Pricing Power: The Political Economy of Renewable Energy Transitions in Europe

Max Willems

Who wins from decarbonization, who loses, and why? While climate politics research has largely focused on conflicts between “green” and “brown” interests, more recent scholarship conceptualizes climate policy as a distributional bargain between corporate actors and the state. Although the electricity sector sits at the center of such decarbonization bargains, political economists have largely neglected them as a site of distributional conflict. Yet electricity prices are inherently political: Market design, subsidies, tariff structures, and network charging regulation are all shaped by political decisions and can differentiate sharply between different producer and consumer groups. Governments use electricity pricing to promote social equity, recover policy costs, and advance industrial policy goals. Even within the common European electricity market, pricing generates very different distributional outcomes across countries, as this project shows by tracing negotiations over renewable energy policy costs and benefits in Germany, Sweden, Spain, and the United Kingdom since the mid-1990s. It argues that variation reflects the ability of key economic actors to present access to lower electricity prices as being essential to their national growth model, given the joint legacy of the energy and industrial sectors in each country. This perspective highlights distributive dimensions of the energy transition that have so far received insufficient attention.