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Research - 01.12.2021 - 00:00

The EU's approach to energy issues can be dangerous for Switzerland

Senior Research Fellow on Energy Governance Philipp Thaler reflected energy relations between Switzerland and the EU. In an interview with energate, he says the EU is following an internal logic with its insistence on a framework agreement. For an agreement to be reached on electricity issues as well, he says, Switzerland in particular must move quickly.

1 December 2021.

energate: Mr. Thaler, Switzerland and the EU want to work out a roadmap for clarifying the disputes by January. However, the Vice President of the EU Commission is sticking to a framework agreement, as he said in an interview. So there will not be separate agreements or alternative cooperation on electricity issues. He is also staying with Brussels' stance in other respects. What do you think the chances are that a framework agreement is still possible?

Thaler: The statements of the Vice President show once again: since the Brexit shock, the EU Commission has been acting more consistently in regard to third countries. To the outside world, this appears tough and cold-hearted. Internally, however, this follows the sober logic of preserving equal opportunities in the single market and at the same time counteracting the political crisis. The EU Commission continues to wrestle with similar issues with Great Britain, but also internally with Poland and Hungary. They are in a sense, signaling that only those who submit to the rules of the single market can benefit from its advantages. A concession on the part of the EU is therefore unlikely. In this constellation, Switzerland will have to move first in order to reach a framework agreement. On the positive side, the discussion here is becoming more objective. Though, it is difficult to say whether that will be enough for an agreement.

energate: After the negotiations on the framework agreement broke down, Switzerland was excluded from the European cooperation platform of energy regulators (Acer) and, for the first time since it was founded in 1998, was no longer invited to the so-called Florence Forum. Have these consequences already had an impact on cooperation with Europe in electricity supply?

Thaler: For cooperation in the electricity sector, the exclusion from the Florence Forum is regrettable, but not significant. Likewise, the end of the observer status of the Swiss regulatory authority in the electricity sector ElCom at Acer is digestible. Both exclusions are rather symbolic and political. In this context, however, one recognizes a new approach of the EU, according to which it no longer decides primarily in the interest of the power supply and the markets, but rather politically. This approach bodes ill and could be dangerous for Switzerland. At the moment, the biggest concern from Switzerland's point of view is that the EU's Commission treats it as a third country. In fact, unlike other third countries, Switzerland is physically integrated centrally into the European power grid. The fact that this special infrastructural position is reflected in the status of cooperation is increasingly being called into question.

energate: What are the further consequences if Switzerland does not conclude a framework agreement or shows no serious interest in doing so?

Thaler: The EU will go its own way and, under the current and emerging political conditions, follow through with its current stance regarding third countries. In doing so, it could weaken Switzerland, perhaps unintentionally, but indirectly. The 70 percent rule shows that the EU is issuing new regulations on cross-border electricity trading, understandably thinking of the advantages for its members. However, in order to comply with the rule, neighbouring countries could reduce electricity deliveries to Switzerland, which would endanger the security of supply here, especially in winter. So as long as Switzerland is physically integrated, but not regulatory, this will always lead to problems.

energate: What other EU measures could hurt Switzerland?

Thaler: What will be important is how Switzerland is integrated into the Terre, Mari and Picasso balancing energy platforms. For example, Swissgrid helped set up the Terre platform for tertiary balancing energy - which is unique for a third country and demonstrates Switzerland's special role to date. The platform has been active for over a year and Switzerland forms a common market with Italy, France, Spain and Portugal for the cross-border exchange of tertiary balancing energy. However, the EU Commission has asked the other members to exclude Switzerland from the platform as well, and Swissgrid has filed a lawsuit to that effect. These exclusions would have an impact on grid stability here, which would then have to be ensured by less efficient processes.

energate: Since the negotiations broke down, various political players in Switzerland have voiced their own proposals for a way forward without a framework agreement. Does this path exist?

Thaler: It is highly uncertain that unilateral approaches away from the established channels will be crowned with success. In fact, Switzerland first needs a general debate on how to position itself in relation to the EU. It needs to find an answer as to whether political autonomy is feasible and what it will cost. In fact, such discussions are starting to take place. That is positive. Everyone basically wants a solution to the issue because it makes the domestic energy transition so much easier. But the fact is that the debate has a much larger background that is forcing some players to rethink fundamental political positions. They have to make weighty sacrifices.

energate: Who is particularly challenged?

Thaler: In many areas, politics today is once again thought of in such a way that states or international organizations like the EU have to assume a strong steering function. This is, of course, diametrically opposed to the neoliberal approach of the 1990s in general and, to some extent, to the Swiss liberal political tradition (“Freisinn”). In this respect, electricity could be just a foretaste of other areas where the EU will also regulate more. Take the issue of green finance, for example: the EU will soon decide what requirements a green investment must meet. The template has already been followed by China, Russia and the US. It seems as if an international standard is emerging. Switzerland will not be able to escape this.

The questions were asked by Yves Ballinari. The text has been translated by the HSG media office. The original text can be found on the energate website at www.energate-messenger.ch.

Image: Unsplash / Riccardo Annandale

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