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Changing prioritieson ‘climate action’ and energy policyin Europe as they have emerged
during 2014
A strategic assessment
Gwythian Prins

7 February 2015

THIS IS A REPORT IN FINAL FULFILMENT OF A CONTRACT JOINTLY FOR THE
INSTITUTE OF ENERGY ECONOMICS OF JAPAN.

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SUMMARYOverview
1. 2014 was a time of unusual and comprehensive flux in European affairs. It saw
the abrupt end of the post‐soviet era 1991‐2014. It therefore concluded theperiod since 1989, and especially since the late 1990s, when all current
European ‘climate action’ policies were conceived and formed. We are in adifferent age now. The evidence today is that much is now different both fromwhat was the case in January 2014 and from what official statements are stillsaying. Nothing in the period 1989‐2014 should be assumed to predicteither in general or in detail what will happen in 2015 onwards. This meansthat the Paris 2015 UNFCCC meeting will occur in circumstances and underpublic and political priorities that are quite different from those which themoving circus of its professional governmental and NGO activist participants
assume, as the failure to find a workable consensus at the Lima COP20, alreadyshowed.
2. This flux arose in part from domestic political changes. Prominent was arrivalof a new President of the European Commission. Mr Juncker was appointed ina new way by interposition of the European Parliament: it superceded thepowers of the nations. A radical change from previous priorities andprocedures has occurred with the Juncker Commission. It remains to be seen ifMr Juncker will be removed from his new office because of allegedly corruptpractices in Luxembourg while he was Prime Minister; but the direction of hisCommission is increasingly clear and may continue even without him.
3. Volatility occurred also because of global events. Some are the result of pasterrors by Europeans but now beyond their direct control; some are fall‐out
from the bitter civil wars fracturing the Muslim ‘umma. Respectively, theserelate to Russia’s return to open hostility following the annexation of Crimea on
21 March and to naked contests of force in energy geo‐politics as a result ofSaudi action from September to squeeze higher cost oil producers (Iran andRussia in that order) and to protect OPEC market share by depressing the oilprice. By the end of December, oil prices had halved and have dipped to below$60 bbl. This is the eighth slump in oil price of more than 30% in the last thirtyyears. The ‘peak oil’ rhetoric favoured by many ‘green’ organisations is deflated.
Other contextual international events are a consequence of European decisions.
Above all these relate to the rolling and deepening crisis of the single Europeancurrency. The Greek election result in January 2015 returning a strong anti‐
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austerity government opens what many expect to be the beginning of the end‐
game for the single currency. The Euro weakens still.
4. Facing 2015, Germany, Spain, France and the UK are the pivotal Europeanstates on climate and energy issues, each for different reasons; and there areuncertainties about how events will unfold in each. But in two other groups ofstates ‐ in Scandinavia and the eastern rim ‐ matters seem more predictable.
The report identifies underlying trends and discusses forthcoming potential
trigger‐points to provide a secure foundation for assessing future events.

In a little more detail…
5. There are two background special factors that make assessment of EU
politics complicated: the imbalance between its ambition and its power and therefusal to recognise openly the consistent record of failure in the declaredobjectives of EU ‘climate action’ policy to deliver the predicted results. These
explain the deeper reasons why success is inherently unlikely in the future even
if the policies were applied as intended, which they were not and are not.
6. The evidence supporting that judgement is in the three centre‐pieces of EU‘climate action’ policy of the last two decades each of which is reviewed indetail: attempts at carbon trading have failed; ‘green growth’ promised andpredicted has failed to materialise – and these two polices have contradictedeach other – and the series of declared ‘climate action’ polices (20:20:20; 2030)
have been subtly changing in unacknowledged concession of failure. Notably,
the ambition to impose ‘binding legislation’ on sovereign nations has been
quietly side‐lined in the 2030 ‘climate action’ policy adopted in October 2014.
7. It is broadly a copy of the NAMA tactic that has been followed in theUNFCCC conferences since the Durban COP and it is already plain that NAMA
(now called INDT) will be the strategy for Paris following the predictable failureof the Lima COP20 to change the established pattern of these conferences(“deadlock”; extra time; “breakthrough”; toothless ‘Saviour Document’)
8. However, the return of open hostility in relations with the RussianFederation and with its autocratic president in particular, and the Saudi repriseof the September 1985 tactic to regain control of world oil markets havecatapulted energy security issues to the top of the EU and national Europeanagenda.

