‘Harder’ soft governance in the European Energy Union

ABSTRACT

In 2016, the Commission proposed an ambitious governance strategy in order to further the transformation of the European energy system towards the Unions’ 2030 climate and energy targets. Therein the EU adopted the Regulation on the Governance of the Energy Union in 2018 to harden its otherwise soft governance. This contribution firstly aims at characterizing the ‘hardness’ of this soft governance. The analyses showed the introduction of harder elements to soft governance to at least a certain extend. Secondly, it explains the degree of hardness from actor-centred institutionalism perspective by analysing the trilogue of the co-legislators and the Commission. The analysis shows a successful entrepreneurial role of the Commission in those questions where it was backed by the European. The Parliament performed strongly due to powerful support of its joint committee, experienced negotiators and a wide majority voting in the plenum. In contrary, the Council showed a divided opinion in many points and was confronted with a weak presidency during the dialogue. As a result, harder elements were introduced in questions, where Commission and Parliament argued along the same lines and could even go beyond the Commissions’ proposal, where Parliament and Council found points of common interest.

KEYWORDS:

• Energy policy
• governance
• European Union
• soft governance

1. Introduction

The launch of the Energy Union by Jean-Claude Juncker, former president of the European Commission, marked an effort to accelerate the transformation of the European energy systems (European Commission, 2016, Fischer & Geden, 2015; Knodt, 2020; Schlacke & Knodt, 2019; Szulecki & Westphal, 2014) and is seen as a ‘watershed moment for EU energy policy’ in the literature (Szulecki et al., 2016, p. 550; see also Eikeland, 2011; Maltby, 2013; Wettestadt et al., 2012). The effort was backed by the Paris agreement that led the European Union to implement a more ambitious climate and energy targets. The 2030 targets formulate the transformation goals in an ambitious way (Ringel & Knodt, 2018). By 2030, the EU pursues the targets to reduce EU greenhouse gases by 40%, cover a minimum share of 32% final energy consumption by renewable energies, and increase energy efficiency by a minimum of 32.5% (Council of the European Union, 2018a). These ambitious European targets are facing limited EU competences at the European level. The Lisbon Treaty, Article 194 TFEU, defines the common objectives of the European energy policy, such as the internal energy market, security of supply, promotion of energy efficiency and renewable energies, as well as the interconnection of energy networks at the European level. Competences concerning the energy mix of member states remain at the national level.

At the same time, energy policy is characterized by a high degree of politicization because of rising cleavage between the Visegrád group including Romania and Bulgaria (striving for security of supply as main goal) on one side and a group of Northern / Western member states (striving for sustainability as main goal) on the other side (Fischer, 2014; Knodt, 2018; Szulecki et al., 2016). The debates started after the accessions of the Central and Eastern European member states to the EU. Due to disputes over gas deliveries between Ukraine and Russia (2006) and between Belarus and Russia (2007), as well as the Central and Eastern European member states’ strong dependence on Russian gas and oil. The cleavage became obvious in the discussion about the 2030 framework for the EU energy policy in 2014. On one side, the Visegrád group, plus Bulgaria and Romania under the leadership of the Polish government, insisted on national sovereignty over decisions regarding their national energy mix, as well as a limited role for the EU and thus, energy security as the overriding priority. On the other side, member states such as Germany and Denmark led a group of environmental and climate-friendly EU member state governments and pushed for ambitious sustainable energy targets (Fischer, 2014, p. 2f). As a consequence of increasing disputes and in contrast to the 2020 target situation (da Graça Carvalho, 2012; Helm, 2014; Liobikienė & Butkus, 2017), EU member states have been unable to agree upon binding national targets in the areas of renewable energy and energy efficiency in order to reach the European targets by 2030.

In order to successfully achieve the European targets despite missing competences and issues of national commitment, the European Commission came up with an ambitious governance strategy in 2016 (Knodt, 2019; Knodt & Ringel, 2017, 2018). At its core, the Commission presented the Regulation on the Governance of the Energy Union (Governance Regulation, Regulation (EU) 2018/1999) which entered into force on 24 December 2018 as a key element of the legislative package presented in November 2016 under the title ‘Clean Energy for All Europeans’ (Ringel & Knodt, 2018; Turner, 2015; Turner et al., 2015; Umpfenbach, 2015).

The Commission proposal of the Governance Regulation provoked a scientific debate on the capacity of the EU to get leverage over their recalcitrant member states in energy transformation issues under the heading of ‘harder soft governance’ (Knodt & Ringel, 2017, 2018; Oberthür, 2019; Ringel & Knodt, 2018). Meanwhile, the debate has broadened and other policy fields, as well as organizations, are addressed when asked how to strengthen enforcement in soft governance arrangements (see introduction of this issue).

This contribution follows the debate with a look at the decision-making process, as well as the final outcome, of the Governance Regulation. It aims at characterising the ‘hardness’ of the soft governance introduced by the Governance Regulation and explaining its emergence. Thus, the research question of the contribution is twofold. As a first step, we ask to what degree the soft governance approach in the European energy policy had been hardened through the Governance Regulation. Secondly, we ask how to explain the degree of hardness of the soft governance within the Governance Regulation found by the first research step. The contribution does not aim to analyse the effectiveness of harder soft governance, as the Governance Regulation is still in its very first implementation phase. After introducing the analytical framework and the methods (Section 1), it develops an analytical and methodological framework for the two research questions. Section 2 presents the analysis of the new governance-system introduced by the EU in December 2018 and carves out the degree of hardness of the ‘harder soft governance’, referring to the categories designed in Section 1. In Section 3, the analysis contributes to the understanding of the degree of hardness of the final Governance Regulation, which was shaped in the trilogue by the Commission, the European Parliament (EP) and the Council. Section 5 wraps up the main arguments and draws some general conclusions.

