; (2) the functional dynamic between targets and internal policies and measures; and (3) the long-term outcomes of the EU’s policies. These aspects are brought into focus precisely because processcentred approaches view governance processes historically (i.e. as they unfold over long periods of time) rather than as a series of discrete events (Pierson 2004). History ‘matters’ first and foremost because discrete and apparently insignificant choices are not simply made and then forgotten about; they are gradually encoded in governance frameworks, which in turn shape subsequent choices. The sequence in which choices are made affects final outcomes (Pierson 2004: 54). Furthermore, process-centred approaches are sensitive to the subtle but nevertheless important causal role of the EU’s own governors, principally the Commission, the ECJ and the Parliament. With respect to (1), it is axiomatic in state-centred accounts that preferences are chiefly determined by domestic-level factors, whereas process-centred approaches argue that they could just as well be exogenously created as states constantly adjust their preferences because of their ongoing membership of the EU. At a very basic level, states from Southern Europe would not in all probability have so readily signed up to the FCCC and (especially) the Kyoto Protocol, had they not been members of the EU. Rather counter-intuitively, these states actively championed the EU’s involvement because it offered them an opportunity to demonstrate their concern about climate change while continuing to grow their emissions. The technically and politically complex burden sharing agreements negotiated in the late 1990s were deliberately designed to facilitate their involvement, not to achieve overall emissions reductions in a cost-effective manner. However, once inside the EU’s burden sharing agreement (and thus drawn into discussions about common and coordinated policies and measures), they have found it harder to maintain this preferred position, particularly after the entry of newer (and even poorer) Member States from Central and Eastern Europe. Similarly, richer states had a number of motives for pursuing an EUlevel response that directly derived from their membership of the EU, including the protection of the single market and the perceived need to act together in all internal and external matters (note also the norms of undifferentiated integration, consensus, and economic and social cohesion). Process-centred theorists have cited other evidence to suggest that states would have responded very differently to climate change had they not been members of

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the EU. For example, Groenleer and van Schaik (2007: 986) claim that concerns about climate change have diffused among Member States as they have taken on the coordinating functions of the Presidency. This arrangement means that, at some point, every state has to play the part of the honest broker (i.e. to act in the EU’s interests), regardless of whether that state is generally in favour or more sceptical of EU action. Over time, it has, process-centred theorists would claim, encouraged all states to develop a much better understanding of the threats and opportunities posed by climate change, which in turn has undeniably had some effect on their preferences. The central coordinating function performed by the Environment Council (in both internal and external policy discussions) has also attracted the attention of process-centred theorists. In other areas of environmental policy, there is plenty of evidence to suggest that the Environment Council’s composition – essentially, national environment ministers working closely with the Commission’s DG Environment – has facilitated the adoption of stronger policies than would have been the case had they been adopted by national cabinets (Jordan 2001). State preferences, therefore, depend upon which part of ‘the state’ is in the lead and the part of the EU in which they are expressing them (Héritier 1999: 58). Membership of the EU has also ‘mattered’ because of the partly autonomous activities of EU institutions. There are several ways in which they have made their presence felt. For example, the Commission has become directly involved in the area of energy policy, an area that, in formal terms at least, still remains under national control. Rulings by the ECJ in the 1980s emphasised that energy was a traded good and gave EU institutions an opportunity to become much more heavily involved via the EU’s internal market powers (Matláry 1997). Admittedly, many of their preferred measures did not have energy efficiency and climate change as their main purpose, aiming instead to promote competition by liberalising energy markets. However, when states eventually (after 1996) decided to adopt more ambitious targets, they worked in a governance context significantly shaped by, and most crucially of all, directly involving the Commission. In fact, Chapter 5 maintains that it was the liberalisation of the European electricity markets in the latter half of the 1990s that provided the main rationale for harmonising national renewable energy policies, not climate change. EU institutions have also made their presence felt at the international level. More process-centred views underline the fact that the Commission’s involvement in external environmental policy arose because of a landmark ruling by the ECJ (see Chapter 2), not an open invitation from the Council. Looked at over a longer time period, the Commission’s involvement – which is now extensive and highly detailed – was therefore ‘unforeseen’ by the initial designers of the EU, namely the Member States (Bretherton and Vogler 2006: 89). It also emerged long before

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states formally established a common foreign policy (via the 1993 Maastricht Treaty) (Sjöstedt 1998: 242–3). European integration therefore developed in the ‘valleys’ (Bulmer 2009) of EU governance between the formal Treaty revisions. Over the course of the past 30 years, the Commission has emerged as an influential source of ideas, knowledge and technical expertise, particularly for smaller and administratively weaker states (Vogler and Stephan 2007: 408). Far from being a mere facilitator of inter-state bargains, it deserves to be treated as an ‘extra Member State’ (Groenleer and van Schaik 2007: 987). The Commission has also made its influence felt on the common and coordinated policy measures that have been adopted at EU level. For example, in the 1990s it followed the line of least resistance, building climate policy informally in less controversial areas such as tradable products and ozone-depleting substances. When new opportunities presented themselves in the 2000s, it changed its approach, operating more openly as a policy entrepreneur. Its biggest achievement thus far has been the adoption of emissions trading – an instrument initially quite ‘alien’ to the EU’s (and, it should be said, to the majority of states’) governance frameworks (see Chapter 6). Although ‘snapshots’ of particular directives continually portray it as weak in relation to the other institutions, the Commission in effect plays a long game, pitching its proposals well above the lowest common denominator of state preferences in the expectation that they will be diluted in negotiations with the Council. More recently, the Parliament, too, has successfully upgraded the EU’s powers. During the negotiation of the 2008 climate–energy package, it did not obtain everything that it wanted, but managed to establish new sources of finance for carbon capture and storage facilities, pushed for tighter deadlines and stricter standards across a number of areas in the package, and generally tightened up compliance procedures. The second aspect relates to the potentially functional relationship between targets on the one hand and internal policies and measures on the other. Processcentred approaches are intrigued by the way in which old policies create new politics – a phenomenon known as policy feedback (see Chapter 2). There are two ways in which this played out in climate policy. First, targets adopted at the international level have undoubtedly fed back into EU policy making, creating new windows of opportunity for EU institutions to exploit. Backed by the Parliament, DG Environment has used them as a force majeure to push powerful, greenhouse gas-intensive sectors such as road transport (in the 1990s) and aviation (in the 2000s) into signing up to new climate change policies. The same could be said of policy instruments. For example, the use of market-based instruments in the Kyoto Protocol was brokered by the US government in the teeth of opposition from Member States, who eventually accepted them as part of the broader Kyoto deal.

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In all these examples, policies were introduced into the EU from the outside, and then exploited by different non-state governors during the unfolding process of internal policy making (Sjöstedt 1998: 243) – a phenomenon that Skou Andersen (2004: 137) has termed policy ‘reverberation’. Process-centred approaches are also interested in the influence of the EU’s own targets. As artificial and over-ambitious as these sometimes have been, they have nonetheless provoked difficult choices in relation to the design of new policies and measures. Generally speaking, the Council has always resisted the Commission’s attempts to establish a functional link between the former and the latter (most prominently under the 1993 and 2004 Monitoring Decisions – see Chapters 3 and 12). None the less, in areas such as energy efficiency and renewable energy, the Commission has again successfully played a long game. Initially it proposed weak, indicative targets and then, when these eventually (and predictably) proved insufficient, it pushed for more binding ones and, eventually, common and coordinated policies and measures. In Chapter 5 it was noted how Member States have managed to resist the harmonisation of national renewable energy support mechanisms, but the underlying tension between the existence of diverging national systems, common emission reduction targets and the establishment of an internal energy market stubbornly refuses to go away. Turning finally to the third aspect, process-centred accounts place more stress on tracing out the long-term outcomes of the EU’s policies, particularly at the national level: in other words, Europeanisation (Bulmer 2009: 317–9; Jordan and Liefferink 2004). Arguably, it is still too early to determine whether states have, as statecentred approaches like to assume, managed to govern climate change in ways in which they originally intended. Experience suggests, however, that Europeanisation does not necessarily unfold as states expect it to (Jordan and Liefferink 2004). There are unintended consequences; when these appear, states struggle to quickly and fully re-assert their control. For process-centred theories the real acid test of the governing power of states will only arrive when the EU’s climate and energy package is implemented at the national level. In the past, states have proved themselves more than capable of modulating the EU’s mitigation policies to fit their changing economic and political circumstances. However, with the combination of more ambitious and binding targets and stronger compliance mechanisms, states could well find it harder to maintain their present level of control. Conclusions Prior to c. 2000, climate policy emerged slowly and in a rather more stepwise fashion than has been the norm in other areas of EU environmental policy. It only started to expand rapidly after c. 2000 and then rather unevenly across the

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challenges of mitigation and adaptation. Over 20 years after the EU first expressed its determination to lead the world on climate issues, it does now deserve to be treated as an important font of policy innovation, both within Europe and at the international level. It now seems appropriate to refer to the climate policy of the EU, rather than (as implied by the title of this book) climate policy in the EU. For an organisation that pledged to lead the world on climate issues, this may seem desperately slow. However, for an emergent and leaderless political system, with weak administrative capacities and a limited core executive, it was the only politically feasible approach it could have adopted. This chapter has revealed that the EU’s policies have been directly influenced by international events, but it has proved impossible to account for them purely in terms of international drivers. Because the influence has been genuinely two- rather than one-way, analysts seeking to explain climate policy have to open up the EU and explore its inner workings. If one refers back to the choices and dilemmas introduced in the opening chapter, the chapters in Part III demonstrate that level and scale dilemmas have generally been resolved in favour of EU-level action. But this basic choice was neither pre-ordained nor uncontroversial. On the contrary, it was deeply political. Given the structure of the EU, it was not entirely surprising that the politics around level and scale choices were mainly perceived in somewhat binary terms (i.e. does the EU act or do Member States?). However, the evolving debate about adaptation is beginning to demonstrate that there are actually rather more levels at which governors can potentially act, an immensely troublesome choice which scholars of more fully federated states will immediately recognise. The most critical timing and sequencing dilemmas related to the choice about whether to act quickly (to ‘mitigate’ aggressively) or less quickly (implying a greater confidence in the capacity to ‘adapt’). This chapter highlighted the difference between mitigation, where policy development accelerated after c. 2000, and adaptation, where it has proceeded slowly in the relative absence of policy entrepreneurs and/or focusing events. Interestingly, even after it started to emerge, adaptation policy (such as it now is) is still being formulated in relative isolation from mitigation policy (the decision to vest DG Environment’s Water Unit with the responsibility to coordinate the EU’s Adaptation White Paper is especially telling in this respect). None the less, official policy discourses are increasingly referring to the need to move beyond a simple dichotomy between mitigation and adaptation, and towards ‘win–win’ strategies that exploit synergies between the two. The possible use of revenues from ETS auctioning for adaptation purposes is a rare example of such a synergy. Soil protection has potential to be another, but until now Member States have been unable to agree on how to proceed. The other key choice with respect to timing and sequencing has been between whether to act before or after the Member States. Here, EU policies really only developed after Member

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States chose to act first, not the EU institutions. But once EU involvement started, it quickly became self-reinforcing. In terms of modes and instruments, the EU mostly remains a ‘regulatory state’. When it has chosen to act in a non-regulatory fashion it has struggled, as demonstrated by the failed carbon tax and the voluntary agreement on car emissions. This does not necessarily mean that it governs in a totally hierarchical manner or that it is condemned only to regulate. The ETS is but one of a number of examples of instrument innovation, although even this supposedly novel instrument retains a number of regulatory features. Furthermore, the chapters in Part III are replete with examples of more networked modes of governance – for example the Policy Coordination Method – being used to produce new policies that triggered a need for new mode and instruments choices. However, once the role of the EU has been decided, policy is mostly enacted in the form of regulations – and fairly loose framework directives at that, in keeping with the informal norm of subsidiarity. The handling of cost and benefit dilemmas has strongly corresponded with the EU’s basic mode of action, that is mostly regulatory. The chief focus of cost and benefit dilemmas has been the relatively irregular negotiations over formal burden sharing, which have been extremely productive of ‘high politics’ characterised by states battling for control. But as EU climate policy has matured, formal burden sharing by fairly hierarchical regulatory means has gradually become less important. As a result of the 2008 Burden Sharing Decision and the revised ETS Directive, governing these dilemmas looks set to involve a greater role for more marketcentred transactions (see Chapter 12). Meanwhile, there are indications that more redistributive and distributive forms of politics are beginning to appear around the spending of EU funds. Finally, implementation and enforcement dilemmas have not been especially acute because of the determination by states to only take on undemanding – and hence eminently implementable – targets. But things will change as the EU comes under internal and international pressure to deliver on the more ambitious 20% (and possibly 30%) reduction targets it adopted in 2008. Finally, there are problem perception dilemmas. These deserve to be covered last (rather than, as in Chapter 2, first) because of their fundamental and enduring importance. EU climate policy passed an important political tipping point in 1996 when the Environment Council committed itself to the totemic 2 °C target. However, the EU’s legal, administrative political powers in the environmental policy area were not sufficient to develop the policies needed to deliver the associated emissions reductions. EU climate policy only really surged forward after c. 2000, when particular governors started to make new connections to cognate problems – chiefly, energy insecurity, poor economic performance and public disenchantment with the wider European project – against the backdrop of various

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focusing events. However, although this framing of the climate change problematique served to advance certain policies that might otherwise not have been adopted, it brought with it a serious dilemma, in the sense that satisfying the goals of energy security, economic performance and greater EU legitimacy may not equate to the emissions reductions that scientists now say are necessary to avoid dangerous climate change. We return to this point in the final chapter. The two theoretical approaches offered rather different interpretations of this pattern of governing, based as they are on somewhat different ontologies and utilising different epistemologies. State-centred approaches emphasised that all the key choices were consciously made by states. This continually pushed EU policies down to the lowest common denominator of their preferences. By contrast, more process-centred approaches revealed that climate policy has not evolved in the manner that states originally intended or would have followed had they not been members of the EU. In our view, both approaches have something to offer but neither has a monopoly on the truth. Climate policy has definitely not evolved in the same functionally driven manner as environmental policy: states have been far too unwilling to cede control over their tax, energy and foreign policy powers to EU institutions. Nevertheless, the chapters in Part III serve to warn us that relying solely on a series of discrete ‘snapshots’ of high summits, treaty amendments and one-off analyses of single directives, risks overlooking ‘[s]low-moving processes [which] may be cumulative, involve threshold effects, or require the unfolding of extended causal chains’ (Pierson 2004: 82). If theories of the EU struggle to account fully for what has happened in the past, what about the future? For this an altogether different approach is required, which is set out in the next chapter. References Adelle, C., M. Pallemaerts and D. Baldock (2008). Turning the EU Budget into an Instrument to Support the Fight Against Climate Change. SIEPS Paper 2008/4. Stockholm: Swedish Institute for European Policy Studies. Bretherton, C. and J. Vogler, (2006). The EU as a Global Actor, 2nd edn. London: Routledge. Bulmer, S. (2009). Politics in Time meets the politics of time: historical institutionalism and the EU timescape. Journal of European Public Policy, 16(2), 307–24. Collier, U. (2002). EU energy policy in a changing climate. In Environmental Policy Integration, ed. A. Lenschow. London: Earthscan. Costa, O. (2008). Is climate change changing the EU? Cambridge Review of International Affairs, 21(4), 527–44. Delreux, T. (2006). The EU in international environmental negotiations. International Environmental Agreements, 6, 231–48. Fairbrass, J. and A. Jordan (2004). European Union environmental policy: a case of multilevel governance? In Themes and Issues in Multi-Level Governance, ed. M. Flinders, and I. Bache. Oxford: Oxford University Press, pp. 147–64.

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Hale, S. and S. Singleton-White (2007). Investing In Our Future: A European Budget for Climate Security. London: Green Alliance. Groenleer, M. and L. van Schaik (2007). United we stand? The EU’s international actorness in the cases of the international criminal court and the Kyoto Protocol. Journal of Common Market Studies, 45(5), 969–98. Héritier, A. (1999). Policy Making and Diversity in Europe. Cambridge: Cambridge University Press. Jordan, A. J. (2001). National environmental ministries: managers or ciphers of European environmental policy? Public Administration, 79(3), 643–63. Jordan, A. and D. Liefferink, eds. (2004). Environmental Policy in Europe. London: Routledge. Kingdon, J. W. (1995). Agendas, Alternatives and Public Policies, 2nd edn. New York: Harper Collins. Macrory, R and M. Hession (1996). The European Community and climate change. In Politics of Climate Change, ed. T. O’Riordan and J. Jäger. London: Routledge. Matláry, J. H. (1997). Energy Policy in the EU. Basingstoke: Palgrave. Moravcsik, A. (1998). The Choice For Europe. Ithaca, NY: Cornell University Press. Oberthür, S. and C. R. Kelly (2008). EU leadership in international climate policy. The International Spectator, 43(3), 35–50. Oberthür, S. and H. Ott, eds. (1999). The Kyoto Protocol. Berlin: Springer-Verlag. Pierson, P. (2004). Politics in Time. Princeton, NJ: Princeton University Press. Putnam, R. (1988). Diplomacy and domestic politics. International Organisation, 42(3), 427–61. Sbragia, A. (2000). Environmental policy. In Policy Making in the EU, 4th edn, ed. H. Wallace et al. Oxford: Oxford University Press. Sbragia, A. and C. Damro (1999). The changing role of the EU in international environmental politics. Environment and Planning C, 17(1), 53–68. Sjöstedt, G. (1998). The EU negotiates climate change. Cooperation and Conflict, 33(3), 227–56. Skou Andersen, M. (2004). Regulation or coordination? European climate policy between Scylla and Charybdis. In Emission Trading for Climate Policy, ed. B. Hansjürgens. Cambridge: Cambridge University Press. van Schaik, L. and C. Egenhofer (2003). Reform of the EU Institutions: Implications for the EU’s Performance in Climate Negotiations. CEPS Policy Brief No. 40. Brussels: Centre for European Policy Studies. van Schaik, L and C. Egenhofer (2005). Improving the Climate: Will the New Constitution Improve the EU’s Performance in International Climate Negotiations? CEPS Policy Brief No. 63. Brussels: Centre for European Policy Studies. Vogler, J. (1999). The EU as an actor in international environmental politics, Environmental Politics, 8(3), 24–48. Vogler, J. and H. Stephan (2007). The European Union in global environmental governance: leadership in the making? International Environmental Agreements, 7, 389–413

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Part IV Climate policy in the European Union: future challenges

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10 Exploring the future: the role of scenarios and policy exercises frans berkhout, constanze haug, roger hildingsson, johannes stripple and andrew jordan

Introduction Policy exists to encourage social and environmental change now and into the future. It makes a promise about the future and, by doing so, seeks to align target groups to its goals and means. A fundamental problem in governing any policy problem is that both the governors and the target groups change their preferences over time. Another is that the prevailing system of governance does not remain stable either; it changes over time, partly as a result of the impact of policies, partly as a result of unexpected outcomes and unintended consequences from earlier policies, and partly because of exogenous changes that have nothing to do with the policy in question. As all these things continually change, so does the nature of the choices and dilemmas which confront governors when they pursue new policies and implement old ones. In looking forward to the future of climate policy, we need to account for changes in the governance system – in our case the EU – and how these may influence the evolution of policies, their impact, effectiveness and legitimacy. But since we are focusing on the longer term (in this and the following chapter, we are mostly dealing with the period 2020–40), we need to go further still. We need to consider the possibility that governance systems will be significantly different from those prevailing today. We need, for example, to confront uncomfortable possibilities, such as a complete failure to agree or maintain a coordinated global climate policy regime, the abandonment of the EU’s 2 °C target or the repatriation of important EU competences to the Member States. Although relatively strong, harmonised policies are basic tenets of EU climate policy at the time of this writing, the future is ‘another country’. In this chapter we discuss the methods used to explore the key choices and dilemmas that may emerge in the EU under diverging international frameworks and policy objectives with regard to climate change. We used two different approaches – policy scenarios and a policy exercise – in order to ensure a sufficient level of rigour in our exploration. There are both analytical and normative reasons

Climate Change Policy in the European Union, ed. A. Jordan, D. Huitema, H. van Asselt, T. Rayner & F. Berkhout. Published by Cambridge University Press. © Cambridge University Press 2010.

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for doing this. Analytically, we are interested in understanding how specific uncertainties may influence the choices made by governors and the dilemmas with which they are confronted. Normatively, we are seeking to make the broader point that climate policies – like those in other fields for which uncertainties about effects and context are great – should be developed in a way that builds in robustness to (sometimes unexpected) changing circumstances. This chapter continues with a discussion of the use of scenarios in policy analysis, and provides a brief outline of how we used them to derive four different policy ‘worlds’ in which the EU might find itself in the period 2020–40. It then introduces the policy exercise method, and describes how and why this approach was used in our research on burden sharing. The final section concludes with some thoughts about the analysis of future policies. In Chapter 11 we report on what the use of the scenarios and the policy exercise revealed about the future of EU climate policy in the five different sub-areas of policy reviewed in Part III. Exploring the future: the role of scenarios In many ways, the future could be quite like the past and the present. However, it is equally likely that in important respects it will be markedly different. For our purposes, one problem is to define how the wider system of governance might shape the dilemmas confronting governors in the EU. In other words, we try to see a policy, and the choices and dilemmas that come with it, as an outcome of a specific set of institutional configurations and political commitments. In applying scenario analysis, we view governance as having a profound influence on policy design, so that different contexts and policy objectives generate different problem framings, choices and dilemmas in the various sub-areas of climate policy. These can be compared with current and expected policies to assess the extent to which they are similar and aligned, or different and hence misaligned. Alignments would suggest a robust policy capable of being adapted to different contexts, misalignments a possible weakness. In this way, scenario analysis provides a way of conducting a sensitivity analysis of current policies. Scenarios in policy research Scenarios are qualitative tools to visualise the future, including storylines (often illustrated by images and indicators) to create representations of alternative future worlds that resonate with a range of actors (de Jouvenel 1967; van der Heijden 1996). Scenarios are plausible representations of the future based on sets of internally consistent assumptions about key relationships in a system, processes of change or desired end-states. The approach may be normative or exploratory. Normative

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scenario planning, sometimes referred to as backcasting, starts with preferred visions of the future, and explores how they could be reached. Exploratory scenario approaches take past trends as their starting point. These have been dominant in global change assessments over the past decade, including the IPCC (Nakicenovic et al. 2000) and the Millennium Ecosystem Assessment (2005). This approach is based on four basic principles (Berkhout and Hertin 2002): (1) The future is not simply a continuation of past relationships and dynamics, but subject to human choice and action, as well as exogenous shocks. (2) Although it cannot be foreseen or predicted, exploration of the future can inform decisions in the present. (3) There is not just one possible future: uncertainty calls for a variety of futures to be mapped onto a ‘possibility space’. (4) Development of scenarios involves both systematic analysis and subjective judgement.

