Elsevier

Energy Policy

Volume 39, Issue 11, November 2011, Pages 7156-7164
Energy Policy

When the grace period is over: Assessing the new Member States' compliance with EU requirements for oil stockholding

https://doi.org/10.1016/j.enpol.2011.08.035Get rights and content

Abstract

The accumulation of appropriate emergency stocks of crude oil and petroleum products has been at the heart of the European Commission's efforts to increase the security of supply. This study investigates how effectively the ‘new’ Member States comply with the requirements of Council Directive 2006/67/EC, which imposes the obligation to maintain minimum stocks of crude oil and/or petroleum products. The empirical focus of this analysis is not only motivated by the practical relevance of this issue, but also by the fact that eleven of the twelve new Member States were given grace periods between one and seven years to bring their national stockholding arrangements in line with the European requirements. The granting of extended deadlines raises the question whether this instrument indeed facilitates the transposition process. The empirical findings show that except for Latvia, compliance with the EU stockholding requirements is generally very good. A more detailed analysis of the Latvian case highlights that the transposition delays principally stem from budgetary constraints. More generally, the individual new Member States' capacity to cope with the financial burdens and the degree of adjustment pressure determine the variation in oil stock levels.

Highlights

► Compliance with Council Directive 2006/67/EC is generally very good in the new Member States. ► Solely Latvia faces difficulties in developing adequate oil stock levels. ► Latvia's insufficient compliance can be attributed to severe budgetary constraints. ► Financial capacity and adjustment pressure determine cross-country variation in stock levels.

Introduction

Questions about how effectively Member States comply with the legal provisions of the European Union (EU) have been at the heart of Europeanisation research. A well-developed body of research has outlined numerous determinants of the correct and timely transposition of European directives. Although the literature is very diverse, the overarching finding is that domestic variables are central to the effectiveness of the transposition process. In this regard, the Member States' administrative capacities and the preferences of domestic veto players were found to possess the highest explanatory power (Treib, 2008, p. 17; see also König and Luetgert, 2008, Mastenbroek, 2005, Tallberg, 2002). More recent studies further underline the relevance of the characteristics of the national decision-making process (see, e.g. Steunenberg and Kaeding, 2009).

Most of the existing studies focus on the transposition behaviour of the ‘old’ Member States. So far, only few analyses have explored the transposition of Community law in the ‘new’ Member States, i.e. the countries that entered the EU in 2004 and 2007, respectively. How well do the new Member States transpose European legislation? Which factors determine their transposition behaviour? With regard to the first question, Sedelmeier (2008) finds that the new Member States on average have a better transposition record than the old Member States. With regard to the determinants of the transposition behaviour, Toshkov (2008) shows that similar to the findings for the old Member States, political preferences and government capacity are the most important predictors for the likelihood of timely transposition. There is, however, one important characteristic about the new Member States that needs to be taken into account when evaluating their transposition performance: all new Member States were given extended deadlines, so-called grace periods, for meeting certain requirements of European law.1

Generally, within the then 31 chapters of the accession negotiations the individual Member States were granted transitional arrangements for different policy measures. For example, in the chapter on environmental policy, Slovenia benefited from grace periods for legislation on the recovery and recycling of packaging waste, treatment of urban waste water, and integrated pollution prevention and control. Other accession candidates' transitional arrangements referred to different environmental policy measures. Hence, in most cases, the sector-specific directives affected by grace periods varied from one country to another.

Things look, however, markedly different in the area of the energy policy, in which, except for Hungary, all accession candidates received extended deadlines for one and only one directive, namely Council Directive 98/93/EC (replaced by Council Directive 2006/67/EC of 24 July 2006) that obliges Member States to build up emergency oil stocks corresponding to at least 90 days of the average daily internal consumption in the preceding year. Why did the accession candidates (almost) uniformly ask for transitional arrangements for meeting the provisions of this particular directive? What does the transposition situation look like now that the grace period has ended for most of the new Member States?

The present study pursues the objective of identifying the specific costs related to the transposition of the European legislation on emergency oil stocks. Most empirical studies treat cost parameters in an abstract manner and come up with very general definitions. While this makes perfect sense for studies that aim at explaining broad patterns of EU law transposition, such a general approach is less desirable for learning about policy-specific costs and benefits. In this way, the study aims to contribute to the newly emerging research perspective on post-accession compliance (see, e.g. Cirtautas and Schimmelfennig, 2010, Falkner and Treib, 2008, Schimmelfennig and Trauner, 2009, Sedelmeier, 2008) as well as the literature on European energy policy (see, e.g. Buchan, 2009, Buchan, 2010, Morata and Solorio, 2011, Strandberg, 2010).