2. Analytical and methodological framework

In order to answer the twofold research question formulated in the introduction, we will first develop indicators for harder soft governance to be able to detect harder elements. This endeavour draws from the literature on soft governance in the EU, especially the Open Method of Coordination (OMC), as well as the debate in international law on hard and soft law.

In general, the dichotomy between hard and soft governance is used to characterize policies within the European Union. Hard governance, in this way, is characterized by legally binding decisions and enforcement. The main instrument of hard governance is legislation. Non-compliance can be sanctioned and is used in areas where the EU exerts exclusive or shared competences, as in environmental policy. Soft governance, on the other hand, is voluntary by nature and instruments commonly used are recommendations, guidelines, target setting and diffusion of information (Anderson, 2015; Deganis, 2006; Mattocks, 2017; Schmid & Kull, 2005; Tholoniat, 2010). Non-compliance is not sanctioned. The EU uses this mode of governance in areas where competences remain at the national level (Blomqvist, 2018, p. 267f). Thus, implementation of soft governance, to a high degree, depends on the engagement and will of the member states (de la Porte & Stiller, 2018, this issue, Schaefer, 2004) and has often led to suboptimal outcomes (Hartlapp, 2009; Knodt & Ringel, 2017; Knodt & Stoiber, 2010; Linsenmann & Meyer, 2002). The public policy community only distinguishes between hard policy tools (standard legislation) and soft tools (Jordan et al., 2005). Besides this basic distinction, looking at EU soft governance, we can detect the great variation. The analysis of soft governance in different policy fields has led to the insight, that since the Commission gathered first experiences with soft governance in the 1990s in the course of the European Employment Strategy (EES) up to the Stability and Growth Pact, known as the European Semester, a huge variety of soft governance partly incorporating harder instruments within EU governance can be detected. As such, the borders between hard and soft governance became blurry (Graziano & Halpern, 2016), leading to the conclusion that it seems reasonable to use a continuum from harder to softer governance instead of a dichotomy (Blomqvist, 2018; Linsenmann & Meyer, 2002; Trubek & Trubek, 2005, 2007). Thus, harder soft governance should not be conceptualized as a hybrid type of governance, but ‘hardness’ should be understood as a one-dimensional measure to come up with different degrees of hardness (Abbott et al., 2000; Falkner et al., 2005; Trubek & Trubek, 2005, 2007).

The literature on this phenomenon at the international level has already systematically analysed different degrees of hardness. The debate is dominated by scholars of international law and focuses mainly on aspects of ‘legalization’ and ‘delegalization’ (Terpan, 2015), labelled as hard and soft law (Peters & Pagotto, 2006). In order to detect hard and soft law, three dimensions have been proposed: obligation, precision and delegation. Obligation in this literature refers to the fact whether a norm is legally binding or not; precision indicates how precise a rule is described and delegation designates to the possible delegation of authority to implement the norm (Abbott et al., 2000). The community of EU scholars has not come up with an approach to characterize the degree of hardness of soft governance. Nevertheless, there are descriptions of harder elements throughout different policy fields (Knodt & Ringel, 2017; Linsenmann & Meyer, 2002; Van der Veer & Haverland, 2017) that can be used to develop indicators in an inductive way. Even if theoretical categories of the law scholars are helpful to come up with a classification, an exclusive use of the categories of obligation, precision and delegation, in the way Oberthür (2019) deploys them to analyse harder soft governance, is not sufficient, as it ignores the fact that harder and soft governance, with the emphasis on the governance aspect, is a much broader concept than the term hard and soft law in International Relations. The governance term focuses on more than legal norms and rules and incorporates the whole process of soft governance, including different actors as characterized above. Thus, harder elements can address the legal norms, as well as the iteration process, monitoring and evaluation procedures including actors involved within the process. In addition, the categories from international law have to be adapted to the European context, as will be shown, for example, in the case of the category ‘obligation’ (see below).

Having said this, we will develop indicators deductively and inductively, that will serve as a framework to evaluate the degree of hardness of soft governance the Energy Union set up in the Governance Regulation:

The first indicator is obligation as one of the categories used to differentiate between hard and soft law in international relations (Abbott & Snidal, 2000). Obligation in this literature refers to the question whether a norm is legally binding or not. Although, obligation should be defined here in a different and more slender way. As soft governance arrangements within the EU are legally non-binding, the degree of obligation depends on the precise wording within a regulation or directive. For example, a harder obligation would ask the member states to follow the Commission’s recommendations to ‘utmost account’, whereas a softer formulation, such as ‘due account’ or ‘account’, would be appropriate. Despite this nuance of obligation, the legal nature of the arrangement would still qualify as legally non-binding.

Closely linked to the degree of obligation, is if a justification of non-compliance by the member states is required. The formal requirement to justify their reaction/non-reaction on the policy recommendation of the Commission would qualify as ‘harder’ soft governance.

