The Making of the European Energy Market: The Interplay of Governance and Government

Abstract

This case study asks whether delegated, sectoral governance by private actors and arm’s-length agencies enhances policy efficacy or does sectoral governance require a shadow of hierarchy cast by government actors to deliver desired policy results? EU energy market liberalisation shows that sectoral governance successfully mobilises regulatory expertise, capacity and legitimacy and delivers workable norms and rules for market transactions in a complex policy environment. However, it also finds that the efficacy of sectoral governance mechanisms is constrained by distributive conflicts between different national jurisdictions and sector interests. If deadlock occurs, the European Commission as governmental principal casts a double shadow of hierarchy over sectoral governance agents: the threat of further legislation and of EU competition law. While both instruments enhance policy efficacy, they cannot substitute for the intrinsic rule-making qualities of sectoral governance: governance and government play complementary roles in the policy process.