Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
PSIRU www.psiru.org The social, environmental and trade union case for public and democratic ownership of energy By David Hall [email protected] Public Services International Research Unit (PSIRU) University of Greenwich, UK October 2012 www.psiru.org PSIRU www.psiru.org Summary • Why public? – – – – Problems with private power German remunicipalisations Developing countries Why the public sector works • Why democratic? – Dimensions of democratic control Draws on various PSIRU reports including: • Overview of energy in Africa October 2012 (working paper) • Remunicipalising public services in Europe May 2012 • Why we need public spending October 2010 • Global experience with electricity liberalisation December 2009; • Electricity companies in Latin America 2007 October 2007 PSIRU www.psiru.org Why public? • Failure of private sector • Positive case for public sector – – – – – Economic not just politics Public is more economically efficient Public sector is vehicle of infrastructure investment Public sector is vehicle of investment in renewables Public sector grows in line with economic growth PSIRU www.psiru.org Privatisation & liberalisation: no price cuts, no investment • Prices: no benefits to consumers – EU: “public ownership tends to decrease prices [and] vertical disintegration tends to increase prices” – USA: prices rise fastest where deregulated • Connections: private sector does not invest – 90% of investment in electricity in Africa is state – Investment in extension of household connections are all state: e.g. rural electrification in South Africa, ‘luz para todos’ in Brazil • Power generation: underinvestment, corruption – independent power producers (IPPs) rely on government guarantees via power purchase agreements (PPAs) – corrupt, expensive, inflexible, anti-competitive – almost all investment is in gas, not renewables • R&D funding mainly public • Blackouts: Auckland, Rio, Buenos Aires, California, N-E USA/Canada, Italy, India PSIRU www.psiru.org Problems with liberalisation in OECD countries 1 Consumers – both large and small – strongly oppose restructuring. 2 Restructuring has not resulted in ‘‘real’’ or ‘‘true’’ competition. 3 Restructuring has brought higher electricity prices. 4 Technological innovation has not been realized. 5 High concentration of generation ownership, and joint ownership of generation and transmission, throughout the restructured world. 6 Single-price, bid-based auctions are easy to game and difficult to police. 7 It is very difficult to negotiate reasonable long-term contracts. 8 Disincentive to invest .. failure to build necessary infrastructure > concerns re reliability 9 Inadequate transparency and cooperation 10 Regulators have not protected consumers from the problems of restructuring. 11 Developing renewables requires move away from liberalised markets. “the structure of today’s ‘organized markets’ is neither competitive nor sustainable” (Andersen 2009) PSIRU www.psiru.org A British business success……. Sales £m. Return on capital employed (£422m. In 2009) (42% in 2009) Aggreko (international power projects) PSIRU www.psiru.org …. but a measure of global failure? A. Aggreko rent temporary diesel generators - expensive, high carbon, does not develop local capacity B. Market is result of failure to invest in developing countries – – “Poor countries are seeing demand for power increasing by over 8% per annum……” but investment will prioritise replacing capacity in north. So: “…. the world-wide shortfall of power generating capacity nearly 10-fold, from about 70 gigawatts (GW) in 2005 to around 600 gigawatts by 2015” PSIRU www.psiru.org Public efficiency • Public finance works – – – – – – Historically used in north (inc USA) and south Tax revenue is sustainable basis lower interest rates on debt than private corporations crisis reinforces relative cheapness of public finance even in developing countries! E.g. Indonesia 2009 private pays 3% more for debt • Public/private operating efficiency: no difference – UK privatisations, global electricity comparisons, World Bank studies, electricity, water, transport etc – USA study finds unbundled systems are less efficient: deregulated states “have lower productive efficiency, and … decreases in efficiency over time. In particular, the vertical separation of generation… is associated with an adverse impact on productive efficiency” (Goto and Makhija 2009) PSIRU www.psiru.org Renewables investment: government not market • Historical investment in renewables is by governments • Consensus that liberalised markets cannot deliver in EU “Several countries already source over 70% of their power generation from low-carbon sources (Figure B4.10)9. For these, investment has typically only occurred with substantial government intervention, even where markets have subsequently