In order to define the degree of hardness of soft governance, the precision dimension of the soft law literature is also of interest to the EU context. The question is how unambiguously a rule or a target is described (Abbott et al., 2000; Terpan, 2015, p. 73). A target could be described precisely with a number (e.g. X% of something), or imprecisely as ‘a contribution’ to something. A more precise formulation would harden the soft governance.

The process of soft governance strongly relies on the public debate of member states’ efforts to reach commonly agreed targets and objectives. Thus, blaming and shaming is one of the core elements of soft governance. The degree of opportunities to do so depends on the possibility to debate the national strategies, Commission rankings, or recommendations in public (de la Porte & Stiller, 2018, this issue). Thus, the question that remains is how many platforms, arenas, or opportunities for such debates are established. ‘Harder’ soft governance would explicitly insert platforms or arenas for ‘blaming and shaming’ to a higher degree which exerts the usual reporting by member states and the Commission.

As soft governance arrangements are highly dependent on the will of member states, the strong role of a third party actor at the higher level is crucial (de la Porte & Stiller, 2018). The category of the role of third parties explicitly exceeds what is describes under the category ‘delegation’ in the soft law literature, where delegation refers to the possible delegation of authority to implement the norm (Abbott et al., 2000). We would enlarge this definition and point out that the delegation can target the full authority to implement, but also can include instruments which rely on only partly transfer of authority or delegation of accompanying measures. Such a strong third party actor, as the European Commission in the case of the EU, can try to push member states not willing to support the European goals and targets by ambitious surveillance and use of all available instruments. ‘Harder’ soft governance would imply the possibility to exert such a role for a community actor. For ‘harder’ soft governance, third parties could be equipped with enforcement instruments.

As soft governance is not binding by nature, the possibility to introduce direct sanctions is limited. Nevertheless, if agreed by the member states, direct sanctions such as financial penalties can be introduced to ‘harden’ soft governance arrangements. Beside direct sanctions, enforcement could be introduced to soft government arrangements by linking them with policy fields that have sanction potential through financially relevant instruments.

The European Semester uses indirect sanction by policy coupling, linking the European Semester to the European Structural and Investment Funds (ESIF). The ESIF Regulation relates the access to funding to the economic governance according to the Commission recommendations within the framework of the European Semester. Thus, the compliance with the Commission recommendations within the European Semester by a member state is a condition to access ESIF resources (Van der Veer & Haverland, 2017). The introduction of such indirect sanctions by policy coupling would qualify as ‘harder’ soft governance.

These indicators, developed to characterize the degree of hardening of soft governance, will be used to analyse the energy governance laid down in the Governance Regulation.

To categorize the harder soft governance of the governance regulation according to those indicators, we used content document analysis as one of the basic techniques of qualitative research, especially its summative technique (Mayring, 2010), which has a very low level of interference made by the researcher (Früh, 2011).

Addressing our second research question, we will use the concept of actor-centered institutionalism by Mayntz and Scharpf (1995). It assumes that social phenomena are to be explained as the outcome of interactions among intentional actors, and that ‘these interactions are structured, and the outcomes shaped, by the characteristics of the institutional settings within which they occur’ (Scharpf, 1997, p. 1). Institutions are formal and informal rules that ‘stimulate, enable or also restrict [the] context of action’ of actors (Mayntz & Scharpf, 1995, p. 43). For our analysis, we will concentrate on the negotiation process within the trilogue, which can be characterized as distributive bargaining as interaction mode (Scharpf, 1997, p. 126). Co-legislators (Council & EP) have a strong interest in achieving an acceptable result, while acting within a ‘compulsory negotiation system[s]’, meaning that each party can exercise a veto (Scharpf, 1994, p. 29) as the trilogue is taking place in the shadow of co-decision as a compulsory negotiation system. The trilogue has been described as an elaborate process of aggregation and negotiation of preferences from the EP, the Council, and the Commission which encompasses three different layers of negotiations (political, technical and bilateral), both in inter-institutional and intra-institutional fora (Roederer-Rynning & Greenwood, 2015, pp. 1153, 1161). The institutional setting of the trilogue gives the EP a leverage advantage over the Council by ‘control over logistic arrangements, the advantage conferred by numbers in full political trilogies’, and the fact that the EP members are accustomed to political negotiations, in contrast to civil servants of the Council, who must come to terms with the limitations of the rotating Presidency and the legislative involvement of the European Council (Roederer-Rynning & Greenwood, 2015, p. 1161). Within the Council, the ‘core-executives’ have developed a common will to find a solution, which might counterbalance the rotating Presidency disadvantage (Dyson, 1999). Especially weak Presidencies suffer political leverage from the European Council, especially from ‘sherpas’ (Roederer-Rynning & Greenwood, 2015, p. 1160) – political advisors of member states’ governments. Within the EP, the delegation is developing an ‘esprit de corps’, as Roederer-Ryyinning and Greenwood call it during the Trilogue, which hampers the Council to lobby part of the EP delegation (2015, p. 1165). The trilogue has often paused negotiations in order to carry out intra-institutional and bilateral deliberation. This implies, that back-coupling with the intra-institutional opinion formation plays a prominent role. Thus, the intra-institutional coherence of the position makes a difference. In addition, using the supranationalism argument, it is obvious that a precondition for strong supranational governance is unity within and between supranational institutions. Thus, we assume that the Commissions is focused on ‘the development of vertical integration as a major raison d’être’ (Wettestadt et al., 2012, p. 70) and tends to overstretch its competences in a cautious but permanent way (Puntscher-Riekmann, 1998, p. 121). The same holds true for the EP, which mostly acts as a supporter of further integration.

