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(Working Paper #10) Preparing a Public Pathway: Confronting the Investment Crisis in Renewable Energy

By By Sean Sweeney and John Treat - Trade Unions For Energy Democracy, November 2017

Inadequate levels of investment in renewable energy are a major obstacle standing in the way of the transition to a new, renewables-based energy system. TUED Working Paper 9, Energy Transition: Are We Winning? raised this investment deficit in passing and in a very broad context: Fossil-based energy use is rising globally, and renewables have so far failed to seriously alter the overall direction of global energy systems. “Modern renewables” like wind and solar remain on the margins of the global energy system. At the end of 2015, wind and solar PV together generated just 4.6% of global electricity.

By using the term “investment deficit” we aim to draw attention to the discrepancy between the levels of investment in renewable energy that are currently being seen around the world and those levels that are widely considered necessary to meet the science-based emissions targets and temperature thresholds articulated in the 2015 Paris Climate Accord: “well below two degrees Celsius” and “net zero emissions.”

It is also necessary to stress at the outset that the investment deficit in renewable energy is part of a much larger investment shortfall in what are often referred to as “low-carbon solutions” or “green technologies” (including, for example, storage and conservation). We touch briefly on this below but focus mainly on generation— principally wind and solar power.

Echoing a string of recent reports, a 2017 study by the International Energy Agency and the International Renewable Energy Agency (IEA-IRENA), Perspectives for the Energy Transition: Investment Needs for a Low-Carbon Energy System, estimated that investment in renewable energy needs to be more than double 2016 levels by 2030, reaching roughly $600 billion per year, in order to be consistent with the effort to keep global temperatures below the warming threshold of two degrees Celsius. This means approximately $14 trillion of investment in wind and solar generation, combined, by 2030.

Like many similar studies, however, the IEA-IRENA study fails to explain why, in a world awash with “idle capital,” the investment deficit in renewables exists at all. The present paper attempts to address this crucial issue. We believe that an honest review of the data and the policy history leave no doubt that the dominant policy paradigm—justified (and perhaps blinded) by a constant insistence on the need to “mobilize private sector investment”—has failed, even on its own terms, either to generate the kind of momentum needed to drive a full-on energy transition or to seriously impede the rise in fossil fuel use. We believe such a review also shows that the prospects for the dominant policy paradigm to produce results consistent with any serious effort to reduce emissions—let alone meet the Paris targets—are extremely poor.

We will attempt to show that any effort to address the investment deficit must deal with its systemic and institutional roots. These roots trace back to the privatization and liberalization of electricity markets that began in the UK in the 1980s, became EU policy in the 1990s, and have since come to define the dominant policy approach in many parts of the world. Even where energy systems have remained publicly owned, the policy approach to renewables is oriented toward private corporations and investors.

Download (PDF).

Bringing Power to the People: The Unlikely Case for Utility Populism

By Kate Aronoff  - Dissent, Summer 2017

One glaring omission in the postmortem handwringing about the 2016 election is the fact that most poor people in America—of all races and genders—simply didn’t vote. They were prevented from doing so by a number of structural barriers—voting restrictions, second and third jobs, far-flung polling locations—as well as a lack of excitement about two parties they saw as having abandoned them.

Enter: twenty-first-century electric cooperatives, a perhaps unlikely player in the contest for power between progressives and conservatives in the heart of so-called Trump country in rural America.

If there’s one thing poor, rural communities tend to have in common, it’s where they get their power—not political power, but actual electricity. Over 900 rural electric cooperatives (RECs)—owned and operated by their members—stretch through forty-seven states, serving 42 million ratepayers and 11 percent of the country’s demand for electricity. They also serve 93 percent of the country’s “persistent poverty counties,” 85 percent of which lie in non-metropolitan areas. REC service areas encompass everything from isolated farm homes to mountain hollers to small cities, with the highest concentrations in the South, the Midwest, and the Great Plains. And they might just offer an opportunity to curb the right and the climate crisis alike.