Scenarios are therefore not predictions of the future, but merely representations of alternative plausible future contexts, against which current strategies will need to be robust. They are systematic thought experiments (providing analysts with a means of asking ‘what if?’) that can be used to test current assumptions – often tacit and untested – about the future. They are, in short, not ‘truth machines’ but ‘learning machines’ (Berkhout et al. 2002). Exploratory scenario approaches begin with some assumptions about key variables shaping future (policy) contexts and attempt to construct plausible representations of the future (Alcamo and Henrichs 2008). The future is pictured through the elaboration of a number of alternative worlds over which social agents may have limited control. Unlike traditional forms of planning, they stress the ability of actors to adapt to their evolving contexts. The question of agency is therefore reduced to the problem of the capacity of actors to adjust to prevailing conditions. Although there are different ways to construct scenarios, three main elements originally emphasised by the French school, La Prospective (Godet 1987: 22), remain at the core of most scenario exercises: identification of the key independent and dependent variables; analysis of actor roles and strategies; and construction of plausible scenarios on the basis of assumptions about key variables and the relationships between them. Beyond this, there remain large differences with respect to the methods used to build, test and refine scenarios. Most methods and tools involve, to a varying degree, expertise, creativity and interaction (Ringland 1998). Less formal approaches include interactive methods such as futures workshops and conferences. More formal, often quantitative, techniques based on expert knowledge include crossimpact analysis, fuzzy cognitive mapping, Delphi and expert consensus methods. Creative exercises include brainstorming and scenario writing. The appropriate

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balance of methods and the interaction between participatory and expert-based scenario techniques remains open to debate and to a large extent dependent on the problem at hand. In general, the narrower and more technical the problem, the better defined the options and the shorter the time interval involved, the more useful quantitative techniques will be. Under conditions of higher uncertainty, the authority of formal methods and experts declines (Swart et al. 2004). Many practitioners argue that a mixture of methods is desirable and that efforts should be made to establish better links between them (see, for example, Swart et al. 2004; Alcamo and Henrichs 2008). In this chapter, we therefore mix scenarios with policy exercises. Scenarios in climate change research Scenarios have been at the heart of climate change assessment for many years. On the one hand, pathways of economic, social and technological change leading to greenhouse gas emissions are hard to predict. On the other, scientific uncertainty remains about the scale and pattern of response of the climate, the oceans and the biosphere to changing concentrations of greenhouse gases (Solomon et al. 2007). These two essentially separate components of uncertainty are an integral aspect of all climate assessments, including the projection and appraisal of future policies. Beyond this, there is a third component of uncertainty related to the social and political responses to climate change. Indeed, it could be said that uncertainty is one of the defining features of the whole climate change problematique (Petersen 2000). Scenario analysis has been used in a wide variety of ways to bring shape to the scientific and policy debate (Parson 2008). Important socio-economic scenarios applied to climate change assessment include: *

*

*

The IPCC Special Report on Emissions Scenarios (SRES). These model emission trajectories, based on assumptions about the degree of globalisation and political orientation on sustainability-related issues (Nakicenovic et al. 2000). The UNEP Global Environmental Outlook includes scenarios on global environmental change (including climate change), while the International Energy Agency’s World Energy Outlook and Energy Technology Perspectives and the EU’s World Energy Technology Outlook focus on future developments in energy supply, energy demand and technological innovation (UNEP 2007; IEA 2008a, b; European Commission 2003, 2006). The UK Climate Impacts Programme’s socio-economic scenarios (Hulme and Jenkins 1998; Hulme et al. 2002) are aimed at supporting long-term policy planning in a number of policy fields, with particular attention to greenhouse gas emissions and climate impacts.

Kok et al. (2008) conducted a comparative review of four recent global assessments in the field of the environment and sustainable development. They show the importance of initial assumptions, but also how the assessments tend to converge in

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the ‘worlds’ they articulate. This presents a certain paradox: despite scenario planning being promoted as a way of exploring a variety of different futures, different studies have come to resemble each other more and more. In our case, the four worlds that we derived bear some similarity to those described in, for instance, the IPCC and the Global Environmental Outlook scenarios. Climate policy scenarios for the European Union In this section we will develop a scenario approach to understand how climate policies could evolve over the longer term (2020–40) and which choices and dilemmas this might raise for governors at national and EU levels. By creating a stable frame of internally consistent assumptions about future worlds in which EU climate policy might evolve, the scenarios make it possible to plot alternative policy trajectories and, as we do in Chapter 11, assess whether current policies are robust with respect to different outcomes. Although scenarios are a well-known method in business strategy and in climate assessment, they are not nearly as well used in policy analysis. To be clear, in using them to inform our analysis of future policy and governance, we are not making predictions, nor are we questioning the underlying norms underpinning current EU policies. Nor do we ascribe any probabilities to alternative futures. Our scenario approach flows from the idea that future EU policy will be shaped by two principal dimensions: the political objective of climate policy and the degree of international coordination around it. Under the first dimension, we are interested in whether the primary goal of policy is to mitigate climate change through emissions reductions or to adapt to the impacts. Here we define two alternatives in terms of global mean atmospheric temperature increases by 2100, consistent with climate scenarios used elsewhere (van Vuuren et al. 2010). Specifically, we assume either a 2 °C world, in which mitigation has been and remains the overarching policy objective, or a 4 °C world, in which adaptation to climate change impacts has become the primary goal. A 2 °C world implies a political commitment to low atmospheric CO2 stabilisation (in the range 450–500 ppm) requiring a very strong and effective focus on mitigation. It also implies substantially strengthened emissions reduction policies, with growing but still relatively limited attention to adaptation. A 4 °C world implies essentially unconstrained world energy pathways, leading to more and faster warming, causing significant adverse impacts and a far greater need for adaptation in the EU and globally. Under this scenario, the orientation of policy would be towards managing the risks of climate change. Hence, the scenarios explore two distinct goals that feature in contemporary discussions of future climate policy: a high-mitigation/ low-adaptation world (2 °C) or a low-mitigation/high-adaptation world (4 °C). In exploring the implications, it should be borne in mind that, according to best estimates of the IPCC, decadal average warming by 2030 is insensitive to the extent

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to which emissions reductions are achieved in the interim (Solomon et al. 2007). Only by 2100 will choices made in the first decades of the twenty-first century lead to significant differences in global temperatures and consequent impacts. In other words, temperature change is essentially the same in all four of our 2020–40 worlds. The second scenario dimension relates to the nature of climate governance over the coming 30 years, principally the degree of coordination at the international level. At one end of the scale, we can imagine a truly international architecture of agreements and commitments that enables coordinated climate governance (whether related to mitigation or to adaptation). At the other, we assume international climate action dominated by choices made by autonomous state and privatesector actors, with little effort made to ensure political coordination between states. Taking the globally coordinated end first, we assume that agreement is reached on gradually expanding international climate policy. This is associated with significant political and ethical commitments to address climate change as a global problem with ‘common but differentiated’ obligations to mitigation and/or adaptation. Such a world entails a ‘broadening’ and ‘deepening’ of the FCCC approach, with both wider participation and strengthened commitments to mitigation and/or adaptation. It also implies a stronger role for the EU in coordinating the national policies of its Member States as well as involvement in international policy making. By contrast, in the autonomous scenario local and national-level action is much more loosely coupled through ad hoc coalitions, partnerships and networks. International policy – insofar as it exists – comprises bilateral, regional and sectoral initiatives and agreements (‘small-n agreements’) in which states play a role alongside business, NGOs, citizens and consumers. In such a world, international climate governance represents a messy set of rules, practices and norms. It is likely that the EU itself would look different under such circumstances – more an ‘Anglo-Saxon’ model of free-trading nations than a federation of states that have pooled their sovereignty. Between these extremes, we can of course imagine a variety of different architectures (Biermann et al. 2010). Drawing these two dimensions together creates a ‘possibility space’ with four quadrants (see Figure 10.1), each defining a set of background conditions (‘worlds’) under which EU climate policy could develop between 2020 and 2040. The first stage of the analysis is to sketch out the role of climate policy in each of these worlds, via a series of ‘narrative sketches’. Four climate policy worlds: narrative sketches In this section we outline these four climate policy worlds in further detail, namely: (1) coordinated mitigation; (2) autonomous mitigation; (3) coordinated adaptation;

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High mitigation/ Low adaptation

Policy objective axis

Scenario D

Autonomous

Coordinated

Degree of coordination axis

Scenario A

Low mitigation/ High adaptation

Figure 10.1 Exploring the future: a possibility space with four quadrants. High mitigation/ Low adaptation

Autonomous mitigation: ‘Fragmentation & lowcarbon competition’

Coordinated mitigtation: ‘Kyoto+++’

Autonomous

Coordinated

Autonomous adaptation: ‘Let them adapt’

Coordinated adaptation: ‘Sharing the burdens of adaptive planning’

Low mitigation/ High adaptation

Figure 10.2 Four climate policy worlds.

and (4) autonomous adaptation (see Figure 10.2). This is primarily a process of induction, but one that draws on historical precedents. Coordinated mitigation: ‘Kyoto+++’ This world is defined by an effective political commitment to high mitigation through strong international policy coordination. In the ‘coordinated mitigation’ world, the international community succeeds in reaching a new Kyoto-like regime, negotiated under the FCCC, entailing mitigation action by both major industrialised

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states (including the USA) as well as developing countries. Absolute emissions reduction commitments (at first for Annex I countries and then gradually for the rest), and a framework for adaptation and technological cooperation, are agreed. Options for such a regime range from the ‘multi-stage approach’ with gradual commitments for all countries, ‘contraction and convergence’ of per capita emissions to the ‘global Triptych’ approach (see, for example, Höhne et al. (2005), for an overview). Policies, interacting with market and technological changes, succeed in achieving deep cuts in emissions. For the sake of simplicity, we assume that what applies at the global level – a high level of supranational coordination, for example – also holds for the EU. In this world, therefore, the EU becomes a more integrated polity. It extends its coordinating powers on energy and foreign policy, and plays a leading role in the international climate regime. EU emissions reduction policies address a range of sectors (energy, transport, industry, residential, waste, agriculture, etc.) and a comprehensive set of gases (at least the Kyoto Protocol’s basket of six) and include measures to increase the sequestration of carbon emissions (carbon capture and storage; and land use, land-use change and forestry). Mitigation policies take as their starting point specific physical targets (in terms of emissions, greenhouse gas concentrations, maximum mean temperature increases, or total carbon budgets) and allocate these as legal obligations to different parties. Autonomous mitigation: ‘fragmentation and low-carbon competition’ This world is defined by high mitigation, but under conditions of low intergovernmental coordination. It assumes that no comprehensive global climate agreement is negotiated, and that where action on climate mitigation and adaptation is cooperative, it is achieved through a multiplicity of bilateral and regional agreements. Instead of global coordination, much greater emphasis is placed on competitive markets and market mechanisms to generate technological and system innovations leading to radically lower levels of greenhouse gas emissions. As far as the EU level is concerned, ‘autonomous mitigation’ implies the maintenance of the single market as the primary justification for EU action on climate. Common action on mitigation and adaptation is consequently comparatively weak. Member States compete in the EU and internationally to exploit competitive advantages generated from the transition to low-carbon energy economies. In the ‘autonomous mitigation’ world, international climate governance is characterised by a multitude of overlapping and contrasting initiatives. The EU and other significant OECD countries (which conceivably would include today’s ‘laggards’: Japan, Australia and the USA) enter a post-2012 agreement with binding emissions targets, to provide a basis for linking carbon trading schemes. Other coalitions, however, focus on voluntary emissions targets and/or sectoral agreements. Major

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developing countries such as China, India and Brazil, and their industrial sectors, participate in these schemes, producing a complex geometry of commitments and actions. In all cases, there is a commitment to achieving deep cuts in emissions through a broad spectrum of abatement measures. Any potential conflicts between climate policy goals and other objectives, such as security of supply and competitiveness, are resolved regionally or bilaterally between states, allowing for greater flexibility and room for local innovation. The emphasis on market mechanisms in this world extends beyond mitigation to include adaptation. Coordinated adaptation: ‘sharing the burdens of adaptive planning’ In the ‘coordinated adaptation’ world, the primary political objective is to adapt to the impacts of climate change, to be achieved through high levels of international coordination. Specifically, there is a global approach to adaptation, including an agreement on burden sharing based on historical responsibility and capacity to pay (Dellink et al. 2008). The revenues raised feed into a large-scale international fund for adaptation, which disburses resources to countries, sectors and groups. This fund goes beyond conventional development assistance and is linked to disaster relief, with a view to reducing risks and vulnerabilities of regions and groups. However, the ‘coordinated adaptation’ world assumes that action on emission reductions (nationally or internationally) is less successful. Again, we assume that the high level of global coordination is mirrored at EU level. Thus, EU-level competences emerge regarding the planning of new developments in ways that minimise their vulnerability to drought and flooding and the transfer of more climate-friendly development assistance to the developing world. Autonomous adaptation: ‘let them adapt!’ ‘Autonomous adaptation’ is a low-mitigation/high-adaptation world with little intergovernmental coordination. It assumes that no broad international climate agreement on either mitigation or adaptation is in place. Limited and mainly voluntary action is taken to reduce emissions. Mitigation is viewed as being difficult and expensive, contributing to a widespread free rider problem in commitments to emission reductions. Small-n agreements (for example, at regional level), are mainly oriented towards greater adaptation. Adaptation is seen as primarily a concern for the market, except in the case of major climate-related disasters. In this world the EU system is weak, and it is left to particular Member States to form ‘coalitions of the vulnerable’ to push for action on specific issues (e.g. drought and flooding). Autonomous adaptation at the national and local level has two major aspects. First, there is a belief that managing growing risks is the only feasible response to climate change, and that adaptation should mostly occur at the local level. Second,

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multilateral approaches to problems – be they climate- or ‘non-’ climate-related – are mostly rejected. Voluntary action on mitigation is driven by factors including: fossil resource scarcity and rising prices; damage to these resources as a result of climate change; increasing attractiveness of renewable energy due to learning and lower prices; and growing costs of adaptive measures. International cooperation takes place on the basis of the perceived benefits to countries and industries (such as sharing risks and costs of R&D, protection of intellectual property rights, capabilitybuilding, market creation, etc.), rather than a commitment to shared climate protection goals. Exploring the future: policy exercises and policy games Having outlined the four worlds that will frame our discussion of future policy choices and dilemmas in Chapter 11, we turn to look at the second method used: an interactive policy exercise. In common with scenarios, policy exercises and games take a qualitative future ‘plot’ or storyline as their point of departure. However, they incorporate two additional elements that distinguish them from scenario exercises. First, they require real-life stakeholders or experts to participate in them, normally in a given role (which may be their own or close to it, but may also be very different). Second, by imposing specific decision rules, they confront participants with predefined tasks or decisions that need to be taken within a limited time frame under a fictitious scenario setting. Policy games Policy games, also referred to as ‘simulation-gaming’, ‘free-form gaming’ or, in defence analysis, ‘war gaming’, have a long-standing tradition, particularly in the military sphere. The first examples date as far back as the First World War (Brewer 1986). In the 1950s and 1960s, gaming expanded from the military sphere to other, more policy-related fields such as international relations and crisis management. The 1970s witnessed further applications in the fields of environmental and social policy, as well as corporate strategy. Parson (1997) has summarised the main characteristics and advantages of policy games under two headings, which to a large extent also apply to the use of scenarios in policy research: representation and deliberation. Representation refers to the fact that policy games reduce complexity through structured abstraction: a game represents a simplified model of reality. The key actors, relationships and cause–effect links are maintained. Although the approach implies a risk of bias in its design through omission of crucial actors or variables, it helps to reduce the complexity, facilitating problem-structuring and integration of knowledge. Yet, where game

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theory relies on agents with predefined preferences, it is interaction between genuine stakeholders leading to possibly different outcomes – what Parson (1997) refers to as ‘deliberation’ – that is key to policy games. Policy exercises Policy exercises are a type of policy game. First advocated by Brewer (1986) and further developed by Toth (1988a, b), they are an adaptation of the method of modelbased gaming used in military or business contexts. In Toth’s words (1988a: 237): ‘… at the heart of the process [of the policy exercise] are scenario writing of “future histories” and scenario analysis via the interactive formulation and testing of alternative policies that respond to challenges in the scenarios. These scenario-based activities take place in an organizational setting reflecting the institutional features of the problem at hand.’

Policy exercises are less tightly structured than policy games. Their key objective is to facilitate thinking about problems that are not yet well structured; in other words, areas in which the set of relevant choices, important consequences, or desired outcomes may be contested or unclear, or in which there may be other basic difficulties in framing. This format, like other gaming exercises, requires participants to make plans and decisions in a fictitious setting. However, the setting is typically richer and less structured and, unlike policy games, involves no fixed scoring system. A narrative ‘scenario’ provides the basic setting for participants’ decision-making, but may adopt a flexible approach to time. Participants may, for example, walk forwards in time through a succession of decision situations, or they may work backwards from a specified end point. Alternatively, they may go over the same set of decisions over and over again. Policy exercises have been applied in the academic study of global environmental change, as well as health, education and regulatory policy reform (see Crookall and Arai (1995) for examples). A number of applications have focused on various aspects of climate policy, from global negotiations to local adaptation options (see, for example, Jäger et al. 1990; Klabbers et al. 1995; Parson 1996a; Kasemir et al. 2003; Lonsdale et al. 2008). Given the high complexity and uncertainties involved in appraising future European climate policy, in our own research we also opted to apply the more flexible policy exercise format rather than the more structured gaming approach.

Policy exercises and games: a summary In policy games and exercises, participants jointly explore the future ‘possibility space’, build a shared understanding of key concepts and search creatively for

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solutions (Joldersma et al. 1995; Wenzler and Chartier 1999). Therefore, to exploit the potential of this method, participants should ideally be diverse, both in terms of background (both disciplinary and professional) and their view of the problem at hand. Last but not least, depending on the game structure and the kinds of supporting material used, policy games and exercises can provide a valuable platform for synthesising diverse sources of knowledge as well as different tools, both quantitative and qualitative (Mayer and Veeneman 2002). However, the use of policy games and policy exercises for participative appraisal has some limitations. Apart from their being highly time- and resource-intensive, Parson (1996b: 235) identifies the achievement of ‘relevant behavioural similarity’ between a policy exercise and the real problem environment it seeks to simulate as a key challenge. Although early advocates enthusiastically proclaimed the value of gaming as the ‘future’s language’ (Duke 1974), the relevance of policy games as ‘experiments’ to predict future policy developments remains doubtful. Thus, although policy games can serve as powerful transmitters of certain skills or knowledge, they should, like scenarios, never attempt to ‘instruct’ participants or assume that there is an ‘optimal’ policy option. Furthermore, their ability to be replicated – and thus the potential for deriving general conclusions on future trends and policy outcomes – is deemed relatively low, because each run may deliver different results, even with the same participants. Although this may not take away the individual learning effect of an exercise for participants, it clearly diminishes its relevance for policy appraisal. Overall, the literature has become more modest over time in its expectations of what policy games and exercises can deliver (Parson 1996b). Nevertheless, they have proved their potential to improve the structuring of complex long-term problems, to identify institutional and process bottlenecks and to creatively develop and assess policy options in a ‘safe environment’. Exploring the future of climate policy in the European Union Policy scenarios A policy scenario analysis was carried out for four of the policy sub-areas through semi-structured interviews with a selection of 54 EU policy-makers, policy advisors, researchers, members of think tanks, and NGO and business representatives. These people were approached, confronted with the four worlds and asked to elaborate on their potential implications for current and future policy strategies. The aim was to collect well-informed opinion on possible policy choices and associated governance dilemmas. For these interviews, which were conducted by different interviewers for each policy sub-area, the overall framework was presented in a summary form (the term we used was a ‘scenario storyboard’), which illustrated the four worlds and set out the main conditions and circumstances. Along with a

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standard semi-structured template of questions, the storyboard allowed interviewees to think beyond the specific political and institutional conditions that prevailed at the time of the interview and to explore alternatives. In other words, they were used to provoke ‘what if’ type questions. For example, ‘how well would policy x fare if the world looks like scenario y in 2020–40?’ Or, ‘what kind of policy instrument would be most robust if the world moved in the direction of scenario a or scenario b?’ The purpose was to encourage the interviewees to reflect on the most pertinent dilemmas and choices that might arise in each scenario, whether these would reflect the kinds of dilemma that the EU has confronted in the past 20–30 years, or would be different. Following on from that, how well prepared did they think prevailing policy and governance systems were to handle the dilemmas and associated choices that could arise in the four worlds? A policy exercise on burden sharing We involved another group of people in a policy exercise that explored the future shape of burden sharing in the EU. Burden sharing was thought to be an ideal issue area in which to conduct a policy exercise because the stakes are so high and the available options so varied (see Chapter 4 for a flavour of just how important it has been in the politics and policy of climate change in the EU). The exercise involved 22 experts from EU institutions, environmental agencies, think tanks, academia and the private sector from ten Member States. The exercise was set in 2018, at a time when the EU was developing its post-2020 strategy. Participants played roles in teams as senior decision-makers of either the Commission or one of four key Member States and were asked to negotiate the key features of an EU-level post2020 burden sharing agreement. Our point of departure was the two mitigationoriented worlds outlined above. Given that the burden sharing concept has so far mainly been applied to emissions abatement (see Chapter 4), the two mitigationfocused worlds seemed most appropriate for creating a decision-making context for the policy exercise. Using the two ‘high-mitigation’ worlds in parallel with two groups – one in which a global agreement on climate change was in place, the other characterised by little international coordination – we sought to investigate the extent to which changes at the international level might impact upon policy choices inside the EU. The policy exercise stimulated rich and sophisticated discussions in a focused setting, the results of which are summarised in the next chapter. Conclusions In this chapter we have outlined two methods that we applied in researching future EU climate policy: policy scenarios and policy exercises. The two methods are

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somewhat different. Scenarios set out a heuristic framework which helps characterise a variety of future conditions along certain key dimensions of change. Scenarios are commonly used in strategic planning and have played an important role in climate change assessments, especially through the generation of projections for global greenhouse gas emissions, the modelling of global and regional climates and in impact studies. Scenarios have not, however, been quite as regularly applied in policy analyses. In the next chapter, we report the findings of an attempt to use them to encourage different governors in the EU to think about future climate policies. By contrast, policy exercises are simulations of hypothetical situations in which policies could be developed in the future. Crucially, they involve real-life actors who have a stake in the policies they are simulating. The aim of such exercises is to discover how different groups of actors would collectively design policies under a system of governance which is different from that prevailing today in Western Europe. Policy scenarios and exercises seek to elicit views about alternative futures from experts in a systematic way. Together, they provide a way of getting more analytical purchase on the huge complexity of policy futures and the key choices and dilemmas that they could conceivably provoke in different future worlds. Scenarios and policy exercises are useful because they reduce complexity through structured abstraction. In both methods, assumptions about the prevailing background conditions (e.g. the four worlds) are internally defined. The choices and dilemmas that may flow from them are, however, elicited in a participatory manner, through interviews with experts and stakeholders (as in scenario analyses), or by collectively simulating decision-making processes in a scenario setting (as in policy exercises). In Chapter 11 we report on the results of applying them in the five sub-areas of EU climate policy covered in Part III.

