Abstract
Public interest values which were once pursued via public ownership are now embodied in the regulation of privatised energy industries. Together with security of supply, ‘environmental sustainability’ is a touchstone concept in the design of the European Union (EU) energy policy programme. Both goals are especially well served by the development of renewable energy sources. State regulation is indispensable to spur a market shift towards greener sources and public finances play a decisive role in fulfilling this objective.
This paper draws on the contemporary debate on electricity market regulation in the EU with resource to public finance mechanisms to promote a sustainable development path. This kind of public regulatory intervention faces several challenges. On one hand, the regulatory environment in the European Union has undergone significant changes. These concerned the means and terms of public action and the rationale informing public action, i.e., the applicable concept of ‘public interest’. On the other hand, some goals brought forward in political programmes enclose potential conflicting rationalities. Achieving the targets set by the EU for renewable energy requires strong public financial intervention, whilst competitive market rules demand careful restriction of state aids.
Careful handle of the current regulatory toolbox is required to conciliate potential conflicting goals within energy policy. Two different regulatory frameworks place particular constraints on EU member States intervention via tax instruments to promote renewable energy sources, namely the one aimed at spinning energy market competition and the one directed at stimulating more sustainable energy consumption. This paper analyses how EU regulation deals with the referred conflict taking as reference point the Directive n. 2003/96/CE, 27.10.2003, on energy taxation, and the Community guidelines on State aid for environmental protection.
Claudia Dias Soares
"Regulating utilities: Using public finance mechanisms to promote sustainable energy markets in the European Union"
Paper presented in the Frontiers of Regulation. Assessing Scholarly Debates and Policy Challenges University of Bath, September 7th-8th 2006. ECPR Standing Group on Regulatory Governance
Full paper available here: paper Bath 29.08.2006.doc (upf.edu)
