What is our toolkit for sustainable and equitable energy?
A deep dive into the 'policy mix' of energy democracy
What are the instruments we have that could make energy flow both sustainably and more equitably? (As a friendly reminder, sustainability and equality cannot be separated. If moral reasons don’t do it for you, than logistical reasons should sway you: a more equitable society is a more capable society.) I come to you today with an overview of just such instruments that Matthew Burke and Jennie Stephens (2017) carefully assembled out of both the scientific and grey policy literature. Let’s call it a kind of state of the art of progressive energy wonkery.
To them, the main momentum in this field derives from the idea of energy democracy, which is able to capture multiple aspects of what a sustainable energy transition will have to look like. They base their overview of the energy democracy field on the work done by Sean Sweeny et al who summed up the agenda with these three Rs: resist, reclaim and restructure.
Energy democracy goals include a shift to 100% renewable energy sources in ways that resist the dominant fossil-fuel energy agenda, re-claim social and public control over the energy sector, and restructure the energy sector to better support democratic processes, social justice and inclusion, and environmental sustainability. (37)
Resist not only means pushing back against the fossil fuel industry in every way, but also stopping the privatization of energy. Reclaiming the energy sector involves re-defining it as a public good, which means new ownership and business models that are put together explicitly to serve public interests. Restructuring follows directly from that and entails integrating the energy sector more closely with communities, especially “front-line” communities that stand to gain the most (but the literature also mentions working towards the elimination of geopolitical competition over resources).
Just from this very brief introduction, I’d like you to take away two things: one, democratization is not just about participatory decision-making. It has to do with distribution, or in normal speak: fairness. Two, if you want to a more sustainable and equitable energy system, you need to make space for it. That is why resisting comes first here: scaling down fossil fuels is a priority. All these policy instrument discussed here will stay in the margins as long as you don’t pro-actively (but responsibly) shut down the fossil energy sector.
The clean energy movement is traditionally not very good at this, and understandably so. However:
Given a growing sense of urgency in responding to climate change, the push to resist expansion of fossil fuel extraction may need to take precedence and deserve more immediate action. (Burke & Stephens, 44)
The good news is: recent weeks have shown that it’s not as difficult as you might imagine. Except for the behemoths, a lot of the fossil extraction business is in a very precarious financial condition, depending directly on state support to keep going. That gives the state – the public – power. In theory. (Write to your representative of choice to make it so.)
Back to the overview. They divide their policies up into “regulatory context, financial inclusion measures, economic institutions, and new energy system institutions”. So strap on your goggles, folks, we’re going for a deep dive!
Actually, what I’ve done is to take the instruments and indicate whether local, regional and/or national government could initiate the policy and whether I thought the policy was low, mid or high hanging fruit. As a sort of quick orientation into the field.
Legend
I made some infographics for your pleasure-seeking, promiscuous eyes, to make up for the boring black lines on white screens.
Big Greek looking building: federal or central government. Mid-sized Greek looking building: state or provincial government. Small Greek looking building: municipal government. If you see a building in technicolor, that means that level of government should have competence for the policy instrument in question.
Note: please be disclaimed of the fact that while Burke and Stephens sensibly targeted their review to one country (the US), I’m making senselessly sweeping claims across nations. Of course, the wildly varying distributions of competences across federal and unitary political systems (and within them) means that it’s difficult to say anything generally valid. (It especially leaves the regional level a muddy category.) Uhm, I guess you’ll know when it comes to your own country?
Then, for the level of difficulty:
😎: ain’t no thing aka easy does it (aka low-hanging fruit)
🤓: Yes, we can! aka where’s a technocrat when you need one (aka mid-hanging fruit)
😓: OK, so this isn’t a rose garden aka fight the power (aka high-hanging fruit)
Note: the level of difficulty is not ‘technical’: all of these instruments have been deployed and can be deployed successfully in many contexts. The difficulty refers to the institutional changes they require. Creating ‘political will’ is not part of this calculation, except for those instruments that aim at resisting the fossil fuel sector. The amount of pushback they’ll likely get feels essential to their implementation.
Regulatory context
“Statutory priority for demand reduction and distributed generation”. As discussed earlier, reducing our energy demand is critical to the overall transition to work. In addition, cost-savings are crucial for fair energy. It also happens to pair quite well with low-yield local energy production. National governments can do a lot to push these, but every level of government has competencies in this matter.
Quite a few countries have been playing around with some form of “shared or community solar”. Just as important is the ability to buy into electricity generation if you don’t live nearby a generation site. Getting credits towards your energy bill for that can be facilitated by new regulation.
Setting standards is a tried and true instrument. Predictably incrementally progressive standards are the best. One example in this field is setting minimum requirements for renewable and/or distributed energy.
The key to ensuring proper “participatory energy planning and deliberation” is ownership – as a better guarantee than the goodwill of the planners. Co-ownership can be mandated.
Note: I classified this as low-hanging, but by that I mean it’s easy to start doing it. How things work in detail might still be tricky. Take the example of involving communities in the earliest stages in local renewable projects. That should be a no-brainer by now, but that doesn’t mean it’s easy to do. (I actually want to keep coming to this topic, gathering some collective experience.)
“A CCA functions by designating a public agency such as a municipality, county or other jurisdictions as the aggregator, to procure electricity on behalf of ratepayer “. This can be a bit of a fight, because it really messes with ‘the way we’ve always done things’, and because it isn’t how most towns have done it, it requires setting-up a whole new institutions. They have been set up by municipalities wanting to make good on promises to reach net-zero and it has proven an effective instrument.
