It is often said that there are major trade-offs between energy security, equity and sustainability. But what if this is a misconception? Energy Post editor Karel Beckman argues that by creating a new sustainable energy system we can at the same time advance energy security and reduce energy poverty.Â
Over the New Year holiday period I have been reading an interesting essay by Rebecca Solnit on the expected confrontation this Paris year between “the climate movement” (encompassing not just activists and NGO’s, but also a diverse coalition of political leaders, regional authorities, institutional investors, multinationals and even the Pope) and “Big Energy” (encompassing not just the Exxons and Shells of this world, but also the state oil producers and the coal sector). One phrase in that essay that stuck with me is that she wrote of a “vision of a world in which everything is connected”. To which I added in my own mind: yes, and “no one dominates any one else”.
And I wondered, is there a link between such a world – a world of peace and equity – and energy? The answer, I believe, is yes. After all, there has always been a connection between war and energy. One obvious illustration of this is the many wars and other military actions the US and its allies have undertaken over the decades to secure their access to Middle Eastern oil. These have come at a tremendous cost, not just financially (although the costs of war are often ignored in the debate over who gets the most subsidies – fossil fuels or renewables), but also in human suffering and geopolitical strife. And the result of this more or less permanent energy war has been nothing short of a catastrofe: parts of the Middle East and North Africa have become diaster areas.
In Europe, 2014 was the year in which “energy security” (i.e. dependence on Russia) once more shot to the top of the political agenda. The new cold energy war in Europe, brought about by the conflict in Ukraine, is used by some as an argument against ambitious climate and renewable energy policies, and for a stronger geopolitical stance, but I would argue that the reverse is true: there is no better argument in favour of renewable energy and climate policy than the need for energy security. Unfortunately, this is an idea that does not seem to have caught on yet in many parts of the world, e.g. in Eastern and Central Europe.
Energy trilemma
There is an important parallel here with another line of thinking ,which holds that “energy poverty” is also a key argument in favour of a conventional, fossil-fuel-based energy system. It is often said we need to “balance” both equity and security against sustainability (this is called the “energy trilemma”). In other words, that there are major trade-offs between those three elements. But what if this is a misconception? What if advancing sustainability also advances security and equity?
Now I know that there are many honest people (including many energy experts) who genuinely believe that an energy “transition” away from fossil fuels is just not possible, neither economically nor physically, at least not for the foreseeable future, without huge collateral damage to our energy security and equity. They argue that the intermittent nature of solar and wind power makes these sources insecure, that their high cost imposes a too heavy burden on the poor and that in fact their low energy density makes it impossible to build an industrial society on them. (There are also people who believe renewables can do the trick but only with a much larger role for nuclear power.)
Creating fiat money and boosting “demand” (i.e. consumption) is the antithesis of sustainability – of both economic and environmental sustainability
These are not just self-serving arguments. They deal with real concerns. I know because I used to think much the same way. In recent years, however, I have become more and more convinced that they may well be misguided. But to understand why this is so requires a paradigmatic shift in thinking. If you start from the way our current energy system functions, and you “superimpose” renewables on that, you will indeed run into all the problems just mentioned. The only way it can be done is to fundamentally change the system itself.
One of the people who has done most to convince me of this is the Canadian-born, UK-based energy expert Walt Patterson, currently a Fellow at the Chatham House think thank in London. Patterson has for many years been developing a new way of thinking about energy and energy systems. Fortunately, he has recently given a presentation which sets out his vision in a brilliant way. We are proud that we will be able publish this tomorrow on Energy Post. To me this will really kick off the year, because it will give our readers a comprehensive vision of an energy world in which everything is connected – and no one dominates.
RWE and Eon
Simply put, Patterson’s world is characterised by energy neutral buildings, microgrids and decentralised energy production – which sounds familiar enough, but the important point that he makes is about how to get there (how we need to change our regulatory and market models) and why we can only get there if we radically change the way we think about energy (read the article tomorrow).
Note that this new energy world is not one in which there is no room for corporations or financial institutions or the private sector. Far from it. It will require adjustment to be sure, but companies like the two largest German utilities, RWE and Eon, have already shown that they are willing to transform themselves – and others are following their example.
Indeed, what is still insufficiently understood by public and policymakers is that this new decarbonised energy system will present tremendous new business opportunities across a great many established industrial sectors, such as the construction and housing sector and the automobile industry. (This is a point eloquently made by Amory Lovins in his recent book Re-Inventing Fire, with which I kicked off 2014 on Energy Post, and which presents a similar vision to Walt Patterson’s, in even greater detail.)
