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Why we need publicly owned energy for a Green New Deal

Rapidly transitioning to a zero carbon future requires a publicly owned energy system centred on democratisation and decentralisation.

Cat Hobbs
2 August 2019
Offshore wind farm in the Baltic Sea, Bernd W'stneck/DPA/PA Images

Whether it’s 11 years or 18 months, we haven't got long to make the big, bold changes needed to prevent global climate catastrophe.

If we're going to have a chance of preventing widespread disaster, we can't keep waiting for the private sector to deliver our clean, green energy future. Public ownership is the way to transition quickly to zero carbon, hand in hand with workers, citizens and communities.

Privatisation failed – if you see Sid, tell him

In 1986, when Thatcher sold off British Gas, the company was floated on the stock market, accompanied by the famous ‘Tell Sid’ advertising campaign. In 1990, the UK’s regional electricity boards were privatised. But a shareholder democracy owned by people like ‘Sid’ never materialised.

We don’t own much of our energy, individually or collectively. The UK is rich in offshore wind, but only 7% is owned by UK entities and only 0.07% is in UK public ownership. We’ve flogged off our nuclear to China and France - for ‘£17 billion of risk and not much benefit’ as Aditya Chakrabortty points out. Our energy infrastructure is owned by National Grid and other private companies owned by investors from Qatar to China, to US to Hong Kong. The Big Six supply companies (British Gas, E.ON, EDF Energy, nPower, Scottish Energy and SSE) are owned by UK, French, German and Spanish investors.

These investors aren’t interested in clean, green, affordable energy. They’re interested in their profits. That’s why since energy was privatised we’ve seen rip off prices, burning of fossil fuels and a lack of investment in the infrastructure we need. The government needs to set the pace and start the race. Bringing energy into public ownership would save us around £3.2 billion in dividends and a lower cost of borrowing – money that could be reinvested in getting us to our carbon targets quicker.

The transition to a low-carbon, sustainable future cannot be left to the investor class, CEOs of multinational companies, or governments that refuse to break with the current paradigm of endless growth, the imperative of profit, and the enforced chaos of competition in strategic sectors. Acting alongside other social movements, unions can begin by explaining the challenge in clear terms. Unions must then develop transformational strategies that are anchored in a paradigm of sharing, solidarity, and sufficiency. This is perhaps the only way to ensure a Just Transition for workers, and survival for human society as a whole.

Trade Unions for Energy Democracy, Working Paper 11 ‘Trade Unions and Just Transition’

Across the world, people are taking energy back

The Transnational Institute (TNI) has tracked cities around the world that are taking control of their local energy supply, sometimes backed by popular votes

The city of Munich in Germany is particularly inspiring. It has committed itself to developing an electricity supply that is 100% municipal and 100% from renewable energy. The council did this because they were tired of waiting for the private companies to make the necessary investments, and they were confident that the city council could do the job better – putting sustainability before profit. By 2025, the utility company aims to produce so much green energy that the entire demand of the city can be met.

What would public ownership mean in practice?

77% of us believe energy should be in public ownership. Our new report ‘When We Own It: A model for public ownership in the 21st century’ aims to outline what energy democracy means in practice.

We propose that you would have easy access to data and information, and could give your feedback and ideas online, on the phone or in a shopfront on every high street. You’d be a member of ‘Participate: Energy’ – the new, democratically accountable organisation representing energy users. Energy reps will sit on supervisory boards, alongside trade union reps and civil society reps – like environmental NGOs, fuel poverty groups, renters’ unions and local community groups.

Public planning processes would include large scale meetings every five years, annual reporting back, open board meetings and citizens assemblies for difficult or controversial issues.

We need local, regional and national conversations about our energy future. Andrew Cumbers explains how in Norway, the publicly owned company Statoil was set up in 1972 in order to control the use of oil in the interests of the ‘whole of society.’ Although Norway now needs to transition beyond oil, we can still learn from this example. The company was subject to a lot of democratic scrutiny and debate in parliament and a new, independent ‘Petroleum Directorate’ was created, with responsibility for regulating and controlling North Sea oil and gas resources, which led to better health and safety for workers.

