National institutional systems’ hybridisation through interdependence. The case of EU-Russia gas relations

International audienceThe interdependencies between the EU and its external natural gas suppliers and Russia question the transformative impact of interdependence linked to hybridization processes. Our approach combines theories of institutional change, and French Regulation Theory. These approaches lead to a new look to characterize the way in which the confrontation of two regulatory systems (EU and Russia) is resolved today. The importance of the European market leads however to an adaptation of the Russian governance model for gas exchanges. But it also implies a transformation of the European model. The competitive norm acts as a lever to bring about hybridization of regulations in the Russian gas sector and EU energy policy

Island in the neoliberal stream: energy security and soft re-nationalisation in Hungary

Since 2010, the Hungarian Government has increased its stake in the country’s energy sector at the expense of foreign-owned energy companies. This ‘soft re-nationalisation’ is driven by both exogenous and endogenous factors, especially the country’s external dependence on gas imports, its previous commitment to a European model of energy liberalisation, public dissatisfaction with high energy prices and the emergence of an ‘illiberal state’. The case of Hungary’s ‘soft re-nationalisation’ yields two central findings. Firstly, conceptually, there is a need to move away from just focusing on the radical re-nationalisation of energy in the form of resource nationalism, and instead understand re-nationalisation as consisting of a broad spectrum of state interventions into the energy market. Secondly, Hungary’s recent ‘statist turn’ in the energy sector highlights inherent tensions within EU energy policy as it threatens attempts to establish a fully liberalised and marketised energy market across the continen

The power of civilizational nationalism in Russian foreign policy making

The article draws upon theories of identity to understand Russian foreign policy towards Ukraine since 2000. The article argues that contemporary Russian foreign policy can be best understood as an articulation of ‘civilizational nationalism’ which relies on the myth of cultural superiority. The focus is on not only treating Russia as an imperial power, but on the cultural claims that this relies upon and its configuration within changing historical ideas of ‘Russianness’. Since the Orange Revolution, Russian presidents have accused Ukraine of following anti-Russian policies. This has been aided by a discourse of ‘civilizational nationalism’ where Ukraine is described as being part of a ‘Greater Russia’, rather than as a sovereign territory. This article analyses how imagined civilization and greatness of Russian culture is driving foreign policy making towards the Ukraine. Rather than an external territory, Ukraine is constructed as a ‘little brother’ which renders interventions legitimate

Building new gas transportation infrastructure in the EU – what are the rules of the game?

Although the EU has called over the past decade for gas pipeline promoters to ‘respect EU rules’, these rules had either not been established or were not clear. It was not until March 2017 that a legally binding regulatory framework for the development of incremental (new) pipeline capacity was established, in the form of the Capacity Allocation Mechanisms Network Code (CAM NC). However, the CAM NC did not resolve all the problematic issues fully, as prior to its adoption many new pipelines had been developed under a patchwork of TEP exemptions, Open Season procedures, and Intergovernmental Agreements. In addition, the CAM NC left important regulatory specificities for the TSOs and NRAs to decide, thus enabling them to develop capacity allocation methods which differ across the EU. Thus, the problem of the regulatory treatment of incremental capacity – created under diverse frameworks with varying degrees of consistency – has not been fully resolved at the EU level and uncertainty remains in respect of its future treatment. This problem has been exacerbated by the ongoing politicization of the EU regulation, particularly in respect of all Russian pipelines but especially Nord Stream 2. This paper concludes that those pipeline projects initiated prior to the CAM NC’s entry into force should proceed under the rules which were in place at the time of their initiation. Although the EC and the regulatory authorities might be tempted to request some changes in respect of their regulatory treatment – particularly where this differs from what would have been required under the CAM NC – this temptation should be resisted, as further changes would unnecessarily increase (already very significant) uncertainty and complexity. This complexity, together with the lack of clarity associated with the regulatory framework for incremental capacity, suggests that very few major new pipelines will be built in the EU in the future, apart from TAP and EUGAL and the Baltic Pipe, as well as those pipelines needed for connecting the second string of Turkish Stream with European markets. This is because it will be much easier for those wishing to bring additional gas to Europe to do so via LNG import terminals.</p