Nominally democratic, RECs have the ability to transform a sizable chunk of America’s energy sector—one of the highest-polluting parts of our economy. Servicing ratepayers whose top agenda may not be climate change, the push to integrate renewables into RECs’ energy mix nonetheless grounds the transition away from carbon-intensive fuels in something more material: energy bills. Member-owner reformers dotting the map of red and rural America are already waging fights over their cooperatives on two fronts: for basic representation and for energy efficiency. Their work—combining a zeal for small-d democracy with one for bringing down emissions—could hold the key to making sure the transition away from fossil fuels includes some of the poorest places in the country on the ground floor. Crucially, it could also help extend our much heralded clean energy revolution beyond liberal enclaves like New York and California. If successful, reformed RECs could give progressives a much needed foothold in places the Democratic Party has long since abandoned. They might also help greens refocus fights onto pocketbook issues.

Understanding the RECs’ radical potential, however, means understanding their history. Rural electrification was intended to accomplish one goal: to serve people neglected by the private sector. At the start of the Great Depression, some 90 percent of rural homes lacked electricity. For private utilities (the only game in town at the time) extending power lines to customers spread out over tens or hundreds of miles simply wasn’t worth the cost—especially considering that the vast majority of those potential customers happened to be poor.

Our Best Shot at Meeting Paris Goals? Make Energy Public

By Sarah van Gelder - Yes! Magazine, July 9, 2017

Mayors across the country have vowed to deliver on the goals of the Paris climate accord in defiance of President Trump’s decision to back out. But how can they, realistically, when the national government is questioning climate science and promoting coal, fracking, and pipelines?

Simply put: Make energy public. Instead of privatizing city services, as some policymakers have long advocated, a new report shows that public ownership gives cities and towns the best shot at meeting renewable energy and efficiency targets.

Reclaiming Public Services: How Cities and Citizens are Turning Back Privatization,” a study by the Amsterdam-based Transnational Institute, challenges the ideas that governments are ineffective service providers, that private companies are more efficient, and that austerity budgeting and reductions in public service are inevitable.

Cities and towns that want well-run water and sanitation services, low-cost access to the internet, and affordable housing should keep those operations public or run by local nonprofits, the report found. If these services are now private, the institute recommends “re-municipalization.”

The report is based on research involving 1,600 cities in 45 countries that have chosen public ownership over corporate ownership, especially of their energy and water systems. “These (re)municipalisations generally succeeded in bringing down costs and tariffs, improving conditions for workers and boosting service quality, while ensuring greater transparency and accountability,” the report concludes.

Both Hamburg, Germany, and Boulder, Colorado, for example, are making their electric power enterprises public in order to shift to green and renewable energy sources.

In France, 106 cities and towns have taken over their local water systems in the past 15 years, in spite of the fact that France is home to some of the world’s largest private water companies. During that time, the report found that no French cities went the other direction and privatized their water system.

The report focuses on water and energy services, but there are many other services that benefit from local public ownership—some unexpected. The French towns of Mouans-Sartoux and Ungersheim bought farmland and hired local farmers to supply organic produce for school lunches. In India, the Tamil Nadu government opened dozens of public low-cost restaurants run by impoverished women to feed the poor. Argentina privatized postal services in 1997, but just six years later, renationalized the service in response to the private company’s poor service and high prices.

Privatization is tempting; it can provide local governments with short-term cash infusions. What politician doesn’t like to fill a budget hole without raising taxes? But the infusions don’t last. The private companies must pay large sums to their shareholders and executives, which they often do by cutting corners on upkeep, wages, and services, or jacking up customers’ rates. Instead of circulating locally, that money leaves a city’s economy.

According to the report, once a service is turned over to a private company, many cities found it was difficult to maintain accountability. They faced cost overruns, poor service, and violations of contracts. Many found they saved money and improved services when services went back into public hands.

Although family-owned or worker-owned businesses and consumer cooperatives are essential to local economies, some services—like water and sanitation—are best operated at a municipal or regional scale, and multiple providers may not make sense. In cases of these natural monopolies, local public ownership especially makes sense.

Like an ecosystem, a functioning local economy requires diversity. It needs many forms of ownership and types of entities. To thrive over years, each entity must both give and take; they must be in relationship with the people, institutions, and ecosystems that make up each community. When a local economy is dominated by enterprises that work to extract value for Wall Street banks or corporations controlled by absentee owners, communities are drained of their common wealth. It is that concern that drives much of the opposition to big international trade deals, like the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership, which critics say favor corporate rights over those of local government.