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Crookall, D. and K. Arai (1995). Simulation and Gaming Across Disciplines and Cultures. Seven Oaks, CA: Sage. de Jouvenel, B. (1967). The Art of Conjecture. London: Weidenfeld & Nicolson. Dellink, R., T. Dekker, M. den Elzen et al. (2008). Sharing the Burden of Adaptation Financing. Translating Ethical Principles into Practical Policy. IVM Working Paper R08/05. Amsterdam: Institute for Environmental Studies. Duke, R. D. (1974). Gaming: The Future’s Language. London: Sage. European Commission (2003). World Energy, Technology and Climate Policy Outlook 2030. Luxembourg: Office for Official Publications of the European Communities. European Commission (2006). World Energy Technology Outlook – 2050. Luxembourg: Office for Official Publications of the European Communities. Godet, M. (1987). Scenarios and Strategic Management. London: Butterworths. Höhne, N., D. Phylipsen, S. Ullrich et al. (2005). Options for the Second Commitment Period of the Kyoto Protocol. Berlin: Federal Environment Agency. Hulme, M. and G. J. Jenkins (1998). Climate Change Scenarios for the UK. UKCIP Technical Report No. 1. Norwich: Climatic Research Unit. Hulme, M., G. J. Jenkins, X. Lu, et al. (2002). Climate Change Scenarios for the United Kingdom: The UKCIP02 Scientific Report. Norwich: Tyndall Centre for Climate Change Research. IEA (International Energy Agency) (2008a). World Energy Outlook 2008. Paris: International Energy Agency. IEA (International Energy Agency) (2008b). Energy Technology Perspectives 2008. Scenarios and Strategies to 2050. Paris: International Energy Agency. Jäger, J., N. Sonntag, D. Bernard and W. Kurz (1990). The Challenge of Sustainable Development in a Greenhouse World: Some Visions of the Future. Report of a policy exercise held at Bad Bleiberg, Austria, 2–7 September. Stockholm: Stockholm Environment Institute. Joldersma, F., J. L. A. Geurts, and W. J. H. van’t Spijker (1995). Spelsimulatie, theorie, definitie en plaatsbepaling in de bestuurskunde. Bestuurskunde, 4(4), 148–56. Kasemir, B., F. Toth and V. Masing (2003). Venture capital and climate policy. In Public Participation in Sustainability Science, ed. B. Kasemir and J. Jäger. Cambridge: Cambridge University Press, pp. 155–75. Klabbers, J., R. Swart., A. van Ulden and P. Vellinga (1995). Management of organized complexity through gaming. In Simulation and Gaming Across Disciplines and Cultures, ed. D. Crookall and K. Arai. Oxford: Pergamon, pp. 122–33. Kok, M. T. J., J. A. Bakkes, B. Eickhout et al. (2008). Lessons from Global Environmental Assessments, PBL Number 500135002. Bilthoven: Netherlands Environmental Assessment Agency. Lonsdale, K. G., T. E. Downing, R. J. Nicholls et al. (2008). Plausible responses to the threat of rapid sea-level rise in the Thames Estuary. Climatic Change, 91(1), 145–69. Mayer, I. S. and W. Veeneman (2002). Games in a World of Infrastructures: Simulation Games for Research, Learning and Intervention. Delft: Eburon. Millennium Ecosystem Assessment (2005). Ecosystems and Human Well-being: Synthesis. Washington, D.C.: Island Press. Nakicenovic, N., J. Alcamo, G. Davis et al. (2000). Special Report on Emissions Scenarios. Working Group III, Intergovernmental Panel on Climate Change (IPCC). Cambridge: Cambridge University Press. Parson, E. A. (1996b). What can you learn from a game? In Wise Choices: Decisions, Games and Negotiations, ed. R. J. Zeckhauser, R. L. Keeney, and J. K. Sebenius. Boston, MA: Harvard Business School Press, pp. 233–52.

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11 Governance choices and dilemmas in a warmer Europe: exploring the future johannes stripple, tim rayner, roger hildingsson, andrew jordan and constanze haug

Introduction Since 1996, EU climate policy has subscribed to the overall objective of ensuring that global average temperatures do not exceed 2 °C above pre-industrial levels. Achieving this target will require fundamental shifts in European and global energy systems. The EU’s 2008 climate-energy package, which set out a 20% emissions reduction target by 2020, was a significant step forward in political commitment, although it still fell well short of the IPCC’s recommendation (Pachauri and Reisinger 2007) of a 25%–40% cut by 2020. The European Council has, since 2007, also been committed in principle to a reduction in collective emissions from industrialised countries by 60%–80% by 2050 – a figure broadly commensurate with the IPCC’s advice (see Chapter 3). What stands out about all these goals is that they deal with what many of today’s governors would consider to be the very long-term future, although in scientific terms they are not that distant. Given that climate policy is such a long-term undertaking, there is a need to understand whether these and other policies are likely to be robust over these timescales; in other words, capable of performing well under a range of different conditions. The general aim of this chapter is to explore how EU climate policy might evolve in the period from 2020 to 2040 given a set of different policy contexts. In effect, we reverse the emphasis on historical developments described in Parts II and III, and examine how policy might unfold in the future. The more specific is to explore the choices and dilemmas that could conceivably arise in this period. Throughout, the purpose is not to predict what will happen, but to critically explore contexts – or ‘worlds’ – that diverge from those that are assumed or hoped for by today’s governors. This is a less abstract and academic a process than it might seem. Governors in the EU have, as noted above, already adopted targets and policies that seek to shape the world beyond 2020. We are especially interested in knowing

Climate Change Policy in the European Union, ed. A. Jordan, D. Huitema, H. van Asselt, T. Rayner & F. Berkhout. Published by Cambridge University Press. © Cambridge University Press 2010.

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how their policies are likely to perform in different worlds, and whether they are flexible or generate ‘lock-ins’ that later could prove costly and/or difficult to reverse. To structure the discussion, we employ the methods – scenarios and a policy exercise – outlined in Chapter 10. There we derived four future worlds: (1) ‘coordinated mitigation’; (2) ‘autonomous mitigation’; (3) ‘coordinated adaptation’; and (4) ‘autonomous adaptation’. These were used in interviews with key governors1 to encourage them to think about the most pertinent dilemmas and choices that might arise in each world. Are these, we asked them, likely to be the same kinds of dilemma as the EU has been faced with in the past 20–30 years, or will they be markedly different? And how well prepared are today’s policies and institutions to handle the dilemmas and associated choices that could surface in future worlds? We start by describing the world which most resembles the assumptions underlying current EU policy – namely ‘coordinated mitigation’ – and then look at the other three. We then examine how governors thought the six governance dilemmas introduced in Chapter 1 were likely to play out in and across these four worlds, specifically in relation to the five sub-areas of policy covered in Part III.

Climate policy in four future worlds Coordinated mitigation: ‘Kyoto+++’ The governors that we worked with felt that a ‘coordinated mitigation’ world would be characterised by widespread global awareness of the urgency of climate change mitigation and a commitment among countries to cooperate to achieve significant and verifiable cuts in emissions, consistent with achieving the 2 oC target. Such a world should largely be seen as an extension of the current policy situation, with the EU playing a significant role in shaping both internal and international policies. A widening and deepening of the international climate regime would also imply the consolidation of national targets and timetables embedded in international, legally binding protocols. As a mode of governing, the ‘targets and timetables’ approach is very much a speciality of the EU. It is deeply ingrained in the EU’s multi-level political system (see Chapter 3). Indeed, it is probably the feature of the EU which DG Environment has tried the hardest to ‘upload’ to the international level. From this perspective, a ‘coordinated mitigation’ world would translate it into explicit EU burden-sharing arrangements (see Chapter 4) and a stronger, more hierarchical internal enforcement regime. As noted above, this is a ‘world’ which accords with the basic working assumptions of contemporary EU governance. Those who participated in the scenario and policy exercises were well able to relate to it. The majority also felt that a ‘coordinated mitigation’ world would ease many of the policy dilemmas that currently

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bedevil the EU. The trend towards deeper harmonisation would, they felt, strengthen the EU’s legal system and facilitate a move towards a more fully integrated energy market at EU level. Their expectation was that reforms made by the Lisbon Treaty would strengthen policy making and coordination powers, and thus make the EU more ‘state-like’. In a ‘coordinated mitigation’ world, choices confronting the EU in relation to how best to act (i.e. mode and instrument dilemmas) could, our governors felt, become more straightforward than in the past. Given that it has traditionally acted as a regulatory state, the EU’s capacity to govern hierarchically would remain. The current drive to adopt regulatory standards for traded products can therefore be expected to expand further in this world into non-traded items such as buildings. In a ‘coordinated mitigation’ world, the EU will also find it easier to govern via marketbased instruments, particularly if other parties push for early adoption of an international emission trading scheme or, at least, greater coordination between national schemes. Alternatively, a globally coordinated carbon taxation regime would create equal and transparent incentives to make investments in lower-carbon technologies such as carbon capture and storage and energy efficiency improvements. That said, such a world would not be entirely unproblematic for the EU. Its support for a global climate regime would, for example, still be heavily reliant on other major emitters agreeing to similarly stringent commitments. Having committed to a 20%–30% reduction by 2020, the EU is anxious to bind all significant emitters (and especially rapidly industrialising states such as Brazil and China) into what it perceives to be credible commitments. But even with Barack Obama as President, there remains a strong body of opinion within the USA that the post-2012 regime should not be modelled on the Kyoto Protocol (Aldy and Stavins 2007). Meanwhile, poorer developing countries want to link any new commitments they make to significant resource and technology transfers from industrialised countries (see Chapter 12). Given these differences, the means of coordination (whether through agreed targets and timetables, a global carbon market or carbon tax, or North–South resource transfers) still remain open to debate, as do the depth or tightness of the coordination (for instance in relation to sanctions to enforce compliance with international agreements). Hence, the onus remains on the EU to show leadership and goodwill, principally by delivering on its own commitments. Therefore, in a ‘coordinated mitigation’ world, the pressure on the EU’s internal enforcement capacities could be even greater than it is today. Other important dilemmas will continue to confront the EU in this world. First, it remains uncertain how far and how fast the international community will allow carbon prices to rise and what influence this may have on overall energy costs. If the rise is not quick enough, the stimulus to new investments in major mitigation

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options will be inadequate – a weakness of the first phase of the EU ETS (Rogge and Hoffman 2009) – and the EU will find itself under pressure to employ a more stringent internal cap. If not, alternative instruments may have to be considered. One possibility might be to underpin the EU ETS with a tax system or sectoral targets to dampen some of the price volatility that has plagued the system since its inception (see Chapter 6). Some have suggested that the EU may have to become more deeply involved in facilitating innovation (Malerba 2004), by funding the supply of new technologies and establishing, for example, the necessary market and institutional conditions (Eskeland et al. 2008). However, the EU’s ability to develop portfolios of instruments in this way has been very limited thus far. The bitter disputes that surrounded the funding of new carbon capture and storage facilities during the passage of the climate-energy package (see Chapter 3) may provide a foretaste of things to come. Another dilemma – also implicitly related to level and scale choices – is how to deal with potential public opposition to such a remote and ‘undemocratic’ body as the EU becoming more influential in defining the price of a basic commodity such as energy. As the EU comes under pressure to provide more money to incentivise greater developing country participation, it may be forced to identify new sources, perhaps linked to an explicit burden-sharing system. This will not be easy: Member States in the past have fiercely resisted any attempts to vest EU institutions with tax raising and spending powers. Alternatively, the EU could re-allocate existing budgets (agriculture, structural funding etc.) to support the aims of climate policy, although this will also not be easy (Adelle et al. 2008). Finally, although implementation and enforcement dilemmas may not be as acute as in some of the other worlds, the presence of the deeply entrenched norm of ‘negotiated enforcement’ (see Chapter 2) suggests that the Commission may well struggle to ensure common EU policies are fully delivered. If we turn to the challenge of adaptation, different but equally difficult choices and dilemmas loom into view. As all regions of the world look set to experience considerable climatic impacts even in the high-mitigation worlds, adaptation seems destined to become a more prominent feature of climate policy. Choices will therefore have to be made about how far and how fast to coordinate appropriate policies at EU level. These are considered further in the discussion of more adaptation-oriented worlds below. For now, it is worth noting that in a mitigation-oriented world, governors will at the very least have to ensure that their mitigation policies do not conflict with their adaptation goals. For example, if the ‘coordinated mitigation’ world entails widespread cultivation of bio-crops, goals relating to adaptation, such as the maintenance of resilient ecosystems and water resources, may come under pressure (Acclimatise and Hampshire County Council 2007).

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To conclude, although this world appears superficially attractive to the majority of today’s EU governors, handling some of the choices likely to arise in it may require an even stronger role for the EU in some politically sensitive areas. This may be music to the ears of those who regard climate change as an opportunity to deepen European integration. Whereas the governors from the Commission and the European Parliament that participated in our scenario exercise felt at home in this world, those from Member States generally felt less comfortable, which could itself constitute a significant source of political instability. Autonomous mitigation: ‘fragmentation and low-carbon competition’ In the ‘autonomous mitigation’ policy world, the governors that we worked with were asked to envisage a future with less coordination of domestic policies and measures at the international level. This world would reflect a continuation of the trend towards greater fragmentation in international climate governance, with an increasing number of agreements between like-minded countries on various subissues (Biermann et al. 2010). In such a world, many Member States and citizens in the EU will feel as committed to the 2 oC target as they do in the ‘coordinated mitigation’ scenario. However, the EU as a whole will struggle to function as a single bloc as its Member States act more autonomously, in ways reminiscent of climate policy in the 1980s and 1990s. Without broad international agreement on ‘targets and timetables’, one dilemma that will continually trouble the EU is precisely when and in what sequence to act. In the absence of a stable international regime, Member States will be acutely aware of the risk of carbon leakage. The global policy architecture (a feature which is taken as given by many governors) will become far less predictable, as different countries tackle climate change in ways that most clearly benefit them and their coalitions. A strong belief in the competitive benefits of energy efficiency improvements and investments in new low-carbon technologies, stimulated also by greater concerns about energy prices and supply security, would form the main ideological theme of this particular world. EU Member States would, however, need to do something unprecedented – namely to confront cost and benefit dilemmas against the backdrop of a weak and perhaps non-existent international regime. As explained in Chapter 4, internal burden sharing can be pursued in a more or less top-down manner. In the ‘coordinated mitigation’ world, the preference would probably be for systems that are at least as top-down as those that informed the 20–20–20 package. However, in an ‘autonomous mitigation’ world there is likely to be greater internal political pressure for a more bottom-up approach, reminiscent of EU climate policy in the 1990s. With less direct pressure from the international level pushing the EU to maintain a common position (with a single ‘bubble’), an ‘autonomous mitigation’

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world could well be characterised by the kind of intense leader–laggard conflicts that hamstrung mitigation policy until the 2000s. Cost and benefit dilemmas would in effect be addressed through the exercise of state power, with the Commission very much on the sidelines. In the absence of international coordination, there will be less political pressure on the EU to show leadership globally. As the informal norm of social and economic cohesion will be weaker in this world, Member States that come under domestic political and economic pressure to mitigate emissions may feel much more inclined to surge ahead and reap first-mover advantages, leaving others with less aggressive ecological modernisation strategies (see Chapter 3) behind. As the norm of undifferentiated integration breaks down, EU governors could find themselves having to govern via much softer forms of governance linked to the Policy Coordination Method. In such a world, governors will have to revisit earlier choices about modes and instruments and consider whether they are still robust. For example, some of those participating in our scenario exercises felt that the EU ETS would have to be redesigned to function more independently of the international regime. If the scheme proves incapable of inducing the emission reductions and technological changes expected of it, a policy decision may have to be made to scale it back or even replace it. Other instruments such as national energy and carbon taxation, regulation and subsidies to encourage R&D in areas like carbon capture and storage, might then come into play. EU governors felt that in this world they would be under pressure to go ‘back to basics’ and deliver emission reductions using more tried and tested, namely regulation. To retain its salience, EU climate policy might even have to be completely reframed – more as a device to ensure competitive relations with emerging economies, than to tackle climate change. The governance challenge confronting the EU would then be whether and how to coordinate these efforts. The chances of additional resources being devoted to coordination are far slimmer in this context than in the ‘coordinated mitigation’ world. This is partly because the norm of social and economic cohesion will be less prominent. Moreover, the revenues generated from taxation and trading schemes are likely to be smaller, as the locus of governing moves down to lower levels. This takes us to level and scale dilemmas. If, as noted above, the EU is less involved in coordination, these dilemmas will not just disappear either, but rather manifest themselves in slightly different forms. For example, in the case of the EU ETS, the single market project is likely to be less ideologically dominant, possibly undermining one of the strongest rationales for a single, EU-wide scheme. Consequently, difficult choices will have to be made about how to link national schemes, all against the backdrop of rising fears of carbon leakage to less regulated economies outside Europe. Governors will then have to confront a difficult

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dilemma: should they introduce compensatory instruments such as border adjustment measures to prevent neighbours from securing a competitive advantage (a step that could easily spiral into a ‘race to the bottom’), or stoically shoulder the additional costs? The way in which the EU confronts these and other dilemmas will be conditioned by its underlying perception of what ‘the problem’ is. Although potential ‘supply side crunches’ (IEA 2007) and peaks in world oil and gas production are ‘external’ to our worlds, they are relevant because of the assumed lower carbon price in an ‘autonomous mitigation’ world. Thus, governors will need to decide whether the dominant ‘problem’ is that of energy security or climate change. Improving energy efficiency and boosting renewables are a solution to both problems, but if coordination at EU level is generally weak, domestic energy supply such as nuclear and coal power (with carbon capture and storage) may prove attractive. The EU’s 2004 enlargement (to include relatively poor but coal-rich states like Poland) has made the resolution of this issue much more complex. Coordinated adaptation: ‘sharing the burdens of adaptive planning’ In the two ‘high-adaptation’ worlds, the focus shifts towards adapting in various ways to climate impacts, with the long-term aim of learning to cope with a significantly warmer world (i.e. 4 °C or more above pre-industrial levels by 2100) (Hulme and Neufeldt 2010). A ‘coordinated adaptation’ world is characterised by a concerted international effort to deal with the risks and costs associated with climate change. This could include a burden-sharing agreement that allocates the costs of adaptation in a manner consistent with the principle that states have a ‘common but differentiated responsibility’ for dealing with climate change (FCCC, Article 3(1)). On this basis, a substantial international fund would have to be created, possibly building on the Adaptation Fund operationalised at COP 14 in Poznan (see Chapter 3). In this world, the EU would have to significantly reconfigure itself to lead much more strongly on adaptation issues (both internally and externally) than is currently the case (see Chapter 7). Whether out of a sense of altruism or of enlightened selfinterest, the EU may wish to increase substantially its development assistance budget to support countries and regions experiencing greater vulnerability to climate change and with weaker adaptive capacities. However, this is likely to provoke a number of tricky dilemmas. Where, for example, will the additional resources come from (a cost and benefit dilemma) and will they be spent by Member States or the EU (a level and scale dilemma)? One option is for revenues from auctioning under the EU ETS to provide the lion’s share, but in this lower-mitigation world the revenues may turn out to be insufficient. New sources of revenue might

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therefore be required and/or budgets re-allocated to adaptation from other areas. Either way, the EU will need to work out how to ‘sell’ the benefits of coordinated adaptation to those that will be expected to contribute funds (and who may be relatively less affected by climate change). Alternatively, the EU may decide that spending money is not the right answer and that instead steps should be taken to secure its borders against what Biermann and Boas (2008) have termed ‘climate refugees’, in which case Member States may have to countenance a greater role for the EU in border and asylum issues. At the same time, in this world the EU will also be expected to show greater leadership on adaptation issues inside Europe. It might, for example, be pushed to translate international agreements into a common and binding EU framework. This would greatly extend the current focus of EU adaptation policy, beyond what is currently termed ‘mainstreaming’ (see Chapters 7 and 8). As the EU’s primary goal in this world shifts from preventing climate impacts by mitigating to coping with them by adapting, new policies will be required. But what would the new EU policies address? An ‘adaptation directive’ could seek to reduce cross-border vulnerabilities by requiring Member States to adopt national action programmes that are regularly screened and benchmarked at EU-level. Policies could also include greater assistance to regions (e.g. the Mediterranean) that are especially vulnerable to the risk of drought, funding water-efficiency measures or setting mandatory standards for water-using products. At the most extreme, this might even involve the construction of trans-European water grids. Stronger implementation of existing policies, especially of the Habitats, Birds and Water Framework Directives, could lead to the construction of so-called ‘green infrastructure’, which on the one hand should ensure connectivity between species habitats (critical to healthy and resilient ecosystems), and on the other provide critical services such as flood management (European Environment Bureau 2009). Whatever new issues are tackled it seems clear that a ‘coordinated adaptation’ world will require the EU to strike a new balance between European interests and existing national demands for subsidiarity in adaptive planning. In a ‘coordinated adaptation’ world, political demands for stronger enforcement procedures and larger EU adaptation funds are likely to be far greater than is currently the case. This will inevitably provoke new mode and instrument, and implementation and enforcement dilemmas. For example, the Commission might be expected to develop more harmonised building codes and planning requirements to protect infrastructures (such as roads and electricity networks) that are vital to the effective functioning of the internal market. Following a political decision to spread the climate damage and adaptation costs as evenly as possible across the EU, the Commission might be called upon to develop a dedicated ‘climate change vulnerability and adaptation fund’. However, as noted in Chapter 7, this might simply

