Matthew Lockwood, IGov Team, 23rd November 2017
The IGov project is about the governance structures and processes needed for the transformation of the British energy system. At the heart of this transformation is the need for the radical decarbonisation of energy, but in a way that is affordable and secure. We believe (and it is now fairly widely accepted) that this transformation will also involve a move away from a centralised supply focused paradigm towards more flexible demand and the expansion of distributed energy resources; indeed these changes are already under way.
However, such a transformation is also inherently political, in a number of ways. First, there will be winners and losers, and some of the possible losers include actors which are currently large and highly influential. Second, the new energy system will require people to engage with energy in new ways, for example as prosumers, as managers of demand, even if only indirectly. Third, even though we may manage to minimise the overall costs of transformation over the medium to long term, there will be upfront costs, which currently fall on consumers (the Committee on Climate Change estimates that these costs will almost double by 2030). There will also be big movements of costs between categories (for example the electrification of transport will mean less spent on transport energy but more on electricity). There will be overall issues of public acceptability as well as distributional effects.
Successful governance of this transformation will therefore need to include building a societal and political consensus not only for the need for transformation but also for the overall strategic direction taken. The energy policy community is now focused on decentralised energy resources, but will the public really go along with this? There will be some big irreversible decisions along the way – for example, as to whether to convert or close down the national gas network. The question, then, is how such a consensus can be built. To be clear, ‘consensus’ here need not (and will never) mean that absolutely everyone in the country agrees; rather, it means that decisions about energy policy are seen as necessary, transparent and fair (and fairly reached) by a large enough majority of people and institutions that they will remain stable over time.
At the moment, the main route we have to strategic direction on decarbonisation comes from the Committee on Climate Change, through the setting of carbon budgets, and the long-term emissions reduction target in the 2008 Climate Change Act. The idea behind the CCA and the CCC was that if decisions on climate policy are left to politicians they will be swayed by short term political considerations rather than the long term public good, especially if some of those decisions are unpopular, and that legislation and an independent technocratic body, isolated from politics, will do a better job. This approach was also seen in monetary policy in the 1970s, which led to the establishment of independent central banks around the world.
The CCA/CCC model has in many ways been very successful, and certainly has been much emulated. The CCC does have a degree of formal legitimacy, because its role of recommending carbon budgets was set up through Parliament (although some people in Britain today feel excluded from the political process, and have a low opinion of MPs, as the Brexit referendum and aftermath have shown). It also has some substantive legitimacy, because the process by which it makes its recommendations are pretty transparent, and the evidence it uses is fairly widely accepted as well founded (although this is not true for everyone, since a minority – albeit now probably only around 10% – of people still think climate change is a hoax and climate scientists can’t be trusted).
However, the question is whether the CCC and its analysis, on their own, are enough to make the case with the wider public that very urgent, transformative change, with some upfront costs, is needed.
Despite the idea that big societal decisions can be led by independent technocratic bodies, the reality is that such bodies (even central banks) always need the support of the relevant forces in civil society – in this case the environmental NGOs, who understand that the CCA cannot be taken for granted and that the independence of the CCC and the acceptance of their recommendations by government needs their constant vigilance and support. In practice, politics has not been removed from the setting of carbon budgets, and more importantly, from the implementation of policy to meet those budgets. This point can be seen more widely in that just handing a contentious issue to a technical body does not depoliticise it – the recent Davies Commission on a third runway at Heathrow is a good example.
At present, the politics of the setting of carbon budgets and the energy policy making driven by them is largely ‘elite’ politics, occurring between the Committee, government, some in Parliament and NGO advocacy experts. Awareness of the budgets and their implications is negligible amongst the mass of the public. One view is that as long as this works, and it has so far, then don’t rock the boat. Decarbonisation by passive consent, as it were, has so far been a fairly successful project, so if it ain’t broke then don’t fix it.