A context factor can be seen in the embeddedness of the Governance Regulation decision-making process within the implementation process of the Paris Agreement. This strong interdependence of international commitment on one hand, with climate and energy policy in the European multilevel system on the other, has an impact on European governance. The mechanisms can be seen in the pressure to implement the Paris agreement within the EU and member states, as well as in the possibility to enhance legitimacy through the linkage to internationally agreed common norms and targets (Gehring, 2002; Knodt, 2005; Knodt & Jachtenfuchs, 2002; Oberthür & Gehring, 2006; Wettestadt et al., 2012). It is common knowledge that international embeddedness could be used, particularly by the Commission, to strengthen its role and position in the negotiation process (Knodt, 2005).

We start from the assumption that the Commission as a supranational institution proposed a harder soft governance approach in order to gain leverage over the member states’ energy transformation process and wanted to strengthen its role in EU energy governance, as well as support an ambitious climate- and energy policy. The EP could either act in favour for harder governance to back-up the Commissions’ community beneficial solution, or defend national interests, depending on its intra-institutional setting. The Council, in order not to weaken national autonomy rights, have been very reluctant to harden the soft governance approach. As mentioned above, member states show heterogeneous interests when it comes to European and national climate- and energy transition ambitions. We also assume that the Presidency has an impact on the negotiations within the trilogue.

In the second step of analysis, we used document analysis combined with qualitative in-depth interviews. Document analysis in this part of the process served two purposes. Firstly, it allowed us to track the changes and development of the Governance Regulation as we compared the Commission proposal with the opinion of the EP and the Council, as well as the final regulation after the trilogue, allowing us to analyse the different positions of the European institutions. Secondly, it helps us to generate additional interview questions and thus, was used in an interactive and complementary way (Bowen, 2009). Document analysis was carried out by content analysis as described above.

The analysis also draws on 18 interviews conducted in the project ENavi December 2016 to June 2019, with members of the European Commission DG Energy, the EP, national ministries, and Permanent Representation to the EU. Interviews were semi-structured, asking for the content and procedures of the formulation of the Governance Regulation, actors involved in different stages, as well as interests of the institution, and interest conflicts within and among different actor groups.¹

3. Which ‘harder’ soft governance system for EU energy governance?

The analysis of the hardness of the soft governance within the Energy Union in this section will focus on the Governance Regulation (Regulation (EU), 2018/1999) as part of the ‘Winter Package’. This regulation details governance structures and processes for the years after 2020 and aligns the post-2020 energy and climate change reporting. The Energy Union governance can be divided into (a) strategic and long-term energy and climate planning and (b) short term reporting (Ringel & Knodt, 2018, p. 213). The strategic long term energy and climate planning comprises two elements: The first element is the integrated National Energy and Climate Plans (NECPs), which have to be set up by the member states. The NECPs are the main instrument to coordinate member state contribution towards the European climate and energy targets of the 2030 framework. The process works as a horizontal coordination procedures of soft governance and comprises the following steps: (1) A mandatory consultation of national stakeholders and potentially other member states, in terms of regional energy and climate cooperation, as procedure for setting up the NECP; (2) a NECP description of national objectives, targets and contributions in each of the five dimensions of the Energy Union;² (3) an explanation of possibilities for regional cooperation across member states; (4) an account of national policies and measures foreseen to meet these objectives; (5) an analysis of the status quo on the five dimensions of the Energy Union in the given member state, including projections as to whether the existing policies and measures are likely to achieve the national objectives; (6) an assessment of the impact of planned polices to meet the objectives NECP (Regulation (EU), 2018/1999; Ringel & Knodt, 2018, p. 213).

The second element of the strategic climate policy planning is the Low Emission Strategies (LES) covering a 50-year horizon. These strategies include the EU and member states’ commitments towards achieving the greenhouse gas reductions of 80–95% by 2050, in accordance with the objectives of the Paris Agreement (Ringel & Knodt, 2018, p. 214).

Beside the two dimensions of the Governance Regulation, short-term reporting complements the governance. There are two forms of reporting, an annual and a biennial progress report. Member states have to hand in their reports for European Commission evaluation. The Commission issues recommendations on the reports (Ringel & Knodt, 2018, p. 215).

The Governance Regulation provides a soft governance of the energy policy, as it rests on a system of coordination through central goal setting and decentralized implementation responsibilities (Schmid & Kull, 2005). Nevertheless, it contains ‘harder’ elements of soft governance, which can be characterized according to the analytical framework using the indicators developed above:

• Obligation: The Governance Regulation allows for an evaluation of the NECPs to assess if the objectives, strategies and measurements are ambitious enough to fully reach the European 2030 framework targets via the following procedures: (1) a yearly Energy Union report delivered to the European Parliament and Council; (2) an assessment summary of member states progress respective in all coming two-year steps; (3) individual feedback on the implementation of sectoral directives and the energy and climate issues of the regulation (Knodt & Ringel, 2017). Member states have to react to these recommendations to fill ambition or delivery gaps within one year. The regulation formulates that ‘each Member State shall take due account of any recommendations from the Commission in its integrated national energy and climate plan’ (Regulation, 2018/1999, Art. 9, p. 21). This formulation has to be seen as a kind of ‘harder’ element of soft governance, as it stresses the obligation to consider the recommendations as necessary changes to the NECPs. Nevertheless, the formulation could be much sharper to have a higher degree of hardness.

