A Common Renewable Energy Policy in Europe?

A Common Renewable Energy Policy in Europe? Explaining the German-Polish Policy Non-Convergence

Andrzej Ancygier & Kacper Szulecki

ESPRi Working Paper No. 4 – April 2014

Abstract While the European Commission envisaged the creation of a common European energy market by , it is quite clear that the provisions of the Lisbon Treaty protecting national sovereignty over energy policies and mixes are here to stay. We have, however, seen some visible moves towards EU-wide energy governance coordination through regulation and steering bodies. What about policy convergence? While some authors argue that we are seeing policy convergence in the specific area of renewable energy (regulated by the Climate and Energy Package targets), we investigate a case of clear non-convergence: Germany and Poland. This article analyzes the different channels and mechanisms of policy diffusion and tries to explain why, despite the geographic proximity and compatibility of energy systems, Germany and Poland have so far been very different in their renewable energy policy choices. We focus on four mechanisms discussed in the political science literature: learning, emulation, competition and coercion, and show why the Polish government is largely ignoring the developments taking place in the neighboring country and following its established pattern of development in the power sector. We show the limits and potentials of each mechanism, and conclude with some policy implications for both neighboring countries. Contact: Andrzej Ancygier, Hertie School of Governance E-mail: [email protected]

Citation Ancygier, A.; Szulecki, K. 2014. A Common Renewable Energy Policy in Europe? Explaining the German-Polish Policy Non-Convergence. ESPRi Working Paper No 4. April 2014. ©

4 - All rights remain with the authors.

ESPRi Working Paper Series – ISSN 2083–7011

Editor: Kacper Szulecki, ESPRi – www.espri.org.pl Language editing: James Longbotham

Acknowledgements This research is part of a larger project conducted by the working group Governance and Policy Aspects of Climate Change in the framework of the Dahrendorf Symposium 2013, hosted by the Hertie School of Governance, German Institute for Economic Research (DIW Berlin) and the London School of Economics and Political Science, supported by the Mercator Foundation. The authors would like to thank Zbigniew Karaczun, Andrzej Kassenberg, Karsten Neuhoff, Anna Pobłocka, Lidia Puka and Julia Szulecka as well as the remaining members of the group and participants of the workshops in Berlin and London where preliminary results were presented.

1. Introduction So far, the idea of a common energy policy, building on the principle of energy solidarity as well as the assumed priority of an Integrated European Market (IEM) for power and gas, has remained rather vague. Although we see regional market integration initiatives – such as that in the North-Western European region or in Central Eastern Europe – and although we witness an increase of coordination in European energy governance through steering institutions such as Agency for the Cooperation of Energy Regulators (ACER) and European Network of Transmission System Operators for Electricity (ENTSO-E), the sovereignty over energy policies remains on the national level. This is guaranteed by Article 194 of the Treaty of Lisbon, and reflects the generally dominant mindset in thinking about energy policy, which is considered a vital element of national politics, and member state governments are unlikely to let it go in the foreseeable future. This does not mean that national energy policies are not becoming more alike, that is, increasingly homogenous. The phenomenon of policy convergence in different areas has been a major object of interest for political scientists for some decades already. In the complex realm of energy policy, one could expect most policy convergence to take place in the sector of renewable energy sources (RES). This is due to the fact that the RES sector is influenced not only by the regulatory and steering institutions in energy policy, but it is also seen as a tool of climate policy. While we have seen some convergence in that area, recently we seem to be witnessing a shift in the opposite direction. The question remains – why is policy convergence occurring between some countries and not between others? This article investigates policy convergence and the process of policy diffusion – or lack thereof – in the case of Germany and Poland in the renewable energy sector. Such diffusion is expected for a number of reasons. First of all, especially since 2007 the political relations between these two countries have been better than ever before. In addition to bilateral cooperation in a number of areas, there is an increasing collaboration at the European level. Secondly, both countries enjoy very close economic relations, with German investors willing to invest in Poland – including in the Polish energy sector. Thirdly, Germany and Poland are neighboring states, and geographic proximity has long been considered a major enhancer of policy diffusion (Obinger, Schmitt & Starke, 2013, p. 115). Finally, a close cooperation leading to policy diffusion would be in the interest of both countries: German policymakers have already understood that the energy transition in Germany (Energiewende) can fully succeed and achieve its economic and environmental goals only if it is scaled up into a pan-European transformation project. Poland at the same time could take advantage of the lessons learned in Germany and avoid certain mistakes in moving towards a diversified power mix and thus limit the costs of transition towards a renewable energy-based power system in the long-term. What we are seeing in reality, however, is anything but convergence. We thus try to explain this case of non-convergence, tracing the major mechanisms of policy diffusion present in the theoretical literature, and investigating the reasons for their ineffectiveness. The analysis proceeds as follows: next section provides an overview of the theoretical literature on policy diffusion, transfer and convergence, on which we build to design our own analysis of non-convergence between Germany and Poland. We describe four policy diffusion mechanisms that receive the most attention in the literature. We then provide some historical background on renewable energy policy in the European Union (EU), and review existing analyses of renewable energy policy convergence. The fourth section gives an overview of the RE policies of Germany and Poland, contextualizing our analysis. Subsequently we provide the empirical evidence for the presence or

absence (and the reasons for that absence) of the four policy diffusion mechanism. The article concludes with a discussion of the findings and their policy implications, including some propositions concerning the way the scope of policy diffusion and PolishGerman cooperation in the area of renewable energy can be improved. 2. Policy convergence, diffusion and transfer – concepts and theory In some areas policies across countries are indeed becoming more and more homogenous. Often quoted examples include economic liberalization (Simmons & Elkins, 2004) and environmental policy innovations Jörgens, ; Tews, , but one could also extend that logic to broadly conceived policies and rules, such as electoral democracy (Gilardi, 2012). This homogenization is especially clearly visible across the European Union, a political environment encouraging and enhancing convergence of norms and policies (e.g. Liefferink & Jordan, 2005; Radaelli, 2003). The phenomenon spurred two interlinked, but not identical bodies of literature. Those focusing more on the actual outcome – the fact that policies are becoming similar – analyze patterns of policy convergence. Those in turn who are more interested in the process by which policies travel from an innovator to followers, or the way certain policy choices cause reactions elsewhere, focus on policy diffusion and policy transfer. These concepts are close, but not interchangeable. In the remainder of this section we discuss the definitions of each as it is most visibly present in the literature, the relations between the different concepts, as well as their usefulness for our own analysis. We conclude with some notes on the methodology and data collection methods adopted. 2.1 Policy convergence Knill defines policy convergence as the development of similar or even identical policies across countries and over time , p. . (e notes that policy diffusion and policy transfer can – under certain circumstances – lead to policy convergence, yet the latter can also be, in theory, the result of similar but relatively isolated domestic events (2005, p. 767) or a similar response to common policy problems. This type of convergence by coincidence is, however, growingly unlikely in the globalized world and especially in a political system such as the EU. According to Busch and Jörgens , p. , the growing density of communicative interlinkages among nations makes independent and isolated policy decisions increasingly unlikely. In other words, pure policy innovation is rare, and whenever policymakers are forced to make choices, they can – and often do – look to other countries for advice, inspiration, information or warning. They can also be forced to change their policies in more or less coercive ways. What remains to be clarified is the operationalization of policy convergence. Holzinger and Knill show that convergence can vary both in degree and in direction (2005, p. 776-7). This, however, is mainly a concern for large-n studies of convergence patterns. In our qualitative analysis, we are able to trace the growing similarity of particular policy dimensions (see 3.4) or to show the evident incompatibility of other elements. 2.2 Policy convergence vs. policy diffusion Policy convergence or non-convergence is thus the outcome – the dependent variable – of different processes. Policy diffusion studies inquire about the actual process that leads to convergence, its depth and speed (Fabrizio & Hawn, 2013), and the conditions

