Energy Governance The Challenges of Sustainability

Adrian Smith

The argument in this chapter is that post-privatisation energy governance is struggling with the challenges of sustainable energy. Institutions developed for the earlier job of liberalisation are not necessarily the best for the new task of promoting sustainability (Mitchell, 2007). Yet energy policymakers are proving reluctant to discard principles embedded and embodied in privatised and liberalised energy systems, especially the taboos of explicit technology choice (for details see Chapter 8), direct interventions in infrastructure provision (Chapter 9), and constraining consumer behaviours (Chapter 10).

In the UK, for example, energy governance is moving out of a period essentially characterised as running or 'sweating' the energy system inherited at privatisation (Helm, 2004a), and the system now requires significant reinvestment. This juncture, compounded by rising energy prices, climate concerns, and newfound fears over energy security, provides an opportunity for a new approach to energy governance. The challenge confronting policymakers is to think imaginatively about how new governance arrangements can facilitate the large-scale investments and behavioural changes needed for a transition to a radically different, sustainable energy system. This will inevitably involve many losers, as well as creating winners, and is therefore highly political.

Energy governance - the pursuit of energy development for the wider public good - presents policymakers with many complex issues: exercising leadership, steering innovation, changing consumer behaviours, ensuring accountability, aligning disparate interests, envisioning long-term sustainability goals, systematic policy learning, and so on. This chapter provides a general framework for thinking about those challenges. Energy governance is a 'meso-level' activity in the sense that it sits between and articulates with both the (macro-level) structures and imperatives of national political economy and the specific (micro-level) actions of individual energy users (whether individual people, organisations or social groups). So having looked at some contextual and structural issues in Chapters 1 and 2, and considered how these play into energy policy discourse in Chapter 3, this chapter gives a sense of the complexities of governing for sustainable energy transitions.

Many of the features of energy policymaking discussed in this chapter are generic to industrialised, consumer societies. That is, they confront policymakers in all OECD-type countries. However, in order to ground discussion, the UK is used to illustrate the points being made. The UK was one of the first countries to liberalise its energy system. It currently seeks international leadership in addressing the climate challenge, and has instituted some ambitious targets for carbon reduction. It therefore seems an apt place to illustrate the challenges of energy sustainability in a liberalised energy world.

According to the UK government, sustainable energy policy means trying to meet four objectives simultaneously (DTI, 2003c, p. 11):

• to put ourselves on a path to cut the UK's carbon dioxide emissions -the main contributor to global warming - by some 60% by about 2050 ... with real progress by 2020;

• to maintain the reliability of energy supplies;

• to promote competitive markets in the UK and beyond, helping to raise the rate of sustainable economic growth and to improve our productivity;

• to ensure that every home is adequately and affordably heated.

The breadth of these objectives across social, economic, and environmental priorities, and the potential conflicts between them, suggest that sustainable energy policy faces a Herculean task in coordinating diverse and complex networks of organisations and people, technologies and practices operating across multiple scales on both the demand and production sides of energy systems. Problem definitions and policy objectives will differ between countries, but are all likely to pose similar challenges to the UK definition above. Guiding, steering or simply facilitating the creation of sustainable energy systems - sustainable energy governance - involves policymakers and other stakeholders trying to integrate across multiple objectives. Later chapters indicate this is far from evident in practice.

It is not the purpose of this chapter to define what sustainable energy systems may eventually look like. As we shall see, one challenge is to maintain a broad-based and meaningful public debate around our sustainability options, and to ensure there is sufficient legitimacy to direct significant resources to the development of a diverse portfolio of options. Even if it is possible for many people to share an imagined picture of a future sustainable energy system, its pursuit is likely to throw up many surprises, failures, and successes along the way, such that reappraisal, challenge, and resolve will be important. Whatever the driving vision for sustainability (if one emerges) and its consequences, this chapter assumes its governance will require significant efforts on the part of policymakers. This is clear for decentralised visions that rethink radically the ways we use energy; but it is also true for visions that remain close to the existing situation and 'simply' substitute highvolume carbon-emitting energy supply with nuclear and carbon capture alternatives.

Whatever the sustainability vision, what are the more generic challenges facing policymakers when seeking to reconfigure energy governance, irrespective of the precise policy framings, instruments or settings chosen for their use? 'Policy framings' were discussed in Chapter 3, and this term is used here to refer to those understandings shared among groups of policymakers and stakeholders about what the energy challenge is, and how it can best be tackled. Groups with contrasting policy framings often contest the proposals and their underlying analysis. Examples include framings that see energy use best served by market-based approaches around lower carbon fuel usage, or a frame that starts at the demand side and considers how modern life can be supported by energy services. 'Policy instruments' are those mechanisms that shape governance arrangements: measures such as the creation of a carbon emissions trading system, the provision of independent standards certificates that guarantee the performance of solar water heating systems, regulations for the operation of energy markets and subsidies regarding the upgrade of electricity networks, and the incorporation of energy skills in the formal training of the workforce. 'Policy settings' refers to the scope and extent of each mechanism: does it send out a strong signal or a weak one; is it highly prescriptive or more suggestive?

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