The real energy debate has as much to do with democracy as technology, writes ALAN SIMPSON
WHAT a sad place Parliament is at the moment. Lust, mistrust and the abuse of power have stripped Parliament of the confidence it needs to tackle today’s structural crises and the existential ones that lie beyond.
The New York Times published an article on Monday detailing how far all nations are from meeting the Paris Agreement commitment to live within a 2°C rise in global temperatures. Not a single continent or bloc is on track to meet its targets.
On current trends, we will be lucky to keep temperature rises to less than 3.5°C, at which point all bets about any sustainable economics are off.
Free trade agreements with anyone and everyone will be delusional. Riding the storms will be the order of the day.
It is still possible to avoid this, but politicians of all parties have to concentrate on not fondling the planet’s knees rather than each other’s. Even for the well intentioned, this is going to be a challenge.
At the last election, Labour tapped into a political zeitgeist that was looking for something more honest, more open and more socially inclusive. It wasn’t enough to win, but it saw off the rout the right had hungered for.
By the time of the next election everything will be so much worse. The principles of openness, accountability and sustainability will have to be turned into policies that transform economics itself.
This is the challenge Labour must now rise to.
Optimists may turn to the likes of Venezuelan economist Carlota Perez who’ve long argued that today’s technology revolutions may yet dig us out of this hole. Their claim is that these will bring “not only a full revamping of the productive structure, but eventually a transformation of the institutions of governance, of society, and even of ideology and culture.”
If this is true, then transformative technologies themselves will have to be made socially accountable.
Nothing in the government’s approach to market economics suggests this is their direction of travel. If anything, the risk is that Britain will swap one form of corporate imperialism for another; leaving the planet and the poor as marooned as they are today.
Energy economics is a case in point. Ignore the Saudi purges pushing up the short-term oil price, or Donald Trump’s attempt to sell coal as a solution to climate change, the real challenge comes in the ownership of genuinely transformative technologies.
For all the lip service given to support for renewable energy technologies, the British government is systematically squeezing energy democracy out of the picture.
Virtually all investment in the British energy sector is now publicly funded. An elaborate web of government subsidies directs payments to large power generators rather than decentralised renewables.
These range from the ludicrously expensive price-guarantee deal for Hinkley C, to “capacity payments” offered to existing power stations, to clean-up costs picked up by the public for both oil extraction and nuclear waste, and to the new, long-term power purchase agreements (PPAs) that onshore renewables are excluded from.
At a local and community level, Ofgem now plans to compound the problem. It wants to change the basis of domestic “network charges” so they are no longer levied on a household’s net consumption but on its overall demand for electricity, including any generated on site.
So instead of rewarding households with solar panels — for reducing demand pressures on the grid — Ofgem wants them penalised.
What Ofgem ignores is that up to 250,000 of Britain’s poorest households have had panels installed by their local authority or housing association: all done in programmes to alleviate fuel poverty. Ofgem’s approach to “market fairness” would reverse this, making the fuel-poor even poorer.
German counterparts are baffled by such regressive thinking. “Why tax the solution,” they ask, “when you could tax the problem instead?”
To do so Ofgem would just need to lay network charges in the lap of the most polluting power stations, rather than added to the bills of the non-polluting poor. It is an option that big energy will not even entertain.
Instead, Ofgem prefers to open up a faux divide between those who are part of the solution and those who just wish they were. Big energy will fleece both.
Britain’s energy game is rigged and rotten. In a piercing summary of how corporate power calls all the shots, energy economist David Toke observed that the government “clearly seem to favour big power plant over decentralised options for balancing electricity supply and demand, including battery storage and demand-side response.
“Really these technologies should now be routinely combined with renewable energy schemes to create ‘virtual power plant’ to deliver energy services for consumers.”
Virtual power networks and local power grids would offer an alternative route into energy democracy. But it is a route the government clearly opposes. As Toke himself concluded: “The revolution is being held back by the dead hand of the centralised power regime.”
Labour needs to be wary of falling into the same trap. Today’s energy market framework should be scrapped not tweaked.
The challenge is more about how to democratise and localise rather than just to nationalise. This is the opportunity today’s disruptive technologies offer.
The key will be to identify a framework of public funding programmes that underpin a shift into the socially accountable as well as the ecologically sustainable.
We quickly forgot how effective feed-in-tariffs (FITs) have been in widening citizen involvement in Britain’s clean energy revolution.
Their influence ran from schools and energy co-ops to households and public authorities. Elsewhere, countries added annual “degression” rates to the tariff payments, forcing efficiency (and cost reduction) gains to run alongside market transformation.
Other countries also offer “rights of local supply,” allowing localities to sell the energy they generate to their own communities — and at a fraction of national retail prices. It is an approach opposed, in equal measure, by the Tory government, its big energy donors and existing market regulators.
Nothing makes this point more forcibly than the Friends Provident Foundation report Gridlock in UK Power Markets. Its focus is on the threat to shareholder value from big energy dominance of the British electricity market.
But it is the threat to democracy that the rest of us should worry about.
The assessment itself offers a scary insight into of how far big energy is from Britain’s official decarbonisation, decentralisation and democratisation agenda — towns, cities and even villages across the land may hunger for the right to deliver more of their own energy security (and keep the revenues associated with it) but this isn’t where policy is heading.
All the technologies that might deliver smart, flexible and local must play second fiddle to “big.” Even “green” is becoming a market for colonisation rather than decentralisation.
This is how we need to understand Shell’s investment in electric vehicle charging points at petrol stations, its (belated) interest in offshore wind and Vattenfall’s 1.8GW wind farm in the North Sea.
To catch up, Shell wants the British government to launch a new, 5-6GW round of offshore wind targets, and to offer them in a single auction. Tomorrow’s green oligarchs are
slowly encircling Britain’s coastline.
None of the British community wind co-ops will, of course, get a look in; not just because they are onshore, but because they lean towards more localised, socially accountable market models. Big isn’t troubled by such niceties. It wants ownership and market dominance.
This is why government “green” subsidies have been skewed towards the offshore and why contracts for battery storage are scaled to favour big generators rather than smaller localised ones.
The downgraded status the government now attaches to “demand-side reduction” measures simply reinforces this message.
Nowhere will you find a government commitment to devolved (and reducing) carbon budgets or to duties on the energy system to reduce energy consumption, provide heat (as well as power) services or to clean up air quality.
Energy saving duties — especially on networks rather than power stations — would force the grid to co-invest (with localities) in making homes and businesses more energy efficient. It would be the most effective route into clean transport and air quality improvements too. But green imperialism will have none of it.
The one comfort in this sorry tale is that it can be rejected and reversed. In doing so, Labour could rebut perhaps the greatest fallacy in neoliberal economics — its claimed belief in free and open markets.
My dad used to mock my economics notes on free trade and perfect competition.
“Show me a free market of three,” he would chide, “and I’ll show you a cartel of two. Don’t kid yourself, businesses don’t want perfect competition. They like niche markets. The bigger the business, the bigger the niche it wants.”
Big energy’s obsession has never, fundamentally, been about fossil fuels. It’s interest is in power — market power; the hegemonic ability to dominate, whatever the game. This is why the real energy debate has as much to do with democracy as technology.
No doubt my dad would be saying this is what today’s conversation about an “inclusive” green economy has to address. To be colonised is not the same as being free. Perhaps this time round I will have the sense to listen.