On the other hand, local entities, whether operated by worker-owners, families, nonprofit enterprises, or local governments, seek out multiple bottom lines—multiple benefits for employees, young people, vulnerable residents, and other local enterprises. They also take responsibility for their own human and natural communities. That is how We the People and the natural world can thrive for the long term.

Our Best Shot at Meeting Paris Goals? Make Energy Public

By Sarah van Gelder - Yes! Magazine, July 9, 2017

Mayors across the country have vowed to deliver on the goals of the Paris climate accord in defiance of President Trump’s decision to back out. But how can they, realistically, when the national government is questioning climate science and promoting coal, fracking, and pipelines?

Simply put: Make energy public. Instead of privatizing city services, as some policymakers have long advocated, a new report shows that public ownership gives cities and towns the best shot at meeting renewable energy and efficiency targets.

Reclaiming Public Services: How Cities and Citizens are Turning Back Privatization,” a study by the Amsterdam-based Transnational Institute, challenges the ideas that governments are ineffective service providers, that private companies are more efficient, and that austerity budgeting and reductions in public service are inevitable.

Cities and towns that want well-run water and sanitation services, low-cost access to the internet, and affordable housing should keep those operations public or run by local nonprofits, the report found. If these services are now private, the institute recommends “re-municipalization.”

The report is based on research involving 1,600 cities in 45 countries that have chosen public ownership over corporate ownership, especially of their energy and water systems. “These (re)municipalisations generally succeeded in bringing down costs and tariffs, improving conditions for workers and boosting service quality, while ensuring greater transparency and accountability,” the report concludes.

The reversal of privatization and an urban coming of age

By staff - Rabble.Ca, June 23, 2017

A gentle revolution is underway in Barcelona, Spain. Until recently, prevailing wisdom has been that efficient, quality and cheap services are best provided by handing everything over to the private sector. These days are gone. From energy supply to kindergartens to funeral services, the municipality is providing more and more of the basic needs of its citizens at affordable and transparent prices. Following a city council motion in December 2016, Barcelona is now aiming to municipalize its water service. Since the progressive coalition Barcelona en Comú gained power in the Catalan capital, the city has introduced a wide-ranging policy of remunicipalizing outsourced public services and creating new ones.

Barcelona is not unique in this respect. Thousands of public officials, workers, unions and social movements are working to create effective public services that address the basic needs of people and respond to social, environmental and climate challenges. They do this most often at the local level. Reclaiming Public Services, a new report, found that there have been at least 835 examples of (re)municipalization of public services worldwide in recent years, involving more than 1,600 cities in 45 countries.

Cities and towns around the world are following different models of public ownership, with citizens and workers involved in a variety of ways. People are moving away from private options and developing new, public ways to deliver services. Far from being an anomaly, bringing services like transport, health care and energy back under public control is a worldwide trend -- and one that makes sense.

Privatization has been given ample chance to succeed and has come up short. The persistent myth that public services are by nature more expensive, inefficient and outdated, and that we, as citizens and users, should resign ourselves to paying ever higher tariffs for ever lower standards has not yet abated. Nor has the idea that service workers have no choice but to accept ever more degraded conditions. Because everything is seen to have a price, many politicians have lost sight of the common good, while "taxpayers" are sometimes only interested in their own individual pursuits.

The remunicipalization movement tells a very different story. While it is still in its infancy in Canada, the remunicipalization movement in Europe can be seen as a response to austerity policies and is being carried forward by an increasingly diverse array of politicians. Successful (re)municipalization experiences inspire and empower other local authorities to follow suit. We see it in the way municipalities and citizens have joined forces in Germany to push for energy democracy. In France and Catalonia, networks of public water operators pool resources and expertise, working together to deal with the challenges of remunicipalization.

There are many examples from outside Europe too. In India, the city of Delhi began the process of delivering affordable primary public health care in 2015 by setting up 1,000 Mohalla (community) clinics in 2015. Since then more than 2.6 million of its poorest residents have received free quality services.