that favor or hinder the spread of policy innovations Tews, . Busch and Jörgens (2005) see policy diffusion as merely one of three possible mechanisms of policy convergence, alongside international harmonization and the imposition of policies, and the only one in which policy innovations are adopted voluntarily. This is an interesting approach, but may seem counter-intuitive and detached from a large body of policy diffusion literature that defines the concept in much broader terms. Shipan and Volden, drawing on a survey of nearly 1,000 research articles employing the concept of policy diffusion, propose a generic definition according to which policy diffusion takes place when one government s policy choices being influenced by the choices of other governments , p. ; also: Graham, Shipan & Volden, , p. . This seems to be a normal feature of contemporary politics, where policy choices, as Braun and Gilardi emphasize, are interdependent , p. . )nterdependence as the key defining component of diffusion is thus what separates both approaches Maggetti & Gilardi, , p. 3). The nature of the influence between governments and the degree to which free will is involved are left open, even if that influence is described as the pressure for policy innovation that comes from outside the polity Shipan & Volden, , p. – our emphasis). 2.3 Policy diffusion vs. policy transfer The difference between policy diffusion and transfer varies depending on the research quoted. Dolowitz and Marsh define policy transfer as a process in which knowledge about policies, administrative arrangements, institutions etc. in one time and/or place is used in the development of policies, administrative arrangements and institutions in another time and/or place , p. . They note that this is close to yet another concept – lesson drawing which in policy diffusion literature translates to learning , but emphasize that policy transfer is also neutral about the (in)voluntary nature of the process. )t can thus cover both voluntary and coercive transfer, same as policy diffusion in the broader definition. The difference between diffusion and transfer is elsewhere. Marsh and Sharman (2009, p. 274-5) suggest that diffusion literature privileges structure, while the transfer literature privileges agency. The difference seems to be also in the scope and research design. Studies of policy transfer typically focus on a single policy in a single country to assess the extent to which the policy s origins are found to be heavily influenced by other countries policy choices , while policy diffusion studies typically ask how policies flow to and from multiple governments over time Graham et al., 2012, p. 7). Although we analyze mutual influence, taking into consideration the fact that Germany introduced policies aimed at increasing the role of renewable energies much earlier than Poland, we assume that policy innovation should flow (diffuse or be transferred) from Germany to Poland. Thus defined, our study of the reasons behind GermanPolish renewable energy non-convergence is closer to the literature on policy transfer. However, we treat policy transfer as part of the wider processes of policy diffusion, and in the remainder of the article treat the two concepts as synonyms. This does not seem to be heresy. Comparing the by now classic review of policy transfer literature by Dolowitz and Marsh with the recent diffusion review essays by Graham, Shipan and Volden, we can see common ground emerging in which agency (that is concrete political actors, individuals is brought back in Dolowitz & Marsh , -6; Graham et al., 2012, p. 12-passim). Marsh and Sharman on the other hand note that policy transfer studies can benefit by drawing on the mechanism-oriented research developed in policy diffusion studies (2009, p. 271-passim).

2.4 Defining a policy – different policy dimensions For clarity s sake, our analysis requires a note on the way policy is understood. Policies in the area of policy diffusion or convergence studies can refer to quite specific procedural choices, like parliamentary gender quotas (Bush, 2011), wider regulatory moves aimed at concrete results, like anti-smoking policies (Shipan & Volden, 2006), or very broad concepts and sets of overarching policies. The latter is the case of energy policy, which is a vast issue area, composed of different policies and pieces of legislation, and affecting other areas – like industrial, environmental or development policies. This makes the diffusion or convergence in energy policy more difficult to operationalize and analyze. In place of single, cut out policies (cf. Shipan & Volden, 2008), we need to take into account such aspects as long term energy strategies (i.e. national roadmaps), sectoral legislation (i.e. on RES), governance schemes for the coordination of different energy sources in the energy mix, support mechanisms (including differences for various technologies), administrative processes on sub-national levels or the organization of the power market. That makes the statement that energy policies in two countries converge quite debatable in itself, and requires further specification. Apart from the scope of different policy areas, there are also different policy dimensions. Heichel, Pape and Sommerer make a note of this problem in their review essay on policy convergence, arguing that it is necessary to distinguish between such elements as policy goals, policy content, policy instruments, policy outcomes, and policy style , p. . Similarly, Dolowitz and Marsh disentangle policies in their review of policy transfer scholarship into policy goals, content, instruments, structure and policy concepts, attitudes, ideas as well as administrative structures and techniques. In the case of our case study, we try to be as specific as possible in showing which precise policy dimensions are analyzed and which policy innovations were adopted or discussed under the general umbrella theme of renewable energy policy . 2.5 (Non)convergence and (non)diffusion

Most of the literature on policy convergence and policy diffusion focuses on successful homogenization and spread of innovation (cf. Fabrizio and Hawn 2013). Van der Heiden and Strebel note that the reasons why diffusion might not occur in a certain domain is under-theorized and lacks an empirical test , p. . This is not surprising, especially for quantitative studies that may operationalize non-convergence as constant, thus outside of the area that can be explained. However, critics point out that to provide compelling explanations of why policy diffusion may or may not occur, scholars have to investigate a wider range of outcomes, including those of limited diffusion or nondiffusion (Karch, Nicholson-Crotty, Woods & Bowman, 2013). Marsh and Sharman also call for the examination of more negative cases (2009, p. 270). 2.6 Mechanisms of policy diffusion To explain the case of German-Polish renewable energy policy non-convergence, we investigate the channels and mechanisms of policy diffusion to see where communicating and exchange of experiences lead or could lead to convergence, but for different reasons failed to. To organize our analysis, we distinguish four policy diffusion mechanisms that are most often put forth in the by now very robust body of recent theoretical and empirical literature (Braun & Gilardi, 2006; Gilardi, 2012; Heinze, 2011; Maggetti & Gilardi,

2013; Marsh & Sharman, 2009; Obinger et al., 2013; Shipan & Volden, 2008, 2012). The four mechanisms include two positive ones – learning and emulation, in which governments adopting a policy innovation do it voluntarily, and two negative ones – competition and coercion – in the case of which adoption is an involuntary necessity and is imposed upon the country in question. In the remainder of this subsection we define these mechanisms and indicate their characteristic elements, through which they can be identified in the empirical analysis that follows. Learning Learning, the most important of policy diffusion mechanisms, means drawing conclusions from experiences of other countries by observing the politics of policy adoption and the impact of those policies (Shipan & Volden, 2008, p. 841). As a result, policies may be partly or completely adopted (positive learning) or avoided (negative learning). The latter concept is problematic, though. If policy diffusion means spreading of policies and leads towards convergence, is then negative learning indeed part of that process? In our analysis we try to inquire about the reasons for negative learning if it occurs. Berry and Baybeck note that [w]hen confronted with a problem, decision makers simplify the task of finding a solution by choosing an alternative that has proven successful elsewhere , p. . Thus, if a policy has been successful in another country, the likelihood is higher that it will diffuse (cf. Maggetti & Gilardi, 2013, p. 12). This formulation should immediately draw our attention to two elements that condition the diffusion through learning: a common definition of a policy problem, and the perceived success of a policy. This means that learning in the sense of policy diffusion already requires some prior knowledge and interpretation of the situation, which are then updated through learning (cf. Braun & Gilardi, 2006, p. 306). This points to further conditions, such as the availability of reliable and accurate information and policymakers rationality. Both can be problematic, as even in routine situations, learning is incomplete because of bounded rationality Moynihan, , p. ; also: Weyland . According to Obinger et al. (2013, 114), in some cases decision makers may use cognitive shortcuts to reduce the complexity of certain policy. Furthermore, there is the question of what the policymakers in a given country want to achieve with the policy innovation – solve a problem, provide welfare or acquire political gains? (Heinze, 2011, p. 15). Learning becomes further complicated in crisis situations, when policymakers face an objective or a perceived threat. The scope of learning required during crisis is greater, demanding new understanding of the most basic aspects of the causes, consequences and solutions Moynihan, , p. . )n such cases, on the other hand, policy makers tend to rely on their own networks to learn. This in turn means that transnational channels of communication and wider expert communities, which are not recognized as part of the close and trusted network, become blocked. The latter issue raises the question of agency and the role of individual actors such as policymakers, experts, activists – collectively described as policy entrepreneurs, advocates or agents of transfer (Jacobs, 2012, pp. 201-202). These actors, under normal conditions, help to transfer experience and information (go-between actors) (Shipan & Volden, 2012, p. 3). But agency also implies the active support of policy diffusion that could be dubbed policy teaching . Van der (eiden and Strebel note that the exporting entity can actively foster diffusion if it shares its knowledge with other entities , p. , which is linked to policy observability . Learning can also be enhanced by international actors – in our case, especially the EU institutions or the International Renewable Energy Agency (Stone, 2004; Roehrkasten & Westphal, 2013, Jacobs, 2012, pp. 204-209).