There is something to this argument, but there are also some limits to it, especially looking ahead. Carbon budgets are becoming more demanding over time, with the first two budgets in particular able to harvest the low hanging fruit. We may also have to tighten the budgets beyond what is in the Act as the science becomes clearer and more pressing. It is also the case that to date we have decarbonised with a strong element of ‘luck’ – progress since the 1990 baseline year has been hugely helped by the 1990s ‘dash for gas’, by the economic depression following the 2008 financial crisis and by a degree of industrial decline. Moreover, emissions reduction has mainly been upstream in electricity generation (recently especially in fuel switching from coal to gas), but the future of energy is going to increasingly be about issues where the mass of consumers will need to get more directly involved – buying electric vehicles, contracting for demand flexibility, maybe producing, selling and buying in local power markets. They may be driven by pure economics in some of this, but some degree of engagement will be needed. There are huge issues of trust. This point is already recognised in the area of smart meters, where Smart Energy GB has been set up to help sell the roll-out programme to the public. Finally, as mentioned above, investment costs, which currently consumers bear on bills, are rising and will continue to rise. For example, legacy costs from renewables support under the Levy Control Framework are due to increase from just over £6 billion a year now to £9 billion in 2020/21. Wholesale prices are lower as a result of renewables, but they could still rise if gas prices rise (as is quite possible as recent LNG oversupply starts to wind down).
If this is right, and there is a need for a deeper and more inclusive discussion about climate and energy policy, then the question arises of how this might take place within our political and institutional system. By its nature, the CCC cannot play what is fundamentally a political role. It does offer views on energy policy, but must tread a fine line if it is not to be seen as overstepping its remit. The process must be handled in some other way.
Thinking about how this might be done is usefully informed here by political theory that links modes of consensus building to types of electoral systems and political institutions. In countries with proportional representation (PR), it is common for there to be a larger number of political parties that have to negotiate to form governments. While it is not always straightforward (see the recent collapse of talks in Germany) this kind of set up does produce a culture of inclusion and seeking common ground between political parties. This goes beyond just forming governments; discussion and agreement on big issues in such countries is typically handled through strong parliamentary committee systems in which all parties, interests and ideologies are represented. An example would be Denmark’s Energy Agreement of 2011–12, which was negotiated and backed not only by parties within the governing coalition, but also by all but one of the parties in the parliament. The process was serviced by a great deal of technical analysis and support. Once agreement is reached in this way, political support for policies tends to be stable. One major reason for this is that political parties in PR systems tend to directly represent specific groups or constituencies in society. Because they do not have to win outright majorities in constituencies to get elected, there is no need for parties to become the broad churches they are in first-past-the-post systems. Thus when political parties in PR systems sit down to negotiate, it’s effectively like different parts of society sitting down together to negotiate. Trade-offs, coalitions and deals are explicit, rather than implicit. There is a clearer link between the positions of social and economic groups and the agreement.
We lack that set up here in the UK, and as Antony King and Ivor Crewe put it, as a result we do not do deliberation well. Political parties typically do not reach consensus agreements through informed negotiations in committees, but rather governments (still typically single party) slug it out with the opposition (a single party) in a confrontational process. This process is heavily driven by the politics of the internal coalitions of our broad church political parties (see Brexit), but this is a much less transparent and stable process than the explicit negotiations seen on the Continent, and leaders always have an eye on what a small group of voters in marginal want. The CCA itself provides a good example of this. There were only a handful of votes against the Act when it passed in 2008, which thus appears to represent cross-party consensus and the basis for stable long term policy making. However, since embracing climate change was the core of David Cameron’s ‘detoxification’ strategy for the Conservatives, and he offered the plausible chance of a Conservative government in the late 2000s, many Tories voted for the Act on short term tactical grounds rather than because they really agreed with it, and the party is still split over many of the issues.
So on the one hand, the CCC can’t provide a deep-rooted consensus for energy transformation (beyond doing a good job of presenting the science) because it is a technical advisory body. On the other hand, our political system and parties are not good at developing consensus solutions to difficult long term problems (this is true not only of climate policy but also in areas such as pensions and social care).