These locally rooted changes are providing improved services as well as savings for local authorities and the public. The Nottingham City Council in the U.K., for example, decided to set up a new energy supply company in 2015 after finding that many low-income families in the city were struggling to pay their gas and electricity bills. Robin Hood Energy offers a cheaper service than private providers because it neither extracts profits nor confuses customers with complicated pricing schemes. The company, which offers the lowest energy prices in the country, has the motto: "No private shareholders. No director bonuses. Just clear transparent pricing." They have also formed partnerships with other major cities. In 2016, the city of Leeds set up the White Rose Energy municipal company to promote simple no-profit tariffs throughout the Yorkshire and Humberside regions. In 2017, the cities of Bradford and Doncaster agreed to join the White Rose/Robin Hood partnership. Meanwhile, campaigners with Switched on London are pushing their city to set up a not-for-profit energy company with genuine citizen participation. The motivations in these diverse cities are similar: young municipal companies can simultaneously beat energy poverty and play a key role in achieving a just and renewable energy transition.

Bringing Power to the People: The Unlikely Case for Utility Populism

By Kate Aronoff  - Dissent, Summer 2017

One glaring omission in the postmortem handwringing about the 2016 election is the fact that most poor people in America—of all races and genders—simply didn’t vote. They were prevented from doing so by a number of structural barriers—voting restrictions, second and third jobs, far-flung polling locations—as well as a lack of excitement about two parties they saw as having abandoned them.

Enter: twenty-first-century electric cooperatives, a perhaps unlikely player in the contest for power between progressives and conservatives in the heart of so-called Trump country in rural America.

If there’s one thing poor, rural communities tend to have in common, it’s where they get their power—not political power, but actual electricity. Over 900 rural electric cooperatives (RECs)—owned and operated by their members—stretch through forty-seven states, serving 42 million ratepayers and 11 percent of the country’s demand for electricity. They also serve 93 percent of the country’s “persistent poverty counties,” 85 percent of which lie in non-metropolitan areas. REC service areas encompass everything from isolated farm homes to mountain hollers to small cities, with the highest concentrations in the South, the Midwest, and the Great Plains. And they might just offer an opportunity to curb the right and the climate crisis alike.

Nominally democratic, RECs have the ability to transform a sizable chunk of America’s energy sector—one of the highest-polluting parts of our economy. Servicing ratepayers whose top agenda may not be climate change, the push to integrate renewables into RECs’ energy mix nonetheless grounds the transition away from carbon-intensive fuels in something more material: energy bills. Member-owner reformers dotting the map of red and rural America are already waging fights over their cooperatives on two fronts: for basic representation and for energy efficiency. Their work—combining a zeal for small-d democracy with one for bringing down emissions—could hold the key to making sure the transition away from fossil fuels includes some of the poorest places in the country on the ground floor. Crucially, it could also help extend our much heralded clean energy revolution beyond liberal enclaves like New York and California. If successful, reformed RECs could give progressives a much needed foothold in places the Democratic Party has long since abandoned. They might also help greens refocus fights onto pocketbook issues.

Understanding the RECs’ radical potential, however, means understanding their history. Rural electrification was intended to accomplish one goal: to serve people neglected by the private sector. At the start of the Great Depression, some 90 percent of rural homes lacked electricity. For private utilities (the only game in town at the time) extending power lines to customers spread out over tens or hundreds of miles simply wasn’t worth the cost—especially considering that the vast majority of those potential customers happened to be poor.

Reclaiming Public Services: How cities and citizens are turning back privatisation

Edited by Satoko Kishimoto and Olivier Petitjean - Transnational Institute, June 2017

You would be forgiven, especially if you live in Europe, to think that public services are by nature expensive, inefficient, maybe even somewhat outdated, and that reforming them to adapt to new challenges is difficult. It would seem natural to assume – because this is what most politicians, media and so-called experts tell us continuously – that we, as citizens and users, should resign ourselves to paying ever higher tariffs for services of an ever lower standard, and that service workers have no choice but to accept ever more degraded conditions. It would seem that private companies will inevitably play an ever larger role in the provision of public services, because everything has a price, because politicians have lost sight of the common good and citizens are only interested in their own individual pursuits.

This book, however, tells a completely different story. Sometimes it may feel as though we are living in a time when profit and austerity are our only horizons. In reality, below the radar, thousands of politicians, public officials, workers and unions, and social movements are working to reclaim or create effective public services that address the basic needs of people and respond to our social, environmental and climate challenges. They do this most often at the local level. Our research shows there have been at least 835 examples of (re)municipalisation of public services worldwide in recent years, some of them involving several cities. In total there have been more than 1600 cities in 45 countries involved in (re)municipalisation. And these (re)municipalisations generally succeed-ed in bringing down costs and tariffs, improving conditions for workers and boosting service quality, while ensuring greater transparency and accountability.

