Eco­nomic di­ver­sity in the en­ergy sec­tor:

Post-cap­i­tal­ism in the here and now?

AQ: Australian Quarterly - - CONTENTS - DR AMANDA CAHILL

We are at a cross­roads. The tremen­dous struc­tural changes needed to tackle cli­mate change have pre­sented us with a unique yet clear choice: strengthen the eco­nomic and po­lit­i­cal sta­tus quo, or in­vest in so­lu­tions that will not only trans­form our en­ergy sys­tem, but our eco­nomic and po­lit­i­cal sys­tems as well. Nowhere is this choice more ev­i­dent as it is in the de­bates around the fu­ture of Aus­tralia’s en­ergy sys­tem.

Rapid de­vel­op­ments in re­new­able en­ergy tech­nol­ogy have made the task of tran­si­tion­ing Aus­tralia’s en­ergy sys­tem away from fos­sil fu­els not only pos­si­ble, but eco­nom­i­cally fea­si­ble. Yet com­pared to other OECD coun­tries, Aus­tralia has been slow to em­brace the tran­si­tion, which is par­tic­u­larly strik­ing given its vast re­new­able en­ergy po­ten­tial.

While Ger­many pro­duced 36% of its na­tion’s elec­tric­ity needs from re­new­able en­ergy in 20171 and Swe­den achieved its 2020 re­new­able en­ergy goal of 49% back in 2012,2 Aus­tralia con­tin­ues to de­bate its na­tional re­new­able en­ergy tar­gets, fu­elling on­go­ing pol­icy un­cer­tainty.

In this chal­leng­ing and con­stantly shift­ing pol­icy en­vi­ron­ment, three dis­tinct eco­nomic mod­els have emerged to tran­si­tion Aus­tralia’s elec­tric­ity sys­tem

to one pow­ered by re­new­able en­ergy, each pos­ing rad­i­cally dif­fer­ent eco­nomic and po­lit­i­cal pos­si­bil­i­ties. The first is for pri­vately owned cor­po­ra­tions to con­tinue to lever­age pri­vate in­vest­ment and pub­lic sub­si­dies to fund the switch to re­new­able en­ergy, ef­fec­tively strength­en­ing the cap­i­tal­ist sta­tus quo.

At the other end of the eco­nomic spec­trum are a grow­ing num­ber of small-to-medium sized com­mu­ni­ty­owned re­new­able en­ergy (CORE) projects that ex­em­plify a post-cap­i­tal­ist al­ter­na­tive. The other al­ter­na­tive to cap­i­tal­ist mod­els of pro­duc­tion is the pub­licly-owned model of elec­tric­ity gen­er­a­tion that was re­spon­si­ble for es­tab­lish­ing most of the en­ergy in­fra­struc­ture across the coun­try un­til pri­vati­sa­tion in the 1990s. 3

Each of these mod­els can – and are al­ready – tran­si­tion­ing Aus­tralia’s elec­tric­ity sys­tem to one pow­ered by re­new­able en­ergy. The fo­cus of this ar­ti­cle is not the tech­ni­cal as­pects of this tran­si­tion, but the po­ten­tial of each model to fos­ter more eq­ui­table eco­nomic sys­tems, draw­ing on three ex­am­ples: AGL, Hep­burn Wind, and the Queens­land Gov­ern­ment’s pro­posed Clean Co.

Cap­i­tal­ism and the Sta­tus Quo

Since the 1990s, pri­vate com­pa­nies have gen­er­ated most of Aus­tralia’s elec­tric­ity. De­spite the huge costs in­volved in trans­form­ing the en­tire en­ergy sys­tem, there is sig­nif­i­cant sup­port among pri­vate en­ergy com­pa­nies for poli­cies de­signed to ac­cel­er­ate the tran­si­tion. This in­ter­est is not solely mo­ti­vated by con­cerns about cli­mate change.

Aus­tralia’s cur­rent fleet of coal fired elec­tric­ity plants are age­ing, with more than half of Aus­tralia’s coal-fired elec­tric­ity plants hav­ing op­er­ated for more than 30 years. 4 With the cost of build­ing new re­new­able en­ergy projects now fall­ing be­low the cost of build­ing new coal fired plants, 5 the eco­nomics are clear.

As the largest owner, gen­er­a­tor and de­vel­oper of re­new­able en­ergy in Aus­tralia, AGL is one of the big­gest pro­po­nents of in­vest­ment in clean en­ergy. The com­pany has adopted a goal to re­tire all of its coal-fired power plants by 2050 and is al­ready tak­ing great strides to­wards this goal, launch­ing the Pow­er­ing Aus­tralian Re­new­ables Fund (PARF) in 2016 to sup­port the de­vel­op­ment of over 1 GW of large-scale re­new­able en­ergy projects.

Se­nior AGL of­fi­cials have been trans­par­ent about the fact that their mo­ti­va­tions do not stem from en­vi­ron­men­tal con­cerns alone, and that they con­sider mov­ing in­vest­ments away from coal and to­wards re­new­able en­ergy good busi­ness sense.