• Justification: The Governance Regulation also contains a compulsion for member states to justify their action and/or non-action. If a member state does not address the recommendation of the Commission, it ‘shall provide and make public its reasons’ (Regulation, 2018/1999, Art. 9, p. 21). This duty imposes the burden of proof on member states and can be seen as a ‘harder’ element of soft governance.

• Precision: The targets of the Governance Regulation, with respect to renewable energies and energy efficiency, are defined precisely and binding only at the EU level through the 2030 targets (Council of the European Union, 2018b). In the case of inconsistencies, insufficient progress of national planning towards the overarching Energy Union objectives, and insufficient ambition of the NECPs, the Commission recommends corrective actions to the member states. As there are no binding national targets for renewable energies formulated to achieve the European targets, the Governance Regulation contains a ‘gap-filler mechanism’. In case of ambition gaps with respect to renewable energies, the Regulation annex provides an algorithm that defines the allocation of the missing percentage points to the member states. This formula addresses the lack of national binding targets and is used by the Commission to address ambition gaps. Although, the algorithm does not apply to energy efficiency objectives (Regulation (EU), 2018/1999). In addition, the Commission has to evaluate the implementation of measurements, and tracks member states’ efforts to increase the share of renewable energy. The national contributions must be complemented by an indicative trajectory for the increase of these forms of energy. The trajectory starts at the level of either the binding national 2020 renewable energy target, or the real value of renewable energy shares in gross final consumption, in the event that the real value surpasses the 2020 target. The regulation foresees achieving three reference points: 18% of the national contribution has to be met by 2022; 43% by 2025; and 65% by 2027. Member states falling below their national reference points will have to cover the gap by implementing additional measures within one year. Energy efficiency shares the same reference dates without a fixed percentage (Regulation (EU), 2018/1999). Thus, the imprecise targets due to missing binding national targets have been specified by the formula and the indicative reference points and values (at least in the case of renewable energies). This adds a harder element to the soft governance for renewable energies but fails to do so in the case of energy efficiency. In particular, the de facto determination of national targets resulting from the formula adds hardness.

• Degree of ‘blaming and shaming’: The Governance Regulation has increased opportunities for ‘blaming and shaming’ compared to the monitoring system of the 2020 targets, as the state of the Energy Union report must currently be discussed with the Parliament and the Council (Regulation, 2018/1999). The EU exerts public pressure through these discourses, combined with the duty to publish all NECPs, reports and recommendations, and could capitalize on the ‘blaming and shaming’ instrument to a higher degree. This newly established area for public discourse can be considered as an increase in the hardness of soft governance.

• Role of third party actor at European level: Within the Governance Regulation the European Commission is installed as a strong third party actor and not only a facilitator. This role is visible in the empowerment of the Commission by the regulation to adopt ‘delegated acts’ subject to the European climate and energy policy (Regulation, 2018/1999). This mechanism opens the possibility of the Commission to adopt new regulation or sharpen existing law, in order to force member states to work towards the European goals. It is a harder element of soft governance, intended to strengthen the role of the Commission in the governance of the energy transformation (Knodt & Ringel, 2018).

The Governance Regulation does not contain direct or indirect sanctions in case of non-compliance. Nevertheless, the Governance Regulation has mildly hardened the soft governance mechanisms. The next section will explain how to understand this outcome by comparing it with the original, ambitious European Commission proposal and analysing the role of the co-legislators.

4. Understanding the degree of ‘harder soft governance’ in EU energy governance

In 2016, the Commission proposed the Governance Regulation to the co-legislators, the EP, and the Council. In the 2018 trilogue, all three actors negotiated about the final version of the Governance Regulation, which then was decided by the EP, as well as the Council, and entered into force on 24 December 2018. This section will analyse the negotiation process along the harder soft governance indicators elaborated in Section 1 and used to classify harder soft governance of the Regulation in Section 2. The positions of the three decision-making bodies, as well as the outcome of the trilogue, are summarized in Table 1.

Table 1. Comparison Commission, European Parliament and Council approach and final Governance Regulation.