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heighten the risk of mal-adaptation. Critics suggest that rather than providing postdisaster relief, a more appropriate and efficient function for such a fund would be to act as a reinsurance mechanism for national and regional insurance pools (Hochrainer et al. 2010). In any case, the history of climate policy to date suggests that Member States will not willingly pool sovereignty across such a wide array of policy areas. To resolve the ensuing tensions, the Commission may decide to push for joint action more quickly in areas where EU competence is already well established (such as agriculture, water and biodiversity protection) than where it is contested (e.g. land-use planning matters). However, it may take very significant climate impacts to be felt before Member States allow EU institutions to curtail common spending programmes (e.g. on certain types of agriculture) that effectively increase vulnerability to future climatic impacts. The fact that its mitigation policies will be almost 30 years old in 2020, whereas its adaptation policies will still be relatively new, gives a strong clue to the scale of the governance challenge that a shift to a ‘coordinated adaptation’ world will pose for the EU. Autonomous adaptation: ‘let them adapt!’ The fourth and final world – ‘autonomous adaptation’ – is characterised by the fragmentation of climate governance at both international and European levels. Because of the perceived failure to significantly reduce greenhouse gas emissions, the 2 °C objective is largely forgotten by 2020. Although the process of tightening climate mitigation targets at the international level will have ground to a halt, the governors that we worked with thought that the increasing frequency of extreme weather events would create new political demands for governance responses. However (and in contrast to the ‘coordinated adaptation’ world), multilateral approaches would be rejected; adaptation will mostly be viewed as a problem demanding Member State and/or private sector responses. In so far as there is international collaboration, it will therefore mainly centre on specific issues (such as drought and flooding) affecting ‘coalitions of the vulnerable’. Otherwise, the primary responsibility for governing adaptation would be passed on to the private sector, with relatively weak and sporadic government steering. In an ‘autonomous adaptation’ world, the governors assumed a Europe where the EU comes under greater pressure from its Member States to scale back its current role in climate governance. Apart from securing the EU’s borders against climate refugees and protecting strategically important assets, it will be expected to do far less. The existing norm of economic and social cohesion will break down to some extent. Calls to re-capitalise a rapidly depleted Solidarity Fund, for example, would fall on deaf ears. Member States can be expected to assert their autonomy to define

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precisely which items of ‘critical capital’ should be protected and how to adapt sectors and regions that face the greatest costs (and opportunities). In contrast to the ‘coordinated adaptation’ world, the choice of which level to act at is already determined by the internal logic of our scenario framework: governing will take place mainly at local, national and bilateral levels, and the EU will only intervene when it is deemed essential. In practice, difficult choices will have to be made about precisely which level to act at. For example, if agriculture is still a key EU competence beyond 2020, there may be political pressure to coordinate adaptation at EU level in the interests of food security. Similarly, if important transport and energy networks are still deemed to be necessary to facilitate the movement of people and goods across borders, continuing EU involvement may be generally welcomed. If, on the other hand, the single market programme begins to unravel and the norm of undifferentiated integration breaks down, central coordinated authority may be forcefully resisted, however severe climate impacts may be. As with the other three worlds, choices about how to act and at what level, are likely to be tightly interconnected. The emphasis on autonomous (as opposed to coordinated) governance in this world suggests an underlying preference at EU level for the Policy Coordination Method, and possibly even the Intergovernmental Method (see Chapter 2). For example, particular Member States may decide to organise themselves into regional groupings to coordinate specific issues (e.g. the threat of climate refugees from North Africa). In contrast to the ‘coordinated adaptation’ world, strong political demands for a binding adaptation directive are rather unlikely. Instead, mode and instrument dilemmas will be pushed downwards to lower levels of governance. Conceivably, some Member States could take a strongly interventionist approach, while others will rely more on market mechanisms through which private actors are urged to make their own provisions through the insurance market. In fact, regardless of ‘world’, adaptation will inevitably comprise a multiplicity of actions by households, firms, governments and civil society. Sophisticated policies will be required to turn private initiative into a force for adaptation. This is likely to involve a degree of public-private partnership. For example, as climate damages grow, insurance will become riskier and public policy measures may be needed, for example to share the most extreme risks with commercial insurers. Environmental pricing may also play an important role in incentivising landowners to preserve natural assets and consumers to use them carefully. Public-private partnerships can help to accelerate investment in infrastructure, which is likely to be the most expensive aspect of adaptation (OECD 2008). Even though this is a very adaptation-focused world, the governors that participated in our exercises expected mitigation to play some (albeit limited) role. Any

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mitigation measures are, however, likely to be pursued autonomously (e.g. by particularly enthusiastic Member States) and then chiefly in response to ‘nonclimate’ problems such as energy insecurity. However, as in the ‘autonomous mitigation’ world, these efforts could create headroom for other domestic energy sources (mainly coal and nuclear) to be exploited. To summarise, the fundamental dilemma confronting the EU in this world is whether to stand back and allow private actors to adapt to climate change or to continue pursuing mitigation efforts in order to avoid the risk of rapid, abrupt and potentially dangerous climate change. Regardless of which option is ‘chosen’, having the necessary EU-level policies implemented could be more difficult than it is today unless, that is, the impacts (floods, storms etc.) become so severe that they constitute a focusing event (see Chapter 2). Then there might be pressures from other policy fields or powerful Member States to expand the EU’s functions, for instance into areas such as migration, the supply of drinking water, land-use planning and/or coastal defence. Exploring future climate policy: new choices and new dilemmas? The previous section demonstrated how today’s governors imagine alternative futures, each of which generates different dilemmas. Governors perceived the dilemmas to vary across the five areas of policy covered in Part III. So, for instance, with respect to emissions trading, the crucial dilemma was perceived to concern ‘levels and scales’; for renewable energy policy ‘modes and instruments’, and so on. The remainder of this section explores these patterns in more detail. Problem perception dilemmas What is the main problem to be confronted if Europe is to act on climate change? Chapters 3 and 9 described how governors have sought to exploit linkages between different but interconnected ‘problems’ (namely, climate change, energy insecurity and poor economic competitiveness) and a range of ‘solutions’ (expansion of the single market to new issues such as energy, enhancement of the EU’s foreign policy powers, etc.). Particular focusing events in the past have strongly affected governors’ perceptions of which problems to tackle and how to prioritise among them. The exploration set out above indicates that these different problem perceptions are likely to interact rather differently in the four worlds. One of the most obvious areas of difference is the relationship between mitigation and adaptation. So long as the existing political commitment to a strong mitigation strategy remains, it will be politically difficult for the Commission to begin planning explicitly for alternative worlds that are premised on a 4 °C temperature rise. Conceivably, there is a danger that the 2 °C global target may eventually be perceived as having been ‘dangerously misleading’ if it encourages actors to assume that most climate impacts can still be

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avoided by mitigating emissions, when growing evidence suggests that it is unattainable (Anderson and Bows 2008: 18; cf. Tol 2007). In practice, what EU policy makers take to be their main strategic priority in the long term depends to a large extent on what worlds they are working in. Lower stabilisation scenarios (c. 450–550 ppm) imply that a range of technological mitigation options are available and feasible at reasonable costs. However, very low stabilisation levels (i.e. below 400 ppm) are heavily dependent on, for instance, the expansion of renewables and carbon capture and storage (Knopf and Edenhofer 2010). In principle, governors felt they should develop policies that are robust under different temperature ranges. To take renewables as an example, whereas mitigation objectives are dominant in a ‘coordinated mitigation’ world, security of supply, internal market and industrial policy concerns are more pressing in the other three. In the two high-adaptation worlds, renewables do appear to satisfy these other ‘non’ climate goals, as well as enhancing technological innovation and employment In practice, many scientists do now regard the 2 °C target as an unattainable one (see Chapter 12). This has stimulated a policy debate about the need to mitigate for 2 °C but plan to adapt to potentially much higher rates of warming (see, for example, Anderson and Bows 2008: 18). What would sort of governance dilemmas would such an approach raise? At present, EU policy is mainly directed at creating a ‘coordinated mitigation’ world. As noted above, maintaining a strong focus on mitigation in order to sustain the international climate regime, while at the same time taking serious steps to strengthen adaptive capacity, both in Europe and in third world countries, will certainly be challenging. In the past, the Commission has been able to identify and exploit synergies between the linked problems of energy insecurity and climate change. Whether it can use other combinations, perhaps invoking imperatives of ‘climate security’, to simultaneously progress adaptation remains to be seen. This would require an unprecedented surge in policy commitment given that a large number of Member States have simultaneously watered down EU-level adaptation policies and failed to develop their own (see Chapter 7). In the meantime, rather than seek an optimal balance between mitigation and adaptation efforts – the cost and benefits of climate change are likely to be too widely distributed over actors, geographic and temporal scales for this to make sense (Swart and Raes 2007) – it might be better to broaden the menu of mitigation and adaptation options, which are too often developed in parallel. We return to this point in the next chapter. Level and scale dilemmas Level and scale dilemmas arise out of the choice between different levels of governance. In the past, the perceived choice in the EU has been between acting

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at EU or at Member State level. Chapter 3 revealed that this perception has been so critical in the past that it has effectively conditioned the handling of the other dilemmas. For example, opting to govern at EU level immediately steers governors towards modes and instruments that do not disrupt the single market (think of the adoption of the ETS for example – see Chapter 6) or which support the norm of economic and social cohesion without requiring significant new EU-level funds (as in the burden sharing agreement – see Chapter 4). Our interviewees reported that they felt that in the future, the governance of climate will remain a multi-levelled endeavour. Looking across the four worlds, decisions about how to govern emissions trading and renewable energy supplies were perceived to provoke some of the most acute level and scale dilemmas. In the case of emissions trading, the EU seems to be moving slowly towards deeper harmonisation. While this is not directly reliant on the existence of an international agreement, it would be easier to achieve with a strong post-2012 framework. Then the EU ETS could be linked to other trading schemes outside Europe, creating the foundations of a global carbon market. As noted above, the EU ETS would struggle to evolve in this way if the EU found itself in an ‘autonomous mitigation’ world. In the field of renewables, a similar trend towards deeper harmonisation has been evident, but has not progressed as far. Chapter 3 indicated that the promotion of renewables is closely linked to energy policy developments in the EU, a field which has traditionally fallen within the exclusive competence of Member States. Although the EU is now securing greater legal competence, choices to move the locus of policy making are still being taken very slowly. Therefore, the majority of our interviewees did not foresee a role for a fully harmonised renewables policy in any of the worlds, although future focusing events may facilitate the resolution of some of the associated dilemmas. In adaptation policy, previous choices about the level and scale of governance have not yet led to a significant EU involvement. However, the traditional rationales for EU action could be invoked to justify deeper EU involvement even in the two autonomous worlds. For example, if the functioning of the internal market is threatened by severe climate impacts and/or autonomous adaptation measures taken in individual Member States, then political pressure for deeper harmonisation might bring change. Timing and sequencing dilemmas Should the EU act first or wait for other actors to take the lead? There are two aspects to this: an external one and an internal (i.e. intra-EU) one. Starting with the external dimension, in the last 20 years the EU has sought to exert international leadership by

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pursuing early and sustained mitigation. Although the EU has not led on every issue, its aspiration to lead is deeply ingrained. However, scenario analysis encourages participants to consider how well such ingrained assumptions stand up in different worlds. Many of the governors that participated in our exercises found it extremely difficult, however, to conceive of any other world than ‘coordinated mitigation’. With respect, secondly, to internal EU politics, future timing and sequencing dilemmas could prove to be just as tricky. In the past, EU climate policy targets were the focus of battles between the more environmentally-ambitious Member States favouring stricter targets and those preferring weaker ones. In this process, national governments were forced to decide whether to aim for competitive advantages by moving first or holding back until the situation became clearer. As EU climate policy took off in the 2000s and more powers moved upwards to Brussels, the emphasis shifted towards the calibration of instruments rather than the setting of targets. For example, the development of burden sharing is currently tied to the evolution of the EU ETS. If the scope of the ETS continues to expand (as in a ‘coordinated mitigation’ world), the scope for top-down burden-sharing will shrink as market forces play a progressively greater role. This could reduce the freedom that Member States currently enjoy to select mitigation options that lie outside the EU ETS. Were this to happen, Member States might start to question whether it is politically expedient to build the EU’s climate strategy around a single policy instrument. Finally, there is also an internal aspect to the way in which timing and sequencing dilemmas play out in adaptation policy. In the past, the choice has been framed in rather binary terms – either ‘reactive’ or ‘proactive’ adaptation. This strategy of planning based upon earlier precedents may be adequate in the more mitigationoriented worlds, but may not be in the more adaptation-oriented worlds. Mode and instrument dilemmas Mode and instrument dilemmas arise when choices have to be made about how to govern. How well do the EU’s current instruments fare in the four worlds? The logic of setting targets and sharing out the burden via an internal distributive instrument is, as explained in Chapter 4, very deeply engrained in the EU. However, if the EU continues to expand and become more internally differentiated, current approaches may have to be re-thought, particularly if more radical emission reduction targets are taken on. So while the basic principle of burden sharing may remain, it will have to evolve to fit different future worlds. Thus, in a ‘coordinated mitigation’ framework, many governors felt that the EU would have to innovate because many of the more cost-effective mitigation opportunities would be located in those Member States least able to pay (especially new accession states). One possibility would be to

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introduce greater flexibility regarding the type of ‘burdens’ traded (Ellison 2008). By contrast, if the EU finds itself in a more ‘autonomous mitigation’ world, pressures may grow for burden sharing to revert to the more bottom-up format that prevailed in the 1990s. Whether the EU institutions will find it easy to relinquish powers that they have fought so hard to attain is a very moot point. Emissions trading has a role to play in all four worlds, including as a potential source of funding for adaptation measures. However, its role would likely vary. In a more coordinated world, the EU’s scheme becomes the lynchpin of a global carbon market and Member State control lessens. In the ‘autonomous mitigation’ world, the Member States retain greater governing powers, while the EU scheme is protected from potential carbon leakage and competitiveness effects by border adjustment measures against third countries. Renewable energy policies are also expected to play some role in all four worlds. Although the harmonisation of national support schemes by 2020 currently seems unlikely (even in a ‘coordinated mitigation’ world – see below), the EU will nonetheless still have to grapple with the choice of how to support renewables, particularly in the two mitigation-focused worlds. The EU may have to take the lead and develop a strong trans-European grid to ensure electricity can move to where it is needed (at present the north is rich in hydropower, the south is blessed with solar resources and the states on the western fringes enjoy significant wind power potentials). In order to achieve this, the EU may eventually have to consider developing greater competence in land-use planning. However, this would be a very radical departure from the status quo.

Cost and benefit dilemmas The distribution – or redistribution – of limited resources in the act of governing creates winners and losers. Internal burden sharing was expressly developed to deal with cost and benefit dilemmas in the EU. As long as the EU continues to pursue a strongly mitigation- focused approach based on a targets and timetables logic, the need for some burden sharing will remain, although it will have to change to fit the prevailing world. The interactive policy exercise we conducted, however, suggested that the wealth-based approach embodied in the 2009 Effort Sharing Decision will probably not endure. As we have argued, in the ‘coordinated mitigation’ world, new criteria will have to be developed to cope with increasingly ambitious mitigation targets. By contrast, in more adaptation-focused worlds, the whole focus of burden sharing could shift. This might conceivably be achieved by adjusting mitigation burden sharing targets accordingly, or negotiating a separate adaptation-specific framework.

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One factor that will inform the way the EU handles future cost and benefit dilemmas will be the price of carbon. Given the regressive nature of higher energy costs, there may, however, be political limits to how high carbon prices are permitted to rise, even in a ‘coordinated mitigation’ world. In an ‘autonomous mitigation’ world, a different set of cost and benefit dilemmas might conceivably arise around the threat of carbon leakage in increasingly fragmented carbon markets. These threats may encourage the EU to investigate new policy instruments (such as sectoral agreements and border adjustment measures) or to tweak existing ones (linking trading schemes, excluding certain sectors from the EU ETS or offering free allowances to those at risk of leakage). Implementation and enforcement dilemmas Finally, implementation and enforcement dilemmas emerge when choices are made about how to secure policy change. Until now, EU climate targets have tended to be so unambitious as to be almost self-fulfilling (Haug et al. forthcoming) (see also Chapter 12). But as mitigation targets become ever more stringent, implementation and enforcement dilemmas can be expected to become much more acute. Bearing in mind the EU’s historically weak administrative capacities and the well-established informal norm of negotiated enforcement, how are these dilemmas likely to play out across the four worlds? If the world in general moves towards a strong post-2012 regime of ‘coordinated mitigation’, the EU institutions will find it easier to make a case for more legally-binding policies, stricter deadlines and more stringent sanctions for non-compliance. If, on the other hand, the EU finds itself in an ‘autonomous mitigation’ world, the Commission’s role may be restricted to evaluating performance and disseminating best practice, very much along the same lines as the Policy Coordination Method. When it comes to adaptation, the form that implementation and enforcement dilemmas take could well depend on whether the locus of governance is at national or EU level. But given that many adaptation decisions are currently taken at a more local level (Klein et al. 2007) – and often with little or no state steering – one wonders whether implementation and enforcement dilemmas will ever be as acute as they are in the area of mitigation. Future climate policy in the European Union: some conclusions What kind of world is EU climate policy likely to find itself in ten to 20 years from now? To approach this question in a structured way we developed four climate policy worlds. We started with the world which is most like the EU of today – namely ‘coordinated mitigation’ – and then looked at three alternative (and in many

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respects quite different) worlds. Working with a range of governors, we aimed to identify and explore the most pertinent dilemmas and choices in each world. Before we set out our main findings, some methodological reflections are warranted. Producing a set of background scenarios proved to be no easy task. As noted in Chapter 10, during the initial phases of our research a wide range of alternative configurations were, considered and then rejected. The scenarios selected proved to be broadly applicable across the five sub-areas of climate policy covered in Part III, but they were not always equally productive of new insights. This was partly because current policies tend to be primarily oriented towards mitigation or adaptation. According to the governors with whom we interacted, the sharp distinction between the two is likely to become less relevant in future, particularly as the effect of historical emissions feeds through and generates impacts regardless of the ambition level of current mitigation policies. As noted in Chapter 10, it will not be until 2100 that choices made in the first decades of this century will create significant differences in global temperatures and, hence, consequent impacts. We return to the unfolding relationship between adaptation and mitigation in the next chapter. Another methodological point worth making is that it is critical to tailor scenarios to the research questions being posed. This may make it difficult to maintain a standard set of scenarios, as is the case with the IPCC SRES scenarios. Another important point is that a participatory approach is vital in areas – like governance – in which modelled projections are not possible. But such an approach is very resource-intensive, requiring large teams of researchers. Our scenario exercises indicated that governors are able, within certain limits, to think creatively about the future. In particular, the policy exercise provided a relatively safe environment in which participants could build up a shared understanding of the challenges in devising future burden sharing arrangements, as well as possible solutions. The two different ‘worlds’ that provided the backdrop for this exercise, however, had less of an impact on the discussion and the outcomes than originally anticipated – a fact which may have reflected the interactive-deliberative element of this particular method. The final methodological point to emerge from our analysis is that the scenario and policy exercises both revealed difficulty that many governors encounter when trying to think well beyond the policy status quo. This should be a cause for concern in such a strategically important and fast-moving policy area as climate change, in which critical but largely unforeseen focusing events have regularly affected the dynamics of governance in the past. Turning now to the more substantive conclusions to emerge from our analysis, the ‘coordinated mitigation’ world was perceived to present the fewest challenges to EU climate policy as currently practiced. A globally agreed ‘targets and timetables’ regime should, it was thought, provide institutional predictability, so long as the EU

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can continue to manage internal differences via burden sharing. However, such a world will not be completely straightforward: governing Europe in such a directed manner would challenge a number of well-entrenched norms, such as those of flexible pragmatism (in the past the EU has shied away from setting long-term goals), consensus and negotiated enforcement. By contrast, the other three worlds were considered to be significantly different to the policy status quo, and hence be more not less difficult to govern. For example, in the ‘autonomous mitigation’ world, the EU will have to find ways to mitigate its emissions in the context of an uncertain and much less coordinated international policy. Climate governance may then have to be reframed as a technologically driven growth-oriented strategy. In a ‘coordinated adaptation’ world, the emphasis of EU climate change policy would shift from its current focus on mitigation to adaptation. This could push the EU into sensitive areas such as land-use planning. Finally, in an ‘autonomous adaptation’ world, Member States could push the EU to reduce its role in climate governance compared with today. In such a world, EU climate policy could well be governed via more Policy Coordination and Intergovernmental Methods, with far less emphasis on formal burden sharing. Whether this constitutes a stable governance framework is open to question. Current policy discourses emphasise the ‘localness’ of impacts and vulnerability (and hence adaptive policy). However, as climate impacts become more marked there may be strong countervailing pressures for deeper EU coordination to maintain critical infrastructures and prevent regional disparities from becoming too great. Looking across the four worlds, what are the main lessons for the manner in which choices and dilemmas are handled by today’s governors? On the face of it, key elements of current policy (emissions trading, renewable energy, burden sharing and adaptation) seem destined to play some role in all four worlds – although rather different ones than they do today. In this sense – and again in very broad terms – this chapter has shown that EU climate policy appears quite robust, so long as policies retain some flexibility and governors are sensitive to the need to remain adaptive. But at the time of this writing, the EU is relying heavily on one single ‘flagship’ instrument – the ETS – for mitigation which is robust in one or two of the four worlds but less so in the rest, as well as an array of regulatory standards covering traded products which pre-suppose the continuing existence of a strong internal market in Europe. One obvious way to strengthen the robustness of policy is to reformulate and expand the current tool-box so that it can withstand ‘major shocks’ (Berkhout et al. 2002: 94). Regarding political shocks, governors (both nationally and in Brussels) should ‘think the unthinkable’ a little more and consider what they would do were the world to move sharply towards the two less coordinated worlds. Technological shocks, on the other hand, could be positive – for example, a new breakthrough technology that allows emission reductions at low cost – or negative – such as the

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failure of a hitherto promising technology such as carbon capture and storage, biofuels or even geo-engineering options. Geo-engineering involves direct control and manipulation of the climate system by, for example, injecting dust (aerosols) into the stratosphere or fertilising the oceans with iron (see Wiman 2002; Crutzen 2006; Hulme 2008). Although the latter are being actively discussed in the scientific community (Lenton and Vaughan 2009), they were not mentioned at all by the governors with whom we interacted. With growing discussion about very low stabilisation scenarios (e.g. 350 ppm), geo-engineering solutions may, however, eventually demand a more considered response from governors. History tells us, however, that governance systems in the EU take a great deal of time to evolve, and that sudden changes in the distribution of political competences in the EU, of the kind that open up the space for innovative policy instruments, are unlikely, at least in the short term. In fact, one thing that is implicit in all four worlds – but especially the ‘coordinated mitigation’ one – is the role of the EU as a background or enabling condition. So far, the EU – and its climate policy – has benefited from a permissive consensus amongst the public about the benefits of deeper integration; a consensus that, as Chapter 2 noted, is gradually breaking down. As the impacts of climate change become more pronounced and the costs of mitigation stack up, climate policy makers will find it harder and harder to escape these debates. If, for example, the EU moves forcefully in the direction of ‘coordinated mitigation’ with significantly higher levels of harmonisation (and therefore, by implication, Europeanisation), will national governments and the citizens of Europe be prepared to accept further interventions into their sovereign affairs? Even more fundamentally, can EU climate policy be politically robust in the absence of a much deeper-seated societal commitment to European integration? We explore these and other more existential issues in the next chapter. Note 1. In this chapter, we use the shorthand ‘governor’ to refer to the wide range of individuals who were either interviewed as part of the scenario analysis or took part in the policy exercise. See the Preface and the relevant chapters for further details.

