Transcript Powerpoint - Trade Unions for Energy Democracy

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?
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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
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Why public?
• Failure of private sector
• Positive case for public sector
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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
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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
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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.
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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.
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Single-price, bid-based auctions are easy to game and difficult to police.
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It is very difficult to negotiate reasonable long-term contracts.
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Disincentive to invest .. failure to build necessary infrastructure > concerns re reliability
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Inadequate transparency and cooperation
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Regulators have not protected consumers from the problems of restructuring.
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Developing renewables requires move away from liberalised markets.
“the structure of today’s ‘organized markets’ is neither
competitive nor sustainable” (Andersen 2009)
PSIRU
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A British business success…….
Sales £m.
Return on capital employed
(£422m. In 2009)
(42% in 2009)
Aggreko (international power projects)
PSIRU
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…. 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
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“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
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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
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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
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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
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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
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Even in the USA……1903-2010
PSIRU
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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
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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
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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
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Democratic
6. Democratic = determined by public objectives
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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
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Framework
• Reducing GHGs as common public objective
• Democratic and public as core framework
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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
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Conclusions
• Role of public ownership based on core advantages
• Public policy objectives central
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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
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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
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Anti-privatization struggles,