Hence, if we are able to follow this road to a new fossil-fuel-less energy future, we may be able to address all in one stroke the three greatest challenges of our time: first of all the threat of environmental disaster, which is obvious, but also the plague of war and violence and the bane of poverty and unemployment.
Us and them
Allow me to add a few thoughts of my own on this. When it comes to war and repression, the point I believe should be stressed is that a connected, decentralised world not only challenges the world’s dictatorial powers, whether it’s the Russian, the Chinese, the Saudi Arabian or any other repressive State, but also the powers-that-be in the US and other Western countries.
Too many people in the West think in terms of “us” (the free, democratic world) versus “them” (dictatorships) when it comes to foreign policy. They tend to regard the policies of Western governments as a fight of good against bad. This does not do justice to reality. The US government is guilty of countless wars, military interventions, “regime changes”, bombings and killings of innocent people as well as other gross violations of human rights. (European governments have a better record, but only in recent times.) It employs one legal and moral standard for itself, and another by which it judges and treats the rest of the world. Domestically, the US is to a significant extent ruled by powerful and rich lobby groups who are able to buy whatever political power they want. To point all this out is not to excuse the crimes of other States. On the contrary, we need to point this out if we want to be able to justify our criticism of those crimes.
It’s still very obscure what the Energy Union will look like. There is a risk that it will become a Union “against Russia”, whereas what we need is an Energy Union “for transition”
When it comes to the economy, the point I would like to stress is that to achieve “sustainability” the solution is not to get rid of the “free market”. The current economic crisis is not the result of the workings of the free market, or of economic freedom. The fact is that our monetary, financial and economic system is run by governments and central banks in collusion with the private financial sector and other privileged industries. It is a “mixed economy”, which some have called “crony capitalism”.
The most important characteristic of this system – the elephant in the crisis room which is rarely mentioned – is the ability of State institutions to create money by fiat, i.e. out of nothing. Yes, it was greed which led to the crisis, but greed could only become as powerful as it did because there was a money-making machine at the back of it. This made it possible for States and private actors alike to go on a spending spree and incur tremendous debts, which we are leaving to future generations just as much as the pollution of the atmosphere. (It occurred to me that the ability to “print” money may be said to be our own “oil curse”: it gives our rulers virtually unlimited means to spend without consulting their citizens, and buy off any discontent.)
Our governments are now trying to solve the economic crisis by doing more of the same, i.e. creating cheap money and stimulating “demand”. This is reversing cause and effect. If this were really a solution, there would not be any economic problems, since we would be able to spend our way out of any crisis. But the important point here is that boosting “demand” (i.e. consumption) is the antithesis of sustainability – of both economic and environmental sustainability. Instead we need to promote saving (both money and energy), and the creation of real values that satisfy genuine needs. Employment and well-being will follow as a result. The new energy system meshes perfectly with such a political and economic model.
Trendsetter
What could the role of Europe be in all this movement? The EU could be a global trendsetter. The  EU’s energy and climate policy is at least going in the right direction. And the structure of the EU lends itself well in some ways to an interconnected, equitable world. But there are also a lot of hurdles to overcome. The EU would need to develop new regulatory and market models and to overcome its ingrained tendency towards welfarism, bureaucracy and reliance on government subsidies rather than private capital and entrepreneurship. This seems a tall order.
In the coming year all the energy talk in Brussels will be about the Energy Union. But it’s still very obscure what that Union will look like, let alone how it will be implemented and governed. There is a risk that it will become a Union “against Russia”, whereas what we need is an Energy Union “for transition”.
One thing that is clear is that there are fierce and complex struggles ahead in the energy sector. We hope the articles on Energy Post will provide you with news and ideas that will help you make sense of the complexities we are confronted with and even occasionally help you look at the energy world in new ways. We will in the days, weeks and months ahead return to all of the key energy topics mentioned here, and highlight them from different perspectives (please note that we are open to all reasonable viewpoints!). Our most important focus will, as always, be on the big picture: on where the energy system is headed, in Europe and elsewhere – and how its various parts are connected and interact. For starters, don’t miss Walt Patterson’s essay tomorrow – and let us know what you think about it.
Editor’s Note
Karel Beckman is editor-in-chief of Energy Post. If you want to keep abreast of new publications on Energy Post, you can register to receive our weekly email update here. Comments on our new website design are also welcome!