Emulation Emulation is often equated with synonymous concepts like socialization or mimicry. We opt for emulation, as it does not share the main problem of the popular socialization literature, namely, that it assumes a linear process with a visible normative bias towards the trend-setting country or organization (for a critical discussion see: Saurugger, 2010; Szulecka & Szulecki, 2013). Emulation results from the desire of the decision makers to fit into a norm-based community , and means copying the actions of others to look like them Van der (eiden & Strebel, , p. 47). This can come from a deeply held conviction based on common values, norms and ideas, but can be purely strategic, which is why emulation is also superior to socialization as an analytical concept. Certain policies may be adopted even if there is no problem that they should solve, in that case just for show . On the other hand, political forces of interest groups within a country may be divided in respect to the values they share, and thus some may be more prone to policy diffusion through emulation than others (i.e. Euro-enthusiasts vs. Euro-sceptics). Other reasons for emulation include persuasion through intergovernmental organizations and advocacy groups, or visible diffusion of a policy in many other countries (a critical mass). Dolowitz (1997) shows how the diffusion of rhetoric can precede the diffusion of policy, and so governments may first start talking the talk before they move on to actual policy adoption. We suggest, however, that engaging in a dialog over the need for policy change increases the chances for policy diffusion, as it opens the ground for policy entrepreneurs and advocates (Szulecka & Szulecki, 2013). Competition Policy diffusion is not always voluntary and not always beneficial (Shipan & Volden, 2012, p. 3), and this is especially so in the case of the two negative mechanisms. Competition drives policy diffusion by making it necessary for some countries to introduce a certain policy or remove environmental standards to avoid competitive disadvantage, and attract economic activity Simmons & Elkins, , p. . This mechanism is most often associated with a race to the bottom Marsh & Sharman, , and is also termed externalities (Heinze, 2011). But this picture can be more nuanced. In the case of renewable energy policy, policy innovation coincides with technological and infrastructural innovation. In other words, diffusion through competition can mean that a country changes its policy for something more ambitious and even more costly to remain competitive and innovative. This can result in a race to the top in environmental or innovational regulation cf. Jacobs, . On the other hand, the desire to safeguard one s competitive advantage (i.e. low energy costs) can hinder the adoption of policy innovation – in a race to the bottom fashion. There is also a third option – adopting a policy to gain competitiveness in synergy with the trendsetting country. Distinguishing between competitive and cooperative interdependence, Braun and Gilardi (2006) note that it has the logics of a prisoner s dilemma. This means that although cooperation and policy convergence could be desirable, lack of trust and information lead to choosing a safer, individualistic option. Coercion Coercion aims at convergence, but many scholars do not see it as a mechanism of policy diffusion. In our bilateral analysis, however, it seems highly relevant. A more or less explicit compulsion to adopt policy innovation may come from powerful states or from international organizations (Marsh & Sharman, 2009, p. 272). The latter may result from membership in an organization (compliance with community regulations in the case of

the EU) or the desire to benefit from aid or lending (Obinger et al. 2013, p. 114-115). Powerful countries can also use intergovernmental fora and institutions to push for policy convergence if they see it as beneficial, while in federal systems steering by upperlevel government … can help to overcome the unwillingness to assist in diffusion to a certain extent Van der (eiden & Strebel, 2012, p. 356). Coercion is not just about sticks, it s also about carrots – as was most visibly the case with pre-accession EU conditionality policy vis-à-vis Central Eastern European countries (Schimmelfennig & Sedelmeier, . )t thus alters the relative size of payoffs associated with policy alternatives, while policy makers perception of their effectiveness may remain the same (Braun & Gilardi, 2006, p. 310). Thus defined, coercion shares a structural similarity with emulation, only in purely material terms. 2.7 Note on the research design and methodology While much of the research conducted on policy diffusion is quantitative and involves large sets of cases, we analyze the issue of convergence of support mechanisms for renewable sources of energy in the EU by looking at a single case study. Germany and Poland, as has already been noted, are not a random choice, but exemplify two categories of EU member states and two distinct attitudes towards RES expansion. At the cost of generalizability, we can take on more questions at the same time and investigate the process in depth at different levels. This research design is a form of the critical incident case study (Weatherbee, 2010). In the framework of the case study we look for evidence of the four diffusion mechanisms described above and, using process-tracing technique try to understand through which channels and on which levels they were or were not effective in bringing about policy change. The data for this analysis was gathered through expert and stakeholder interviews, as well as archival and secondary literature analysis.

3. Renewables: towards policy convergence in Europe? Although this might seem peculiar from today s perspective it was neither climate nor other environmental concerns that made the states of the then European Communities pay attention to the potential of alternative sources of energy already in the 1970s. It was the question of energy security and import dependency. In its resolution from 1974, the European Council pointed out that investment in research and development should make it possible for new sources of energy to replace traditional sources in the long run. At that time, however, priority was given to an increased exploitation of coal and nuclear energy (Council of the European Communities, 1974). But with the catastrophe in Chernobyl and the looming threat of climate change, renewables moved to the center of attention. )n the resolution, the Council underlined the need to optimize the exploitation of these sources of energy in the Community , while at the same time it encouraged member states to closely cooperate in this area by undertaking a tighter exchange of information on the development of the exploitation of new and renewable energy sources through concerted action and, if necessary, ensure coordination at Community level Council of the European Communities, . )n other words – policy convergence in this area was from the start perceived as desirable and potentially bringing synergistic benefits. Following the Commission s suggestion, the Council has also proposed the introduction of measures at the Community level designed to encourage the use of new and

renewable energy sources European Council, . But with the exception of some programs financing R&D in the area of renewable sources of energy, such as JOULE or ÉCLA)R, the support for renewable sources was designed nationally. The major push came from the introduction of support mechanisms, which allowed producers of power from renewable sources to access the market dominated at that time by a limited number of power producers. The guarantee that electricity from renewable sources will be purchased at a certain price encouraged private actors to invest their own resources in technological development. In Denmark, opposition against nuclear energy led local communities to search for alternatives. Developments there were closely observed and followed in Germany, where in 1991 a system of feed-in tariffs for energy from renewable sources was introduced (Bechberger, Mez & Sohre A 2008, p. 16). Three years later a similar support mechanism was also introduced in Spain. Support for renewable energies in all these countries resulted not only in technological development and an increase of installed capacity, but also in the development of a new industry. This led to the success of such companies as Vestas, Enercon or Iberdrola, which for a long time dominated the global wind energy market and contributed to the creation of thousands of jobs in their respective countries. The effectiveness of support mechanisms in facilitating technological development and deployment of renewable sources caught the eye of the European Commission, which during the negotiations over the first renewable energy directive in the late 1990s insisted on the harmonization of the support schemes at the European level. But strong opposition from member states, especially from Germany (which was reluctant to resign from its own scheme), forced the Commission to take a more conciliatory position: it would only monitor the situation and would come with a proposal for a communitywide support scheme in the future if it was necessary (European Commission, 2000). During the negotiations preceding the adoption of the second renewable energy directive in 2008, the issue of harmonization returned on the agenda: although the Commission avoided the word harmonization , the suggested mechanism of internationally tradable guarantees of origin was very similar to the quota-based instrument suggested by the Commission in the late 1990s (Jacobs, 2012, p. 33). But this time the discussion over harmonization was not as contentious as a decade earlier – the Commission did not want to endanger the adoption of binding renewable energy targets by worsening its relationship with Germany, the strongest advocate of the feed-in tariffs in the EU (Ancygier, 2013a, p. 322-325). In the meantime, some degree of convergence of the support mechanisms did take place in the EU. The most visible policy tool – feed-in tariffs – has been adopted in 66 nation states (REN21, 2013, pp. 76-78). By 2010, 23 out of 27 EU countries have already adopted feed-in tariffs (Jacobs, 2012, p. 27), although in some cases only for small installations. Some of this convergence can be attributed to policy diffusion through competition – understood as a race to the top . Some countries introduced generous feed-in tariffs to encourage investment and development of new technologies, which due to the relatively low share of the installed capacity was not perceived as having a big impact on energy prices. That was especially the case in France and Spain (Jacobs, 2012, pp. 222-224). After a close analysis the process of implementation of the feed-in tariffs in Germany, France and Spain, Jacobs pointed out that certain agents of transfer were crucial for communicating policy outcomes in these countries and contributed to policy transfer (2012). Communication between the green parties in Germany and France was especially important and had an impact on the content of the Renewable Energy Law (EEG) adopted in Germany in 2000. Close cooperation between the renewable energy associa-