been liberalised” “we should not accept the significant risks and costs associated with the current market arrangements… changes to the current arrangements are both required and inevitable.” (UK Committee on Climate Change, 2009 http://www.theccc.org.uk/reports/progress-reports ) PSIRU www.psiru.org Re-municipalisation in Germany and elsewhere • German re-municipalisations driven by superior performance of public sector in delivering renewables • Municipalities buy energy companies from MNCs (> €8.1 billion) – Sales due to debts, concessions expire • New law facilitates municipalisation • Munich spells out reasons – Private sector has failed to deliver on renewables – Municipality can and will deliver on renewables • Elsewhere: – Latin America: renationalisation eg Bolivia, Argentina – Japan: state nationalises Tepco – Boulder City, Colorado, USA: a new municipal utility PSIRU www.psiru.org Higher GDP, higher public spending 70.0% Higher GDP per capita positively linked to higher public spending as % of GDP (OECD 2008) Public spending as % of GDP 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 0 10000 20000 30000 40000 50000 60000 70000 GDP per capita Long rise of public spending as % of GDP, in line with GDP per capita: “Wagners Law” (Tanzi 2000) PSIRU www.psiru.org Even in the USA……1903-2010 PSIRU www.psiru.org Public solutions along the energy chain Energy chain sector Public/democratic solution adopted or demanded Oil, gas, fracking Iraq, Argentina, Bolivia Coal South Africa Hydro USA, etc Solar Demands: Desertec Wind China Geothermal Indonesia, Chile Nuclear Japan, Ukraine Waste: incineration, biogas stoves Hamburg, India Biofuels Demands: Africa Efficiency Public transport, buildings Public transport Electricity Generation many inc. Germany, Bolivia, etc Transmission many Distribution Many inc. Germany, South Africa, India Extraction Renewables Other Lighting Gas Transmission, storage, distribution Slovakia, Bolivia District heating Germany etc PSIRU www.psiru.org Democratic • Democratic: political power and material interests 1. Democratic = not corporate – People 7 billion votes, corporations 0 – Against corporate power, corruption, campaign finance – decisions in public sphere, not secret meetings 2. Democratic = national not international institutions – Environmental and social priorities vs trade, profit – World Bank, IMF etc: no privatisation conditionalities – WTO, BITs: no compensation rights in breach of social/env rules – EU: environmental/social should override market PSIRU www.psiru.org Democratic 3. Public ownership and control of natural resources – Oil-gas-coal, sunshine, wind and rivers – “Earth, fire, air and water” 4. Make private ownership of electricity/energy illegal – As with water in Netherlands, Uruguay, ?Italy – As per Indonesian constitution, Icelandic constitutions 5. Human right to energy – “Right to energy is human right, not corporate right” – Rural unconnected: right to energy from sun/wind/rivers – Human right as equality demand: energy for 1= energy for all PSIRU www.psiru.org Democratic 6. Democratic = determined by public objectives – – – – – – not commercial objectives Long-term vision for planet and people Development for planet: climate change Social development for people Economic development for countries (tech transfer etc) Re-development for rich countries: with lower consumption? (air-con, cars, aluminium) 7. Unions and social movements for people vs capital – Based on material interests: workers, consumers, gender, neighbourhoods, rural – Also environmentalists and faith groups PSIRU www.psiru.org Framework • Reducing GHGs as common public objective • Democratic and public as core framework – – – – – – Political strategy is local issue Technology is local issue Energy source is local issue Central/decentral is local issue Pricing is local (public) issue Just transition of employment is local issue PSIRU www.psiru.org Conclusions • Role of public ownership based on core advantages • Public policy objectives central – – – – Public ownership of resources Renewables and low-carbon economy, universal affordable coverage Flexibility over whole system: renewables, transport, demand Decent jobs, not return on capital • Democratic accountability • Public finance is cheaper – Interest rates lower – Borrowing is just deferred taxation • Capacity-building and labour – Build competences, train labour at all levels PSIRU www.psiru.org Can we do this? • Yes: we did it before, 1900-1950 – First electricity private – Multinational expansion with limited supply (for rich, lighting, tramways) – Public ownership by • Municipalisation • Nationalisation • Yes: we have done it in water – Water privatisation largely defeated since 2000 – Even reversal in home country of MNCs (France) – Still struggles but we won, not them PSIRU www.psiru.org Anti-privatization struggles,