The empirical findings will show that the main reason for which the accession candidates asked for special arrangements was the need to organise the necessary investments. Despite the financial burdens emerging from the EU stockholding requirements, nine of the ten Member States for which the extended transposition deadlines had ended in December 2009 were found to be in full compliance with Council Directive 2006/67/EC. It is only the government of Latvia that has faced difficulties in building up sufficient emergency stocks for two of the three regulated oil types. The transposition delays in the case of Latvia can be explained by the unavailability of any financing from the state budget in the years 2009–2011. The new Member States' absolute levels of emergency oil stocks, however, are not only determined by the financial burdens but also stem from the extent of institutional incompatibility and adjustment pressure.

The study proceeds as follows. Section 2 gives an overview of the general development of the EU's energy security policy, focusing in particular on the issue of emergency oil stocks. Section 3 presents the arguments advanced by the accession candidates during the negotiation of the energy chapter in order to receive transitional periods. In a next step, Section 4 introduces the main arguments elaborated by studies of post-accession compliance and puts forward hypotheses. Subsequently, data on the situation of emergency oil stocks in 2008 and 2011 is presented in Section 5. A detailed analysis of the Latvian case and an exploration of the determinants of absolute stock levels in all new Member States are presented in Section 6. Section 7 concludes the study by summarising the key findings.

Section snippets

General characteristics of European energy legislation

European energy policy is an area in which major achievements have only recently been made. Although the EU evolved out of the European Coal and Steel Community and the Euratom Treaty, the Community is still in the process of developing energy concerns into a coherent policy field. For a long time, the Member States blocked the further policy integration as they considered energy issues to be of primary national political importance (Padrós and Cocciolo, 2010, p. 33; Pointvogl, 2009, p. 5704).

The negotiation of the energy chapter

States aspiring to become members of the EU have to transpose the acquis communautaire (henceforth: the acquis), i.e. the entirety of Community law. The incorporation of the 80,000 pages strong body of Community law represents an immense political and administrative effort. In view of this impressive volume of obligatory policy and institutional reforms, “it is a genuine puzzle (and one that has remained largely unnoticed) that the post-communist countries have been rather successful in

Compliance with the EU's oil stockholding system: theoretical expectations

The Europeanisation literature has shown that ineffective transposition might be the result of the degree of ‘misfit’ between domestic policies and institutions on the one side and the requirements emerging from European legislation on the other side (see, e.g. Börzel, 2000, Duina, 1997, Knill and Lenschow, 1998, Mastenbroek, 2005, Treib, 2008). In a nutshell, this theoretical perspective posits that greater degrees of misfit increase the adaptation pressure on a given country, which in

Assessing compliance with Council Directive 2006/67/EC

This section takes stock of the current situation in the twelve countries that joined the EU in 2004 and 2007. Most of the data used is publicly available. For learning about some specific aspects of oil stockholding, experts in the relevant organisations in the Czech Republic, Latvia, Poland, and Slovakia were approached. The presentation of the empirical material involves an overview of the current stock levels as the most important aspect of the Directive and a brief characterisation of the

Explaining compliance with Council Directive 2006/67/EC

This section sheds light on the causes underlying the challenges the Latvian government faces for meeting the EU obligations for oil categories I and II. Moreover, it seeks to provide a more general explanation for the cross-country variation in stock levels. In so doing, the empirical illustrations follow the theoretical considerations presented in Section 4.

Conclusion

This exploratory study investigated the situation regarding emergency oil stocks in the new Member States of the EU. In so doing, it posed two core research questions: Why did the accession candidates (almost) uniformly ask for transitional arrangements for meeting the provisions of this particular directive? What does the transposition situation look like now that the grace period has ended for most of the new Member States? The main argument presented by the accession candidates during the

Acknowledgements

I would like to thank Anete Jurcika for supporting me in gathering empirical information on Latvia as well as three anonymous reviewers for their helpful comments on earlier versions of this article. I am also grateful to Jan Bartoš, Dainius Braziunas, Alan Vaht, Ladislav Zabo, the Ministry of Economics of Latvia and the Administration of State Material Reserves of Slovakia for providing me assistance in data collection.

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