Transverse Integration and Crisis-Driven Incrementalism: 2021-2022 Price Shock and the Partial EU Power Market Reform

This paper explores why major external shocks often lead to incremental adjustments in EU policymaking rather than deeper integration or disintegration. The empirical puzzle arises from the EU’s response to the Russian invasion of Ukraine and the ensuing energy price crisis, which—despite challenging the foundations of the common power market—resulted only in limited reforms to the EU electricity market design (preserving marginal pricing and short-term markets, expanding the use of long-term contracts, strengthening consumer protection, and reaching compromise solutions on supporting nuclear energy). The study pursues two main research tasks. The first is to situate case-specific insights from document-based process tracing of the electricity market reform within broader theoretical debates on EU integration and crisis-driven policymaking. The formulation of an explanatory causal mechanism and the application of process tracing illustrate how reform debates surrounding multiple national approaches – the “Iberian exception,” France’s energy sovereignty ambitions and pro-nuclear strategy, Germany’s discussions on industrial support schemes and potential bidding zone division, and Poland’s advocacy of coal-generation interests – to a different extent shaped the EU’s final electricity market reform. Theoretically, the paper extends Schimmelfennig’s (2024) model of EU policy crises by introducing a scenario in which shocks trigger incremental adaptation rather than renewed integration. It explains post-crisis incrementalism not through the resilience of neoliberal ideas, but through the structural logic of EU governance and the Commission’s brokerage role between diverging member-state preferences. Drawing on Dyson and Marcussen’s (2010) notion of transverse integration as a dynamic equilibrium between unitary ambitions and differentiated realities, the study shows how competing national policy visions reinforced incremental change in the EU electricity market reform. The second task is to unpack the sectoral industrial interests behind the dynamic competition among visions and preferences of various member states and EU institutions, enabling an exploration of the boundaries of major pro-status-quo coalitions and societal alliances around the idea of a more radical market overhaul. The analysis of non-state intersectoral coalitions supporting different regulatory ideas is conducted through automated textual analysis of consultation responses submitted by 114 organizational stakeholders to the European Commission.