Tseard says
Great read, Karel! I fully agree with you. And now to something completely different (as Monthy Python might say). One word: Snowden. Or one sentence: how about protecting our privacy from ‘Big Brother’?
Karel Beckman says
Well, Tseard, I consider small-is-beautiful societies with ditto energy systems to be less susceptible to Big Brother like intrusions. Power (in both senses of the word) should be devolved. But of course small brother and small sister can be annoying too! We will never get an ideal world …
Tseard says
And again: many thanks for the valuable essay of Walt Patterson, quite illuminating (in more than one meaning).
beste regards,
Tseard Zoethout
Paul Hunt says
“The fact is that our monetary, financial and economic system is run by governments and central banks in collusion with the private financial sector and other privileged industries.”
Happy New Year, Karel. I’d live with the ‘collusion’, if governments were enforcing the rules of the game to protect and advance the interests of the majority of citizens who fund almost all of these antics as consumers, service-users and taxpayers. The reality is that governments and central bankers have been suborned by the private financial sector, privileged industries and special interest groups which dominate the sheltered (or non-traded) sectors of national economies. There may have been some collussion in the run-up to the creidt crunch when governments encouraged the private financial sector to boost credit to households to compensate for labour’s continuously declining share of national income. ‘Let them eat credit’ as Raghuram Rajan, now head of India’s central bank, put it at the time. The private financial sector has left much of its mess on the liabilities side of governments’ balance sheets, openly sneers at efforts by politicians to prevent the sector doing damage to economies (not to mind compelling it to generate economically and socially useful outcome) and has become even more concentrated.
Difficult and all as it is to muster, the only effective restraint that may be imposed on the private financial sector and on the other powerful and influential special groups that have suborned governments is via collective action by citizens as consumers and service-users. It is encouraging to see well-motivated and well-heeled citizens in specific locations doing this in relation to energy supply, but it is far from sufficient. This is perhaps the major gap in Walt Patterson’s otherwise excellent presentation.
Karel Beckman says
Paul, what about the debts that our governments have incurred? Surely they were not forced to do so by the private sector. They did it essentially to win votes – and somebody else can clean up the mess tomorrow. In the US they call it “revolving doors”, people moving from the private sector (Wall Street) and back. It is wishful thinking to assume that the government are the good guys who can’t help what they’re doing. They could change the laws if they wanted to, but it is not in their interest.
Karel Beckman says
Here a comment from a reader, Jeffrey Michel, who asked me to post this:
“My comment to your article:
Thomas Edison’s DC-operated Pearl Street Station could not ultimately compete with high-voltage alternating current from the 5000 hp hydroelectric turbines installed by Nikola Tesla at Niagara Falls. Decentralized electrical generation was widely abandoned in the 20th century in favor of the higher energy densities of large power plants. Lower capital expenses per megawatt-hour prevailed under the control of private corporations and the state combines of planned economies. For the Soviet Union and the Axis powers, national electrification likewise enhanced the capabilities of social organization with state-controlled information carried by radios, printing presses, and public loudspeakers.
The current implication is that indeterminate Cloud data made accessible to the global population could provide comparable benefits for less insidious purposes than those pursued by monopolies and dictatorships. There are many imperfections in that argument. The United States, where the Internet was invented, outranks all other countries in the number of imprisoned individuals. Criminal elements have excelled in using the digital infrastructure for their own nefarious activities. Companies that manage the high volumes of personal data employed by browsers and the social media are likewise capable of influencing pricing mechanisms on smart grids and of spying on individuals and foreign governments in patriotic collaboration with their secret services.
Supplanting any highly reliable coal power plant near a major population center by widely scattered, intrinsically redundant, and commensurately capital-intensive intermittent renewable generation requires extensive monitoring of transmission infrastructures. The efficiency improvements achieved by techniques of demand-side management can be further enhanced by discrete intrusions into the private spheres of individuals.
Uncorrelated wind and solar generation that is sufficient to maintain supply reliability invariably provides more grid electricity than the market is capable of accommodating, except by raising consumer prices. Feed-in tariff contracts insure that the owners of wind and solar farms will always receive the same return on their investment even if conventional generation would be more cost-effective, particularly when fossil fuel prices fall as is currently the case. Data management services may reduce this discrepancy to achieve lower net cost. Wherever renewable energies remain highly fragmentary, however, the continuing reliance on coal and gas will provide verifiable price benefits that may preclude adding an overlying data infrastructure.”