Ambitious climate policy through centralization? Evidence from the European Union

Abstract

Finding the right balance between centralization and decentralization is a struggle as old as the European integration project itself. Centralization, defined as a shift of competences to a higher and more aggregated governance level, offers a number of advantages, including greater policy consistency and fewer market barriers and competitive distortions. However, it also comes at the price of reduced flexibility to accommodate national circumstances, which in turn can undermine domestic political support. As the evolution of climate policy in the EU illustrates, the degree of centralization does not necessarily correlate with the level of policy ambition with respect to climate protection. Tracing the role of centralization debates in the context of emissions trading and of policies to promote renewable energy, this article shows shifting preferences about centralization over time, and attempts to explain the causes of these changes and their implications for climate policy. It also addresses a recent trend towards greater regional cooperation, which is reflected in the emerging notion of a European Energy Union. But it also concludes that generalizations about the impact of centralization – or a lack thereof – fall short of the nuances in each individual case.Policy relevanceFollowing its recent enlargement, and faced with changing economic and political circumstances at the national level, the EU must once again confront difficult questions about the adequate balance between centralized and decentralized approaches as it seeks to operationalize the climate and energy targets for 2030. The need for greater ambition in climate protection, unilateral measures taken by Member States to induce greater greenhouse gas mitigation in the power and industry sectors covered by the EU Emissions Trading Scheme, divergent strategies to stabilize electricity markets as these integrate growing shares of variable renewable energy sources, or the ongoing discussion about a European Energy Union all underscore the need for improved understanding of the implications of centralization. This article draws on past experiences with central climate and energy policies to explain factors affecting the decision for or against centralization, as well as the effects of such decisions.