tions (BWE in Germany, ADEME in France and ASIF in Spain) allowed for policy transfer between the three countries. The remuneration for solar photovoltaics in the German Renewable Energy Law from 2000 and the introduction of additional tariff payments for providing auxiliary grid services in the amendment of the law from 2009 was based on the Spanish experiences. At the same time the introduction of tariff degression in France was influenced by the content of the German EEG (Jacobs, 2012, pp. 201-209). But most of the countries that introduced feed-in tariffs failed to predict the radical fall in the price of photovoltaic panels. Generous feed-in tariffs especially in Spain and the Czech Republic and the low price of PV panels led to an explosion of investment in new capacities. In Spain the installed capacity more than quadrupled within one year and reached almost 3.4 GW in 2008 – almost ten times the goal set by the government for 2010 (Environmental News Network, 2008). A similar situation took place in the Czech Republic, where the installed capacity exceeded expectation and due to generous tariffs led to an increase in energy prices (Colthorpe, 2013). Also in Germany the new installed capacity of photovoltaic plants exceeded 7 GW annually between 2010-2012 (BSW-Solar, 2013). The impact of this development on power prices forced governments to take action. Whereas some countries, like Germany, decided to significantly reduce feed-in tariffs for some forms of renewable sources of energy, others, like Spain or Czech Republic, took more radical steps by introducing caps on the installed capacity or retroactive changes to the support mechanism and additional taxes on income from selling electricity from some renewable energy sources (Cala, 2013, Dorda & AliOettinger, 2010). Different to the process of introducing the support mechanism, it is difficult to see any coordination between the countries affected by rising costs of supporting the development of renewable sources of energy. In some other countries (i.e. Italy and France) significant bureaucratic barriers decreased their effectiveness and made the development of renewable energies much more expensive than it would have been, had governments learned from the experiences of other member states. Furthermore, as Szarka (2007) notes, a policy instrument (or choice), such as the fit-in tariff itself is not enough to drive RES deployment. Trying to explain the lack of a wind rush in France (although policy convergence with e.g. Germany existed), he points to national institutional frameworks, industrial structures (infrastructural constraints and pathdependency) and the lack of mobilizing discourses that would appeal to the French public. The Commission used the confusion over the retroactive changes in some member countries to enforce further convergence of the support mechanisms. In December 2013 it presented a proposal to change the EU regulations on state aid in the area of energy and environment. One of the major suggestions was the statement that feed-in tariffs can only be granted as a result of a genuinely competitive bidding process , which de facto means that the feed-in tariffs would be decided by competition between different producers and not set by the government (European Commission, 2013). Although this does not exclude other forms of supporting the development of renewable sources of energy, the provisions of the state aid guidelines, if implemented, will significantly limit the number of options that governments are able to choose from.

4. Germany and Poland: Policy (non)convergence Taking into consideration the process of policy diffusion that took place between Germany, France and Spain – at least at the stage of introduction of support mechanisms – one could also expect a similar process to take place in the case of Poland and Germany.

This can especially be the case taking into consideration some factors signaled earlier: close political and economic relations, active cooperation at the European level and geographical proximity (which also means similar weather conditions important for renewables). And yet it is hardly possible to find EU member states with energy policies as divergent as those of Poland and Germany Ćwiek-Karpowicz, Gawlikowska-Fyk & Westphal, 2013) – especially in the area of renewable energy. Asking along the lines of policy convergence scholars, if conditions are so similar, but there is no convergence, what are the facilitating factors that are lacking? We first sketch out the background conditions for renewable energy policy in both Germany and Poland to understand the policy context before moving on to the analysis of policy diffusion mechanisms. For a long time Poland and Germany followed a similar path of development in the area of energy: at the beginning of the 1990s Germany generated over 68% of electricity from fossil fuels, mainly lignite, and further 28% from nuclear power plants. In Poland almost 99% of the power was generated in coal-fired power plants. In both cases the role of renewable sources of energy was minimal: 4% in Germany and slightly over 1% in Poland (EIA). But over the following two decades the share of energy from renewable sources has increased in both countries to over 10% in Poland (GUS, 2013, p. 69) and 24% in Germany (BDEW, 2014). But a focus on the increased share of energy from renewable sources in the power mix does not show the full picture as the kinds of renewable energies developed in each of these countries and their impact on the energy sector was very different. In Germany the increase in the RES production resulted mainly from the development of wind and photovoltaic energy, which led to the development of a brand new sector of economy with 378,000 jobs and an annual turnover of almost € billion EurObserv ER 2012, pp. 173. )n the case of Poland % of the energy acquired from renewable sources came either from biomass co-firing in coal-fired power plants, or from large hydroelectric plants built decades earlier (GUS, p. 59). The impact of both sources of energy on the economic development and job creation in the country was minimal. Also the installations used to develop other sources of energy, mainly wind and biogas, was largely imported. In other words, there was very little of a value-added chain in Polish renewables. As a result the number of jobs and the overall turnover in the renewable energy sector in Poland was less than a tenth of the number of jobs and the turnover in Germany EurObserv ER 012, pp. 173-174). These differences in the development of renewable sources of energy are mainly the result of the different policy mechanisms adopted in both countries. In Germany the introduction of the feed-in tariffs in 1991 contributed to the increased support for R&D and deployment of wind energy: by the end of the decade the cumulated installed capacity exceeded 10 GW (Bechberger, Mez & Sohre, 2008, p. 7). Replacement of the Feed-in Law (Stromeinspeisungsgesetz, StrEG) by the Renewable Energy Law (Erneuerbare Energien Gesetz, EEG) in 2000 and the introduction of the generous feed-in tariffs for photovoltaic energy led – with some delay – to a rapid development of this source of energy: the installed capacity increased from 3.8 GW in 2007 (EurObserv ER , p. to over 32 GW in 2012 (BSW-Solar, 2013). But the rapid development of renewable sources of energy did not happen without mistakes. The major side effect was an increase in the cost of the support mechanism caused by the aforementioned delay in reducing the feedin tariffs for electricity from photovoltaic panels. Also the slow development of the electricity grid led to problems, such as unplanned flows of electricity through neighboring countries, among other Poland (cf. Puka & Szulecki, 2013). The situation in Poland looked very different. Although Poland introduced a support mechanism for renewable sources of energy already in the 1990s, it did not con-

