Of Markets and Subsidies: Counter-intuitive Trends for Clean Energy Policy in the European Union and the United States

Abstract

Abstract The United States (US) is frequently portrayed as a nation with a deep distrust of big government and a strong commitment to markets and competition. In contrast, the prevailing image of the European Union (EU) is that of a highly bureaucratized polity favouring interventionist economic governance over free market capitalism. In the context of clean energy, however, these roles appear to be somewhat reversed. A top-level survey of the US clean energy policy landscape reveals a surprisingly pervasive reliance on government subsidies with few, if any, competitive elements. EU clean energy policy, meanwhile, reflects an unexpected commitment to market-based instruments and competition. This article suggests that these counter-intuitive policy trends can be explained by critical differences in the black-letter law of both jurisdictions and its enforcement in the courts, among other factors. Unlike their American counterparts, EU judges prioritize the timely transition to a low-carbon energy economy over unrestricted competition among Member States. As the EU pushes for greater intrastate competition in clean energy policy, the US focuses instead on defending the Founding Fathers’ ideal of unfettered interstate competition.