Power to the People: Socialize Renewable Energy

February 24th, 2018 - by admin

Christine Marie / Socialist Action & The United National Antiwar Coalition & Sean Sweeney and John Treat / Trade Unions for Energy Democracy – 2018-02-24 20:56:51


Power to the People: Socialize Renewable Energy
Union Group Argues for Public Ownership of Energy Systems

Christine Marie / Socialist Action & The United National Antiwar Coalition

(February 18, 2018) — As Bill McKibben and other climate leaders keep reminding us, the cost of solar and wind energy keeps dropping. They assure us that if government continues to incentivize private investment with guarantees of profitable it would make these renewable sources competitive with fossil fuels and lead to a green capitalism.

This thinking is based on a seminal 2006 paper by Nicholas Stern, former chief economist at the World Bank. However, “Working Paper No. 10“, recently released by the Trade Unionists for Energy Democracy (TUED), proves that the “Stern Review” was a pipe dream and urges labor organizations to fight like the devil for an alternative course — public ownership of energy systems run under democratic control.

According to the International Energy Agency and the International Renewable Energy Agency (IEA-IREA), the investment needed to keep global warming below the threshold of two degrees Celsius would have to double the 2016 levels of investment to $600 billion a year and reach $14 trillion invested in solar and wind by 2030.

The chances of this happening, under the current paradigm of public-private partnerships that guarantee profits and mitigate risk to private investors, according to the “Working Paper No. 10” authors Sean Sweeney and John Treat, is zero. In fact, they argue, based on a close study of the situation in the UK, that the idea that we can reach safe levels of renewable energy via aid to private profiteers is “the greatest policy failure ever.”

Public money, they argue, is already responsible for the vast bulk of the world’s energy deployment. But it takes ever-increasing amounts of public funds to actually get private industry to make even token commitments to renewables in the midst of a capitalist crisis full of risk for stockholders. The net result is that wind and solar today generate just 4.6% of global electricity.

In a world full of idle capital, and a decade of government incentives, the current levels of investment in a transition to renewable energy will doom us to an unlivable planet. Sweeney and Treat explain that as long as there are more profitable and less risky places to invest, private capital will continue to refuse to be part of humanity’s effort to secure its home.

The historic task of decarbonizing energy generation, Sweeney and Treat, explain, “will require virtually unprecedented levels of long-term planning, coordination, and cooperation” that are completely at odds with the way that capitalist markets work.

“Ending the market that never was by reclaiming energy systems open up an altogether different set of possibilities and an entirely new energy transition scenario where there can be full attention paid to the technical challenges without the policy-afflicted distractions generated by obstructive and destructive ‘competition’ between different private actors and interests,” they say.

Perhaps, most importantly, they insist that “unions and their allies are well positioned to challenge the myth that a transition to renewable energy can be accomplished by catering to the interests of big companies and private investors. The global labor movement can and should demand and fight for a viable transition pathway — one that is anchored in public financing, social ownership and democratic control.”

To popularize this vision, TUED has mounted an animated video explaining the need for social ownership and workers control of energy on its website. It is called “This is What Energy Democracy Looks Like and is available at http://unionsforenergydemocracy.org/resources/video/.

This is What Energy Democracy Looks Like

It is designed to be show at union meetings and other gatherings of workers and can lay the basis for the sharing of written arguments for the nationalization and municipalization under democratic control.

What is missing from “Working Paper No. 10” and this introductory video is a full discussion of just how the unions and unorganized working people might successfully carry out a struggle to implement this strategy. In the United States most union leaders limit their political advocacy to positions acceptable to the Democratic Party and their corporate backers.

In order to educate the ranks and mobilize them in numbers sufficient to put public ownership on the agenda, the union leadership will need to break through this obstacle and chart a course for “a living wage on a living planet” that is independent of both capitalist parties.

After such a break, the labor movement will then need to also repair their broken relationships with immigrant workers, with the Black and Latino communities, with women, and youth. This vision will certainly animate the best class-struggle fighters in the coming period.

Preparing a Public Pathway:
Confronting the Investment Crisis in Renewable Energy

Why a Profit-based Approach to Renewable Energy
Is Failing to Deliver the Energy Transition and
Why We Urgently Need to Pursue Public Alternatives

Sean Sweeney and John Treat / Trade Unions for Energy Democracy

Why, in a world awash with “idle capital” and in desperate need for a just energy transition to a renewables-based system, are global investment levels in renewable energy so out of sync with climate targets?

In the previous TUED Working Paper #9, Energy Transition: Are We Winning?, we raised in passing the serious investment deficit in renewable energy, in the context of a broader examination of overall trends with the global energy system and greenhouse gas emissions. In this paper, we have taken on the investment question directly and in detail.

Part One: Investment Deficit Realities
The first section of the paper shows how current levels of investment in renewables, while generally trending upwards in recent years, fall far short of the levels needed to achieve the “decarbonization” objectives presented by major institutions, and do not even begin to allow us to realize the technical potential of renewable energy resources and technologies.

We also show that, although the world’s major policy institutions acknowledge the investment deficit and recognize its implications, they are stuck in a policy “echo chamber,” in which the same misguided prescriptions are repeated and the same fading hopes are circulated in a market-biased “group think” pattern.

Part Two: The Greatest Policy Failure Ever?
This section shows how the main assumptions and policy initiatives and mechanisms put in place to stimulate investment in renewable energy have turned out to be severely flawed.

Here we revisit the main arguments of the Stern Review, the landmark 2006 study on the economics of climate change, which asserted the primary role of the private sector, the efficacy of competitive electricity markets and carbon pricing as means to promote renewables, and the need for government policy to “send signals” by way of a “sticks and carrots” approach to escort green business from the economic margins to the mainstream.

Part Three: The “Out of Market” Experience
This section covers how states have used subsidies and “certainties” in the form of “public-private partnerships” (P3s) and “power purchase agreements” (PPAs) in an attempt to bring renewable energy to levels that can reduce emissions significantly and meet climate goals.

We show how this story has unfolded in the EU, and how such an approach has not solved the underlying problems facing renewables — namely, their inability to generate sufficient levels of profit for investors. We also show how this approach has led to a destructive economic and political conflict between different for-profit energy interests.

Part Four: Slow Motion Calamity?
How “Market Design” Has Created a Risky Future

Here we look at the impact these “out of market” measures have had on the traditional utilities and the entire energy system — an area that often receives limited attention.

The use of subsidies to protect renewables from market competition has led to an investment crisis across the entire sector, with potentially serious implications for the kind of energy transition the world needs over the coming decades. We also explain how problems of “energy market design” are likely to continue to impose pressure on for-profit renewables in the future.

Part Five: The Return of the State?
In this section, we examine several additional issues pertaining to the present investment regime: the potential role of institutional investors; the persistence of public-private partnerships (P3s) in energy; the “financialization” of P3s; and, the shifting roles of public and private actors.

We also look at the reasons behind the very recent emergence of green bonds and the significance of the (weak) trend towards long-term financing for renewables.

Conclusion: The Public Pathway
Finally, we briefly summarize union policy at the international level. Here we see a growing confidence in publicly driven alternatives, but also a lingering support for the “green growth,” for-profit framework articulated by major institutions such as the World Bank and influential policy voices such as Nicholas Stern and Bloomberg New Energy Finance.

We then spell out the main arguments for public financing and public renewable power and the need to challenge the existing approach to investment in renewable energy.

Download the full paper here.

Background Notes
For additional material related to this paper, including quotes from leading policy voices and graphs of key data, please download the “Background Notes.”

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