The conversations should involve organisations and groups who understand the challenges in the energy supply chain. Controversial, extremely damaging extraction techniques like fracking should be outlawed altogether. Asad Rehman has argued the Green New Deal will be dirtier than we think as the technology often depends on extracting rare minerals from countries like the Democratic Republic of Congo and Chile.

We need the right to vote against any proposals to privatise or outsource energy. In 2013 the citizens of Hamburg voted to reverse the privatisation of the city’s electricity, gas and heating networks.

These accountability mechanisms and democratic processes would go hand in hand with a bold plan for a Green New Deal – delivered through public ownership at every stage: generation of renewable energy, transmission and distribution across the country, and supply to our homes.

Generating green energy and green jobs

Government needs a duty to decarbonise – and that means leaving the oil and gas in the ground. Platform points out that extracting 20 billion barrels of oil and gas will make it totally impossible to meet our carbon targets. The UK and Scottish governments need to switch subsidies to renewables and work with trade unions and communities on a plan for just transition.

The PCS report ‘Just Transition and Energy Democracy’ explains that over 250,000 mining jobs were lost in the 1980s and 90s – we need to ‘address the legitimate fears of workers that they will again be left to pay a disproportionate price.’

To answer this, government, councils and unions need to work together to introduce new green, permanent, unionised, skilled jobs and revitalise communities across the UK. We need a new Lucas Plan, with workers at the heart of the process – looking at how technology can be best deployed for social benefit.

We can create a million secure Government jobs in renewable energy, in increasing energy efficiency by insulating homes and public buildings free of charge, in hugely expanding cheap public transport to get people and freight onto cleaner forms of transit, and in developing the "green skills" that we need through education and training.

One Million Climate Jobs report, Campaign Against Climate Change Trade Union Group

Public ownership can create hundreds of thousands of jobs in generating energy and in new industry supply chains. There are very few places in the UK where renewable energy can’t happen – wind and solar can be delivered almost everywhere. This creates a huge opportunity to reverse decades of underinvestment in ex-mining communities decimated by Thatcher.

Platform estimates that 40,000 existing oil workers (direct and supply chain) may need to be in a different job by 2030. But their research shows, with ambitious government policies, we can create three to four times as many jobs in clean energy industries.

Right now, government is undermining renewable energy with regressive policies, failing to give vital support to onshore wind and solar - and renewable energy jobs have plunged by a third. This is a disaster. The government needs to reinstate subsidies for solar and deliver an onshore wind boom.

Workers and climate change protestors joined together in an 11 day occupation against the closure of the Vestas wind turbine factory in 2009. (The company has now created some new jobs but not as many as it axed). We could take control over decisions like this - with a publicly owned British company with a long term strategy for turbine manufacture, with workers, citizens and the public on the board.

Offshore wind is touted as a success – but the real story here is that the public is missing out by leaving it to non UK companies (public and private) to pick up the benefits. We should be following the example of countries like Denmark and Sweden - their publicly owned companies DONG and Vattenfall own 32% and 6% of UK offshore wind capacity, respectively. We need our own ‘Waterfall’.

The Labour Energy Forum report ‘Who owns the wind?’ proposes the creation of four major publicly owned offshore wind companies: Scottish Wind, Energy for Londoners, Wind of the North and Floating Cornwall. These would lead the way in investing in and directly operating publicly owned offshore wind capacity. Effectively they would also act as anchor institutions, boosting local and regional economies.

The public sector can build its renewables capacity and expertise and ultimately deliver far more efficiently than the private sector. Modelling work by Frontier Economics for IPPR shows how full public ownership through construction and operation can generate substantial savings for consumers because of the lower cost of capital. In addition, there are the profits coming back to the public purse - Swindon Borough Council has a solar bond that generates £1 million every year.

Connecting communities to the grid

The National Grid – which transmits electricity and gas across the country – and the regional distribution companies which distribute energy - were built for an age of coal, oil and nuclear. The future of energy is decentralised and renewable. We need to own this vital infrastructure so we can upgrade it.