References Acclimatise and Hampshire County Council (2007). What Policies Present Barriers to Adaptation in the UK and the Netherlands? ESPACE Project Extension Action 1b: Final report. Southwell: Acclimatise. Adelle, C., M. Pallemaerts and D. Baldock (2008). Turning the EU Budget into an Instrument to Support the Fight Against Climate Change. SIEPS Report No. 4. Stockholm: Swedish Institute for European Policy Studies. Aldy, J. E. and R. N. Stavins (2007). Architectures for Agreement: Addressing Global Climate Change in the Post-Kyoto World. Cambridge: Cambridge University Press.

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Anderson, K. and A. Bows (2008). Reframing the climate change challenge in light of post2000 emission trends. Philosophical Transactions of the Royal Society A, 366(1882), 3863–82. Berkhout, F., J. Hertin and A. J. Jordan (2002). Socio-economic futures in climate change impact assessment: using scenarios as ‘learning machines’. Global Environmental Change, 12, 83–95. Biermann, F. and I. Boas (2008). Protecting climate refugees: the case for a global protocol, Environment, 50(6), 9–16. Biermann, F., P. Pattberg and F. Zelli, eds. (2010). Global Climate Governance Beyond 2012: Architecture, Agency and Adaptation. Cambridge: Cambridge University Press. Crutzen, P. J. (2006). Albedo enhancements by stratospheric sulfur injections: a contribution to resolve a policy dilemma. Climatic Change, 77, 211–19. Ellison, D. (2008). On the Politics of Climate Change: Is there an East-West Divide? Working Paper No. 181. Budapest: Institute for World Economics. ENDS Europe Daily (various years). London: Environmental Data Services (ENDS) Ltd. http://www.endseuropedaily.com/articles/index.cfm Eskeland, G., E. Jochem, H. Neufeldt et al. (2008). The Future of European Electricity: Choices Before 2020. CEPS Policy Brief No. 164. Brussels: Centre for European Policy Studies. European Environment Bureau (EEB) (2009). How is Europe Adapting to Climate Change? EEB Input into the Informal Environment Council of 14–15 April 2009. Brussels: European Environment Bureau. Haug, C., T. Rayner, A. Jordan et al. (forthcoming). Navigating the dilemmas of climate policy in Europe. Climatic Change. Hochrainer, S., J. Linnerooth-Bayer and R. Mechler (2010). The European Union Solidarity Fund: its legitimacy, viability and efficiency. Mitigation and Adaptation Strategies for Global Change (in press). Hulme, M. (2008). Governing and adapting to climate. A response to Ian Bailey’s commentary on ‘geographical work at the boundaries of climate change’ Transactions of the Institute of British Geographers, 33(3), 424–7. Hulme, M. and H. Neufeldt, eds. (2010). Making Climate Change Work for Us. Cambridge: Cambridge University Press, in press. IEA (International Energy Agency) (2007). World Energy Outlook 2007. Paris: International Energy Agency. Klein, R. J. T., S. Huq, F. Denton et al. (2007). Inter-relationships between adaptation and mitigation. In Climate Change 2007: Impacts, Adaptation and Vulnerability, ed. M. L. Parry, O. F. Canziani, J. P. Palutikof, et al. Cambridge: Cambridge University Press, pp. 745–77. Knopf, B. and O. Edenhofer (2010). The economics of low stabilisation: implications for technological change and policy. In Making Climate Change Work for Us, ed. M. Hulme, and H. Neufeldt. Cambridge: Cambridge University Press, in press. Lenton, T. M., and N. E Vaughan (2009). The radiative forcing potential of different climate geo-engineering options. Atmospheric Chemistry and Physics, 9, 2559–608. Malerba, F., ed. (2004). Sectoral systems of innovation. Cambridge: Cambridge University Press. OECD (2008). Economic Aspects of Adaptation to Climate Change Costs, Benefits and Policy Instruments. Paris: OECD. Pachauri, R. K., and A. Reisinger, eds. (2007). Climate Change 2007: Synthesis Report. Geneva: Intergovernmental Panel on Climate Change. Rogge and Hoffman 2009 – Author to provide full reference please

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Solomon, S., ed. (2007). Summary for Policymakers. In Climate Change 2007: The Physical Science Basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, ed. S. Solomon, D. Qin, M. Manning et al. Cambridge: Cambridge University Press. Swart, R. and F. Raes (2007). Making integration of adaptation and mitigation work: mainstreaming into sustainable development policies?, Climate Policy, 7(4): 288–303. Tol, R. (2007). Europe’s long-term climate target: a critical evaluation. Energy Policy, 35(1), 424–32. Wiman, B. L. B. (2002). Climate engineering: Concepts, examples, and risks. In Natural Resources System Challenge: Climate Change, Humans Systems and Policy, ed. A. Yotova. Oxford: Eolss Publishers.

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Part V Climate policy in the European Union: retrospect and prospect

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12 Governing climate change in the European Union: understanding the past and preparing for the future andrew jordan, dave huitema, harro van asselt, tim rayner and frans berkhout

[I]f you study the history of political decisions about the environment … you find that there are no New Jerusalems at the end of [the] road …. Each political decision implants a choice into our system of social values; this imperceptibly changes the system of values, and this in turn affects the next choice (Ashby 1978: 78).

Introduction In his 1978 book, Reconciling Man with the Environment, Eric Ashby sought to address what he considered to be one of the most critical issues of his time: the protection of the environment. He believed that by continually making difficult policy choices and confronting the associated dilemmas, humans would gradually arrive at a fuller understanding of their environment and thus a more anticipatory approach to managing it. This reconciliation, he contended, would be achieved not by ‘heroic long-term megadecisions’ but by ‘the cumulative effect of wise mediumterm microdecisions, each … clarifying the shape of the decision that needs to follow’ (Ashby 1978: 87). Ashby was one of those rare individuals in public life who somehow managed to combine a life-long career as a scientist (he was, among other things, President of the British Association for the Advancement of Science and a Fellow of the Royal Society), with equally important roles in policy making. This sensitised him to the realpolitik of decision making. So although his view of humanity was an inherently positive one, he did accept that when it comes to governing society, there are never any New Jerusalems – that is, ideal end points. It was his deep appreciation of the relationship between the desirable and the politically feasible that made Reconciling Man with the Environment such a classic text.

Climate Change Policy in the European Union, ed. A. Jordan, D. Huitema, H. van Asselt, T. Rayner & F. Berkhout. Published by Cambridge University Press. © Cambridge University Press 2010.

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The world today is of course very different from that described by Ashby. Governments share the task of governing society with many other social actors. Nowhere has the shift from government to governance been more pronounced than in Europe, where the EU engages in a great deal of governing but is not a government in the conventional sense. And the environmental agenda he described (comprising many significant, but essentially quite discrete problems) has been utterly transformed by the appearance of the overarching and inherently ‘wicked’ problem of climate change. None the less, many other things remain the same: humanity is still trying to reconcile itself with its environment; very difficult policy choices are continually being made; and there are still no New Jerusalems. The EU has undoubtedly made some very significant policy choices with respect to climate change. As noted in Chapter 1, the main challenge in the 1980s and 1990s was how to make policy makers aware of climate change. In the 2000s, awareness abounds. The challenge now and into the foreseeable future is how to govern it in ways that are informed by science, but are also politically and economically feasible. The main purpose of this concluding chapter is to return to the three main aims identified in Chapter 1. These were: (1) to describe what climate change policies have been adopted by the EU in the past thirty years; (2) examine the choices that informed these policies; and (3) look forward and explore how EU policy might evolve in the short to medium term (i.e. 2020–2040). The remainder of this chapter takes each of these questions in turn and, by drawing on the findings of earlier chapters, offers some answers. What climate policies have been adopted? Climate policy choices in the past thirty years The purpose of this section is to describe what kinds of climate change policies have been adopted at EU level and relate them to the patterns of governing at national and international levels. The analysis in Part III revealed that climate policy in the EU has evolved massively over the past 30 years, to the extent that the EU is now a front-ranking actor in the wordwide governance of climate change. Table 12.1 summarises this evolutionary process by returning to the six main phases that were originally introduced in Chapter 3. Drawing on the more detailed findings of the chapters in Part III, it highlights some of the more important policy outputs that were adopted in each phase. Although it only offers a broad overview of the very many events that are described in much greater detail in Chapter 3 and Part III, Table 12.1 does highlight the highly variable form that climate policy has taken in the EU. If one examines the entire pattern from the perspective of particular types of choice, this unevenness

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Table 12.1 The six main phases of climate policy development in the EU Time period

Key theme1

Policy activity2

Pre-1988

The first stirrings of scientific concern

1986 – Non-binding energy efficiency target set (5). 1988 – ALTENER established (5). 1988 – First Communication from the Commission on climate change (3). 1988 – Rhodes European Council commitment to protect the global environment (3).

1988–1992

The EU’s first bid for international leadership

1990 – EU stabilisation target adopted (3). 1990 – Commission publishes draft EU climate policy programme (3). 1991 – Work starts on internal burden sharing (4). 1992 – The EU signs the FCCC at Rio (3). 1992 – Failure to adopt EU carbon/energy tax proposal (3+6).

1992–1997

Coming to terms with a widening gap between EU targets and action

1992–3 – Council eviscerates the Commission’s climate policy package (3). 1992 – EU adopts framework Directive on energy labelling (3). 1996 – Environment Council adopts the 2 °C target (3). 1997 – EU adopts a -15% reduction target and agrees an informal burden sharing arrangement (3+4). 1997 – EU signs the Kyoto Protocol (3).

1997–2001

The EU’s second bid for international leadership

1998 – New burden sharing agreement adopted to implement -8% Kyoto target (4). 1998 – Adoption of voluntary agreement with European car producers (3). 1999 – Adoption of the Landfill Directive (3). 2000 – First ECCP launched (3). 2000 – Water Framework Directive adopted (7+8). 2001 –European Council decides that EU will ratify the Kyoto Protocol without the US (3). 2001 – Adoption of Directive on Renewable Energy Sources containing indicative targets (5). 2001 – Commission launches proposal for EU ETS (6).

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Table 12.1 (cont.) Time period

Key theme1

Policy activity2

2001–2005

Strengthening and extending the EU policy framework

2003–4 – Adoption of the EU ETS and Linking Directives (6). 2005 –Kyoto Protocol enters force (EU ratified in 2002) (3). 2005 – Adoption of Framework Directive on Energy-Using Products (3). 2006 – Adoption of Regulations on Ozone Depleting Substances (3). 2002 – Solidarity Fund established (7).

2005 – present

Complying with Kyoto and preparing for the post-2012 period

2005 – Council adopts 15%–30% reduction by 2020 target (3). 2006 – Action Plan on Energy Efficiency adopted. 2007 – Adaptation Green Paper published (7). 2007 – Council adopts unilateral 20% reduction target by 2020 (and conditional 30% target (3). 2008 – Adoption of climate–energy package (3–6). 2007 – Floods Directive adopted (8). 2009 – Adaptation White Paper published (7+8).

1 2

See Chapter 3 for details. Number(s) in parentheses refer(s) to relevant chapter(s) of this volume.

becomes even more apparent. For example, in their continual confrontations with level and scale dilemmas, governors have progressively shifted the locus of governing from the Member State to the EU level. In 1979, there were virtually no climate policies at any level. Nowadays, Europe has many more and a very high percentage of them are at EU level. Using information supplied by Member States, the EEA (2008) estimated that 57% of national policies and measures were introduced in direct response to EU policies and a further 24% were inspired by them. These percentages broadly indicate that there has been significant European integration in this field in the past 30 years. The methods used by decision makers to make these level and scale choices (see Chapter 2) reveal something else about governance in the EU. The Monnet Method was conspicuous by its absence in the first few phases and even the Regulatory Method was limited to the more trade-related aspects of climate policy. Otherwise, the most important aspects of mitigation policy (e.g. burden sharing) generally proceeded on the basis of the Intergovernmental Method or (as continues to be the case with adaptation policy) the Policy Coordination method, which gives primacy

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to the state level and marginalises the Commission and the Parliament. The Regulatory Method did not really become important until around c. 2000 and only became the dominant method after 2005. This pattern (from national to EU-level steering) is also apparent in relation to the EU’s engagement with international negotiations. Even though the identification of common positions and the ratification of all international agreements are still dominated by intergovernmental forms of decision making, based on the rule of unanimity, EU institutions (and especially the Commission) have become more directly involved in these activities, and especially since the mid 2000s (see Chapter 9). So although the EU is now present and highly active at all levels, states are still the primary actors, supported and facilitated by the Commission. In parallel, the EU Member States most active in terms of global diplomacy (Germany, France and the UK) have worked to advance policy in non-UN fora, including the G8 and the G20. Nevertheless, in broad terms, the main (but by no means the only) level and scale at which Member States govern climate change is the European one. The choices made in relation to modes and instruments have produced notable departures from the EU’s normal reliance on regulation. These include innovative market-based (e.g. the ETS), voluntary (e.g. the 1998/1999 agreements on car emissions) and informational instruments (e.g. the labelling of energy products). In this respect, the EU has demonstrated a significant capacity for innovation in the use of instruments: the EU ETS – proposed in 2001, implemented in 2005, reviewed in 2007 and reformed in 2008 – represents a case study in rapid, adaptive policy learning. In addition, small funds have been created to cover some aspects of adaptation and promote the use of renewable energies. The adaptation field is emerging as a test-bed for softer, non-regulatory forms of governance such as mainstreaming (Schout et al. 2010). The types of instruments used in climate policy therefore exhibit a great deal of variety, exceeding the norm for EU environmental policy more generally. As far as implementation and enforcement are concerned, Chapter 9 concluded that in the past the tendency has been to evade this choice either by setting targets whose implementation can be assumed, or by relying upon soft modes of governance such as reporting and peer reviewing. In the more recent past, stronger and more direct implementation and enforcement powers, including legal sanctions and fines, have been built into EU-level policies, demonstrating a ratcheting-up of the EU’s enforcement capacity. However, one of the first and most lasting achievements of EU policy was the 1993 Monitoring Decision. Although Member States were quick to remove any formal enforcement and scrutiny powers (see Chapter 3), the obligation on them to publicly report on their emissions according to a standardised protocol gave the

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Commission the information it needed to check that Member States were on track or not. As is well known, this information has encouraged NGOs to scrutinise the emissions performance of their Member States. Rather less well known is that at critical points, the Commission has used this information to justify (and inform the design of) new common policies and measures. Finally, Chapter 9 revealed some interesting variations in the way in which different problems have been framed. Since 1988, the main ‘problems’ demanding a policy response were perceived to be either environmental (i.e. how to establish whether climate change was occurring and what kinds of policy responses should be adopted) or energy-related (principally, access to affordable and uninterrupted supplies), or were associated with the EU’s ongoing quest for political integration (i.e. in the 2000s the Commission identified climate change as an area where the EU could enhance its international and internal identity). During this period, the EU found it easier to adopt policies that ran with the grain of the single market (e.g. product standards and the EU ETS), than those (e.g. the carbon/energy tax) that required new competences at EU level. In the 2000s, other ‘problems’ (e.g. energy insecurity) emerged and were quickly seized upon as additional justifications for EU action in relation to mitigation. By contrast, the ‘problems’ requiring deeper EU collaboration in relation to adaptation (knowledge and information provision, disaster relief, burden sharing, etc.) have not yet been perceived to be as urgent. There have been quite practical reasons for this: the Commission is a relatively small organisation and has struggled to cope with the sheer breadth of the combined ‘impacts and adaptation’ agenda. As noted in Chapter 7, adaptation has also been widely perceived (particularly among the most powerful governors – the Member States) to intrude far too deeply into national affairs. In addition, there remains a strong but implicit belief in the EU that to pursue strong, common adaptation policies risks sending the (wrong) signal to developing countries that it has gone soft in its commitment to strong and immediate mitigation. Climate policy development in the EU: a summary Climate change policy in the EU has, therefore, evolved massively over the course of the past 20 years. It was initially little more than a focus of the EU’s research policy, but gradually developed into a sub-area of environmental policy, before finally emerging (in the 2000s) as an organising focus for virtually all its policies. Consequently, it is now strictly correct to refer to the climate policies of the EU, rather than (to return to the title of this book) climate policies in the EU. Moreover, these policies have developed from symbolic targets, to ones that are both binding and supported by an array of common and coordinated policies and measures.

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The overall pattern is therefore one of ‘sustained policy innovation’, supported by processes of ‘competitive multi-level reinforcement … within a quasi federal system’ (Schreurs and Tiberghien 2007: 24, 22). But when viewed more closely, as was done in Part III, the overall pattern of policy change actually looks rather lopsided (at least in terms of modes and instruments) and unevenly focused (with mitigation almost completely eclipsing adaptation). The temporal development has also been highly uneven, with numerous fits and starts rather than an inexorable progress towards more policies containing ever higher standards. Part III indicates that there was a long period (c. 1988–2000) of slow, incremental change in EU climate policy, followed by a briefer period of intense policy innovation (c. 2000– present), when the output of mitigation policy rocketed. When viewed as an unfolding process rather than a series of snap shots, the political tipping point was not c. 2000, but rather 1996, when the EU switched from simply offering to stabilise its emissions to acknowledging the need for ‘significant overall cuts’ commensurate with the 2 °C target (see Chapter 3). How, then, should we account for this highly differentiated pattern of policy change? Clearly, international-level dynamics and influences have to be a part of the story. However, one cannot explain EU policy solely or even mainly in these terms, because so often the EU has acted in advance of the international community. Indeed, the FCCC and the Kyoto Protocol were drafted in such a way as to rule out the need for specific policies and measures (Oberthür and Tänzler 2007: 255–6). The EU has undeniably had to get to grips with new concepts and instruments (emissions trading and the other flexible mechanisms, for example, or the idea of supplementarity) introduced at the international level, but few of its policies were directly caused by the Kyoto Protocol (Victor 2004: 134, 144). In order fully to understand policy in Europe, analysts must open up the EU and examine its inner workings, the choices that have been made and the dilemmas that were (or were not) confronted. Chapter 9 summarised these in great detail and showed that they were not made in the linear order in which they were initially presented in Chapter 1. Moreover, the way in which the EU approached one type of choice has had important implications for the handling of other choices. In short, they proved to be tightly interdependent. In an attempt to cut into the thicket of cause and effect, Chapter 9 analysed the six main choices from the perspective of two broad theories of the EU: one state-centred and the other more process-centred. These drew attention to different aspects of the story, but neither was capable of explaining the whole. This does suggest that there is an enormous opportunity to engage in further theory development and testing in this vibrant and active area of EU policy, perhaps informed by careful comparisons with other multi-level systems such as the USA, Canada and Australia. A good place to start comparing the EU is on the basis of the list of contradictions and

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paradoxes that have always seemed to beset its climate policies. These were described in Chapter 1. Even fifteen years ago, it was not at all obvious that the EU would be able to overcome these and engage in sustained policy innovation. The paradoxes of governance in the EU Chapter 1 identified five paradoxes that have proved to be particularly relevant to the development and conduct of policy in the EU, although further comparative work is needed to establish their exact importance. The first is that the EU regularly expresses a desire to adopt a leading position in international discussions, but is itself a relatively (and to a large extent, deliberately) leaderless system of governance. The introductory section noted that the EU governs but is not a government in the accepted sense of that word. Governance theory tells us that leadership and policy coordination in such settings, albeit not impossible, are immensely challenging. Second, the EU tries very hard to be internally united in its dealings with other international actors, but during the early phases of climate policy it struggled to achieve this, particularly in fast-moving international negotiations. Rather than looking outwards and building alliances with other actors, it spent far too long ‘negotiating with itself’. Third, its basic raison d’être is the pursuit of harmonisation through the development of a single, integrated market. However, at the same time it is continually driven to accommodate internal diversity by adopting complex, differentiated systems of governance. One obvious manifestation of this paradox is the system of EU burden sharing, which has had to be painstakingly accommodated in the international climate change regime. The EU believes that it offers valuable lessons to the rest of world on how to accommodate the simultaneous desire for unity and diversity. But others believe it is deeply confusing because it blurs the lines of responsibility for implementation. It is also potentially quite hypocritical, particularly when the EU pushes for common targets and timetables. Fourth, the EU has managed to develop ambitious reduction targets, but has had to get by with a limited tool-box of policy instruments. Given its relative lack of capacity to raise and spend money, EU policymakers have therefore had to be creative in order to govern. For example, they quickly learnt to rely on regulation to get things done, the costs of which are borne by other actors (principally Member States and private actors). However, the policy theory summarised in Chapter 2 should serve to remind us that regulatory instruments tend to generate benefits that are diffuse but costs that are concentrated on particular actors; in other words, precisely the conditions in which target groups are likely to mobilise against governors. This leads to the fifth and final paradox: the EU has proven highly effective at setting ambitious targets and innovative policies, but struggles to implement them.

