Liberalised complexities and new energy agendas A UK illustration

The liberalisation and privatisation of energy systems has been accompanied by the emergence of a complex web of policy actors and institutions. Expertise in government has been replaced by a market of energy consultants, often commissioned to do studies and provide intelligence by energy policy civil servants. Public sector research labs have been partially replaced by the research and development (R&D) activities of multinational energy technology corporations and university laboratories. Energy utilities, network operators, supply firms, advice centres, and so forth have replaced the large national energy industries. Each conceives their short- and long-term interests differently, and seeks to advance them through a variety of strategies. Specialist energy markets have emerged, such as green electricity suppliers and business energy services. Market, infrastructure, and environmental regulators develop and enforce standards in consultation with government. Regional bodies have also developed their own strategic interests and agendas for energy, and a number of them are developing their own research centres. International bodies and the EU are developing their own views and regulations around energy. Today, energy policy goals must be reached through a much more complex, interdependent, multilayered, and differentiated policy landscape.

This picture is best illustrated by the case of the UK. Energy governance operates through multiple networks of public and private actors orbiting two central government departments: the Department for Business, Enterprise and Regulatory Reform (DBERR) and the Department for Environment, Food and Rural Affairs (Defra). The DBERR (which replaced the DTI in 2007) is chiefly concerned with energy supply and markets, while Defra is mainly interested in energy efficiency, climate change, and the environmental impacts of energy use. Around these two hubs, energy governance includes influential groups charged with ensuring competitive energy markets, such as Ofgem, the energy regulator; and is linked internationally to the Directorate-General for Energy and Transport in Europe, and organisations such as the IEA internationally. But the hubs are also the focus of a climate change and sustain-ability energy policy network, which includes the emerging operators in carbon markets, researchers, politicians, opinion formers, and sustainable energy businesses and advocacy groups, and has international links that include Directorate-General for the Environment in Europe.

The inter-organisational complexity of existing governance arrangements was revealed by reviews leading to the UK Energy White Paper in 2003 (DTI, 2003c; see Chapter 5 for details on this and the subsequent 2006 Energy Review). One outcome was the formation of a Sustainable Energy Policy Network aiming to coordinate information and initiatives across government and industry. In practice, policy development often bypasses or merely informs the Network, and instead involves negotiations and transactions through a kaleidoscope of networks involving government, business, and civil society organisations. Coordination, where it happens at all, is far from smooth and seamless since energy policy is riddled with competing agendas, diverse interests, and contradictory logics. As a consequence of this fragmentation, incentives for individual and organisational actions consistent with a sustainable energy economy can be weak, incoherent, and in conflict with more powerfully entrenched economic and policy priorities.

This situation can make the sector susceptible to strong agendas from political elites, as well as making political elites targets for special pleading from energy policy stakeholders. The UK Energy Review in 2006 (DTI, 2006c) illustrated this in particularly stark terms. Under the intervention of political leaders, energy policy was disrupted and represented as a priority in a particular way and with a new emphasis. It was prompted by the government becoming alarmed about a predicted UK 'energy gap' in the future. The 21st century sees the UK becoming increasingly reliant upon energy sources beyond its national borders, which is a profound change in context. Since the 1960s the UK economy has benefited greatly from development of its offshore oil and gas reserves, which are now in decline. The UK has large and politically influential petroleum and petrochemical industrial sectors.

Following current domestic and industrial consumption patterns, the UK will become increasingly dependent upon imports of energy from other countries. In other areas of their economies many governments have ceded responsibilities to globalising markets, but the globalisation of energy presents an uneasy context for the UK. Whether it is identified in the locations of fuel sources, sites of technology development, priorities of utility companies, sources of demand, logics of development, or whatever, the energy 'system' is a globalising system and one upon which more and more people around the globe are coming to depend.

Political leaders, most notably former UK Prime Minister Tony Blair, felt public policy had to be reviewed and redeveloped in order to ensure the 'lights stay on', and that nuclear energy - hitherto not favoured by the market - should be reconsidered and assisted. The implicit subtext here is that energy markets alone cannot be trusted to smoothly match (low carbon) supply with (energy efficient) demand into the future. Energy remains a very public policy issue.

Of course, the other aspect of the 2006 Energy Review, as with the last energy White Paper in 2003, was how to respond to climate change. A Treasury review led by Nicholas Stern in 2006 (Stern, 2006b, p. 27) called this 'market failure on the greatest scale the world has seen'. Market 'failures' provide a conventional rationale for government 'intervention' (which, framed in this way, usually means some correction to market functioning rather than questioning whether market 'success' is a realistic proposition). The challenge confronting energy governance now is how to transform the energy system again. This time, however, ownership, market regulation and new business practices are not the exclusive concerns. Rather it is the provision of energy services, in more environmentally sustainable and secure ways, that needs to provide the core thrust for policy development.

This is something for which post-privatisation energy governance appears ill prepared. The routines, organisations and processes that emerged under the liberalisation logic must confront a sustainability challenge that, unlike previous episodes of concern, can no longer be easily sidelined. Even when the next economic recession elbows sustain-ability from the mainstream agenda, sustainable energy will remain a concern for the specialists in energy policy in government departments, subnational bodies like Regional Development Agencies, NGOs, trade associations, utilities, and so on. And they will continue trying to transform an energy system which post-privatisation institutions have run more efficiently, but which gives rise to today's sustainability concerns.

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