Read the text (PDF).

It's Time to Take Over the Big Energy Firms

By staff - Fire Brigades Union, August 2014

How can we solve the problems of climate change, eliminate fuel poverty and improve energy security? Most politicians look to the market for solutions – but these plainly do not work.

The climate crisis has been caused largely by around 100 companies, which between them produced nearly two-thirds of the greenhouse gas emissions generated since the dawn of the industrial age.

Fifty of those fi rms are privately-owned – mostly oil companies such as Chevron, Exxon, BP and Royal Dutch Shell and coal producers such as British Coal Corp, Peabody Energy and BHP Billiton. Some 31 of the companies are state-owned companies such as Saudi Aramco, Gazprom and Statoil. Nine were government-run industries, producing mainly coal in countries such as China, the former Soviet Union, North Korea and Poland.

Everyone knows that heating and lighting our homes are basic necessities – yet the price of doing so continues to spiral upwards across the globe. It’s a disgrace that 25,000 people die of the cold every winter in the UK. Yet the government’s own projections say that gas prices are likely to go up over the next decade. Poorer families spend more than high earning households as a proportion of their spending on energy bills. This fuel poverty is a blight on the lives of millions – and a damning indictment of the welfare system in this day and age.

The UK has some of the least energy efficient households in Europe. Refurbishing, modernising and rebuilding the housing stock would make sense for improving living standards, reducing carbon emissions and creating hundreds of thousands of jobs. However the rule of the market does not and will not provide the investment needed.

Read the report (PDF).

Tragedy of the Commons Versus Common Ownership

By A Johnston - Socialism or Your Money Back, May 3, 2011

In 1968 an American biologist Garrett Hardin invented a parable to explain why, in his view, common ownership was no solution to the environmental crisis and why in fact it would make matters worse. This was sweet music to the defenders of capitalist ownership of the means of producing wealth, and Hardin’s parable was soon incorporated into the arsenal of anti-socialist arguments.

Called "The tragedy of the commons", his parable went like this: Picture a pasture open to all, assume its a pasture to which all herdsmen have free access to graze their cattle. In these circumstances, it is to be expected that each herdsman will try to keep as many cattle as possible on the commons. Such an arrangement may work reasonably satisfactorily for centuries because tribal wars, poaching and disease keep the numbers of both man and beast well below the carrying capacity of the land. Finally, however, comes the day of reckoning, that is, the day when the long desired goal of social stability becomes a reality At this point, the inherent logic of the commons remorselessly generates tragedy.

As a rational being, each herdsman seeks to maximise his gain. Explicitly or implicitly, more or less consciously, he asks "What is the utility to me of adding one more animal to my herd?" This utility has one negative and one positive component.

  • 1. The positive component is a function of the increment of one animal. Since the herdsman receives all the proceeds from the sale of the additional animal, the positive utility is nearly +1.
  • 2. The negative component is a function of the additional overgrazing created by one more animal. Since, however, the effects of overgrazing are shared by all the herdsmen, the negative utility for any particular decision-making herdsman is only a fraction of -1.

Adding together the component partial utilities, the rational herdsman concludes that the only sensible course for him to pursue is to add another animal to his herd. And another; and another… But this is the conclusion reached by each and every rational herdsman sharing a commons. Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit—in a world that is limited. In the end, its carrying capacity would be exceeded, resulting in environmental degradation. Ruin is the destination towards which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in the commons bring ruin to all.

Hardin's solution to this tragedy of the commons is "mutual coercion". An appeal to conscience, he argues, is altogether futile. Mutual coercion can be effected through, as it were, enclosing the commons and instituting a system of private property which will enforce a sense of responsibility among herdsmen as to the appropriate number of cattle their land can provide for without resulting in overgrazing. Since they cannot encroach on land owned by other herdsmen, the consequences of keeping too many cattle will be exclusively borne by them. This knowledge will therefore deter them from acting irresponsibly in the first place. Governments drew from Hardin’s theorising was that in existing cases where producers had rights of access to a “common-pool resource” the solution was either to privatise the resource or to subject the producers to outside control via quotas, fines and other restrictions.

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