tribute to the development of renewable sources of energy: although the system adopted was similar to the one adopted in Germany at that time, the tariffs were too low to attract investment in renewable sources of energy and were announced only a year in advance, which made long-term planning that would justify investment in R&D by private companies impossible (Ancygier, 2013a, p. 239). The system was abolished in 1999 and was to be replaced by another one that would help Poland achieve the ambitious development goals mentioned in the Development Strategy of Renewable Energy Sector from 2000. But after the 2001 elections, the new government had a different approach to developing RES. Although investment in bio energy was described as beneficial for the development of agricultural areas, wind energy was considered to be detrimental for the Polish economy: not only had it to be developed on the basis of imported products, but it would also replace jobs created in the conventional energy sector (Ministry of Economy, 2002, p.17). Nonetheless Poland as the future member of the EU had to introduce support mechanism for renewable sources of energy. With some delay, in October 2005, Poland introduced a quota mechanism based on green certificates , which obliged producers of energy to generate a certain percentage of their power from renewable sources. Those companies that did not generate enough electricity from renewable sources were obliged to cover the difference by purchasing a certain amount of green certificates sold by the operators of renewable energy power plants. Thus investors in renewable sources benefitted from two sources of income: the sale of electricity and trade with green certificates (Ancygier, 2013a, 280-291). The support mechanisms introduced in Poland and Germany differed in two respects. Firstly, the German feed-in tariff system provided different levels of support for different sources of energy. As a result it also led to the development of sources that would not have the chance to develop in competition with other sources of energy. At the same time the quota mechanism introduced in Poland guaranteed the same price for all renewable sources of energy. This led to windfall profit for those investing in the cheapest sources of energy, such as biomass co-firing, and practically no chance for more expensive energy from photovoltaic panels to develop: by the end of 2013 the capacity of all photovoltaic panels connected to the grid in Poland was still below 2 MW (WNP, 2014, January 27). The second major difference between the support mechanisms introduced in Poland and Germany was the predictability for existing and potential investors. Whereas fixed tariffs allowed German investors to relatively easily predict their return on investment, in Poland their income was dependent on the price of electricity and green certificates, both of which could fall dramatically. This risk made investment possible only at a higher rate of return, which made the quota system more expensive per unit of invested capacity than a system based on the feed-in tariffs. None of the countries was immune to the political risk of changing the support mechanism, like the one that took place earlier in Czech Republic or Spain. The proposals suggested by the former German Minister of Environment, Peter Altmaier, in early 2013 led to insecurity among investors (BEE, 2013). Also the lack of clarity concerning the changes that would be introduced in the Germany Renewable Energy Act in 2014 (Tagesschau, 2014, January 27) worsened the investment climate, although due to the rapid development of renewable sources of energy in this country, significant changes to the existing framework had been expected. Still, the reform of the EEG is preceded by consultation with a number of stakeholders and has to be adopted by the German parliament. The situation in Poland is very different. The National Renewable Energy Action Plan submitted to Brussels in December 2010 included a statement that regulations concerning development of renewable sources of energy will be included in the bill on

energy from renewable sources that is going to be adopted in Ministry of Economy, 2010, p. 37). Indeed, in December 2011 a draft of the Renewable Energy Law that included radical changes to the existing support mechanism was presented (Ministry of Economy, 2011). After strong critique of the proposal, another, significantly changed draft of the renewable energy was presented in July 2012. The major change concerned introduction of feed-in tariffs for installations smaller than 200 kW (Ministry of Economy, 2012). But after a number of modifications also this project was not adopted. In September 2013 the Ministry of Economy presented the main elements of a support mechanism which was to be introduced in a renewable energy act (Ministry of Economy, 2013a). In December 2013 the Ministry published a draft RES Act which replaced the quota mechanism with auctioning. The changes proposed complicate the system significantly and due to its unpredictability make it even less probable that a domestic industry producing for the needs of the renewable energy sector will develop (Ministry of Economy, 2013b).

5. Analyzing mechanisms of diffusion and channels of communication

5.1 Learning As mentioned in Section 2, learning is the most important diffusion mechanism and takes place when governments, searching for a solution to a particular policy problem, look to others for lessons. But solutions adopted elsewhere should also be presented in a way that makes their implementation possible in another political and economic framework. Therefore the impact of this mechanism of policy diffusion depends on three factors: the perception of a policy problem, the adequacy of the solution offered in the local context, and the existence of actors, functioning as agents of transfer or go-between actors. We thus compare the two countries in these three dimensions. The main reason for supporting renewable sources in Germany was the search for an alternative to nuclear energy and fossil fuels that would on the one hand limit the impact of the energy sector on the environment, while on the other decrease dependency on energy imports. The solution to this problem was to be an ecological industrial policy which would make Germany a major energy-efficiency and environmental engineer . Among other things this has also implied the development of a renewable energy sector, allowing German companies to increase their exports to other countries (BMU, 2006). Thus the perception of the challenges facing the power sector in Germany has changed significantly: instead of being presented as a problem, it has been shown as a chance for the German industry. The growing prominence of climate change on the global political agenda strengthened this attitude further. Germany became one of the drivers of global climate policy, hosting the first Conference of the Parties to the UNFCCC in Berlin in , as well as the Convention s permanent secretariat in Bonn. The issue of environmental protection did play an important role in Poland in the 1980s, spawning a visible protest movement, framed it in terms of the impact of the outdated heavy industry and the power sector on citizens health Szulecki, forthcoming). But the modernization of the most polluting sectors of industry in the early 1990s significantly improved air quality in the majority of the Polish cities and the salience of environmental concerns, weakening the environmental NGOs significantly until the EU accession (Szulecka and Szulecki, 2013). At the same time the issue of climate change was largely underestimated by Polish politicians and media alike. According to

the former Prime Minister and leader of the largest opposition party in the government, Jarosław Kaczyński, there is no evidence that CO2 emissions play any role in changing the climate (Newsweek, 2012, March 17). Although the current Prime Minister Donald Tusk referred to climate change as a problem during his speech at the COP 19 in Warsaw, in the same speech he underlined the role of coal in fueling economic growth and failed to mention the impact of renewable sources of energy in mitigating the threat of climate change (Tusk, 2013, November 19). At the same time, the issue of energy dependency, especially with respect to gas deliveries from Russia, was for a long time the main element of the Polish energy policy. Although compared to the other EU states Poland remains to a large extent selfsufficient basing power generation on indigenous coal , the notion of energy security framed as security of supply and affordability, is high on the agenda. The solutions to the problem of energy dependency suggested by the Polish government were very different from those proposed by Germany. Although Polish Energy Policy 2025 underlined the need to develop renewable sources of energy, the main focus was on the expansion of hard coal and lignite mining (Ministry of Economy, 2005). A major difference in comparison to the German energy strategy was the plan to start a nuclear power program with the first nuclear plant to go online shortly after the last plant is planned to go offline in Germany (Ministry of Economy, 2014). These different solutions to common problems result from different perception of policy problems and policy success.1 It needs to be emphasized that while for Germany an ambitious renewable energy policy is presented as a solution to the problems of climate change and energy dependency, simultaneously providing a new impulse to the German economy, the subsequent Polish governments did not take the issue of climate change seriously and adopted a very different strategy in dealing with the issue of energy dependency (Ancygier, 2013b). In contrast to Germany, the Polish political elites have, since 2007-2008, perceived the EU climate and energy policy package as the main policy problem of the domestic policy sector. Any reforms of legislation or the sector s structure are thus a response not to the issue of climate change mitigation or energy security, but rather a reaction to the externally imposed policy framework, which is to a large extent perceived as German-inspired Musiałek, . This divergence in the perception of policy problems explains the fundamental difficulty in learning from the German experience. Even if energy transformation could be framed as a response to significant policy problems in Poland (i.e. to the risk of falling into the middle income trap or losing competitiveness), German energy transition is perceived as a policy that has proven successful. On the contrary, media coverage and expert opinions dominating the public policy discourse are negative and critical of the German moves, suggesting policy failure. Costs are often exaggerated and the benefits of the energy transition, especially for the local communities, are largely ignored by the key decision makers and analysts. Instead of taking the opportunity to learn from the experiences and mistakes of Germany, the whole idea of energy transition is questioned (Kasztelewicz, 2013, August 12). As one analyst bluntly put it – do not try this at home Ruciński, , February . Assessing the success of a policy is a difficult challenge which indeed depends on many factors, including the vantage point of the evaluator. Marsh and McConell (2010) distinguish between process, programmatic and political success. While in the German public debate all three aspects are to some extent contested, it is clear that on the whole the process of policymaking regarding renewables (in terms of i.e. legitimacy, sustainability For an overview of the way the success of a policy can be conceptualized and evaluated see: Marsh and McConell, 2010.