Swe­den achieved its 2020 re­new­able en­ergy goal of 49% back in 2012, Aus­tralia con­tin­ues to de­bate its na­tional re­new­able en­ergy tar­gets.

As AGL’S CEO An­drew Ve­sey stated re­cently: "We just don't see new de­vel­op­ment of coal as eco­nom­i­cally ra­tional even be­fore fac­tor­ing in a real car­bon cost." 6 Dur­ing one dis­cus­sion I at­tended, a se­nior man­ager from AGL took this sen­ti­ment one step fur­ther, sug­gest­ing that as an early in­vestor in the in­evitable shift to re­new­able en­ergy, com­bined with their ex­ist­ing in­fra­struc­ture, AGL could be po­si­tioned to cap­ture up to 80% of Aus­tralia’s elec­tric­ity mar­ket.

AGL’S pub­lic com­mit­ment to re­new­able en­ergy is cru­cial in catalysing the changes needed for a rapidly chang­ing cli­mate. As a large cor­po­ra­tion, their abil­ity to lever­age vast fi­nan­cial and tech­no­log­i­cal re­sources could sig­nif­i­cantly ac­cel­er­ate emis­sions

With the cost of build­ing new re­new­able en­ergy projects now fall­ing be­low the cost of build­ing new coal fi red plants, the eco­nomics are clear.

re­duc­tions. This is good news for the cli­mate.

From a so­cial, eco­nomic and po­lit­i­cal per­spec­tive though, ques­tions need to be asked about the de­sir­abil­ity of a pri­vate com­pany strength­en­ing their hold over the en­ergy mar­ket, par­tic­u­larly when they al­ready con­trol 30-40% of elec­tric­ity pro­duc­tion in some states. 7

The po­ten­tial ex­pan­sion of cap­i­tal­ist con­trol dur­ing the cur­rent pe­riod of tran­si­tion could leave Aus­tralia in­creas­ingly vul­ner­a­ble to the kinds of prob­lems that have emerged around the world where ne­olib­eral doc­trines have presided rel­a­tively un­chal­lenged.

Where fewer and fewer pri­vate in­ter­ests have been al­lowed to in­creas­ingly mo­nop­o­lise es­sen­tial goods and ser­vices (e.g. en­ergy, wa­ter, land and even food), is­sues such as higher costs and less re­li­able sup­ply to re­mote, and so­cio-eco­nom­i­cally marginalised groups have arisen, ac­com­pa­nied by grow­ing rates of inequal­ity. Some ar­gue that we are al­ready see­ing these im­pacts in Aus­tralia given the high prices of elec­tric­ity and an in­creas­ing num­ber of black­outs. 8

Reg­u­la­tions, sub­si­dies and other pol­icy mech­a­nisms al­ready ex­ist to en­sure that en­ergy is ac­ces­si­ble and af­ford­able to all, so in this sense, pri­vate com­pa­nies in Aus­tralia do not op­er­ate in a purely cap­i­tal­ist mar­ket. Even so, it seems pru­dent to ask – how ef­fec­tive will these tools con­tinue to be as we

nav­i­gate this messy tran­si­tion, given the ever shrink­ing reach of gov­ern­ment and the in­creas­ingly blurred lines be­tween pri­vate and pub­lic con­trol?

And given the po­ten­tial of re­new­able en­ergy tech­nol­ogy to de­cen­tralise and democra­tise pro­duc­tion and wealth dis­tri­bu­tion, why would we want to fur­ther con­sol­i­date the wealth and power of pri­vate cor­po­ra­tions? What if we could har­ness the de­cen­tralised na­ture of the tech­nol­ogy to fos­ter more post-cap­i­tal­ist mod­els of pro­duc­tion, like those ex­em­pli­fied by Com­mu­ni­ty­Owned Re­new­able En­ergy projects?

CORE: A Post-cap­i­tal­ist Al­ter­na­tive

At the other end of the eco­nomic spec­trum, Com­mu­nity-owned Re­new­able En­ergy (CORE) projects rep­re­sent a post-cap­i­tal­ist al­ter­na­tive. CORE refers to “projects where a com­mu­nity group ini­ti­ates, de­vel­ops, op­er­ates and ben­e­fits from a re­new­able en­ergy re­source or en­ergy ef­fi­ciency ini­tia­tive. Com­mu­nity groups are formed based on a com­mon in­ter­est or ge­o­graph­i­cal re­gion such as a town or sub­urb.” 9

There are cur­rently more than 90 small-to-medium sized CORE projects around Aus­tralia, 10 with the Hep­burn Wind Farm one of the most well known ex­am­ples. Hep­burn Wind was es­tab­lished as a lo­cally-owned co­op­er­a­tive with over 2,000 mem­ber-in­vestors.