	Commission proposal 2016	EP trilogue mandate	Council general approach	Governance Regulation final version 2018
Obligation	MS shall take the utmost account of recommendations	MS shall take the utmost account of recommendations	member state shall take due account of (non-binding) recommendations	member state shall take due account of (non-binding) recommendations
Justification	MS ‘shall provide justifications’ where it deviates from recommendations	MS ‘shall provide reasons’ where it deviates from recommendations/ ‘shall provide and make public its reasons’ (appears at different Articles)	– Deleted	MS ‘shall provide its reasoning’/ ‘shall provide and make public its reasons’ where it deviates from recommendations (appears at different Articles)
Precision	if MS’ contributions in NECP are insufficient  …  in case of renewables COM takes into account ambition of individual MS	if MS’ contributions in draft INEKP are insufficient  …  in case of renewables COM assesses individual ambition by a formula in the Annex, based on objective criteria	if MS’ contributions in draft NECP are insufficient  …  in case of renewables COM assesses individual ambition by a methodology, established by implementing act, based on objective criteria	if MS’ contributions in draft NECP are insufficient … in case of renewables COM assesses individual ambition by a formula in the Annex II, based on objective criteria
Degree of ‘blaming and shaming’	public is given early and effective opportunities to participate in, and to be consulted on, the preparation of NECPs /involvement of social partners	public is given early and effective opportunities to participate actively in, and to be consulted on, the preparation of NECPs/enlarged the social partner category and towards long-term strategy; added a multilevel stakeholder dialogue platform	annual public debate of the progress achieved by the Energy Union by the Council	public is given early and effective opportunities to participate in, and to be consulted on, the preparation of NECPs / added part on enlarged the social partner category and multilevel stakeholder dialogue annual public debate of the progress achieved by the Energy Union by European Parliament and the Council
Role of 3rd party actor at EU level	COM is empowered to adopt delegated acts	COM is empowered to adopt delegated acts	changing delegated acts in defined areas	COM is empowered to adopt delegated acts in defined areas
Sanctions	financial contributions by MS to a financing platform managed by the COM, in case of ambition gaps	voluntary financial contributions by MS to an EU renewable energy financing mechanism – no sanction	voluntary financial contributions by MS to an EU renewable energy financing mechanism – no sanction	voluntary financial contributions by MS to an EU renewable energy financing mechanism – no sanction

Source: Council (2017), 2018a; European Commission (2016), European Parliament ( 2017a, 2017b).

The Commission initiated the decision-making process of the 2016 Governance Regulation and proposed a Regulation which exhibited quite some harder elements of soft governance, as will be elaborated below. In interviews with EU officials, interviewees highlighted the interest of the Commission to establish closer relations between the Commission and the member states, within a ‘more close political dialogue’ (see, e.g. Interviews, Council, 24.10.2017, COM, 22.9.2017, MS, 9.11.2017), enabling new structures to bring the Commission into a position with increased leverage, aiming to set up a new governance system that will encompass all dimensions of the Energy Union through ‘an integrated approach and a much stronger political exchange and interaction’ (Interview, COM, 22.9.2017) between the European institutions and the member states. This ‘solid, comprehensive, iterative process’ of the national energy and climate planning and reporting, as well as ‘the dialogue with member states, is seen by the Commission as one of the core issues of the Governance proposal’ (Interview, COM, 22.9.2017) to strengthen the position of the Commission in the political process (Ringel & Knodt, 2019). But the final outcome is not only shaped by the Commission, but also by the co-legislators in trilateral negotiations within the trilogue, as the discussion of the main aspects of the Regulation show.

In case of obligations, the Commission proposed that member states shall take ‘utmost account’ of Commission recommendations in order to harden the soft governance (Commission, 2016). The opinion of the EP called for only using ‘account’, while right-wing nationalists and left-wing forces in the EP, as well as the Visegrád group plus Bulgaria and Romania within the two conservative EP fractions, suggested to water down the formulation to ‘consider’ the recommendations (EP, 2017a). In the Council, Poland (Council, 2017c), Czech Republic (Council, 2017b), and Lithuania (Council, 2017d) also argued for a less binding wording. Here it is obvious that the Council, divided into two main groups, had a very weak bargaining position, as holds true for most of the following disputable questions. On one side, there was a group, or better-tied network of like-minded member states, which strove for an ambitious, harder soft Governance Regulation – such as Germany, Sweden, Finland, and France after the election of Macron. They exerted strong peer pressure and launched a number of joint papers in order to successfully influence the Council position. On the other side, a loose grouping of the Visegrád countries and other changing member states tried to thwart harder elements of the soft governance Regulation (Interview, COM, 25.6.2019). In addition, the Bulgarian Council presidency during the trilogue implemented a rather reserved leadership role and thus weakened the Council position. With regard to the recommendations, the Council stressed their non-binding role but agreed to use the wording of ‘due’ account as a less binding formulation, which entered the final version of the Regulation (Interview, COM, 25.6.2019). The Council also proposed to stress the fact that ‘recommendations have no binding force’, as set out in Article 288 of the Treaty on the Functioning of the European Union (TFEU), which provided compromise with its entry into the final version (Council, 2017). The Council also wanted to explicitly prevent the Commission to insert quantitative information in their recommendation. The Council formulated: ‘Whereas the analysis of the Commission underlying its assessments may contain quantitative elements, the Commission recommendations should remain qualitative in nature and not include quantitative levels of national ambition for the year 2030’ (Council, 2017). This last point did not enter the regulation’s final version, showing that the Council, in particular, emphasized the non-binding character and tried to prevent the Commission from using quantitative hard data for member states recommendations. The Commission in the trilogue acknowledged the no-binding character but plead for an adjective to stress that recommendations had to be taken seriously (Interview, COM, 26.5.2019). All in all, concerning obligations, the trilogue resulted in a less harder soft governance than within the Commissions’ proposal.