‘Finding a home’ for global LNG in Europe: understanding the complexity of access rules for EU import terminals

Entering the 2020s, LNG sellers are operating in an increasingly oversupplied global market, thus facing the problems of whether and where they will be able to ‘find a home’ for their cargoes. Given that the EU is the only liquid gas market with regulated third party access (TPA) to LNG import terminals, the sellers will always be able to place a cargo in the EU for which no other market can be accessed unless the owner/buyer agrees, and hence will need to know and understand the TPA rules for EU LNG import terminals. As no dedicated LNG-specific EU regulation exists and the Third Gas Directive and Gas Regulation 715 left a significant degree of discretion to the regulated terminal operators in respect of capacity allocation mechanisms, UIOLI procedures, and tariffs, enabling the operators to choose different ways of compliance, or apply for an exemption. This has resulted in a situation where the LNG import terminals in the EU are governed by a patchwork of terminal codes developed by their operators, the NRA guidance, and the exemptions, thus making it extremely difficult for an LNG seller to understand the rules. This paper concludes that the development of a dedicated stand-alone LNG-specific regulatory framework at the EU level, which could build on and bring together the LNG-related provisions of the Third Gas Directive and Gas Regulation 715, differing terminal codes and exemptions, would establish a level playing field and simplify the sellers’ task of accessing the terminals. Further legislative initiatives on the part of the EC to amend the regulatory framework for LNG import terminals cannot be ruled out, as well as further actions by NRAs in respect of already granted (and new) exemptions. These could take the form of either developing a new LNG network code, amending the existing CAM NC (which does not apply to LNG terminals at present), and/or amending the existing exemption decisions

The TEN-E Regulation: allowing a role for decarbonised gas

The original TEN-E Regulation, adopted in 2013, established the regulatory framework for the development of cross-border energy infrastructure within the EU. Following the publication of the EU Green Deal in 2019, the EC proposed to revise the Regulation to facilitate the access of renewable and low carbon gases to the energy system by enabling hydrogen infrastructure to benefit from PCI status and thus faster permitting and EU financial assistance. This paper analyses the final Regulation as well as the evolutionary journey from the EC Proposal to the final Regulation. The paper finds that the final Regulation enables and supports ‘hybrid’ decarbonization, which would allow renewable hydrogen to be maximized while low carbon hydrogen is allowed to play a role which allows for renewable hydrogen to be phased in more quickly, thus helping to meet the EU GHG emissions reduction targets. Nonetheless, it remains unclear whether low carbon hydrogen will play an important role in the European energy transition. The combination of (a) natural gas being politically unpopular and expensive, (b) too few CCUS projects making substantial progress, (c) the EU’s unequivocal political preference for renewable hydrogen, makes low carbon hydrogen progress less likely. Overall, the Regulation provides a positive contribution towards a regulatory framework for the decarbonization of the EU’s natural gas infrastructure. It allows more time for doing so compared to the original EC Proposal and provides additional instruments for developing low carbon hydrogen. But it also confirms that unless low carbon hydrogen projects receive financial support and make significant progress before 2030, they are unlikely to happen at all. In fact, these projects would only be possible if investment is made now – rather than in the mid-2020s when Renewable and Natural Gases and Hydrogen Acquis is expected to be adopted. As private investors might be reluctant to invest and EU Member States might be reluctant to support these investments (at least until such time as the Acquis provides more clarity) and as the Regulation does not envisage significant EU financial support, any major low carbon hydrogen contribution towards meeting EU 2030 GHG emissions reduction targets is far from assured

Russian gas exports to Europe: unravelling the misconceptions

Russian gas exports to Europe, and Soviet exports before them, have been controversial since they started, in the late 1960s. As the largest single component of European gas supply, they are the subject of ongoing security and geopolitical controversies. However, much of the commentary on these controversies is subject to misconceptions which, in the 2010s, have been compounded by growing regulatory complexities, particularly in relation to pipeline infrastructure