The National Grid and regional distribution companies don’t answer to you and me – they answer to often very distant investors. If you’re based in London, your electricity is distributed by UK Power Networks, owned by a Hong Kong company led by one of the richest men in the world. Your gas might well be distributed by Cadent Gas – recently found guilty of leaving residents without gas for up to five months, and putting 775 blocks of flats in danger by keeping no inspection record – owned by a consortium including Macquarie (an Australian investment bank), CIC Capital (owned by China Investment Corporation) and the Qatar Investment Authority.

These private energy monopolies often make it difficult for community groups who want to develop new renewable energy projects, so the process is slower and more expensive than it should be. Communities in Harris and Lewis have been slowed down by National Grid in their effort to develop a wind farm. Communities in Cornwall were told by Western Power Networks (owned by shareholders in New York) that new solar farms would require ‘quite expensive’ investment in infrastructure.

Under public ownership, National Grid and the regional distribution companies would have a duty to work closely with community groups to develop new renewable energy, and to steward public assets and land. In Germany, renewable energy producers have a guaranteed right of access to the electricity grid.

‘Public-Common partnerships’ can be developed – this means councils create shared institutions with cooperatives or community interest companies to manage common resources in a democratic way. In Wolfhagen in Germany, the town’s energy utility is jointly owned by the municipality and a new cooperative. Community energy projects can also be rolled out to power a solar railway (the ‘Riding Sunbeams’ project) to help decarbonise transport.

As Andrew Cumbers points out, in Denmark, the government has encouraged local, decentralised wind power on a huge scale, through funding and support for local, collective ownership of turbines. The Danish Wind Turbine Owners Association is an independent, democratically elected membership association set up to represent these small scale, private and cooperative owners. With 5000 members, it provides a strong voice for local communities on energy policy.

Supply companies that work for all of us

Customer satisfaction with the Big Six companies is low. Only 32% of the public trust the energy industry. Tying ourselves in knots to create markets and choice in every sector doesn’t make sense. Energy customers don’t want to switch - 61% of us have never switched company or only switched once - so we pay a loyalty penalty.

Citizens Advice has also shown how we overpay because of the way energy is regulated – this amounts to £11 billion over the past 15 years. The poor are hit hardest, spending 14% of their income on energy and water.

It doesn’t have to be this way. Corporate Watch research suggests each UK household could save £158 a year if energy was publicly owned. Across Europe, bills are around 30% lower when energy companies are in public ownership.

Publicly owned energy supply companies would have a duty to make sure everyone has access to affordable energy. This could include progressive tariffs to tackle over consumption and fuel poverty at the same time by charging high use households more while giving everyone some free energy – alongside a ‘no cut off’ policy.

Forward thinking councils are already created new, inspiring, publicly owned supply companies – with Nottingham-based Robin Hood Energy boldly leading the way and setting up 10 white label partnership agreements with local authorities around the country. Bristol Energy and The People's Energy Company are also breaking new ground. We need to sign up to get our energy from these companies - then build on these exciting options across the country. Ultimately when we get the privatised energy companies out, regional distribution companies could offer supply to people in the area, but with local companies taking over wherever they exist.

The Green New Deal should also mean we are energy citizens not energy consumers. We’re all part of the war effort against climate change.

Ann Pettifor points out that there are 27 million households in the UK, most built in the Victorian era. We have some of the least efficient housing in Europe, and the highest proportion of fuel poverty - 11% of English households. The Green New Deal is an opportunity to change all that. Every house can become a power station, with double glazing, insulation and solar panels (unless it’s about to be rebuilt).

Trusted, publicly owned companies can create new jobs for advisors to go door to door. Pettifor proposes a ‘carbon army’ of workers, highly qualified, skilled and unskilled workers to retrofit and reconstruct our homes and buildings, advise on cutting energy use and bills and roll out smart meters. This would pay for itself, boosting employment and tax revenue in every region of the UK.

PCS describes the situation perfectly: ‘There is no bailout for the publicly owned climate bank as we’ve already been doing insolvency with the planet for far too long’. We have to ‘remove capital from the driving seat of energy transition.’

Renewable, zero carbon energy. Upgraded infrastructure. Affordable energy for all. And all of it creating new, green, permanent jobs. Let’s do it. Whether you’re a citizen, a worker, part of a community group – or all three – your country needs you.

This article was taken from a recent report published by Common Wealth

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