“We’re not talking about lab experiments”: Emerging governance practices for sustainable energy in the UK
Janette Webb and David Hawkey
This paper uses evidence about practices of local energy development as the basis for theorising about governance change for sustainable economy. It considers the policy ambition for transition to clean, affordable energy as a major collective action problem which has to be addressed in the context of the liberalised, and in the UK centralised, energy markets developed alongside finance capitalism over the last 20- 30 years. The paper focuses on decentralised combined heat and power (CHP) projects in cities as a means to explore the contemporary roles of states and markets in governing energy systems change. The experiences of UK practitioners are situated in European context through brief comparison with the Netherlands and Norway.
Heat networks are an established urban energy saving technology, but provide only around 2% of the UK’s space and hot water heating. Many of the factors germane to their 20th century developments (resource efficiency, affordable heat, regeneration, local revenue generation) also inform contemporary plans, but climate protection policies have added impetus. Decentralised energy developments do not however fit easily into the dominant templates for UK energy infrastructure investment. Even though there is good evidence that heat networks are in principle carbon, cost and energy efficient, they are marked out by financial calculi as riskier: they have relatively high upfront investment costs and long-term payback, multiple sources of price risk, and lenders adopt high thresholds for the ‘bankability’ of heat supply contracts. The resulting increase in cost of capital limits the viability of projects. It seems therefore that viable steps towards a more sustainable energy economy are marginalised by current political economic priorities. What are the implications for governing change?
We seek some provisional answers using qualitative case study data to examine the local governance models which have developed out of interaction with policy uncertainties and a centralised energy market. Municipal authorities are working in a context very different from that which supported earlier innovation in Europe. Notably there has been a significant shift towards liberalised markets, and financial deregulation. Nevertheless distinctions between European states persist, with Norway and the Netherlands, as exemplars of a ‘stakeholder’ model of capitalism, demonstrating more coordinated interaction between localities, states and energy utilities to accelerate urban CHP/DH developments. In the UK, limited local authority powers, resources, and capacities, limited supportive institutions, and tensions between socially- and materially-embedded CHP/DH initiatives have resulted in patchy development. Bridging the gap between rationalised finance and local political and economic interests requires considerable governance capacity at the local project level. This has high transaction costs and is prone to recurring crises over management complexities, organizational risks, power struggles, and cultural tensions. Some local authorities have nevertheless established distinctive approaches to enable the development of heat networks. Resulting governance structures are responsive to local circumstances and policy priorities, and in turn work to reconfigure the local opportunity space, with implications for the distribution of costs and benefits. The cases are used as a basis for reflecting on governance frameworks for reshaping energy provision.
Presentation: download here Webb_J – Panel 4
Paper: download here Panel 4 -Webb_We’re not talking about lab experiments
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