Vision and Leadership is required to solve Britain’s energy trilemma. By Jasbir Basi
Let us rewind the clock. Year 1874; place Birmingham. Mayor Joseph Chamberlain had recently induced the town (prior to designation as a city) to buy out the two gas companies in operation, previously in private hands. The following year, profits from the consolidation of the services were used to buy out the local water companies, leading to a form of governance termed “municipal socialism”. Take note, the objective was not the pursuit of further profit but price reduction and improvement in the quality of the city’s water supply, all in the name of public health. Chamberlain; a liberal, won bipartisan support across the town council, using this momentum to press for an improvement scheme in central Birmingham, replacing inner-city slums with what became known as Corporation Street for commerce and legal services. Putting acute criticism of the flaws of municipal governance to one side, Chamberlain set a precedent: a model for local government to do all it could in its powers to meet the needs of an urban industrial society.
Fast forward to the year 2011; place Germany. Since the 1990s, German citizens possessed a legal right to be both producers and suppliers of electricity to the grid systems. Step forward Energiewende, the German energy transformation plan. A paradigm shift in German energy thinking had occurred, from the simple connection from power station to light switch that we the consumer switch on at home, to an interactive system that allows we the consumers to influence the production and consumption of energy. The government faced stiff opposition as we do in Britain from the energy companies, resulting in a trial in the European courts on grounds of anti-competitive policies, which the companies lost.
In 2000, 6.4 % of German power came from renewables, a figure that had risen to 20.1% by 2011. What has been crucial to this remarkable success is the following fact: 50 % of German renewable energy capacity is owned by households, communities and farmers, with energy companies owning less than 13 %. This pattern of ownership is deemed to be a critical reason why the preferential Feeds-in-Tariffs program, has delivered lower German prices than 5 years ago and wait for it: without a public subsidy (Take note Mr Osbourne). In this case, the objective: energy security. Limited quantities of gas and oil meant that 60 % of energy needs were imported, an amount rising since the 1970s, presenting a clear risk to a Germany economy highly dependent on the design and production of products, requiring significant energy demands. The German Environment Ministry presented the following cost benefit analysis; by achieving 40 % carbon reduction target by 2020, the country expects to generate 500,000 jobs, save € 22 bn in imported fossil fuel costs, boost GDP by € 20 bn per year and produce a surplus of 34 euro cents per tonne of carbon saved. Who said saving the planet would not reap economic gains during times of crises?
The above two stories present crucial lessons for British energy policy. That local government needs to do all in its power to support its cities of the future and that the key to tomorrow’s energy thinking as understood by the Germans is this: transformation of the energy market has much more to do with democratic power than with energy.
Let us assess the situation with Britain. British energy policy currently faces a “trilemma”, how to maintain energy security, prevent inflation of energy costs borne by consumers and achieve emissions targets, by no means a moveable feast. However, I urge Mr Cameron, Osbourne, Patterson and Davey to comprehend the lessons learned from Chamberlain and Germany’s energy programme. As the coalition prepares on another dash for gas, one should be reminded that the effects on the climate system are very much real. One only has to look at how the melting of the Arctic ice has contributed to our very recent wet British summer (by modifying upper atmosphere waves known as the jet streams) to demonstrate to the skeptics that the effects of climate change on our weather are very much real.
Rather than a mediocre Energy bill, a debate on energy that takes us back to the 1970s and a squabble between the Department of Energy and Climate Change and the Treasury over public subsidies, let us adopt a mindset, a flexible economic framework to prepare Britain for the energy landscape of the future. An interactive, decentralized energy system, crucial to help Britain develop a new economy out of the gloom of a double-dip recession. As an island nation we led the transition from wood to coal, and from coal to oil. Now Britain, must lead the transition from oil to clean, leading the global energy race if it is to stand up to Mr Cameron’s pledge of delivering the ‘greenest government ever’. A journey that cannot be achieved without the collective “we” the British public, government and industry, united together.
MSc Student Environmental Policy and Regulation, LSE