European gas market liberalisation: Are regulatory regimes moving towards convergence?

In the 1980s and 1990s, privatisation and liberalisation of European gas markets emerged on the political agenda. Back then, “many of the established actors in European gas industry still regarded the introduction of liberalisation as the equivalent of the end of civilisation” (Stern, 1998: 91). Ever since, attempts to liberalise European gas markets were facing strong opposition
and resistance from the industry and industry-oriented governments, aiming to maintain the status quo of market organisation. Initially ambitious regulatory targets from the European Commission boiled down to a very basic introduction of competition and liberalisation in form of the first gas directive. However, the European gas reform marks the starting point for
restructuring the gas sector and its economic governance. European gas markets have gone through profound restructuring processes in the last 10 years. In 1998, the European gas market resembled a patchwork of national markets with highly heterogeneous regulatory regimes. Since then, a European gas market reform attempted to integrate and harmonise gas markets while asking for country-specific solutions to take into account different national characteristics. In early 2000, the European Commission (EC) expressed the over-optimistic expectation of reaching full liberalisation by 2004. Two years later, the European gas market reform was described as a “patchy process” (see EC Inform-Energy, 2002: 16). In 2007, the EC officially
spoke out about what many observers were claiming for years: European gas markets lacked competition, cross-border integration, and harmonisation. Due to the discretion of the European framework regulation, member states could choose to a large extent which regulatory instruments to apply. As a consequence, the reform brought about a divergent convergence of
regulatory regimes which now functions as a framework for natural gas market organisation in the European Union. This study aims to assess the degree and direction of policy convergence applied to regulatory regimes that came into existence in order to realise European gas market liberalisation.

By: Nadine Hasse