Socialised power: electricity is a public good

Member states will be helped by a proposed EU Climate Action Social Fund, which in a way is recognition by the commission that its climate actions have socio-economic impacts. But these unsustainable short-term solutions show that providing access to affordable electricity is a political challenge.

Public good

The urgency of decarbonising Europe requires policy consistency, not ad hoc reactions incompatible with open-market rules. And rather than asking the commission to ‘assess whether certain trading behaviours require further regulatory action’, the European Council at its last meeting should have considered an unorthodox solution—removing electricity as a private commodity from a liberalised market and treating it as a public good.

It’s the state which casts the largest and safest social safety-net to catch the causalities of the market descending into the depths of poverty. Karl Polyani rightly contended that ‘laissez-faire was planned’ and the commission should abandon such ‘planning’ as the recent Market Stability Reserve and new electricity market rules, which fail to recognise that ‘free’ markets are an artificial creation. Instead, it should recognise that, as a public good, electricity should be supplied in a non-rival, non-exclusive fashion—and so socialised.

The first way the commission can deliver socialised electricity is by recognising, with legislative powers, the critical role of ordinary people in decarbonising Europe, beyond being consumers. Rather than the commission promising that ‘consumers will be able to participate actively’ in electricity markets, citizens must be empowered to create energy co-operatives themselves.

Modern electricity technologies, such as photovoltaic solar and wind, align well with decentralised energy systems. All around Europe, renewable-energy co-operatives are being established in communities where ordinary people consume the energy they produce.

Fossil-fuel subsidies to energy firms would be one source of finance for such endeavour—in 2018 these amounted to €50 billion in the EU. Another would be the rising income from carbon permits. The commission should now table a proposal on forming, funding and enabling energy co-ops across Europe.

Inevitable consequence

The commission already funds research and development in innovative renewable-electricity technologies, rather than expecting firms to do so entirely out of their own profits. An adherent of market competition as a solution to all socio-economic challenges, it rewards firms that develop technologies to solve specific problems, such as energy storage, based on superiority of solution.

The ‘price hike’ of which Timmermans spoke is an inevitable consequence of a liberalised market. Neither member states nor the commission should fail in their duty to protect citizens from abuse of market power—as neither would do, for instance, by allowing that health be treated as a mere commodity on the open market. The commission should allow states to (re)nationalise electricity companies, which would remove a driver of energy poverty.

National regulatory authorities, already empowered by the commission and independent of member-state governments, along with the EU Agency for the Cooperation of Energy Regulators, could well serve a socialised European electricity system as frameworks for harmonious energy and climate-policy implementation. This would help resolve tensions between the EU and members states on shared competence on energy.

Politically unsustainable

As she directed her gaze towards Timmermans, Zalewska called the ETS ‘unjust’ and a ‘caricature’. Socialising electricity would save the commissioner from again underselling the scheme, or any other solution to what he called an ‘existential threat to humanity’.

A socialised system would render unnecessary the social safety-nets patched together by member states in response to the ‘price hike’. Timmermans’ ad hoc solution, to ‘use the age old political instrument of redistribution to make sure that the burden is evenly spread in society’, all the while maintaining the notion of a free electricity market, is politically and economically unsustainable.

Socialising electricity would allow for comprehensive EU rules and regulations, set with member states, on energy, environment and climate. Clearly energy can’t be separated from climate any more than carbon from coal. Tensions between the climate and social sides, as Timmermans put it, are certain to persist so long as the EU presses on with its climate actions. They are best reconciled within a socialised system for producing, distributing and transmitting electricity across Europe.

The commission and the European Council have agreed on the need for swift actions ‘that would contribute to energy at a price that is affordable’. Standing in their way is a liberalised electricity market. The urgent need, socially as well as ecologically, is to pave the way to a socialised electricity system.

First published by Social Europe

Further reading: Scotland’s green industrial revolution, Holyrood Magazine; Lesley Riddoch, Renationalise energy sector, The Herald , 20 September; Robert Pollock, Road to a net-zero-carbon economy, sceptical.scot