In IGov we have therefore been asking the question of whether some other process or institution – a consensus building body (CBB), if you like – could play this role in Britain instead. This would have to combine (i) an essentially political dimension, bringing political parties in, both for legitimacy and for the practical purpose of getting agreement accepted by government and Parliament, (ii) some element of representation of social groups in a direct way that is missing in our political system, and (iii) some technical support so that the process is informed by up-to-date accurate evidence. It might well have to be a permanent body or process, at least during the course of energy transition.
In discussing this idea with others, we have found that people find it difficult to grasp the concept, because nothing quite like it exists in British public life. Before they were abandoned, Royal Commissions perhaps came the closest, but even these were somewhat different, being expert-led and lacking in the political and social representation dimensions of the process. It is also the case that the reaction of people also reflects the institutions they are already in, and whether they see this idea as a threat or an opportunity!
In addition to the Danish experience, there are interesting relevant examples from other countries. In France in 2007, Nicolas Sarkozy set up a process for dialogue by different groups on climate change and other environmental issues called the Grenelle de l’Environnement. It involved representatives of national and local government along with those from industry and labour organisations, professional associations, and NGOs. However, while the Grenelle was good at raising issues, its connections to implementation and government were weak. The Grenelle seems similar to processes experimented with in the UK in the 2000s, such as GM Nation and the Sustainable Development Commission’s participatory deliberative exercise on sustainable consumption, although these were temporary processes set up to focus on single issues. They had limited impact as they failed to engage with the broad mass of an essentially disengaged public, and had no clear link to policy making or political processes. More recently, the French government passed an energy transition and green growth law in 2015 which followed a year-long stakeholder ‘national dialogue’ process. This had a clearer link to policy formulation, but was almost overturned in the French Assemblée Nationale because political parties had not been brought into the process early enough. Since 2002, France has also had a National Commission for Public Hearings that major infrastructure projects can be referred before they enter formal planning processes to open up discussion and concerns, improve availability and clarity of information and advises on methods of further public participation in the project design or assessment. The process is defined as a stage in decision forming rather than decision taking.
The Netherlands has a body called the Social and Economic Council (its Dutch acronym is SER), which advises the Dutch government and Parliament and is ‘the primary platform for coordination and consultation on important socio-economic issues’. The SER played a key role on the development of an Energy Agreement for Sustainable Growth in 2012-2013. The body consists of a mix of representatives from the main employer and worker organisations, together with a set of experts form academic and industry. It has both a social and a legal mandate. The idea is that, while the government is not obliged to follow the SER’s advice, ‘any unanimous agreement between employers and employee organisations together with relevant experts, serves as a powerful signal.
It is of course unlikely that any of these models could be simply copied in the specific context of the UK, but they do point to relevant elements and functions. While no existing body fits at present, it is possible that one could if suitably transformed. But the bottom line is that as we now enter a period unprecedented change in the energy system, which does after all provides services we all use every day and which are essential for the modern economy, we may need some of the functions and roles they play.
Probably the biggest challenge to the development of some form of consensus-building body or process in the UK is why government (and party politicians more widely) would open up what they see as their job to a wider group of stakeholders. First, it is important to emphasise again that it would be essential to keep political parties in the process, as otherwise it becomes a ‘stakeholder’ exercise with no traction. Second, it is not implausible that the UK government (and politicians more widely) would recognise that they often struggle to deal successfully with so-called ‘wicked’ problems in the usual Parliamentary process. Indeed, that is precisely why these are often put out to independent or quasi-independent commissions or committees. They also recognise that, especially in recent times, some parts of society feel alienated from the political class and excluded from ‘national conversations’. There is, in other words, quite a wide acceptance amongst Parliamentarians that politics-as-usual in Britain today needs a rethink. Opening up a more inclusive process on a long-term issue like climate change and energy transition in a genuine way could be precisely the kind of move that re-legitimises politics.