1

and innovation) was successful; that in political terms the policy of energy transformation is still a success (it is popular among the German voters and remains high on the agenda); and the crucial debates now focus on its programmatic aspects: was it implemented according to the objectives? Did it achieve the intended outcomes? Was it efficient? Who benefits most? The Polish observers completely abstract from the process and political success, and out of the programmatic debate, focus almost entirely on resource efficiency, understood in very narrow terms – energy price for individual consumers. Obinger, Schmitt and Starke (2013) suggested that in case of complex policies, policymakers may draw on certain mental shortcuts to make sense of other policy experiences and evaluate their success. The lack of understanding of the motivations behind the German energy transition and its tools is visible across Europe, not only in Poland. The Polish media and analysts, as well as the policy-makers, concentrate on the costbenefit analysis of the Energiewende, but simplify the task of weighing the different pros and cons by focusing on only one element, a synecdoche (part for a whole) of the energy transition – the renewable energy surcharge (EEG Umlage). The cost of developing RES in Germany is therefore evaluated by the level of the steadily increasing surcharge. Neither the falling wholesale energy prices nor the actual impact of the surcharge on final consumer energy costs (which is limited, compared to other factors) are taken into account. This mental shortcut is used by some decision makers for negative learning, whereas positive learning is missing. The third dimension – the prominence of agents of transfer is also a very important factor that can explain why policy diffusion occurred between Germany, France and Spain, but not between Germany and Poland. The major difference between the other two countries analyzed by Jacobs (2012) and Poland is the influence of nongovernmental actors on the policy process. Whereas in the case of France, Spain and Germany associations representing renewable energy industry were consulted by the respective governments and were actively participating in the policy-making process, their impact on the Polish renewable energy policy is limited. This results from two factors: the small size of the renewable energy industry in Poland and the lack of effective channels of influence that would allow these actors to contribute to the renewable energy policy in Poland. As the example of a recent environmental controversy in Poland has shown, NGOs can become part of the policy process only in situations where their pressure on the policymakers becomes impossible to dismiss (Szulecka & Szulecki, 2013). At the same time the advocates of conventional sources of energy, mainly the partly stateowned energy companies, play a decisive role in shaping Poland s energy policy and move it in a direction very different from the one promoted in Germany (Ancygier, 2013a, pp. 371-389). The current policy context of energy policy in Poland – European economic recession, energy and climate pressures – are perceived as a crisis by the Polish policymakers, and thus only trusted advisors close to the government (i.e. accredited public think-tanks and industrial lobby experts) are treated as reliable sources of information. This means that governmental think-tanks like the Center for Eastern Studies (OSW – under the Interior Ministry), the Polish Institute for International Affairs (PISM – under the Foreign Ministry or reliable independent analytical agencies such as EnergSys are close to the policy process (although they play an auxiliary role); established independent institutions – like the Institute of Sustainable Energy or demosEUROPA – are consulted, but do not have direct access to policymakers, and environmental NGOs as well as various think-tanks have to use various strategies to make their arguments visible in the debate, without any guarantee of being involved in policymaking even in the agenda-setting phase.

Poland

Germany

While there is very little positive policy learning at the level of central administration, our research elsewhere has shown that renewables are perceived in a very different light by local government representatives (Ancygier & Szulecki, 2013). A survey of Polish municipality and community level administration indicates that grassroots support for renewables is much higher than the policy of the central government suggests. Renewable energy sources, especially solar and wind, were at the top of the preference list of local administrators, while support for conventional energy development was low. Furthermore, over 67% of the local authorities perceive RES as a chance for their community s development.2 What can this difference be attributed to? There can be two explanations according to the framework provided earlier in this section. Firstly, the policy problem that RES are to tackle, according to local authorities, is a different one than that of the central government. Dispersed energy sources are perceived as an investment opportunity and source of both taxes and jobs for the community. They can also make the municipality more independent and thus resilient, an important fact in the Polish countryside, frequently haunted by electricity shortages. Secondly, the access of in-between actors (investors and NGOs) to local authorities is much easier. 84% of the respondents indicated that they were contacted by investors, 22% by environmental activists and 19% by academics. Policy problem definition

Proposed solution

 Climate change  Improving innovativeness  Economic/ industrial growth

 Expansion of renewable energy sources and energy efficiency promotion  Ambitious climate policy

 Economic growth  EU energy and climate policy  Aging energy infrastructure (possible energy gap

 Expanding conventional energy  Developing nuclear and shale gas  Countering EU energy and climate policy (veto, discourse)

Success and adequacy of policy  Political and process success  Visible impact on the political economy of energy  Efficiency issues  Need for adjustments of support schemes  RES development not matched by EE measures  Growing CO2 emissions German RES policy:  Seen as a failure  Expensive and inefficient  Destabilizing the energy system Polish energy policy:  Affordable and rational EU energy and climate policy  Imposing unnecessary costs  Impeding competitiveness  Deepening de-industrialization

Policy entrepreneurs  Numerous go-between actors, lobbyists and policy advocates including in the policy process  Robust civil society; string interest in energy issues  Significant role of expertise and science in policy debates  Only trusted/governmental experts and think-tanks in the policy process  Weak NGOs with little influence  Small role of expertise and science in policy debates

Table 1 – Policy diffusion through learning: conditions and influencing factors

5.2 Emulation Emulation is a mechanism of policy diffusion in which a policy is adopted not simply because the policymakers in the imitating country find it beneficial, but also because they believe that it is a right thing to do and to show adherence to a certain club of nations i.e. green or progressive in our case . Values and identities are thus crucial. It can be argued that on the path leading to EU membership, Poland (as well as other CEE countries) was strongly motivated to adopt European policies to be in the club cf. Schimmelfennig & Sedelmeier, . )n the late s Poland s membership in the Eu-

The online survey was conducted between 1 August and 30 September by the authors. It was sent to the councils of over 2100 Polish localities (gminy), and contained both closed and open questions regarding different aspects of local and national level of energy policy. Results presented are based on 229 answers. 2