With regard to the justification indicator, the Commission proposed a requirement that a member state shall provide justifications if it deviates from recommendations. The Council, with Spain explicitly pushing for no justification requirements in the Regulation, wanted to delete this whole point (Council, 2017a). Nevertheless, there was a strong push from Sweden to insert some sort of justification (Council, 2017f). In addition, the Visegrád group and Romania, who agreed on the term ‘provide reasons’ (Council, 2017e), instead of a justification, if member states were to deviate from recommendations. The EP also suggested the wording of ‘reasoning’ rather than justification. Socialists & Democrats pushed to insert the necessity for making this reasoning public. The EP proposal contained the reasoning in three different articles (EP, 2017b). The final outcome was a takeover of the EP proposal into the Regulation (Council, 2018a). In the case of justification, the final formulation hardened the soft governance of the Regulation, although to a lower degree than originally suggested by the Commission.

The trilogue added a harder element in the category of precision. In its proposal, the Commission inserted linear trajectories for member states in the case of delivery gaps, with regard to renewable energies, in order to monitor the development of the national climate and energy policy and take early corrective action with a base-line of the 2020 targets (Commission, 2016). The EP was more ambitious with regard to this point and argued for binding linear trajectories. Along these lines, the rapporteur of the Environment and Industry (ENVI)/ Industry, Research and Energy (ITRE) joint committee, Claude Turmes (Greens/EFA; rapporteur ITRE), as well as one of the chairs of the joint committee, Jerzy Buzek (EPP) (EP, 2017a, 2017b) were very active. As very experienced negotiators, Turmes and Buzek were backed by a 72% approval of the EP plenum, placing the EP with strong negotiation power. The fact that the Regulation was handled in a joint committee dealing with Energy and environment helped Turmes broaden the later consensus (Interview, COM, 25.6.2019). The Council, in opposition, would have liked to avoid any trajectories, especially with a 2020 target base-line (Council, 2017). The latter point was strengthened by the Visegrád group (Council, 2017e) and France before the presidential election of Emmanuel Macron, as they refused any target monitoring interference from the Commission. After the election, France changed its preferences and supported more ambitious procedures within the Regulation and marginalized the Czech Republic with the backup of the other Visegrád Countries, who proposed alternatives to the linear trajectories (Interview, COM, 25.6.2019). At this point, the Council and EP opinion converged and the agreement of indicative trajectories with three clear reference points for renewables was established (Council, 2018a), providing a slightly harder agreement than the Commissions’ proposal.

The Commission had not made suggestions to eliminate the lack of national renewable energy and energy efficiency targets for member states because the Commission believed that this should be regulated in the corresponding directives on renewable energies and energy efficiency (Interview, COM, 25.6.2019). Both the EP and the Council introduced the idea of having a methodology, or even a formula, for the renewable energy target (introduced by the S&D fraction) to assess the individual ambitions of the member states (Council, 2017; EP, 2017b). As the formula idea was taken up and inserted into annex II of the Governance Regulation, this hardened the soft governance approach by specifying member state targets within the 2030 framework (Council, 2018a) and increased the leverage of the Commission on member state ambitions. At the same time, EP and Council agreed that the introduced algorithm has to be based on objective criteria, taking into account different aspects such as the costs of each member state deploying renewable energies (Council, 2018a). Thus, this precision also limited the scope of action for the Commission, as it is based on quantitative data and does not allow for political estimation. Thus, with regard to precision, co-legislators hardened the Regulation and introduced a limitation of sorts.

In the case of delegated acts, the Council had reservations against this empowerment proposed by the Commission (Commission, 2016). Accordingly, the Council proposed a limitation of possible delegated acts to the Unions Energy and Climate policy framework, energy market developments and new UNFCCC and Paris Agreement requirements (Council, 2017). As the EP was not very interested in this point and had not voted for any amendment, the Council’s version entered the final Regulation.

When it comes to ‘blaming and shaming’ opportunities, the EP and Council enlarged the Commission proposal. The EP stressed that the public is given early and effective opportunities to participate actively in and be consulted on the preparation of NECPs. In addition, it enlarged the social partner category of the Commission by referring to local authorities and relevant stakeholders, as well as introducing a multi-level stakeholder dialogue platform (EP, 2017b). Both points entered the final version. The Council did not accept the stress of an ‘active’ participation or the attempt to amend the long-term strategy process but proposed additional opportunities to debate the NECPs in public. Both the final version and the Commission’s proposal already opened up the possibility for public discourse as NECPs, as well as the recommendation of the Commission that NECPs should be made public. The Council proposed that it ‘will address on an annual basis the progress achieved by the Union and the Member States on all dimensions of Energy and Climate policies as laid out in the national plans for Energy and Climate’ (Council, 2018a). Within the trilogue, the EP accepted this idea but required that the Commission inform the EP and Council, as well as provide the opportunity to discuss the monitoring reports on an annual basis. This right to debate the annual reports was also inserted into the recitals section with reference to the institutional balance of power. Thus, the final agreement within the trilogue hardened the soft Governance of the Regulation. It is obvious that the EP the public dimension was very important in the negotiations (Interview, COM, 25.6.2019). All in all, the additional arenas for public discourse hardened the soft governance proposed by the Commission.