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Just as in other areas of environmental policy, the political rhetoric in ‘Brussels’ has run well ahead of the reality ‘on the ground’ in the Member States. The EU has tried to address this situation, but for a variety of different reasons implementation remains ‘a policy problem without a political solution’ (Jordan 1999). These five paradoxes stem in large part from the way in which governance in the EU was originally designed by the Member States. Since then, countless choices – some of them taken by states, some of them by the EU institutions – have shaped and re-shaped it. In fact, Chapter 2 revealed that the formal and informal features of governance in the EU today are the accumulated product of these earlier choices made in relation to problem framing, levels and scales, costs and benefits, etc. If these paradoxes and contradictions beset many areas of governance in the EU, what steps – or choices – have been taken to ameliorate (and/or possibly overcome) their effects in the area of climate change policy making? One of the striking things about the emergence of climate change policy is that it has been highly contested at almost every step of the way. Governing, in other words, has been and remains a deeply political process – a point that is all too easily neglected in the governance literature (Jordan 2008). Consequently, it is important to understand how and why particular governance dilemmas were handled in the way in which they were, with regard to the five paradoxes. This is a task taken up in the next section.

Coping with the paradoxes of governance Leadership and leaderlessness Chapter 2 explained that the EU was deliberately designed to be a polycentric system of governance with many loci of leadership. The issue of leadership has two sides. On the one hand, some governors (states such as Germany and, more recently, the UK, as well as the Commission) have seen themselves as taking on a leadership role in the development of internal policies. On the other hand, the EU as a whole has the ambition of playing a leading role on the international stage. Simply put, the paradox is that without a central point of steering – both inward and outward – leadership has had to originate from many places at the same time. In the first few phases, there were not enough leaders and too many laggards and EU policy struggled to advance. But as domestic preferences changed and the Commission began to view climate change in more positive terms, new leaders came to the fore. And to many people’s surprise, the very absence of a single point of central leadership began to be viewed as an enabling rather than as a constraining factor. When leadership is concentrated, it is prone to the vicissitudes of the issue– attention cycle and party political dynamics. But in an EU comprising 27 states, several EU institutions and thousands of interest groups, there will always be some

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actors with sufficient motivation to drive the rest towards a higher level of ambition. The absence of a core executive in particular has arguably rescued the EU from many of the potentially highly constraining effects of the electoral cycle. With 15 (and now 27) states there is almost always a group of electorally popular governments willing and able to push for something new, even if the rest are unpopular and/ or fighting for re-election. Polycentricity, therefore, forms a political basis for the escalation of policy ambition. Although the EU is riddled with potential veto points, as a relatively young and protean system of governance it is also richly endowed with ‘leadership points’ (Schreurs and Tiberghien 2007: 25). Moreover, there has not only been ‘baton passing’ on particular issues (Schreurs and Tiberghien 2007: 25) (i.e. one actor or group of actors pushing on a given issue then passing it on to another supporter), but at any one time separate coalitions have pushed for stronger EU policies across a range of different sub-areas. The multi-level nature of policy development in the EU is also important here. Thus, policies developed at one level (e.g. emissions trading at the international and national level) have had feedback effects on cognate levels (Oberthür and Tänzler 2007: 271). In the EU, the single market has often been the medium through which these feedbacks have been transmitted. To summarise, if the past 30 years of climate policy making in the EU tell us anything about leadership and leaderlessness, it is that a great deal of governing is possible without a central locus of executive power. International ‘actorness’ and internal diversity The EU has also taken steps to address the tension between the simultaneous desire for unity (or ‘actorness’ – see Chapter 1) at the international level and diversity within the EU. At first, the EU tried to overcome this by sharing the Presidency. By and large, the majority of states preferred to keep the Commission at arm’s length, chiefly to avoid its intruding into politically sensitive areas such as taxation and energy policy. However, the debacle at The Hague in 2000 (see Chapter 3) forced the EU to radically re-evaluate this arrangement. After 2001, the Commission was formally brought into the troika and after 2004, the EU innovated again, creating the current system of ‘issue leaders’ and ‘lead negotiators’ (see also Chapter 9) through which national and Commission officials work together in teams. Crucially, these teams have a mixed composition. Their purpose is to represent the EU, not the Commission or a particular Member State. Crucially, a very conscious choice has been made to seek greater unity. If and when it is ratified, the Lisbon Treaty could strengthen these arrangements by creating the new post of EU foreign minister, a permanent President of the

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European Council, a joint rather than a rotating Presidency and a foreign service known as the European External Action Service (Benson and Jordan 2008; van Schaik and Egenhofer 2005). In some areas of international policy, these changes will transform the way in which the EU acts, but with regards to climate change, the EU is already working in a more integrated manner, so the net effect may be relatively small. This leads onto another more fundamental point, which is that the EU has come to appreciate that in some circumstances the tension between the simultaneous desire for unity and diversity may well be enabling. Sbragia and Damro (1999) were the first to point out that at the pre-negotiation stage of international negotiations, the desire for unity compels the EU to forge a common position among its Member States. In the past, this has proven to be immensely difficult and hence time-consuming. Sometimes (e.g. prior to Rio and at The Hague in 2000), the resulting ‘common positions’ proved to be not quite so common after all. By contrast, in more fully-fledged federations (e.g. the USA), the federal government simply defines and articulates the national position, without having to negotiate so intensively with lower levels. But when the EU eventually signs an international agreement, it delivers 27 (or however many) signatures and – thus far in relation to climate – an equivalent number of ratifications, whereas the US government has to secure the support of Congress. Thus ‘the very characteristic that makes the EU so problematic for traditional global negotiations – an uncertain, or mixed identity – becomes a strength when it comes to the ratification and implementation of an agreement’ (Sbragia and Damro 1999: 67). To conclude, the EU has not only identified ways to reconcile the simultaneous desire for unity and diversity, but has come to realise that in some situations it pays to be united, whereas in others diversity can be a better option. Harmonisation and burden sharing The paradox of harmonisation is strongly related to the previous paradox. The reason the EU exists is, as noted above, to secure greater market harmonisation, but it nonetheless devotes huge amounts of time to internal burden sharing, which – if anything – is about something entirely different: differentiation. In the process of bargaining between Member States, the EU has searched for an equivalence of mitigation effort. This has not been an easy feat. Chapter 4 powerfully revealed that few things have been quite as productive of political controversy (and legal ambiguity) as burden sharing. To outsiders, it may appear a rather self-indulgent exercise in internal governance, but once a burden sharing agreement has been struck it holds the EU together (Victor 2004: 128), preventing long and potentially debilitating prisoner’s dilemma debates between individual states (Helm 2008: 235).

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The desire for international credibility always underlies burden sharing arrangements, making negotiations more complex. However, it also has a disciplining effect on Member States. By acting together in one bloc, Member States have increased their bargaining power in international discussions and reduced the problem of carbon leakage from one Member State to another. They are two sides of the same coin. However, burden sharing is beginning to change form as a greater proportion of emissions fall under the EU-ETS (from about 50% of total EU emissions in 2008). Market allocation, in short, is (as noted in Chapter 9) gradually substituting for the formal ‘governed’ allocation of emission reduction costs, although formal burden sharing will continue to apply to those parts of the energy economy not covered by the ETS. Under the 2008 climate–energy package, the EU has in effect created a hybrid system. A European carbon market with a single cap will coexist with negotiated, nationally differentiated emissions limits for the c. 50% of carbon dioxide emissions that remain outside the carbon market. This represents somewhat of a half-way house between two very different governing modes of allocation: one network-based (states haggling over burdens), the other market-centred. It represents what was politically possible in 2007–8, but a deep, underlying tension remains. Finally (and as noted in Chapters 7 and 9), burden sharing issues are rapidly becoming more apparent with respect to vulnerability and adaptation. More vulnerable regions and sectors are beginning to demand financial transfers to cope with the effects of climate change. The EU has created an instrument of last resort – the Solidarity Fund – to cope with these demands, but no more – at least thus far. Ambitious targets but constrained instrument choices The EU has adopted a range of eye-catching targets over the past 20 years, but its choice between implementing instruments has tended to be more constrained than that enjoyed by national policy makers. There are two points to be made here: the first relates to targets; the second to instruments. Regarding the former, the EU has occasionally been criticised for adopting targets that were either politically infeasible (e.g. the -15% reduction target agreed in 1997) or simply symbolic (e.g. the joint stabilisation target of 1990). These criticisms rather miss the point, which is that they are both corollaries of the EU’s peculiarly emergent and multilevelled system of governance. This system encourages some governors to aim high wherever and whenever possible. The Commission in particular has, with the backing of some but not all states, always done this in the hope of establishing a functional linkage between the target and supporting policies and measures. As Chapter 9 explained, it eventually succeeded in this, but not nearly as fast or as directly as it had hoped.

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None the less, with respect to instruments, the underlying paradox has not gone away – national policy makers have many more types implementing tool at their disposal. As with some of the other paradoxes, the EU has partly addressed this by exploiting opportunities to move beyond regulation. The failure (in 1991–3) of the carbon/energy tax proposal got the EU off to a bad start in this respect and served almost to accentuate the underlying paradox. The voluntary agreement on car emissions was another early – equally unsuccessful – attempt to move beyond regulation. But the Commission learnt from these experiences and the next time it prepared the ground rather better by consulting with stakeholders in an entirely new forum known as the ECCP. The ETS was the most eye-catching instrument to emerge from this process. Despite some teething problems, it has since been emulated by the USA, New Zealand and Australia (for details, see Chapter 6). The ‘targets and tools’ paradox has also turned out to be not quite as debilitating as one might have supposed. Unlike states (which are often tied up in the highly divisive politics of raising and spending public money), the EU can concentrate on what it does best: target setting, regulation and (now) market creation. In other words, the EU’s reliance on regulation and/or single market competences has given it a certain ‘clarity of purpose’ (Sbragia 2000: 233), which can be highly liberating when the problems being addressed are extremely wicked. However, there are also downsides. As already noted, regulations generate concentrated costs and diffuse benefits. For this reason, where regulations have been successfully agreed, they have tended to perpetuate the status quo, rather than triggering a major transition to low-carbon technologies and behaviours. Admittedly, there has not been enough experience at EU level with non-regulatory tools to determine whether this is a problem specific to regulation. However, for the time being, it seems fair to conclude that the EU has not yet fully escaped the constraining effect of this particular paradox. Energetic policy development but weak implementation Of the five paradoxes, this is the one that continues to bedevil governors in the EU. While some incremental change has occurred (e.g. in relation to the climate– energy package: see Chapter 9), improvements in the EU’s implementation and enforcement powers have failed to keep pace with the rate and scale of policy innovation. Until now, the EU has managed to deliver what it has promised. It met its initial target (later embedded in the FCCC) to stabilise emissions at 1990 levels by 2000 with plenty of room to spare (emissions were in fact 3.5% lower) (COM (2002) 702). The indications are that it will just about fulfil its collective 8%

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reduction target under the Kyoto Protocol (EEA 2008, 2009)) – although only by relying heavily upon the ‘gratis’ reductions made by big states (such as Germany and the UK) (EEA 2008: 3). Any remaining shortfall will probably have to be made up by using the flexibility mechanisms (the ones that the EU fiercely opposed when the USA first proposed them!) to ‘buy in’ reductions from outside Europe (Chapter 6). To conclude, the real, long-term effectiveness of EU climate policy – and thus the potentially constraining effect of this paradox – has not yet been tested. In time, the EU may have to take much more active steps to address this paradox, for example by building in stronger implementation and enforcement powers. The paradoxes of governance: are they enabling or constraining? The EU is widely (and rather unfairly) caricatured as a bloated and sclerotic system of governance, but in the area of climate policy it has repeatedly demonstrated an ability to adapt to cope with the many paradoxes and contradictions that beset it. Against the odds, the EU has emerged as an important, coherent and active source of climate policy innovation, both within the EU and in the international arena. In some respects, the EU’s involvement has complicated the task of governing. Individual Member States could have responded much more quickly to scientific warnings, and with greater ambition, had they not been enmeshed in the EU. But over time, the EU’s involvement has also created new opportunities to get things done; opportunities that would not have existed had the states governed independently. The EU has coped with the paradoxes outlined above, but mainly by tweaking its existing systems, modes and instruments of governance. Indeed, in some respects radical governance change proved to be unnecessary, because some of the paradoxes enabled as well as constrained. Should we therefore declare EU climate governance an unalloyed success? Will tinkering with existing governance systems be a sufficient response in the future? In terms of setting targets and adopting common and coordinated policies and measures, probably yes. However, if we examine what all this policy development activity – the choices, the dilemmas and the changes in methods and frameworks – has actually delivered by way of emission reductions, the overall verdict has to be rather less positive. As the counterfactual – i.e. what the world would have been like without the EU – can never be fully known, we have to rely on a combination of detailed technical analysis and educated guess work. This kind of analysis is still rare in the EU (however, see Haug et al. 2010), but what there is does suggest that the EU’s effect on policy outcomes has been rather less dramatic than is sometimes claimed (Helm 2008: 218; Wesselink et al. 2008: 3), although admittedly none of the other major emitters has come anywhere near to

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fulfilling their Kyoto targets (Helm 2008: 212). In fact, the final verdict may well be that the Montreal Protocol on ozone-depleting substances was more effective (in terms of greenhouse gas emissions reduced) than the Kyoto Protocol (Velders et al. 2007). If governing is all about the active steering of society, then the most charitable thing that can be said for now is that a highly complex governance framework has been established at EU level, but its effectiveness has not yet been conclusively demonstrated. The next and final section explores the implications of this interim verdict for the way in which the EU approaches future challenges. Looking forwards: preparing for new choices and new dilemmas The existing literature points to a number of immediate challenges which, if combined, will provide a far sterner test of the EU’s governing capacities than anything that has been encountered thus far (Schreurs and Tiberghien 2007: 22; Lacasta et al. 2007: 228; Oberthür and Kelly 2008: 44–7). What kinds of challenge are these likely to be? Immediate challenges In the short term, the most obvious and most immediate challenge will be to ensure that the EU fulfils its Kyoto commitments. Until quite recently, there were grave fears that it would fall short, but these were addressed by the wave of new policies that appeared post-2000. With these now in place it seems more and more likely that the -8% target will be achieved (EEA 2009), but (as noted above) only with the help of a variety of ‘non-policy’ effects including economic restructuring, higher energy prices and a run of milder winters (EEA 2009). The second challenge – delivering the 20% and perhaps even the 30% emission reduction targets – will provide an even greater test. The EEA’s most recent modelling work suggests that the EU-27 is significantly off track (EEA 2008: 4). In what it termed a ‘mid-term review’, the Netherlands Environmental Assessment Agency suggested that, in order to get back on track, the impact of existing EU policies would have to increase by a factor of three (and for CO2 emissions, by a factor of five) (Wesselink et al. 2008: 3) to take the EU to -20%. Were the EU to move to the 30% target, an even greater improvement would be needed. Much of the asset stock for energy generation – power stations, for example – in the period to 2020 is already in place or will be put in place in the next few years. Given that these account for such a high percentage of emissions, it is vital that these decisions support the 20% or 30% target, otherwise Europe will be locked into an insufficiently low emissions pathway.

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As Helm (2008: 214) points out, many of the big energy supply decisions – such as on nuclear power or the use of carbon capture and – really only apply to the period after 2020 (Helm 2008: 231, 234). Therefore, more emission reductions will have to be made in areas that have hitherto been relatively untouched, particularly transport, which remains the fastest growing source of greenhouse emissions in the EU (EEA 2009: 13). The 2008 Emissions Trading Directive will make some difference, because after 2012 all planes landing and taking off from EU airports will be part of the trading scheme. However, it will not address other transport-related emissions. The failure of a 2001 White Paper on transport (COM (2001) 370) to put this sector on a more sustainable footing was confirmed by a mid-term review undertaken by the Commission in 2006 (COM (2006) 314). Any road transport emission reductions achieved by improvements in vehicle or fuel technology have been heavily outweighed by a steady rise in traffic volumes. As an inherently liberalising institution (see Chapter 2), concerned to facilitate the mobility of people and goods, the EU appears unable seriously to confront the problem of rising demand for travel. At the time of this writing, the Commission is expected to propose a new transport and energy package (COM (2009) 279/4), perhaps even including tax initiatives to discourage car use, such as road pricing. If this is the case, the EU will need to resolve some potentially highly tricky level and scale dilemmas, for example by creating a framework sufficiently broad to allow differential use at national and local levels. In the meantime, the delivery of emission reductions from the EU as a whole will depend heavily on the performance of a single policy instrument: the EU ETS. Here, the EU can point to a significant history of policy innovation. Although it has led to some emissions reductions (the exact figure is disputed), the industries targeted were treated rather generously in the early phases. Although a number of incremental design changes have accommodated some of the concerns raised, it is far too simplistic to dismiss these experiences as mere teething problems. The concerted lobbying effort against the 2008 Directive revealed the deep unwillingness of many target groups to take on higher burdens, which resulted in the decision to continue handing out free allowances and other measures to combat carbon leakage. In 2009, the Commission made clear its desire to radically scale up the EU scheme by connecting it to similar schemes in other parts of the industrialised world by 2015, and then all advanced developing economies by 2020. Such a transition would be certain to provoke all kinds of new dilemmas. For example, governors working in different jurisdictions will need to ensure that they aim for a similar level of ambition and trade like with like. There is still a very long way to go in identifying and resolving these and other basic compatibility issues. In the meantime, the jury is still out on whether emissions

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trading can really drive the innovations needed to steer the EU towards a low carbon society. The EU that confronts the dilemmas arising from all these difficult policy choices will, of course, be rather different to the one that negotiated the -8% Kyoto target. Crucially, there will be the preferences of the ten new Member States that joined the EU after 2004 to account for. These states participated in some of the ECCP discussions and were indirectly involved in the shaping of ETS (Massai 2007: 311). Their emissions were not included in the EU’s Kyoto Protocol target, but were in the 20%–30% target adopted in 2008. Emissions in these states have declined significantly since 1990, largely because of post-Soviet economic restructuring, but are expected to rise sharply (EEA 2008: 8) as their economies gradually align with the norm in the EU’s single market. At the same time, they will expect the same preferential treatment that the cohesion states received prior to Kyoto. If this happens, it will challenge the EU’s international policies as much as its internal ones. It would, for example, be wholly inconsistent with the EU’s appeal to other rapidly industrialising countries to dampen or reverse their emissions. At the same time as it is grappling with these internal challenges, the EU will have to engage with the international community across a very wide array of related issues. In late 2008/early 2009, the Commission issued or was drafting papers on reducing emissions from deforestation (COM (2008) 645/3), international financing (COM (2009) 39) and linking the EU ETS to other schemes (ENDS Europe Daily 14.1.2009). In the past, when its climate policies were still being established, the EU’s focus was understandably rather inward. After 2000 – and particularly since the debacle in The Hague – it has tried to be more outward facing. In the period after the Kyoto Protocol, these arrangements will be put under immense strain as the EU tries to draw in more developing country support for limitations on their future emissions. The developing countries will only agree to these if richer countries provide new and additional sources of finance. It is by no means clear where this money will come from, particularly when the economies of the richest countries are suffering a severe downturn. In 2009, the Commission produced a position paper which canvassed opinion on a number of options (e.g. using revenues from auctioning EU ETS allowances or borrowing money from money markets) but all of them are replete with governance dilemmas. The EU will also have to rapidly re-adjust to the new political priorities of the Obama Presidency in the USA. For years, the EU has been used to being the leader, while the USA was perceived to be the main obstacle to global agreement. The Bush administration’s infamous rejection of Kyoto in 2001 was at one and the same time a challenge but also a huge diplomatic opportunity: European leaders could distance themselves from US foreign policy, while cooperating with the Americans in the ‘war on terror’. As the US government gradually upgrades its governance system,

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there may be serious competition for leadership at the international level. This may put the EU under a lot more pressure than it has been used to. What European politicians are likely to fear is the possibility that they might lose their leadership role, if the EU is not assertive or internally coordinated enough at the international level, or fails to live up to what it has promised regarding targets. On the other hand, the EU’s re-engagement may create a self-reinforcing ‘race to the top’ with US governors. Either way, it seems fair to expect EU–US environmental relations to exhibit some friction, regardless of the precise issues under discussion (Schreurs et al. 2009). The indications are that this pattern will continue as both sides grapple with the ‘wicked’ problem of climate change. Whether it is the industrialising world or the USA, interacting with third parties will put the EU’s coordination structures and procedures under immense strain. These may only be accommodated by executing even more profound changes to internal systems of governance. Underlying challenges Moving forward into the more distant future, governors will encounter other challenges of a slightly more existential nature. The future is, by definition, unknowable. However, by employing the methods described in Chapter 10, Chapter 11 demonstrated that it is possible to investigate these in a fairly structured manner. It indicated that of the four worlds that EU governors might find themselves in after 2020, the world of ‘coordinated mitigation’ presented the fewest challenges. However, such a world will not be completely straightforward: governing climate change in such a directed manner is likely to challenge a number of well-entrenched norms such as those of flexible pragmatism (in the past the EU has shied away from setting long-term goals), consensus and negotiated enforcement. By contrast, the other three worlds were considered to be significantly different to the policy status quo, and hence the perceived difficulty of the associated choices may be rather greater. One of the main conclusions from Chapter 11 related to the need to develop policies and instruments that are robust within and across these different worlds. At present, the EU is very heavily focused on mitigation. This commitment is powerfully – almost symbolically – expressed through the 2 °C target. By contrast, the EU’s adaptation policies are still relatively inchoate. Therefore the first existential challenge is to decide what is to be the EU’s long-term focus. Specifically, to what extent should the EU’s resources be devoted to adaptation efforts? From a scientific perspective, there has been a growing groundswell of opinion since the publication of the IPCC’s fourth assessment report which holds that the 2 °C target is not only more difficult to achieve than was originally thought in 1996, but also too high to

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fulfil the FCCC’s ultimate objective – that of preventing dangerous climate change (Parry et al. 2009; Smith et al. 2009). Consequently, stabilisation at much lower atmospheric concentrations than 550 ppm (the figure quoted by the Environment Council in 1996 and which underpinned the Stern Review) is now advisable to prevent certain ‘tipping elements’ (e.g. the Arctic ice sheets) from incurring significant and possibly irreversible long-term effects (e.g. significant melting) (Lenton et al. 2008; Ramanathan and Feng 2008). This possibility has stimulated a lively debate in the scientific community about the importance of mitigating for 2 °C but planning to adapt to potentially much higher rates of warming and thus higher levels of damage (Anderson and Bows 2008; Parry et al. 2009). From a governance perspective, this choice (if indeed it can be described as a single choice) is deeply problematic. The 2 °C target has become an immensely powerful symbol of the EU’s leadership, and this alone makes it politically difficult to abandon. It also provides a signal to investors (and developing country parties) that the EU is strongly committed to mitigation. Without this, investor confidence – which is weak at the best of times – in the new carbon economy might fade away, threatening the attainment of the EU’s medium-term mitigation targets. Then again, developing stronger and more coordinated adaptation policies is unlikely to be easy either. At present there is no firm agreement on what the EU’s role should be. Adaptation has not yet been formulated according to the tried and tested rationales for EU action (such as the need to secure the four freedoms, or the politico-strategic advantage of doing so). At present, the rationale for EU action largely rests on the solidarity principle of distributing risk, burdens and disaster relief, as well as the need to spend its own budget in a climate-proof way. As we have seen, this can be a potent rationale, but only once it has been meshed with the EU’s considerably stronger market rationales. There are signs, however, that this is beginning to happen, for example in the moves to integrate further the European insurance market. One hugely difficult area of decision that remains, and which would bring with it significant new dilemmas, is whether and on what basis to raise and distribute a dedicated EU adaptation fund. Agreeing criteria on which to raise and allocate funds – requiring as it would a distinction between unavoidable impacts from climate change and those in some way ‘self-inflicted’ by mal-adaptive policies – could make past negotiations on the sharing of mitigation burdens look comparatively straightforward. In some way, richer northern Member States would need to be persuaded to finance southern Europeans, who are expected to suffer the greatest impacts, at precisely the same time as the focus of regional funding is moving to the post-2004 Member States. In terms of the relationship between mitigation and adaptation effort, rather than attempting the impossible task of securing an ‘optimal’ balance between the two, Swart and Raes (2007) suggest that the most appropriate way forward is to broaden

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the menu of policy options considered, and pursue links between adaptation and mitigation. This should be done in ways that: *

*

*

avoid trade-offs (i.e. when adaptation options are considered, their consequences for mitigation should be routinely taken into account and vice versa); identify synergies (e.g. adopting policy options that reduce greenhouse gas emissions and the vulnerability to climate change, such as water demand management, better soil protection or the use of ETS auctioning revenues to fund adaptation); and enhance and apply response capacity (e.g. in industrialised countries the emphasis should be on putting the existing capacity into action; in the developing world both aspects have to be radically enhanced).