ropean Union was one of the major arguments that led to the adoption of ambitious renewable energy goals for Poland: 7.5% by 2010 and 14% by 2020 included in the Development Strategy for Renewable Energy Sector (Ministry of Environment, 2000). During the meeting of the Environmental Committee of the Polish parliament in March 2001 its members largely agreed that the support for renewable energy sources was necessary because it was good for the environment, job creation and Poland s membership in the EU (Environmental Committee of the Polish Parliament, 1999). Things changed visibly once Poland settled in the Union and understood that it is now a mature member.3 Pragmatic considerations conducted according to the costefficiency frame became fundamental. The Polish government in its rhetoric began to emphasize the need of cheap growth , sometimes referred to in more diplomatic terms as cost-effective development Gazeta Wyborcza, , April . Additionally, the consolidation of the energy sector in 2007-2008 and close links between the government and the energy companies changed Warsaw s perception of the European renewable energy and climate policy. This led to conflicts within the government and resignation of a strong supporter of RES, Professor Maciej Nowicki, from the post of environment minister in late 2009, complaining about his lack of impact on the development of renewable sources of energy (Ancygier, 2013a, p 199). As an EU member country Poland also tried to actively stop the process of policy diffusion from the European level by arguing that an ambitious energy and climate policy would lead to job losses and industry moving to other countries. A coalition of energy companies organized under the name Green Effort Group and supported by the Ministry of Economy started a campaign aimed at watering down some elements of the Energy and Climate Package before it was adopted in December 2008 (Green Effort Group, 2009). Having understood that a fairly passive stance in the 2007 negotiations resulted in adopting EU-wide policies that visibly constrain Poland s energy strategy, the approach towards the European energy and climate policy changed. Poland differed in its standpoint from almost all other EU member countries: in 2011 and 2012 it was the only country that vetoed EU plans to strengthen its climate and renewable energy policy. After one of these vetoes, former Minister of Economy, Waldemar Pawlak, declared that it does not matter for us that we are alone, but that we are right WNP, 2012, June 15). Clearly, the Polish political elites (those opinions are widely shared between mainstream political parties, as the nearly unanimous voting in the European parliament shows) have understood that the European identity of the country does not need further reassurance. What began to matter more, in turn, was a shared post-communist legacy of CEE countries, which began to be articulated as a Visegrad identity , and the Polish foreign ministry made continuous efforts to rally those countries together in EU negotiations and votes. In any case, emulation stopped being an effective mechanism of policy diffusion, simply because the Polish elites no longer see the wider Western European norm-based community as worth their efforts. As the previous subsection has shown, policy diffusion mechanisms work differently at different levels. The Polish policy debate on RES shows that while politicians are largely disinterested in learning from the German example and joining the progressive renewables club , environmental and pro-European NGOs use identity-based arguments to open-up the spectrum of policy options, effectively locked by conventional power lobbies. They thus shame the government as backward , short-sighted and not moving in the spirit of the more innovative neighbors (Wiśniewski, . However, while this rhetoric has internal resonance and appeals to parts of the society, so far it has had little effect on the policymakers. 3

We thank Agata Hinc for pointing this out.

A different explanation, although still in the social constructivist spirit, is given by Pronińska, who argues that Poland s failure to embrace renewables on a larger scale has to do with the country s energy culture. The latter is defined as a system of behaviors in relation to energy system and energy consumption which are characteristic of a society (2013, p. 56). According to this argument, Poland maintains a coal-based energy culture with a strong post-communist heritage. While this seems to be true in a synchronic analysis, where we only take into account the present day, such an approach runs the risk of cultural determinism and petrifying certain social constructs as if they were unchangeable. Germany once also had a coal-based culture, but is now going in a different direction. It seems better to speak of energy discourses and understanding that while one can have a hegemonic position at a certain time, there are still competing discourses in the background that can gain the upper hand (cf. Szulecka and Szulecki, 2013).

EXPLAINING POLAND S SHIFTING ATTITUDE TO RES POLICY Period

Before 2005

2005–2007

2007 – present

Policy

Governmental support for RES

Transition period (uncertainty)

Government strongly opposing RES

The Polish energy sector is divided into small enterprises (usually plants/utilities), and the RES investors have a good entry point; RE policy designed to attract investment

Law and Justice party term; energy not high on the agenda, domestic and other political concerns distract attention from EU energy and climate talks

Consolidation of the energy sector into an oligopoly of four big semipublic companies; companies directly linked to state treasury; movement of officials between administration and companies; RES seen as possible competition and thus preventively suppressed; PE policy designed to benefit utilities

Poland aspires to the EU; before accession, not only strict conditionality but also the desire to emulate and be part of the developed lu drives policies in different domains, including RES, seen as innovation and modernity

The Euro-sceptical government of Law and Justice is the first to challenge this mindset and begin to play hardball on the EU forum; lack of expertise leads to concession in climate and energy policy

Although pro-EU, the Civic Platform government no longer feels that Poland needs to prove anything – it is an EU member; growing disillusionment with the EU resonates well with claims that German and EU energy policy are irrational and harm Poland

Politicaleconomic planation

ex-

Constructivist explanation

Cultural explanation

Poland displays a coal-based, conventional and post-communist energy culture, which is at odds with RE innovation Pronińska, . Attempts to alter the existing system met with opposition at various levels

Table 2 – Different explanations of Poland s changing attitudes in RE policy

5.3 Competitiveness Three ways in which competition may lead to policy convergence are a race to the top increasing regulatory standards to compete on quality and innovation , race to the bottom lowering standards to compete on costs and adjusting one s policy to acquire synergies with a more powerful trend-setting partner. )n the case of a race to the bottom , companies investing in a particular country are, for example, relieved from paying for the external costs of environmental damage. Taking into consideration the importance of the energy sector for all sorts of economic activity, cheap electricity prices would be one of the most important factors that would increase a country s competitiveness. In most cases, however, this strategy of increasing the competitiveness is prof-

itable only in the short-term: due to lower energy prices, domestic companies do not invest in innovation that would increase their energy efficiency. This political insistence on energy prices overlooks the actual shares of production costs that energy accounts for – which outside of energy intensive industries is often quite marginal. As a result, despite low prices, their energy costs may be comparable to – if not higher than – the costs of energy consumption paid by their competitors. Also the costs of environmental damage and – in the case of fossil fuels – extraction of limited resources will have to be borne by the citizens in a longer term. Another way of increasing a country s competitiveness is by introducing policies that trigger investment in innovation and development of new sectors of industry. In the area of energy this can happen especially through the inclusion of the external costs of energy in the electricity prices and introduction of policies that encourage development of alternative sources of energy, which may not be economically competitive in the short-term, but offer enormous potential in the long-term. Such policies can be especially beneficial if the policies allow long-term planning and predictability, which encourage companies to invest in technologies that may turn out profitable in a longer term. Only in this case is it possible not only to increase the installed capacity of renewable sources of energy but also develop an industry that may cover domestic demand for the new products, and also that of other countries thus contributing to the improvement of trade balance. The understanding of competitiveness in Germany and Poland differ significantly. Although driven initially by the desire to limit energy dependency and environmental impacts of the traditional sources of energy, the economic aspects of developing new sector of industry started playing a much more important role in Germany over the last decade. But at the same time the German government is protecting the competitive position of its energy-intensive industry by relieving it from paying the surcharge financing the development of renewable sources of energy. Such policy leads, on one the hand, to an increased financial burden on individual consumers of electricity – although many of them benefit from selling their own electricity – while at the same time the competitiveness of German economy increased as well (cf. Hallerberg, 2013). Energy-intensive sectors of the economy benefit from lower electricity prices resulting from the development of renewable sources of energy. At the same time the introduction of a support mechanism that guarantees predictable income for investors led to the development of a new industry, which also exports its products to other countries, i.e. Poland. Another, more traditional understanding of competitiveness dominates in Poland. The role of low energy prices is underlined as the main determinant of economic development and their increase as the main threat to the industrial development, not only in Poland, but in the EU as a whole. The focus on electricity prices led representatives of the Polish government to coin the notion of deindustrialization, for which – according to them – European climate and energy policy is largely to blame (Piechociński, . This was the argumentation behind Poland s international campaign dubbed climate growth , which the Foreign Ministry launched in through Warsaw, Berlin and Brussels-based PR firms, organizing public events with speakers voicing Poland s stance. Development of renewable sources of energy has been perceived as an important element contributing to an increase of the energy prices therefore it should be achieved at the lowest possible cost (WNP, 2013, March 26). This can explain introduction of support for biomass co-firing considered as the cheapest renewable sources of energy. At the same time, however, the insistence on low energy prices does not explain support for the already existing hydro power plants, which led to windfall profits for the dominant energy companies operating them.

