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The literature on policy convergence has identified numerous facets and causal drivers of convergence. Distinguishing four dimensions of convergence (object, benchmark, drivers, and directed process) helps to clarify why and in what form policy convergence may occur (or not). Thus, depending on, e.g., the object of analysis (policy outcome or instruments used), the same empirical case may give rise to opposing assessments. Furthermore, both economic and political drivers are necessary to account for successful policy convergence: economic convergence partly explains why countries may face similar problems and political mechanisms explain why they might choose similar policies to solve a given problem. The paper illustrates the multi-faceted character of convergence for the dynamic field of renewable energy policies in the EU. The empirical results indicate temporary convergence in the case of policy support instrument choices and conditional convergence in terms of renewables shares. However, the results suggest divergence of public R&D subsidies targeting renewables.

To date, biofuels remain the main option for addressing the European Union Renewable Energy Directive’s 10% transport sector target for renewable energy sources. At EU level and at the level of the member states, political support for biofuels has been motivated by expected contributions to the aims of greenhouse gas (GHG) mitigation, security of energy supply, rural development and employment creation. However, the diffusion of mainly agricultural crop-based biofuels has been accompanied by a critical debate on a range of sustainability issues such as land use change impacts or impacts on resource competition. Moreover, biofuels’ cost-effectiveness as a GHG mitigation option has been called into question. Between the two poles of high expectations and multi-faceted criticism, EU biofuel policy has proven a very dynamic policy field, with no small amount of policy uncertainty for market actors. Against the background of negotiations on a recast Renewable Energy Directive, this contribution discusses from an economic theory perspective whether there is a case for continuing a target which supports the use of biofuels and other low-carbon options in the transport sector; and if so, what lessons can be derived from EU biofuel policy so far for its design.

Germany’s large-scale deployment of RES-based power generation has not resulted in a significant decline of its energy-related CO2 emissions. The reason for this emissions trend was the constantly high level of coal-fired power generation in Germany. Consequently, it has been argued that the German coal binge may be the “dark side” of the Energiewende. We point out that this argumentation is flawed. In fact, the increase in coal-fired generation has been strongly driven by developments on international fuel and carbon markets—and not only, if at all, by the phase-out of nuclear and ongoing RES deployment.

With its “clean energy package”, the European Commission intends to shape the legal framework for a European Energy Union for the period between 2020 and 2030. The package is based on the new EU competences in energy policy which the Lisbon Treaty established in 2009. Besides a Regulation on the Governance of the Energy Union, the package comprises seven proposals for revisions and amendments of existing directives and regulations in the energy sector. These are supposed to build a new legal framework for renewable energies, energy efficiency, energy efficiency in buildings, as well as for the electricity market. This contribution gives an overview of the new regulations and a tentative assessment of the package from a legal point of view.

The EU Commission has newly evolved into a leading energy policy actor. At the same time, the Commission’s proclamation of an “Energy Union” depicts a visionary future rather than the current reality: the internal energy market still awaits full integration and the transition towards a sustainable energy system is taking place largely on the national level (e.g., the Energiewende in Germany). To shed some light on this muddled situation, we analyse the Commission’s promotion of the internal market and policy harmonisation/centralisation from an economic perspective along two dimensions. First, on the content dimension, we investigate whether the double challenge of decarbonising the energy system and finalising the internal market exhibits trade-offs. Second, on the form dimension, we outline the benefits of (de)centralising energy policies. For both dimensions, we build on the theory of fiscal federalism to elucidate the normative aspects of the discussion and the Public Choice approach to positively explain the emergence of the current situation. Overall, we find that the normative policy evaluation indeed differs in some respects from the Commission’s positions, while the latter can be well explained via the Public Choice approach.

Germany has embarked on an ambitious project to transform its energy system until 2050—the so-called Energiewende. Some critics contend that the Energiewende imposes unnecessary and avoidable welfare losses due to a lack of integration within the EU. In contrast, these critiques largely miss the point because the asserted lack of integration cannot be pinned on the Energiewende and the welfare consequences of EU-wide integration are less clear than the critiques imply.

In this paper, we analyze the rationale for an energy policy mix when the European Emissions Trading Scheme (ETS) is considered from a public choice perspective. That is, we argue that the economic textbook model of the ETS implausibly assumes (1) efficient policy design and (2) climate protection as the single objective of policy intervention. Contrary to these assumptions, we propose that the ETS originates from a political bargaining game within a context of multiple policy objectives. In particular, the emission cap is negotiated between regulators and emitters with the emitters’ abatement costs as crucial bargaining variable. This public choice view yields striking implications for an optimal policy mix comprising RES supporting policies. Whereas the textbook model implies that the ETS alone provides sufficient climate protection, our analysis suggests that support for renewable energies (1) contributes to a more effective ETS design and (2) may even increase the overall efficiency of climate and energy policy if other externalities and policy objectives besides climate protection are considered. Thus, our analysis also shows that a public choice view not necessarily entails negative evaluations concerning efficiency and effectiveness of a policy mix.