In exchange for new energy developments, the contractor needs to ‘give back’ in some tangible way. We discussed one case of CBA earlier, which consisted of a kind of trust fund for local projects. However, many other kinds of stipulations are possible, from labour standards to environmental restoration. These things can be ‘encouraged’ in negotiations, but maybe should be mandatory, which would require legislation (which would make this a higher hanging fruit).
Financial inclusion
This is high on the no-brainer scale. Burke and Stephens specifically mention targeting efficiency and weatherization, as well as community based organizations. This could be national, but the more local, the better equipped, probably. As suggested by Mariëlle Feenstra recently, the government can act as a financial facilitator for local governmental action.
Debt is a powerful tool that should be wielded great care. Here, a utility, municipality or other (public sector) third party fronts the costs for a household’s renewable investments and the debts is paid off through the utility bill. In theory, national government can get in on this action, but again, levels of government closer to the action might be more appropriate.
The idea of a revolving fund is that of a bank. You lend money, people pay you back with interest, you get more money (I think that’s what banks do). It’s a little different here: government provides you start with small pot of gold, you start lending households money for home upgrades, and as they pay you back, the pot of gold replenishes and you get to enable more upgrades elsewhere. Simple, effective, but it does require some expertise to manage.
In a field where costs continue to decrease, debt-financing can be a prudent form of increasing renewable energy supply.
The principle is simple: make fossil fuel less attractive while making sure it comes to general benefit, whenever it can’t be avoided. The revenues can be invested either in public goods, individual dividends or revenue-neutral reduction of tax burden on vulnerable groups. Each of these are good, but universal good tend to increase solidarity. Carbon taxing is sensitive though, so it might be difficult to attain.
No cap-and-trade here. You auction a carbon spectrum and you spread the revenue as dividend.
Interlude: the coronavirus crisis has – at times, painfully – revealed that the state has lost a lot of capacity to lead the way. It has abdicated authority and outsourced expertise in pursuit of market efficiencies. In some cases (but by all means, not all) this can hamstring the kind of instruments discussed here. (Governments would have to re-legislate certain domains to regain some of that authority and that will only happen if we formulated energy policy as if our house was on fire, and that is, as of yet, unlikely.)
Economic institutions
Mandating some minimum of revenue of new renewable to go to the electricity bill of vulnerable community members (in the progressive version)
Cooperatives can install renewable capacity and provide energy to members, but they can also branch out to weatherization and generating liveable incomes. If cooperatives can’t act as independent, not-for-profit actors on the grid yet, there are plenty examples of how to do it.
There’s various ways in which utilities can be made to serve public interest and scale down fossil fuels. Municipalization is one of them, which can happen if municipalities “re-purchase privatized companies, cancel or decline to renew private contracts and establish new municipal projects”. Scholars and activists agree: remunicipalization itself not enough, it needs be accompanied by the democratization of institutions.
Another way of making finance follow public interest. A public service bank is not for profit, can be mandated to provide accessible credit and decisions can be made “with and through the communities”. Now take that and apply that to sustainable energy projects.
Alright, we’re up to our last category. You’re a hero!
New energy institutions
In order to spur economic development, you designate vulnerable region as special zones to develop renewable energy. Doing so enables the deployment of some of other investment instruments we’ve just seen.
On the one hand, micro-grids and the grid management technologies to run (and integrate) them should be fairly straightforward to create, but many already exist (mostly by large institutions), so there templates to work off of. However, these templates aren’t unqualified successes (contributing to utility death spirals) and managing a hospital’s microgrid is not the same as neighbourhood’s micro-grid. So I’m designating it high hanging fruit. Locally owned systems of generation and provision can boost renewables, because locals can control where money is invested.
Some conclusions:
There’s no excuse when it comes to low-hanging fruit. They should be in any political program, on the agenda of any relevant body of government. Take the green bonds, for example. Providing healthy financing is key and is simple to do and can be quite effective.
That being said: Burke and Stephens suggest that creating a “policy mix” out of many of these instruments will create “synergies”. In other words, they work better together (OST).
Their minimal mix:
core instruments currently include: statutory demand reductions and distributed generation; public bond instruments; cap-and-dividends; and a set of economic and new energy system institutional reforms including community energy, renewable energy cooperatives, remunicipalization, green public service banks, microgrids and democratized grid management, and sustainable energy utilities. Other instruments can be considered as complementary to this set of core instruments. (44)
Finally: this list shows we already have many tools at our disposition. It’s not quite plug and play, but they’re all definitely (little) engines of change for any society that decides it wants to move forward.
I will leave you with that. I hope this list has been helpful for you! Scroll down to the end if you want some cheat sheets that summarize the above information: which level of government has competence for which instrument and how difficult it will likely be to implement.
Very best,
Marten
Source
Burke M.J., and Stephens J.C. 2017. "Energy democracy: Goals and policy instruments for sociotechnical transitions". Energy Research and Social Science. 33: 35-48. http://dx.doi.org/10.1016/j.erss.2017.09.024
Long-time friends of this newsletter might remember I covered their work earlier on a related topic: understanding power in the energy system.
Cheat sheets
PS
There are three other instruments that the authors reviewed. I didn’t include them in the list above, because they don’t assume the state as primary actor. That doesn’t make them less important, but less relevant for the way I reconstructed the list.
Energy regions: alliances and coalitions of local initiatives – because they are also better together. Creating regional momentum while still focusing on local services (see this earlier issue for an example from the north of the Netherlands).
Sustainable energy utilities: perhaps this sounds a little funny (er… duh!), but it’s basically re-building the (business model) utility from the ground-up with the explicit purpose of fostering renewables.
Cooperative financing: such as crowd-funding for renewable energy generation.
Bye! 👋