However, this book reveals that at present, the EU is confronting many of the most critical dilemmas of mitigation in isolation from considerations of adaptation. Mitigation meshes nicely with the EU’s ongoing concerns about energy insecurity and market liberalisation. It has been championed by political leaders and identified as a broad, long-term objective of the EU. Adaptation issues, on the other hand, are perceived to play out more clearly at lower levels of governance. Indeed, the deepening EU commitment to radical emissions reductions may make it much more difficult to fashion a common EU position on adaptation, beyond normative appeals to solidarity and sharing the (highly unequal) costs of climate impacts. This takes us to the second existential challenge which is how to ensure that governance in the EU remains democratically robust and hence stable enough in the short to medium term to cope with these and other critical choices. In the past, the EU has governed by not confronting dilemmas directly. This was the Monnet Method of integrating by stealth. However in recent years, the permissive consensus in favour of deeper European integration has been badly dented by a series of referendum defeats, declining turnouts in European elections and the rise of anti-EU parties. Chapter 2 noted that the EU has relied more heavily on output-oriented legitimacy than input-oriented legitimacy. In a world short of ‘Europe-wide policy discourses’ (Scharpf 1999), climate change has offered a priceless opportunity to show that the EU can identify and exploit synergies between a range of contemporary policy challenges – including energy insecurity, climate change and economic competitiveness – that people do feel strongly about. It is striking that in an era of growing Euroscepticism, European citizens seem to agree with elites that Europe should be doing more rather than less. In a May 2008 Eurobarometer survey, 83% believed either that the EU was either doing ‘about the right amount’ or ‘not doing enough’ (Eurobarometer 2008). How long can governors expect this permissive support to last? As the impacts of climate change become more pronounced and the costs of mitigation stack up, the politics of climate change show every sign of becoming more not less difficult. If, for example,

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the EU moves forcefully in the direction of the ‘coordinated mitigation’ world described in Chapters 10 and 11 (i.e. significantly higher levels of harmonisation and therefore, by implication, Europeanisation), will national governments and the citizens of Europe be prepared to accept ‘Brussels’ intruding into their transport choices, raising the price of their energy supplies or affecting the way in which they use their land? Thus far, the scope of climate change policy has expanded by steps and jumps, from science policy through to energy and eventually foreign affairs. One fundamental dilemma of mitigation and adaptation that the EU may eventually be forced to confront is where to set the boundaries of EU action. This will be as much a dilemma for national governments as it is for the EU. At present, the citizens of the EU live in domestic political spaces and vote primarily according to domestic political concerns. National governments may find that they have to do a much better job of carrying their publics along with them, if they want to establish new EU-level policies. After all, climate change is a multi-levelled problem that requires multi-levelled solutions. This takes us back to Reconciling Man with the Environment. Eric Ashby was adamant that there are no New Jerusalems in policy making. It is only by engaging in difficult policy decisions and confronting complex governance dilemmas that societies will come to appreciate what is really at stake and take the necessary steps to govern the environment more sustainably. EU climate policy has been 30 years in the making. Undeniably, a great deal has been achieved in this period. Many difficult choices have been taken and many complex dilemmas confronted. But with hindsight, the first steps were probably only the easy part. The really hard work – of effectively decarbonising Europe in a generation – remains to be done and probably in a similar span of time of around 30 years. Interestingly, while remaining hopeful, Ashby (1978: 78) openly conceded that the process of reconciliation will be ‘a long and tortuous one’. Unfortunately, when it comes to confronting the dilemmas of climate change, time is one commodity that appears to be in very short supply.

References Anderson, K. and A. Bows (2008). Reframing the climate change challenge in light of post2000 emission trends. Philosophical Transactions of the Royal Society, A366(1882), 3863–82. Ashby, E. (1978). Reconciling Man with the Environment. London: Oxford University Press. Benson, D. R. and A. J. Jordan (2008). A grand bargain or an ‘incomplete contract’? EU environmental policy after the Lisbon Treaty. European Energy and Environmental Law Report, 17(5), 280–90.

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EEA (European Environment Agency) (2008). Greenhouse Gas Emission Trends and Projections in Europe 2008. EEA Technical Report 5/2008. Copenhagen: European Environment Agency. EEA (European Environment Agency) (2009). Annual European Community Greenhouse Gas Emission Inventory 1990–2007 and Inventory Report 2009. EEATechnical Report 4/2009. Copenhagen: European Environment Agency. ENDS Europe Daily (various years). London: Environmental Data Services (ENDS) Ltd. http://www.endseuropedaily.com/articles/index.cfm Eurobarometer (2008). Europeans’ Attitudes to Climate Change. Special Eurobarometer Report 300. Brussels: Eurobarometer. Haug, C., T. Rayner, A. Jordan et al. (2010). Navigating the dilemmas of climate policy in Europe: evidence from policy evaluation studies. Climatic Change, in press. Helm, D. (2008). Climate change policy: why has little been achieved? Oxford Review of Economic Policy, 24(2), 211–38. Jordan, A. J. (1999). The implementation of EU environmental policy. Environment and Planning C, 17(1), 69–90. Jordan, A. J. (2008) The governance of sustainable development: taking stock and looking forwards. Environment and Planning C 26(1), 17–33. Lacasta, N., S. Dessai, E. Kracht and K. Vincent (2007) Articulating a consensus: the EU’s position on climate change, In Europe and Global Climate Change, ed. P. G. Harris. Cheltenham: Edward Elgar, pp. 211–32. Lenton, T., H. Held, E. Kriegler et al. (2008). Tipping elements in the Earth’s system. Proceedings of the National Academy of Sciences, 105, 1786–93. Massai, L. (2007). Climate change policy and the enlargement of the EU. In Europe and Global Climate Change, ed. P. G. Harris. Cheltenham: Edward Elgar, pp. 305–22. Oberthür, S. and Kelly, C. R. (2008). EU leadership in international climate policy. The International Spectator, 43(3), 35–50. Oberthür, S. and D. Tänzler (2007). Climate policy in the EU. In Europe and Global Climate Change, ed. P. G. Harris. Cheltenham: Edward Elgar, pp. 255–78. Parry, M., J. Lowe and C. Hanson (2009). Overshoot, adapt, recover. Nature, 458(30), 1102–3. Ramanathan, V. and Y. Feng (2008). On avoiding dangerous anthropogenic interference with the climatic system. Proceedings of the National Academy of Sciences, 105(12), 14239–45. Sbragia, A. (2000). The European Union as coxswain. In Debating Governance, ed. J. Pierre. Oxford: Oxford University Press, pp. 219–40. Sbragia, A. and C. Damro (1999). The changing role of the EU in international environmental politics. Environment and Planning C, 17(1), 53–68. Scharpf, F. (1999). Governing in Europe. Oxford: Oxford University Press. Schout, A., A. J. Jordan and M. Twena (2010). The diagnostic deficit: from old to new governance in the European Union. West European Politics (in press). Schreurs, M., H. Selin and S. VanDeveer, eds. (2009). Transatlantic Environment and Energy. Farnham: Ashgate. Schreurs, M. and Y. Tiberghien (2007). Multi-level reinforcement: explaining EU leadership in climate change mitigation. Global Environmental Politics, 7(4), 19–46. Smith, J., S. Schneider, M. Oppenheimer et al. (2009). Assessing dangerous climate change through an update of the IPCC ‘reasons for concern’. Proceedings of the National Academy of Sciences, 106(11), 4133–7. Swart, R. and F. Raes (2007). Making integration of adaptation and mitigation work. Climate Policy, 7, 288–303.

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van Schaik, L and C. Egenhofer (2005). Improving the Climate: Will the New Constitution Improve the EU’s Performance in International Climate Negotiations? CEPS Policy Brief No. 63. Brussels: Centre for European Policy Studies. Velders, G., S. Anderson, J. Daniel, D. Fahey and M. McFarland (2007). The importance of the Montreal Protocol in protecting the climate. Proceedings of the National Academy of Sciences, 104(12), 4814–19. Victor, D. (2004). The Collapse of the Kyoto Protocol (With a New Afterword). Princeton: Princeton University Press. Wesselink, L. G., H. Eerens and J. Vis (2008). EU 2020 Target: 20% Reduction Requires Five-Fold Increase in Impact of CO2 Policies. MNP Report 5000094007. Bilthoven: Netherlands Environmental Assessment Agency.

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2 °C target and dangerous climate change, 270 as potentially misleading, 239 EU’s commitment to, 6, 208, 255, 270, 271 feasibility of attaining, 240 policy implications of, 149, 217, 259 possible abandonment of, 213 relationship to 4 °C ‘target’, 271 2 °C world, 217, see also ‘autonomous mitigation world’, see also ‘coordinated mitigation world’ 20–20–20 package. See climate-energy package (2008) 4 °C world, 217, see also ‘autonomous adaptation world’, see also coordinated adaptation world policy challenges in, 217 acid rain programme (in the USA), 126 influence on international climate negotiations, 126 perceived success, 126 acquis communautaire, 43 acquis communitaire, 46, 167 in the water sector, 167, 168, 170, 173, 181, 182 actorness definition of, 5 of the EU, 12, 18, 262 ADAM project, xvi, 150 adaptation, 20, 70, 146, 158 as a taboo subject, 147, 148 autonomous, 146, 147, 152, 153, 159, 178, 182, 192 importance of the local level, 145, 147 inadequacy of private insurance, 149, 237, 238 meaning of, 21, 145 ‘realist’ perspective on, 147 role of insurance sector, 150, 151, 152, 156, 158, 179, 238, 271 uncertain costs of, 157, 179, 197 Adaptation Fund, 235 adaptation policy, 70, 145–66 burden sharing in, 100, 236, 271 Commission Green Paper on, 11, 151, 153, 154, 158, 167, 175, 177 Commission White Paper on, 11, 150, 151, 153, 156, 157, 158, 159, 161, 162, 175, 176, 179, 180, 207

compared to mitigation policy, 155, 159, 160, 162, 191–2, 193, 195, 197, 207, 258 danger of moral hazard in, 158, 183 enabling and constraining factors, 161–2 four key pillars of, 150 integration with mitigation policy, 157, 162–3, 207, 239–40, 272 international, 76, 147 lack of support for a directive on, 149, 155, 157 links to biodiversity policy, 152, 162, 194 national adaptation strategies, 11, 148, 157 not amenable to ‘one size fits all’ approach, 19, 145 origins of in the EU, 70, 148–9 potential objectives of, 153 potential role of spatial planning in, 150, 154, 171, 183 rationale for EU involvement, 153, 241 reliance on network-based modes of governance, 162 use of ETS revenues in, 131, 207 variation between Member States, 147–8, 177 adaptive capacity, 146, 150, 177, 179, 240 barriers to, 152 elements of, 146 adaptive governance, 168, 182, 183 agency, 15, 29, 215 relationship to structure, 14, 15 agenda setting, 9, 31, 190 in the EU, 31, 190 Kingdon’s model of, 31, 190 agendas (policy) agenda maintenance, 13 agenda universe, 31, 190 institutional agenda, 53, 54, 71, 103, 161, 190 systemic agenda, 31, 53, 103 agriculture, 3, 220, 237 danger of mal-adaptation in, 237 emissions from, 72, 74 impacts of climate change on, 145 ALTENER programme (on renewable energies), 54, 58, 60, 113, 120, 195 development of, 106–8 impact of, 61 Annex I parties (to the Kyoto Protocol), 65, 66, 85, 95, 220

276

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Index Arctic ice sheet melting of, 271 Ashby, Eric, 253, 273 auctioning, 126 and the Emissions Trading Directive (2009), 130–1, 137, 139 economic case for, 136, 139 in ETS phase III, 131 in ETS phases I and II, 137 opposition to, 128, 136 use of revenues from, 76, 133 Australia, 78, 220, 259, 265 Austria, 53, 63, 70, 85, 86, 108 ‘autonomous adaptation world’, 219, 221–2, 230, 237–9, 246 EU’s role in, 221, 237–8, 239, 246 ‘autonomous mitigation world’, 218, 220–1, 230, 233–5 EU’s role in, 220, 233–5, 241, 243, 244, 246 aviation, 205 emissions from, 4, 69 inclusion in the EU emissions trading scheme, 268 backcasting, 215 Bali Action Plan, 72 Barosso, Manuel pronouncements on climate change, 75 Bathing Water Directive (1976), 168 Berlin Mandate, 62 Berlusconi, Silvio, 75 Better Regulation, initiative in the EU, 11, 71, 170 biodiversity policy, 150, 152, 162, 237 biofuels, 188 and the Renewable Energy Sources Directive (2009), 75, 104 Directive (2003) on, 104, 109, 117 second generation, 73 sustainability concerns over, 111, 117 targets for, 61, 73 Bjerregaard, Ritt, 132 Blair, Tony, 188, 191 Brazil, 100, 221, 231 British Petroleum, 64, 134 Brown, Gordon, 71 budget (of the EU), 196 and adaptation policy, 150, 155–6, 157, 161, 162, 192, 236, 271 and climate change policy, 196, 232 development aid, 235 buildings. See Energy Performance of Buildings Directive (2002) burden sharing (in the EU), 7, 10, 18, 20, 42, 83–8, 187, 188, 192, 193, 196, 197, 203, 208, 242, 246, 255, 256, 258, 260, 263–4 acid rain example, 58, 84 and National Allocation Plans, 130, 138 bottom-up, 90, 97, 201, 233 equity of, 93–4, 97 EU Decision on (2002), 86, 95 formal vs informal, 92–3 future of, 242–3, 246 in adaptation policy, 264

277

internal agreement on (1997), 63, 64, 66, 69, 83, 85–6, 98, 188, 192 policy exercise on, 20, 225 primary purpose of, 193 top-down, 84, 91, 97, 98, 195, 233 Bush, George W. rejection of the Kyoto Protocol, 7, 67, 188, 269 Byrd-Hagel resolution, 61 Canada, 55, 132, 188, 259 car emissions. See vehicle emissions carbon capture and storage, 6, 231, 240, 247 funding for, 76, 192, 196, 205, 232 in the climate-energy package (2008), 75 in the EU, 6, 11, 70, 73, 188, 220, 234, 235 carbon leakage, 16, 89, 134, 233, 234, 243, 244, 264 and the climate-energy package (2008), 76, 131, 133, 268 definition of, 22 carbon price, 129, 231, 235, 244 fall during ETS phase I, 129–30, 138, 139 carbon sequestration. See carbon capture and storage carbon sinks, 62 controversy over in international negotiations, 66, 68 carbon taxation, 35, 106, 112, 121, 231, 234 as an alternative to emissions trading, 126, 136, 231 carbon/energy tax proposal, 61, 67, 92 failure of, 9, 10, 59, 69, 131, 187, 208, 255, 265 impact on EU climate policy development, 10, 152, 258 opposition to, 58 China, 94, 100, 221, 231 emissions from, 6 Clean Development Mechanism, 127 and the Linking Directive (2004), 129 supplementarity and, 78, 129 climate change advances in scientific understanding of, 52–3, 71, 147, 155, 161, 188, 190, 255, 270–1 as a ‘wicked’ problem, xvi, 4, 5 biophysical uncertainties, 55, 216 dangerous, 74, 209, 239, 271 entry into political mainstream, xv, 3, 71 framing in relation to other policy problems, 30, 53, 70, 71–2, 73, 151–2, 190–1, 272 rapid, 183, 239 climate impacts, 6, 71, 100, 189, 232, 237, 239, 241, 245, 247, 271 as ‘focusing events’, 239 economic consequences of, 71, 145, 146, 153, 154, 157, 179, 272 effect on critical infrastructures, 246 on water resources, 171–2, 174, 177, 181, 182 predicted in the EU, 70, 145, 146–7, 175, 194, 271 uncertainties surrounding, 145, 146, 156, 157, 162 climate policy framing in relation to other policy problems, 239–40 climate policy of the EU, 207 paradoxical features of, 17–19, 260–1, 261–7 relationship to international policy, 40, 88, 92, 189, 260 theoretical interpretations of, 198–206, 209

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Index

climate regime (international), 98, 189, 220, 230, 231, 240 EU’s involvement in, 7, 17–18, 62 climate-energy package (2008), 74–6, 90, 110 adoption of, 76, 92, 104, 107, 192, 256 burden sharing in, 74, 87–8, 89, 94, 98, 99, 264 implementation and enforcement mechanisms in, 198, 265 inclusion of solidarity fund within, 76 industry lobbying on, 196, 197 main elements of, 74, 75, 88, 100, 112 negotiation of, 75–6, 90, 95, 99, 113, 201, 202, 205, 232 Clinton, Bill, 61, 62, 189 coal, 73, 105, 111, 126, 235, 239 co-decision procedure, 42, 88 cohesion (informal norm of), 42, 83, 84, 89, 95, 192, 193, 196, 234, 237 cohesion policy, 42, 151, 152 cohesion states, 57, 62, 86, 89, 90, 158, 269 and the 1997/8 burden sharing agreement, 86, 93 Combined Heat and Power Directive (2004), 109 Committee of the Regions, 158 Common Agricultural Policy, 49 as alleged cause of ‘mal-adaptation’, 159 reform of, 159 common and coordinated policies and measures, 60, 65, 89, 205 common but differentiated responsibilities, 55, 218, 235 common market. See internal market common position, 62 malleability of, 17, 18, 63 negotiation of in the EU, 63, 92, 200–1, 257, 263 competence, 14, 16, 37, 39–40, 61, 72, 95, 140, 162, 237, 247 exclusive, 38, 109 expansion of in the EU, 43, 140, 156, 157, 167, 243 impact on problem framing, 15, 37, 39, 42, 72, 99, 112, 180–1, 191, 265 limited in the EU, 12, 31, 36, 37, 42, 47, 53, 70, 112, 114, 150, 153, 192, 196, 241 mixed, 39, 41, 49, 95 competitiveness, 16, 70, 93, 108, 117, 152, 190 and the emissions trading scheme, 137 Conference of the Parties (to the Framework Convention on Climate Change) (COP) COP1 (Berlin), 61, 199 COP11 (Montreal), 72 COP13 (Bali), 72 COP14 (Poznan), 235 COP15 (Copenhagen), 72, 75 COP2 (Geneva), 62, 189 COP6 (The Hague/Bonn), 18, 66–7, 68 COP7 (Marrakesh), 68 Constitution, 72 failure to adopt in the EU, 11, 71, 74, 191 lack of in the EU, 40, 42 contraction and convergence, 220 ‘coordinated adaptation world’, 218, 221, 230, 235, 238, 246 EU’s role in, 235–7

‘coordinated mitigation world’, 218, 219–20, 230, 240, 242, 243, 244 EU’s role in, 230–3, 242, 243, 244, 245, 247, 270, 273 costs and benefits. See governance dilemmas Council of the European Union functions of, 22 Presidency, 41 ‘troika’ arrangement, 41 decision-making procedures (of the EU) Community Method, 36 Intergovernmental Method, 36 Monnet Method, 36 Policy Coordination Method, 36 Regulatory Method, 36 deforestation, 53, 269 Delors, Jacques, 60, 191 Denmark, 9, 57, 63, 85, 86, 93, 105, 106, 108, 110, 113, 114, 148, 199 emissions from, 56 emissions trading in, 127, 134, 139 Presidency of the EU, 148 developing countries, 7, 30, 220, 221 emissions from, 76 financial assistance to, 6, 66, 68, 76, 231, 269 greater vulnerability to climate impacts, 147 participation in international negotiations, 10, 68, 99 development assistance, 221, 235 differentiation in EU climate policy, 85, 263 in EU environmental policy, 84 dilemmas. See governance dilemmas Dimas, Stavros, 269 and EU emission reduction commitments, 73 disaster relief, 153, 158, 221, 237, 271 distributive policy, 33, 34, 195, 196, 208 weak EU capacity for, 153 Drinking Water Directive (1975), 168 Drinking Water Directive (1998), 169 drought, 6, 54, 148, 158, 172, 174 Earth Summit (of the United Nations) EU’s participation in, 60 Earth Summit (of the United Nations) (1992), 55 ecological modernisation, 70 as a goal of the 2008 climate-energy package, 75 economic recession, 3, 61 impact on EU climate policy, 60, 75, 189 effectiveness, 34, 175 as an evaluation criterion, xv, 15, 17, 33, 120, 134, 213 of EU climate policy, 5, 133, 266, 267 effort sharing. See Effort Sharing Decision (2009) Effort Sharing Decision (2009), 76, 202 and equity concerns, 90 basis for target allocation, 94 Central and Eastern European Member States and, 94–5 compliance provisions, 96–7 proposal for, 87 provisions for use of external credits, 96