Different understanding of the notion of competitiveness in Poland and Germany only partly explains the lack of policy diffusion in the area or renewable energy. If low electricity prices were the main determinant influencing the policy choice in Poland, there would be no justification for supporting sources of energy, such as large hydro power plants: the amount of electricity from this source remained stable between 2006 and 2012 despite significant subsidies (PSEW, 2013). Also the average support granted for electricity generated from wind energy was for a long time higher in Poland than the feed-in price introduced in Germany (TGE, 2011, 2012) and the lack of development of a meaningful renewable energy industry is largely to blame on the lack of predictability of the support mechanism. 5.4 Coercion Development of renewable sources of energy was not the policy of choice for the subsequent Polish governments after 2001. Although the goal of 7.5% of energy from renewable sources by 2010 was mentioned in the Development Strategy of Renewable Energy Sector from 2000, during the negotiations with the European Commission Polish government suggested a target of . % Wiśniewski, . )n the end, however, the goal of 7.5% of electricity from renewable sources was set for Poland in directive 2001/77/EC. The Polish government was also not satisfied with the 15% goal for 2020 suggested for Poland in the second renewable energy directive: instead it considered 9% to be much more realistic. Still, due to a stronger focus put on the negotiations over Emissions Trading Scheme, Poland unwillingly agreed to the 15% goal, especially since changing the goal for Poland would require changing the whole procedure according to which the goals for all countries were defined (Ancygier, 2013a, 333). The German approach could not have been more different. German Chancellor Angela Merkel was instrumental in suggesting and convincing other countries to agree to the 20% average goal for the renewable energies in the EU by European Council, . By uploading its policies to the European level, the German government not only contributed to the reduction of greenhouse gas emissions (externally, much less domestically), but also created export markets for its renewable energy industry. It can be assumed that without the pressure from the European level the Polish energy policy would have looked very different. Polish Energy Policy by 2025, adopted in 2005, for the first time underlined the need to develop nuclear energy in Poland (Ministry of Economy, 2005). One of the main goals of the consolidation of the energy sector that followed was the creation of a national champion that could finance and conduct such an investment (Ministry of Economy, 2006). Even after a significant price reduction of renewable sources of energy Polish Prime Minister Donald Tusk described shale gas, coal and nuclear energy as the three main elements of the Polish energy policy, without any reference to renewable sources of energy (WNP, 2014, January 3). This shows that the development of renewable sources of energy has been the result of pressure from the European Union and – indirectly – from Germany. (Mszyca, 2012, October 23) This pressure has led to some limited convergence of energy policy: instead of concentrating on conventional energy sources, Poland also had to introduce measures to develop renewable energies. But this pressure did not lead to convergence of the renewable energy policy: as mentioned earlier, the way renewable energies are supported in Poland differs significantly from the mechanisms introduced in Germany. Although coercion may seem to be an effective tool that can contribute to some convergence in the area of energy, and possibly policy diffusion between EU member countries, it has an important limit: since coercion can only take place through the Euro-

pean institution, the country that would like to promote its policies in this way has to gain the support of the majority of other countries. Currently such support is rather difficult to expect, leading the Commission to propose only politically binding renewable energy targets for 2030 (European Commission, 2014). 6. Conclusions Policy diffusion brings the chance for more effective governance. Governments do not have to look for answers to particular problems individually but can use solutions that have already been tested in other countries. These chances can be especially useful in the case of renewable energy policy. In few other areas are problems that policy diffusion can solve as universal. The issues of energy dependency, exhaustion of fossil fuels and environmental degradation affect all countries. Even more importantly, in other areas the costs of faulty policy are higher, a fact that affected a number of countries that failed to adapt their feed-in tariffs to the falling prices of energy from photovoltaic panels. The chance to mutually learn from each other s successes and mistakes was missed in the case of Germany and Poland. Due to the reasons presented above, the process of policy diffusion in the area of renewable energy did not take place. The Development Strategy of Renewable Energy Sector, adopted by the large majority of Polish parliament six months after the Renewable Energy Act (EEG) was adopted by the German Bundestag, has never been implemented. Although feed-in tariffs – at least for small installations – were close to being adopted in 2012, in the end it is highly probable that the existing support mechanism will be replaced by a much more complicated system which makes the development of a domestic renewable energy industry in Poland rather unlikely. But the Polish government not only did not adopt these elements of the support mechanism for renewable energy, which did work for Germany, but also failed to learn from German mistakes. Keeping the high feed-in tariffs despite a significant fall in the prices of photovoltaic panels significantly increased the costs of the support mechanism in Germany. But this mistake has been fixed and the tariffs for small installations were reduced from over € . per kilowatt hour in to less than € . per kilowatt hour in early 2014. At the same time, despite the rhetoric about the importance of low energy prices for economic development, since the introduction of the support mechanism in Poland in 2005 electricity consumers subsidize decades-old hydro power plants which leads to windfall profits for energy companies. The current moment of legislative change – drafting of new laws and necessary novelization of existing acts in both countries – constitutes a window of opportunity for policy diffusion. With the share of power from renewable sources increasing and the need to better integrate volatile sources of energy in the energy grid gaining in urgency, Poland and Germany can better cooperate and learn from each other s experiences. This is even more probable taking into consideration the rising pressure from the European Commission to limit public aid for renewable energies and – by limiting the options available to member states to support renewables – convergence of renewable energy policies in the EU. Taking this into consideration, policy diffusion between both countries may not only be a possibility but also a necessity. What does that mean for bilateral cooperation? So far, learning from Germany was limited to avoiding what was perceived as fallacies and mistakes , while positive examples were largely ignored. This was caused by Poland and Germany using different solutions to the challenges faced by both countries such as energy dependency or the

impact of the energy sector on environment and economic development due to different diagnoses of the problems. Whereas for Germany RES development has been considered to be a way of decreasing the import of energy resources while having a positive impact on the environment and economic development, for Poland the prevailing solution was continued reliance on coal, plans to construct a nuclear power plant and possible extraction of shale gas. In fact, what has been perceived in Germany as the solution has increasingly been treated in Poland as a problem: all Polish governments since 2002 have shown a rather lukewarm support for the development of renewable sources of energy. One reason for such an approach is the potential threat resulting from the development of renewable sources of energy for the incumbent players in the energy sector. At the same time, the voice of the in-between actors who could contribute to policy diffusion between both actors is barely heard in Poland. This is caused to a large degree by the lack of trust that German energy policy is really aimed at environmental protection and not at merely increasing export of Germany products. The complexity of the German energy transition, which due to the nuclear phase out led to an increase of the CO2 emissions, makes the task of explaining the process of moving to low-carbon power sector even more complicated. And yet the situation is changing and the voice of the in-between actors that may facilitate the process of policy diffusion is becoming increasing louder in the Polish media. An example is the statement of the former Polish ambassador in Germany, Janusz Reiter, according to whom, even if Poland does not follow the German example, it can learn much from it (WNP, 2014, February 4). Former prime minister and minister of economy Waldemar Pawlak also quoted the German example when referring to the possibility of creating cooperatives at a local level that could invest in renewable energy (WNP, 2014, February 3). Indeed, as our survey shows, it is at the local level, that the communication between the two countries is increasingly active. When one keeps in mind that the German energy transition also took root at the local level, it is promising for the future of German-Polish cooperation in the area of energy – without the mistakes made by both countries in the meantime. However, there are important differences in the perception of RES. In Germany, prosumerism was largely seen as a movement towards making individual households self-sufficient in energy supply, decreasing dependence on energy companies etc. In Poland, on the other hand, the discourses of dispersed energy generation most visibly resonating with local populace are: economic development of poorer areas and communities; additional source of income in rural areas; and security of supply (both nationally and regionally). Both approaches suggest the need for slightly different regulatory frameworks. Furthermore, opting for dispersed energy generation would require a very deep refurbishment of the energy sector which would alter the current balance of its political economy. If entrenched interests of the energy lobby continue to shape Polish energy policy the only mechanism of policy transfer left could be coercion through EU policies, as it has largely been the case until now. February/March 2014, Berlin About the authors: Dr. Andrzej Ancygier – research associate at the Hertie School of Governance and the Department of Cimate Policy, German Institute for Economic Research (DIW), Berlin. Dr. Kacper Szulecki – research coordinator of the Environmental Studies and Policy Research Institute (ESPRi), until recently Dahrendorf Fellow at the Hertie School of Governance and Guest Researcher at DIW Berlin.

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