Book Review – The Dynamics of EU External Energy Relations: Fighting for Energy
The Dynamics of EU External Energy Relations: Fighting for Energy by Francesca Batzella. London and New York: Routledge 2018. 176 pp., £115 hardcover 9781138631755
As a researcher on the subject, it is always a great pleasure to see a new publication addressing European energy policy, especially with regard to the development of legal provisions concerning the external dimension of the European Union’s energy policy framework. Energy policy has gained much attention in recent years. This is not only due to the European Commission’s various efforts to liberalise European energy markets – a policy domain that successfully resisted efforts for deeper integration until the 1990s – but also due to geopolitical realities posed by energy suppliers leveraging their own political goals affecting energy security and the smooth working of the markets. Hence, European energy policy, the external dimension of the internal energy market, and the role of the Commission in influencing legal provisions, represents a thoroughly topical research agenda, worthy of closer examination. Dr Francesca Batzella’s book, The Dynamics of EU External Energy Relations: Fighting for Energy, does exactly that by examining how much power the Commission has in influencing energy policy outcomes and satisfying its own interests vis-à-vis the interests of EU Member States
The book starts with an overview of key developments of European energy policy and introduces the research question, before setting out the theoretical and methodological framework of this comprehensive piece of research. Based on Rational Choice Institutionalism, Batzella utilizes the so-called Principle Agent Model (PAM), which conceptualizes the Commission as an agent of the Member States – the ‘principals’ - who enter into a contractual agreement with the agent, to generate beneficial outcomes and maximise their own utility. However, and as predicted by the PAM, the Commission will try to deviate from the preferences of the Member States to satisfy its own preferences. Four empirical cases, which have each significantly influenced the external dimension of the internal energy market, are analysed to investigate this puzzle. The final chapter wraps up the empirical findings and expounds on the theoretical and methodological contributions of the research.
The empirical section is based on four hypotheses, informed by the PAM, and tested against the four case studies, two of which are internal legal provisions and the other two are external representations in international fora. The first case study assesses the legislative process towards an information exchange mechanism regarding intergovernmental agreements (IGAs) between Member States and third countries in the field of energy. Decision 994/2012 was conceived to enhance solidarity in the Union and improve transparency among Member States, and between Member States and the Commission. The decision should allow the Union to take coordinated action regarding such agreements and ensure that IGAs comply with Union law when negotiated, effectively securing energy supply. The decision was a highly contested provision, as Member States saw IGAs as a sovereign matter and were reluctant to cede any powers to the Commission.
The second case study investigates Directive 2009/73/EC, which introduced common rules for the internal market in gas and which was part of a broader package aimed at liberalising the internal energy market (a process that started in the 1990s). The most significant part of the proposal was the so-called ‘Ownership Unbundling’ (OU) that endorsed the obligation to separate production and supply activities from network operations. The Directive came with a strong external dimension, as the unbundling obligation affects not only EU companies but also companies outside of EU borders, who want to participate in the internal market. Indeed, this second case represents a provision where Member States preferences varied significantly: some preferred OU, whilst others opted for an alternative method (with Member States retaining national control over the system), and the rest endorsed the status quo. Due to the diverse structure of national energy markets, and different levels of market-integration / connectedness with the rest of the EU market, some Member States did not see the OU as the appropriate means to deliver higher market liberalisation and, thus, strongly opposed the Commission’s proposal.
The Energy Community Treaty (EnCT) forms the basis for the third case study and was conceived to export the EU energy acquis, on grounds of a legally binding framework, to create an integrated market for energy with third countries from South East Europe (SEE) and the Black Sea, respectively. Interestingly, the EU, representing the Member States, is party to the EnCT, while individual Member States are not. In this case, preferences of Member States and the Commission were aligned, emphasising that all actors supported the creation of a common energy market with SEE.
Subsequently, the fourth and final case study assesses the Energy Charter Treaty (ECT), which established a multilateral legal framework for cross-border cooperation. It was signed in 1994 by the European Community and 50 states. The ECT established a multilateral framework for the promotion and protection of trade, investment, and the transit of energy goods. Preferences between Member States were not aligned; energy producers and traders, together with countries that are highly dependent on energy imported from Russia, deemed the ECT important, which cannot be said of countries less dependent on energy imports. However, some Member States shared the Commission’s preference for a legal framework for trade and investment. Across all four case studies, the empirical analysis conducted is both extensive in breath and depth and offers an impressively comprehensive investigation of the material.
A significant contribution of Batzella’s book is owed to the fact that her empirical analysis is based on a solid theoretical framework. Moreover, it is enhanced by her conceptual model, which goes beyond the ‘classic’ PAM and introduces two important ontological contributions.
Firstly, it distinguishes between interests and preferences of actors, in this case the Commission and the Member States. Whereas the former are conceived as being fixed and exogenously given (the fundamental goals that change little), the latter are derived from the former and are endogenously given (the specific policy choices that actors make in order to maximise their own benefits). This differentiation is particularly useful as the existing literature makes little or no distinction between these analytically distinct concepts. Preference alignment can be homogenous and heterogeneous, either between the Member States themselves (horizontal), or between Member States and the Commission (vertical). The homogeneity / heterogeneity of the preferences in turn influences whether the Commission deviates from Member States’ preferences or not.
Secondly, the existing PAM literature sees the agent (the Commission) as either following or deviating from the preferences of the principal. Thus, it assesses the agent’s behaviour from a dichotomous perspective. However, Batzella introduces a more fine-grained account of agent behaviour. In this sense, the book has much to offer regarding a deeper understanding of the PAM and enhances our empirical understanding of external energy policy. It thus elevates itself from overly descriptive accounts – as sometimes found in the literature – towards a more comprehensive assessment on both a theoretical and empirical level.
Batzella’s book is a formidable example of rigorously conducted research, from both a theoretical and empirical standpoint. To my knowledge, it is the only contribution that provides a thorough account of different Member States’ and Commission preferences regarding the four cases under scrutiny. It is thus an invaluable source for scholars who work on energy policy and those who want to acquaint themselves with an enhanced Principle Agent Model.
Ingmar Versolmann is a PhD researcher in Politics & International Relations at the University of Edinburgh and a UACES scholar. His research analyses the driving factors towards deeper integration in European energy policy and the European Energy Union. His research interests include Historical Institutionalism, EU external relations, energy markets and energy security. Contact: iversolm@exseed.ed.ac.uk
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