In the category of sanctions, the Commission’s proposal introduced a financial platform for penalties if member states did not want to change national strategies and policies according to the recommendations of the Commission (Commission, 2016). EP and Council changed that quasi sanction into a ‘voluntary’ contribution according to the Council’s formulation (Council, 2018a). The Council additionally added that the financial contribution should be invested in the ‘most cost-efficient renewable project’ (Council, 2017). In the Council, there was a vast majority of the member states for both changes. Only Poland opposed the cost-efficiency attribute to the financial mechanism, as it feared a disadvantage to its regional investment in renewable energies (Council, 2017c). This specification was not made by the Commission or the EP, but against the Polish objection entered the Regulation (Council, 2018a). In this case, EP and Council softened the hard element of financial sanctions of the Commission’s proposal.

5. Conclusions

Years of conflict between member states on the fundamental principles and targets of the European climate and energy policy, the installation of the Energy Union by Jean-Claude Juncker as president of the Commission, as well as the signing of the Paris Agreement of 2015, has increased the pressure on the EU to find a way out of the dilemma of being a front-runner in the fight against climate change but only possessing limited European steering capacity in the energy policy field to force recalcitrant member states to support ambitious European targets. Due to limited competences primary law-based, especially in energy policy, the EU can only partly draw on soft governance to coordinate energy targets agreed at the European level and member states energy and climate policies.

The analyses showed that the Governance Regulation (Regulation, 2018/1999) has to be seen as an attempt of the EU to escape this dilemma and introduced harder elements to soft governance to at least a certain extent. For this finding, the contribution introduced a framework used successfully to analyse the degree or hardness, pushing forward the discussion of harder soft governance started in 2017 by Knodt and Ringel, without yet having a tool to analyse this phenomenon, and bears potential for much more comparative analysis of different degrees of harder soft governance within the EU, especially within the areas of energy- and environmental policy.

By explaining the degree of hardness of the soft governance within the Governance Regulation by the negotiation within the trilogue, the role of the Commission as a policy entrepreneur was carved out. The analysis showed that the Commission was able to play the entrepreneurial role best when backed by the EP, against the Council position. The EP, as such, could play a strong role with its very experienced negotiators and was even more ambitious than the Commission to have harder soft governance in favour of an ambitious climate- and energy policy with regard to some points. On the contrary, the Council could not show a unified approach because of a deep cleavage between member states regarding climate- and energy issues. The coalition around the Visegrád group objected most of the Commission’s proposed harder elements, prevailing on most points because of the weaker performance during the Bulgarian presidency and loss of a strong partner, France, after the election of Macron as president.

Interestingly, the Governance Regulation was hardened beyond the Commissions’ proposal in some areas where the EP and the Council were both pushing for harder elements. In those areas, the final regulation inserted harder elements than the Commission had proposed, but also limited the Commission’s scope. In one case, it was shown that international embeddedness does not always generate opportunities for the Commission to enhance its role, but could also be used to limit its room of manoeuvre. This finding strengthens the argument of Wettestadt et al. (2012), against common assumptions (Knodt, 2005; Oberthür & Gehring, 2006), that the direction of international embeddedness effects is very case-specific (2012). A comparative analysis of different cases within this area would be very fruitful.

Another beneficial area for additional research, beyond climate-, energy-policies and environmental studies, would be to investigate intra- and inter-institutional negotiations within the trilogue in a more detailed and comparative way. Thus, the interplay of committee chairs and rapporteurs in the EP, role of the presidency within the Council, contact with shadow rapporteurs and bi-lateral consultations in addition to official meetings should be analysed.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes on contributors

Michèle Knodt is Professor of Political Science, Jean Monnet Chair (ad personam) and Managing Director at the Institute of Political Science at the Technical University of Darmstadt. She is also Director of the Jean Monnet Centre of Excellence ‘EU in Global Dialogue’ (CEDI), Co-leader of the Loewe-Excellence Centre ‘emergenCITY’, and Co-leader of the DFG Research Training Group ‘Critical Infrastructures’, PI in the Kopernikus Project 'Ariadne - Evidence-Based Assessment for the Design of the German Energy System Transformation' and she chairs the COST Network ENTER (EU Foreign Policy Facing New Realities). She has published widely on the EU, is especially interested in energy and foreign policy and has received research grants from the German Federal Ministry of Education and Research (BMBF), the German Research Council (DFG), the Volkswagen Foundation and the European Commission.

Marc Ringel reads energy policy, energy efficiency and environmental economics as professor at Nuertingen Geislingen University, Germany and as affiliated lecturer at Université d’Aix en Provence/Marseille, France and Vrije Universiteit Brussels, Belgium. As former official with the Directorate General Energy of the European Commission and with the German Federal Ministry of Economics and Energy he continues to be deeply involved in the development and economic assessment of national and European energy efficiency policy frameworks.

Rainer Müller is a research associate at the chair for “Comparative Politics and European Integration” and the Kopernikus Project “Ariadne - Evidence-Based Assessment for the Design of the German Energy System Transformation” at the Technical University of Darmstadt. His research focuses on the coordination of the energy transition in the European Union. His Ph.D. is on European decision-making process during the negotiations on the “Governance of the Energy Union”-Regulation.

Additional information

Funding

This work was supported by German Federal Ministry of Education and Research [Reference: 03SFK4P0, Consortium ENavi, Kopernikus].

Notes

1 Interviews are quoted with the Institution (Commission (COM), Council, and Member State Representatives (MS)) plus the date of the Interview as agreed with the interviewees.

2 (1) energy security; (2) the internal energy market; (3) energy efficiency; (4) decarbonisation of the economy; and (5) research, innovation and competitiveness.