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Index emissions reduction targets, 35, 206, 208, 255, 256, 267 achievement of through ‘gratis’ effects, 10, 200, 266 and scientific recommendations, 229 and the EU bubble, 65, 95 credibility of, 264 EU’s forte for, 65, 264 in international negotiations, 18, 54, 62, 65, 189 negotiation of in the EU, 19, 43, 65, 74, 83, 84, 85, 87, 91, 94, 97, 192, 199–200, 260 pressure on EU to deliver, 7, 88 range of among Member States, 56, 84, 92 UK scheme, 134 under the Kyoto Protocol, 96, 267 emissions trading, 7, 19, 20, 62, 66, 68, 76 Danish scheme, 127, 134 growing support for, 69, 127, 131–2, 139 provisions in Kyoto Protocol for, 96, 126–7 relationship to other instruments, 135–6 theoretical advantages of, 125, 126 UK scheme, 127, 134–5 Emissions Trading Directive (2003) adoption of, 69, 127 cap setting in, 133 implementation of, 129–30 key provisions of, 128–9 origins of, 10, 127 Emissions Trading Directive (2009) auctioning under, 76 cap setting in, 133 key provisions of, 130–1 origins of, 130 provision for use of external credits in, 76 emissions trading scheme (EU) as a mix of different governance modes, 135–6, 137–8, 140 long-term robustness of, 234, 246 energy efficiency, 53, 231, 233, 235 EU policies on, 54, 58, 61, 72, 73, 195, 198, 201, 206, 255, 256 energy market development of in the EU, 71, 103, 120, 121, 132, 194, 206 integration, 104, 106, 112, 119, 120, 231 liberalisation, 10, 37, 54, 103, 104, 108, 112, 114, 117, 204 regulation, 117 Energy Performance of Buildings Directive (2002), 69, 78 energy policy and the Lisbon Treaty, 72 common (of the EU), 71, 72, 112 competence, 37, 39, 103, 112, 204, 241, 262 EU’s triad of objectives for, 107, 108 energy security, 10, 71, 73, 74, 103, 105, 111, 112, 116, 119, 121, 235 enforcement negotiated (norm of), 43, 88, 95, 98, 118, 232, 244, 246, 270 of international law, 34 powers of the EU, 14, 34, 43, 93, 97, 135, 137, 138, 181, 197, 198, 230, 231, 236, 257, 265

279

enlargement (of the EU post-2004), 70, 83, 109, 188 impact on EU climate policy, 202, 235 Environment Council, 46, 58, 59, 62, 63, 64, 66, 67, 70, 73, 85, 86, 90, 92, 148, 170, 187, 200, 201, 204, 208, 255, 271 joint meeting with Energy Council, 56, 84 environmental action programme, 168 environmental effectiveness. See effectiveness environmental NGOs, 62, 129, 132 European Climate Change Programme (ECCP), 67, 70, 127, 167, 188, 255, 265, 269 establishment of, 10 impacts and adaptation working group of, 149, 174 European Commission, 6 as a policy entrepreneur, 31, 41, 205, 240 Directorate-General Agriculture, 151, 162 Directorate-General Competition, 121 Directorate-General Energy, 109, 112 Directorate-General Environment, 9, 58 reviews of National Allocation Plans, 128, 129, 130, 132 right to conduct international negotiations, 39, 55, 63, 193, 204 weak administrative capacities, 194, 202, 258 European Court of Justice (ECJ), 38 Preussen Elektra vs. Schleswag, 109 European Environment Agency, 148 role in monitoring national climate policy, 8, 171 European External Action Service, 263 European integration ‘by stealth’, 36 climate policy as a new driver of, 10, 11, 61, 89, 191, 208–9, 233, 272 definition of, 9 permissive consensus in favour of, 247 European Parliament, 9, 12, 13, 68, 233 engagement with climate issues, 72, 97, 99, 108, 128, 129, 154, 170 Fitzsimmons Report, 53 European Union emissions from, 6–7 European Union (EU) as a liberalising institution, 38 as a microcosm of international diplomacy, xvi, 8, 21, 99–100 as a regulatory state, 19, 40, 92, 178, 208, 231 as a system of multi-level governance, 8, 12–13, 14, 254, 264 as an emergent entity, 14, 264 emission reductions made by, 4 emissions from, xvi, 4, 6, 21 formal elements of, 14, 37, 38–42 fragile legitimacy of, 48, 272–3 informal elements of, 14, 37, 42–4 leadership capabilities of, 4, 5, 47, 68 leadership on climate change, xvi, 6, 7, 10–11, 56 paradoxical features of, 17 participation in international negotiations, 5 theories of, 4, 29, 44–7, 48 European Union ‘bubble’, 65, 89, 127, 193, 233 international reaction to EU insistence on, 92

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280

Index

Europeanisation, 45, 110, 247, 273 definition of, 40, 206 of national climate change policies, 8, 10, 13 Euroscepticism, 272 Eurosclerosis, 48 feed-in tariff schemes, 106, 110, 114, 115, 116, 117, 119, see also renewable electricity policy financial resources (of the EU), 14, 40, 134, 153, 179, see also budget (of the EU) Finland, 86, 105, 108, 113, 114, 148, 155 first-mover advantage, 140, 155, 234 flexible mechanisms, 65, 66, 74, 78, 88, 95, 127, 129, 266, see also Clean Development Mechanism, see also Joint Implementation, see also Kyoto Protocol, see also emissions trading flexible pragmatism (norm of), 42, 192, 246, 270 floods, 6, 145, 148, 171, 174, 176, 177, 182, 183, 221, 236, 239 EU summit on, 148 of the Elbe and Danube, 171 risk management plans, 171 Floods Directive (2007), 148, 181, 183 coordination with Water Framework Directive, 171, 174 reporting requirements under, 177 risk assessments under, 177 focusing events, 31, 71, 148, 161, 191, 207, 209, 239, 241, 245, see also climate impacts, see also floods, see also heatwave foreign minister, of the EU, 262 four freedoms (in the EU), 38, 39, 53, 112, 271 France, 62, 86, 94, 110, 148, 191, 257, see also Sarkozy, Nicholas emissions from, 8 Presidency of the EU, 75, 201 free allocation, 128, 131, 136 fuel poverty, 30, 49 G20, 257 G8, 3, 257 Gazprom, 71, 72, 191 Germany, 9, 57, 60, 70, 86, 93, 148, 149, 175, 177 climate leadership shown by, 61, 65, 66, 113, 199, 257, 261 emissions from, 8, 64, 84, 92, 127, 187, 200 ‘gratis’ reductions made by, 10 Presidency of the EU, 62, 177, 202 renewable energy policy in, 105, 106, 108, 114 governance definition of, 14 emergence as an analytical term, 13–14 instruments of, 12 polycentric, 261, 262 relationship to government, xv, 14 governance dilemmas and policy choices, 20, 21, 29–48, 224 costs and benefits, 16–17, 33–4, 195–7, 243–4 definition of, 15 handling of, 41, 190–8, 207–9, 256–8, 259

implementation and enforcement, 17, 34–5, 197–8, 244, 257 levels and scales, 16, 31, 192–3, 207, 240–1, 256 modes and instruments, 16, 32–3, 194–5, 208, 242–3, 257 problem perception, 15–16, 35, 37, 39, 42, 190–2, 208–9, 258 relationship between different types of, 17, 35–6 timing and sequencing, 16, 32, 193–4, 207, 241–2 governing as a deeply political process, 261 definition of, xv, 14, 17 Greece, 57, 86 harmonisation, 18, 31, 36, 57, 69, 162, 194, 231, 260 and burden sharing, 264 limits to, 11, 162, 247 of energy market regulations, 121 of key elements of the EU emissions trading scheme, 133, 139, 241 of mitigation policies, 192 of national energy policies, 112 of renewable energy policies, 103, 109–10, 113, 115, 119–20, 121, 241, 243 heatwave, 148, 162 High Representative for Foreign Affairs, 153 historical institutionalism theories of, 45–6 historical responsibility, 221 India, 94, 221, see also developing countries industry opposition to auctioning of ETS allowances, 130, 136 opposition to carbon/energy tax, 58 renewable energy, 106, 109, 116, 117 informational instruments, 77, 257 innovation in renewable energy technologies, 106, 115 systems theory, 114 technological, 10, 70, 73, 74, 103, 126, 220, 232, 240 Integrated Pollution Prevention and Control Directive (1996), 169 integration. See European integration Intergovernmental Negotiating Committee (INC), 55 Intergovernmental Panel on Climate Change (IPCC), 21, 54, 73, 74, 96, 188, 189, 215, 217, 229 First Assessment Report, 56 Fourth Assessment Report, 71, 146, 188, 270 Second Assessment Report, 62, 187 Special Report on Emissions Scenarios (SRES), 216, 245 Third Assessment Report, 146, 147 internal market, 11, 54, 69, 132, 167, 191, 194, 200, 236, 241, 246 in energy, 106–8, 109, 112, 120, 204 programme, 57, 114, 151, 152 International Energy Agency (IEA), 216 Ireland, 86, 90, 110 Presidency of the EU, 90

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Index issue leaders, 262 Italy, 86, 93, 118, 147, see also Berlusconi, Silvio emissions from, 8, 56 Presidency of the EU, 56 Japan, 132, 188, 220 joint implementation, 62, 126 provisions in the Kyoto Protocol, 127, 129 Joint Research Centre, 11, 172 Kyoto Conference of the Parties EU’s preparations for, 62–3, 83, 85–6, 88, 92 Kyoto Protocol as a driver of EU policy, 65–6, 67–8, 72–3, 86–7, 130, 131, 139, 188, 205–6, 259 emission reduction targets under, 65 EU compliance with, 95–6, 199, 265–6, 267 EU ratification of, 68, 69, 255 EU’s role in the negotiation of, 6, 65 ‘saved’ by the EU, xvi, 7 US decision not to ratify, 67 land use, 220, 239, 243, 246 effects of EU policies on national planning practices, 154 Member States guard sovereignty over, 160, 237 Large Combustion Plant Directive (1988), 58, 84 lead negotiators. See issue leaders leadership points in the EU, 262 legislation (EU) implementation costs of, 169 rationalisation of, 72, 170 legitimacy. See also European Union, fragile legitimacy of as an evaluation criterion, 17, 33, 213 input-oriented, 48, 272 output-oriented, 48, 272 levels and scales, dilemmas of. See governance dilemmas liberal intergovernmentalism theory of, Linking Directive (2004), 202, 256 and supplementarity, 96, 129 Lisbon process. See Lisbon Strategy Lisbon Strategy, 70, 170, 188 Lisbon Treaty, 72, 262 Luxembourg, 63, 86, 94 Maastricht Treaty, 42, 132 environmental powers of, 10 political opposition to, 9, 60, 191 ratification of, 43, 68 mainstreaming, 153, 154, 159, 160, 198, 257 as main element of EU adaptation policy, 146, 150, 156, 161, 236 of adaptation into water policy, 167–83 Majone Giandomenico, 42 mal-adaptation, 153, 158, 159, 183, 197, 237, 271, see also adaptation market-based instruments, 33, 77, 99, 116, 117, 126, 205, 231, 257, see also modes of governance

281

Member States. See also National Allocation Plans, see also cohesion states Central and Eastern European, 75, 90, 91, 94, 95 differences in GDP between, 83, 87 leader-laggard dynamics among, 57, 60, 63, 73, 84, 85, 91, 113–14, 147–8, 149, 155, 187, 199 Southern, 172 Merkel, Angela, 74, 191, see also Germany migration, 153–4, 239 Millennium Ecosystem Assessment, 215 mitigation as primary policy objective, 161, 162, 194, 217, 270 costs of, 71, 94, 100, 247, 272 definition of, 20 integration into cohesion policy, 151 integration with adaptation policy, 162–3, 207, 243, 271–2 relationship to adaptation, 155, 239–40, 245, 272 required by UN Framework Convention on Climate Change, 147 modes of governance, xvii, 16 emissions trading scheme in relation to, 135–6, 140, 195 hierarchical, 16, 32 market-based, 16, 32 mix between, 33, 35 network-based, 16, 33, 35 soft, 75, 257 monitoring mechanism, 59–60, 90, 197, 206, 257–8 Monnet Method. See decision making procedures (of the EU) Montreal Protocol, 54, 55, 267 Moravcsik Andrew, 44, 45 multi-level governance. See European Union (EU) (as a system of multi-level governance) national adaptation strategies. See adaptation policy National Allocation Plans, 74, 129, 132 and Kyoto targets, 130, 133 Commission review of, 128, 129, 130, 138 effect of industry lobbying on, 137, 139 lack of coherence between, 130, 133 negotiated enforcement (norm of). See enforcement Netherlands, The, 9, 56, 57, 63, 66, 85, 86, 94, 134, 148, 149, 175, 177, 199, 267 Presidency of the EU, 58, 63, 84, 85, 90, 148, 202 promotion of EU adaptation policy by, 148 new public management, 14 Nitrates Directive (1991), 169 non-trading sectors, 74, 87, 137, 139, see also Effort Sharing Decision (2009) Noordwijk meeting (1989), 199 no-regrets policies, 55, 180 definition, 77 normative power, 10 nuclear power, 141 Obama, Barack, 76, 189, 231 election of, 75 oil crises, 53, 105, 107, 191

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282

Index

OPEC, 62 Open Method of Coordination, 36 Organisation for Economic Cooperation and Development (OECD), 4, 150, 220 ozone depletion, 9, 39, 54, 55, 69 peer review as a soft mode of governance, 257 Pierson, Paul, 46 Poland coal dependence of, 235 emissions from, 8, 70 policy agenda. See agendas policy choices. See governance dilemmas policy effectiveness. See effectiveness policy entrepreneurs, i, 40, 148. See also European Commission and emissions trading in the USA, 126 and the development of emissions trading in the EU, 131, 138, 205 influence of, 190, 192 policy exercises, 230, 245 and policy games, 222–4 and policy scenarios, 225–6 findings from, 243 methods of, 214 on burden sharing in the EU, xviii, 20, 213, 225 policy making in the EU, 5, 13, 19 linear-rational models of, 17 policy objectives. See problem framing policy problems different types of, 30 policy scenarios, 213, 217–22, 224–5, 226, see also policy exercises policy style, 34 policy theory, 195, 260 Portugal, 57, 86, 93, 106 precautionary principle, 7 Presidency of the EU. See Council of the European Union problem. See also competence (impact on problem framing) problem framing, xvii, 15–16, 30–1, 32, 35, 38, 42, 46 alternative versions possible, 35 and free trade, 38, 40 and the Stern Review, 71 and vested interests, 35 problem structuring, 222 process-centred theories (of the EU), 47 application to EU climate policy, 202–6, 209, 259 summary of, 45–6 product standards, 38, 40, 72, 258 public attitudes towards deeper European integration, 9, 43, 48, 160, 208, 247 awareness of pollution, 31, 168, 170 participation, 31, 34, 171, 180, 182 public–private partnership, 238 ratification of international agreements by the EU, 201, 257, 263

redistributive policy, 33, 34, 196, 208 referenda, 48, 71, 191, 272 regulatory harmonisation, 16, 120 Regulatory Method. See decision-making procedures (of the EU) regulatory state EU as an example of, 19, 40, 92, 178, 208 renewable electricity grid access for, 109, 117, 118, 121 share of overall consumption, 104 sources of, 104 renewable electricity policy Directive (2001), 67, 104, 109, 110, 118 renewable energy as solution to three interconnected problems, European Council agrees target for, 110 push and pull strategies, 115 research and development, 105 share in the EU energy mix, 104 Renewable Energy Sources (RES) Directive (2009), 76, 104, 120 implementation and enforcement of, 118 key features of, targets under, 104, 110–11, 116 research and development. See renewable energy Ripa di Meana, Carlo, 58, 202 resignation of, 59, 60 risk management. See floods river basin authorities, 178 River Basin Management Plans, 170, 171, 176 ‘climate check’ of, 155, 177, 179–80, 182, 183 implementation of, 177, 180 river basin(s), 170, 176 as the most ‘natural’ level for water policy, 175 authorities, 170, 176, 179, 180 uncertain climate impacts on, 177, 182 Russia, 71 EU climate diplomacy with, 68 ratification of the Kyoto Protocol, 67, 68, 132 Sarkozy, Nicholas, 191 shipping emissions from, 4, 7, 69 Single European Act (1987) environmental provisions of, 43, 53, 57, 59, 168 single market. See internal market sinks. See carbon sinks soil protection as an area of synergy between mitigation and adaptation goals, 154, 207, 272 Solana, Javier report on the international security dimension of climate change, 153–4 solidarity (norm of) among Member States, 42, 154 solidarity fund as negotiated in the climate-energy package (2008), 76, 193 Solidarity Fund, 100 arguments for the reform of, 151, 158, 237

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Index as an instrument of last resort, 195, 197, 264 criticised by the Committee of the Regions, 158 disproportionately benefiting richer Member States, 179 establishment of, 148, 160, 178, 256 Southern Member States, 169 sovereignty, 39 Spain, 57, 86, 93, 94, 106, 147, 148 emissions from, 8 stabilisation target, 59 as trigger for policy development, 57, 84, 187 EU’s adoption of, 56, 58, 84, 201, 255 national pledges as the basis for, 91, 188 state aid rules, 128, 155 state-centred theories (of the EU) application to EU climate policy, 198–202, 203, 209, 259 summary of, 44–5, 198 Stern Review on the Economics of Climate Change, 71, 73, 121, 188, 271 on barriers to adaptive capacity, 152 Stockholm Conference (1972), 52 Structural Funds, 42, 58, 176 structuration, theory of, 14 structure. See agency subsidiarity (informal norm of), 43, 55, 60, 61, 72, 156, 169, 180, 181, 187, 208 and adaptation policy, 162, 236 and level and scale dilemmas, 43 supplementarity and Article 17 of the Kyoto Protocol, 96 and the Effort Sharing Decision (2009), 96 lack of clear definition of, 129 Sweden, 56, 62, 63, 66, 85, 86, 92, 105, 108, 110, 113, 114, 134 targets and timetables EU’s preference for, 55, 70, 230 taxation. See also carbon taxation, see also carbon/ energy tax proposal limited EU competence on, 12, 138, 200, 262 Thatcher, Margaret, 13 theories of the European Union. See process-centred theories (of the EU), state-centred theories (of the EU) timing and sequencing dilemmas. See governance dilemmas tipping elements, 271 Toronto Conference (1988), 54 Toronto target (1988), 55 Toronto Target (1988), 54 tradable green certificates, 75, 114, 115, 116, 117, 121 compared to feed-in tariffs, 116, 117, 119–20 proposed EU-wide scheme, 109 transport, 3, 7, 58, 68, 70, 74, 145, 220, 238 EU’s difficulties with demand management measures in, 268 steady rise in emissions from, 67, 73, 94, 268 Treaty of Rome, 168 Triptych Approach, 63, 85, 89, 93, 94, 98 origins of, 63, 90 troika. See Council of the European Union

283

unanimity rule, 37, 38, 39, 69, 72, 131, 138, 201, 257 undifferentiated integration (norm of), 43, 193, 203, 234, 238 United Kingdom, 56, 60, 62, 63, 86, 93, 148, 155, 175, 177, 199, 261 adaptation policy and, 149 Climate Impacts Programme (UKCIP), 216 climate leadership shown by, 61, 71, 74, 257 emissions from, 8, 64, 65, 84, 86, 110, 187, 200 emissions trading in, 127, 134, 135, 139, 140 ‘gratis’ reductions made by, 10 Presidency of the EU, 71, 86, 148, 202 United Nations Environment Programme (UNEP), 52 General Assembly, 3 United Nations Framework Convention on Climate Change (1992), 6, 201, 259 and the prevention of dangerous climate change, 271 both mitigation and adaptation required by, 147 EU’s compliance with, 59, 187, 199, 265 EU’s ratification of, 60, 86 EU’s role in negotiating, 7, 9, 89, 200 US role in negotiating, 59 United States of America, 6, 9, 59, 61, 66, 189, 220, 259, 265, 269, see also Bush, George, see also Obama, Barack, see acid rain programme, 126 Kyoto Protocol and the, 68, 127, 132, 231 United Nations Framework Convention on Climate Change and the, 61, 62 Urban Waste Water Treatment Directive (1991), 169 vehicle emissions mandatory reductions proposed in climate-energy package (2008), 75 regulation of, 11, 64, 205 voluntary agreement with car manufacturers to limit, 10, 64, 67, 73, 208, 257, 265 veto players, 41, 47, 138 veto points, 262 Villach Conference (1985), 53 voluntary agreements, 33, 35, 131, 135 and the EU emissions trading scheme, 127–8 rarity at EU level, 19 Wallström, Margot, 68 waste as a non-trading sector, 74 declining emissions from, 72 Directive on the landfilling of, 67, 188 Water Framework Directive (2000), 151, 167, 170, 171, 255, see also River Basin Management Plans and integrated water resources management, 173, 174 as an exercise in ‘multi-modal governance’, 178 implementation of, 155, 172, 177, 179, 180, 182, 236 key provisions of, 170–1 lack of consideration of quantity issues in, 171, 172, 173 static definition of water quality within, 182 water resources management, 174, 175 EU competence over, 181 integrated, 170, 173, 175

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Index

water scarcity and drought Communication on, 152, 172, 174, 181 development of policy on, 171–2 wicked problems, xvi, 4, see also climate change, as a wicked problem definition of, 4

World Climate Conference First, 52 Second, 56 World Energy Outlook. See International Energy Agency (IEA) World Health Organisation (WHO), 11