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9. The decisive Republican victories in the mid‐term elections of November
have consigned President Obama to ‘lame duck’ status. Lacking democratic
mandate via Congress will further impede his attempts to force domestic‘climate action’ by executive order. As he strives to secure some sort of legacy
from his presidency, his inept concessions to China – which conceded nothingof importance whereas Obama promised much – followed by his recklessspeech in Brisbane on 14 November, insulting the Australian Government at thetime of the G‐20, has further weakened his international standing andcommensurately strengthened that of China and India (as became plain at theLima COP20) as well as further stiffening Congressional opposition to his
initiatives, including his recent priority to international ‘climate action’ matters.
Obama’s Australian speech also poses Japan with difficult choices about friends
at a time when its own renewables policies, notably extravagant FIT for solar, isin turmoil, its thermal coal and LPG imports rising and its econ0my falling backinto recession.
10. Closely related because of its world‐wide ramifications is the on‐goingenergy‐geopolitical civil war between Muslims in the Middle East. Saudi Arabia,
supported quietly by Egypt, Jordan (and Israel), are on the one side. A motley
combination of Islamists stands on the other. There is Iran (running Hezbollah
and, with help from Putin, Assad). There is the Muslim Brotherhood and allies(Qatar, Turkey, Hamas). There are the Da’esh (ISIL) and Al Qaeda (sometimes
fighting each other, sometimes not). At the moment, the Iranian pursuit of thenuclear weapon is the epicentre of danger to the whole post 1945 world order aswell as the region. But intellectually weak geo‐political analysis in Washington
and Europe means that the fact that (for the moment), the Iranians also fight
our enemies, the Da’esh, makes them seem to be our friends. This has given
credence to a P5+1 process which looks likely to produce the worst outcome,
namely a leaky and vague diplomatic instrument that cannot prevent breakout.
If that happens, all bets for global security are off – which is another subject.
11. In light of all the above, how should we interpret the radical moves by the in‐coming Juncker Commission? It is plain on the face of the facts that the new
Commission has returned to more traditional priorities. The escalating
Eurozone crisis, the renewed Cold War with Russia and European energy
security are the top priorities. ‘Climate action’ has been swiftly relegated to alow priority despite any statements or appearances to the contrary. Ms ConnieHedegaard and the ‘Climate Action’ DG have disappeared. On the record of4

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actions, ‘Climate Action” is very much the junior issue in Commissioner MiguelArias Cañete’s portfolio. The concerted ‘Green’ opposition to his appointment
was simply swept aside.
12. The current international scene is so full of tensions and contradictions thatno firm predictions about what may happen in particular countries can bemade except the likelihood that formally declared policies are not likely totranslate into what they intend. The report therefore responds to the nature ofevents by offering a deeper sort of analysis. It highlights the forces that areimportant in assessing national directions in three groups of European states.
Particular attention is paid to various national positions on nuclear power inthe energy mix.
13. Paradoxically, the more reliable political and business opportunities toadvance the agenda of innovating clean and affordable energy for all (as spelled
out in The Vital Spark in 2013) probably lie outside the countries which havebeen core enthusiasts for ‘climate action’ in the past and they do not lie in
revolutionary but in evolutionary energy technologies, and not in a principal
preoccupation with decarbonisation.
13. Emerging difficulties in the German economy as a result of its energiewende
policies; the implications of the hollowing out of Spanish democracy –accelerated by the Syriza victory in Greece; increasingly firm resistance to EU‘climate action’ and energy policies in Poland; the consistent priority of geo‐
political over ‘climate action’ priorities in the Czech Republic and Slovakia;crisis in the British energy market at a time of historic uncertainty in British
politics and problems in the previously stable environment of the French
nuclear industry at a time of crisis in French politics are particular points tonote.
14. The report is silent on recent developments in Japan but was written on theassumption that Prime Minister Abe was likely to obtain a renewed mandate in
the snap election in December (as in fact occurred) and that, broadly as has
happened in Europe, Japan’s return to recession will probably reduce thepolitical appetite for gesture ‘climate action’ policies and increase the interestin reliable if less flamboyant practical export opportunities as well as
restoration of least‐cost energy and energy security of supply. The firm
response of some Japanese power companies by refusing to destabilise theirgrids with uncontrolled subsidy‐driven solar electricity surges and METI’s
reported resistance to German levels of deployment subsidy via feed‐in tariff
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which have exacerbated this additional energy problem for Japan, supports thatview.

15. Key findingsStructural and policy priorities have been radically changed at the EU.

Russia, Russian challenge to the European security order, energy
security and the Eurozone crisis are the top issues

‘Climate action’ has been rapidly demoted to a low priority

The 2030 EU ‘Climate Action’ plan was adopted but is unenforceableThe fall in oil and gas prices has destroyed the business cases based on‘Peak Oil’ assumptions for much unconventional energy investment. Itundermines many national energy plans in Europe (eg the UK DECC;
the Scottish Nationalists; the German energiewende above all).

Subsidy and system management costs for uncontrollable generators(wind and solar) are rocketing and face consumer price backlash in UK

But Germany is the key pivot state in the 2014‐15 European crisis
although there is more uncertainty about political dynamics in core
enthusiast states than in the Scandinavian and eastern EuropeanperipheryThe energiewende experiment is poisoning the German economy but willcontinue. Germans probably have the highest public tolerance for cost

The Eurozone crisis, and social stress in southern Europe, will probably
dominate European politics in early 2015. A hollowing out of democracy
is occurring across Europe, North and South, with profound implicationsThe need for security of supply will continue to trump ‘climate action’ ineastern Europe. Poland and the Czech Republic led the successful
neutering of the EU 2030 ‘climate action’ policy in October.

The influence of Denmark and of environmental NGOs on EU affairs
waned in 2014 and does not look likely to revive to 2000s levels. To theirvery public fury, the structural changes in EU procedures have locked
environmental NGOs out of their previously privileged access to policy‐
shaping.

6Contact : report@tky.ieej.or.jp