The transition towards renewable energies yields challenges for security of supply, for instance, as regards the need for low-emission backup capacities. This paper explores how the different dimensions of security of supply are affected by the energy transition. In particular, the paper discusses whether the EU’s import dependency with respect to natural gas poses a problem for the transition pathway. Overall, the energy transition implies not only short-term challenges but also long-term synergies for security of supply. Hence, while concerns about security of supply need to be addressed, they do not put the general transition pathway into doubt.

In most European Union member states, natural gas plays an important and increasing role in energy provision to meet the demand for heat, electricity and transport. Nevertheless natural gas is a fossil energy carrier and various countries have started the stepwise transition from a fossil resource base towards a renewable energy-based energy system due to concerns regarding greenhouse gas emissions, energy security and conservation of finite resources. A biogenic substitute for natural gas is biomethane, defined as methane produced from biomass with properties similar to natural gas. It is a promising fuel to support the transition from fossil fuels to renewables and to support the greenhouse gas emissions reduction targets of the different European Union member states. Biomethane can be produced by upgrading biogas (biochemical conversion) or as so-called bio-SNG (biogenic synthetic natural gas) by thermo-chemical conversion of lignocellulosic biomass or other forms of lignin-rich biomass. Biomethane production via biochemical conversion is a widely applied technology. Bio-SNG via thermochemical conversion is currently barely applied in the respective market. At present, there is hardly any cross-border trade in biomethane in the EU. During the phase of implementation of the biogas and biogas upgrading industry, each member state started to develop its own regulations, standardisations and certifications. For a working European-wide biomethane trade, unified framework conditions like standardisations and certifications have to be established. This chapter gives a brief introduction to biomethane followed by an overview of biomethane use in several European countries. Afterwards, certification, which is a precondition for biomethane trade, is introduced and possible schemes enabling biomethane trade are presented, followed by an outlook.

The European Union has decided to increase its target for greenhouse gas emissions reductions to 40% by 2030, compared to 1990 emissions levels. In contrast, the target for the share of renewable energy sources in electricity consumption—even though increased to 27%—will not be binding anymore for Member States beyond 2020. This is in line with many existing assessments which demonstrate that additional RES policies impair the cost-effectiveness of addressing a single CO2 externality, and should therefore be abolished. Our analysis explores to what extent this reasoning holds in a second-best setting with multiple externalities related to fossil and nuclear power generation and policy constraints. In this context, an additional RES policy may help to address externalities for which first-best policy responses are not available. In addition, we also argue that an unambiguous, “objective” economic assessment is impossible because (i) policies may have a multiplicity of impacts, (ii) the size of these impacts is subject to uncertainties and (iii) their valuation is contingent on individual preferences. Thus, the eventual decision on the optimal choice and design of climate and energy policies can only be taken politically.

This volume addresses the interactions between Germany’s energy transition and the EU energy policy framework. Neither the prospects of the proclaimed “Energy Union” nor the future of Germany’s energy transition can be fully understood without analyzing the manifold relations between the two. Germany, as an early mover in the transformation of energy systems towards renewables, may hold relevant lessons for the transformation on the EU level. The German energy transition, in turn, needs to be explored within the EU context, because the latter reacts to and influences national energy policies. Specifically, the EU Commission aims to steer Member States’ policies towards a more harmonized transition approach. Overall, there are areas of friction as well as synergetic potential between hitherto mostly national sustainability policies and the EU’s push towards harmonized policies within a common market. The overall aim of this book, then, is to identify the most critical issues involved in order to avoid the pitfalls and seize the opportunities of the interactions between national and EU level policies.

This chapter presents the legal framework for the electricity transmission line planning process at European level and highlights where there is need for reform. The legal competence for ‘energy policy’ (Article 194 TFEU) was only introduced in 2009. It is not an original EU competence detached from national planning competences, but rather the Union ‘shall contribute to the establishment and development of trans-European networks’. Consequently, although the two European legal instruments ‘Projects of Common Interest (PCI)’ and the ‘Ten-Year Network Development Plan (TYNDP)’ fulfil the tasks of achieving transparency and coordination within the European planning groups, they do not empower the EU to enforce its energy policy interests against the interests of the member state concerned. Whilst the methodological approach for the TYNDP is well-organised in that scenario planning and monitoring are used, there is still need for improvement in the integration of the public into the planning process, the overarching coordination, and the legal enforcement tools.