Understanding the Differing Governance of EU Emissions Trading and Renewables: Feedback Mechanisms and Policy Entrepreneurs

FNI Report 2/2010. Lysaker, FNI, 2010, 34 p.

This paper presents a comparative study of two central EU climate policies: the revised Emissions Trading System (ETS), and the revised Renewable Energy Directive (RES). Both were originally developed in the early 2000s and revised policies were adopted in December 2008. While the ETS from 2013 on will have a quite centralized and market-streamlined design, the revised RES stands forward as a more decentralized and technology-focused policy. Differing institutional feed-back mechanisms and related roles of policy entrepreneurs can shed considerable light on these policy differences. Due to member states’ cautiousness and contrary to the preferences of the Commission, the initial ETS was designed as a rather decentralized and ‘politicized’ market system, creating a malfunctioning institutional dynamic. In the revision process, the Commission skillfully highlighted this ineffective dynamic to win support for a much more centralized and market-streamlined approach. In the case of RES, national technology-specific support schemes and the strong links between the renewables industry and member states promoted the converse outcome: decentralization and technology development. Members of the European Parliament utilized these mechanisms through policy networking, while the Commission successfully used developments within the global climate regime to induce some degree of centralization.