The first com­mu­nity-owned re­new­able wind farm in Aus­tralia, the pri­mary mo­ti­va­tion for the project was a frus­tra­tion with gov­ern­ment for not do­ing enough to com­bat cli­mate change and a de­sire to take ac­tion to re­duce emis­sions in a mean­ing­ful way.

Ini­tial in­vest­ment was gen­er­ated through a mix of sources: co­op­er­a­tive mem­bers con­trib­uted $9.8 mil­lion, with state gov­ern­ment grants and a loan from the Bendigo Bank con­tribut­ing an ad­di­tional $4.8 mil­lion. 11 From this ini­tial in­vest­ment, the co­op­er­a­tive built two tur­bines that gen­er­ate a to­tal of 4.1MW ca­pac­ity, equiv­a­lent to the elec­tric­ity needs of around 2300 Vic­to­rian homes. 12

With most of the co­op­er­a­tive mem­bers lo­cal to the area, Hep­burn Wind is de­signed to en­cour­age wide­spread com­mu­nity own­er­ship and en­gage­ment and to en­sure that the project gen­er­ates eco­nomic ben­e­fits for the re­gion as a whole. It does this by re­turn­ing prof­its to mem­bers as div­i­dends, but also by gen­er­at­ing lo­cal em­ploy­ment op­por­tu­ni­ties and in­vest­ing in lo­cal projects through a com­mu­nity fund. The co­op­er­a­tive has also in­vested sig­nif­i­cant re­sources into de­vel­op­ing lo­cal ca­pac­ity, lead­er­ship and de­ci­sion mak­ing pro­cesses, in line with their goal to im­prove demo­cratic par­tic­i­pa­tion. 13

CORE projects like Hep­burn Wind

There are cur­rently more than 90 small-tomedium sized CORE projects around Aus­tralia.

can ef­fec­tively pro­duce elec­tric­ity in af­ford­able and re­li­able ways, but they pro­duce it in ways that re­dis­tribute wealth and power. 14 In this way, they ex­em­plify a post-cap­i­tal­ist al­ter­na­tive that con­cep­tu­alises en­ergy not as a com­mod­ity to be traded, but as a fun­da­men­tal right or es­sen­tial ser­vice.

By of­fer­ing a dif­fer­ent eco­nomic and gov­er­nance model, CORE asks who should be mak­ing fun­da­men­tal de­ci­sions about this es­sen­tial ser­vice and how prof­its should be used – to max­imise the wealth of pri­vate (of­ten for­eign) share­hold­ers, or chan­nelled to sup­port lo­cal com­mu­ni­ties to achieve self-suf­fi­ciency and eco­nomic sovereignty?

They ex­em­plify a postcap­i­tal­ist al­ter­na­tive that con­cep­tu­alises en­ergy not as a com­mod­ity to be traded, but as a fun­da­men­tal right.

There are lim­i­ta­tions to this model, in that it places sig­nif­i­cant de­mands on the lo­cal com­mu­nity and users in terms of re­sources, time, lead­er­ship, skills and com­mu­nity good­will to de­velop and main­tain the sys­tem. Not all com­mu­ni­ties have ac­cess to the re­quired re­sources and it raises

an in­ter­est­ing eth­i­cal ques­tion as to whether com­mu­ni­ties should have to take on the re­spon­si­bil­ity for such an im­por­tant ser­vice, or whether this should in­stead fall fully un­der the purview of gov­ern­ment.

Pub­lic Con­trol: The LEAN Al­ter­na­tive

A sec­ond al­ter­na­tive to a cap­i­tal­ist model of elec­tric­ity pro­duc­tion is pub­lic own­er­ship through gov­ern­men­towned cor­po­ra­tions. Pub­licly owned elec­tric­ity com­pa­nies are the sec­ond largest elec­tric­ity gen­er­a­tors in Aus­tralia, and the main pro­duc­ers in the states of Queens­land and Tas­ma­nia.

While pub­lic com­pa­nies now op­er­ate in ways that seem al­most iden­ti­cal to pri­vate cor­po­ra­tions, some ad­vo­cates for re­new­able en­ergy have been call­ing for an ex­pan­sion of pub­lic con­trol over elec­tric­ity gen­er­a­tion in the be­lief that gov­ern­ment-owned en­ti­ties would be able to en­sure a smoother tran­si­tion through di­rect con­trol. One such ad­vo­cate is the La­bor En­vi­ron­ment Ac­tion Net­work (LEAN) – a cross­fac­tional branch of the La­bor Party.

In the lead up to the 2017 Queens­land State Elec­tion, LEAN cam­paigned for the es­tab­lish­ment of a new state-owned com­pany that would build 1 GW of large-scale re­new­able en­ergy in­fra­struc­ture by 2025 to:

…en­sure the man­age­ment of the en­ergy in­dus­try de­liv­ers the sup­ply of en­ergy in the pub­lic in­ter­est, and to max­imise the ben­e­fits of pub­lic own­er­ship, driven by the goal of pro­vid­ing af­ford­able, re­li­able elec­tric­ity to Queens­lan­ders while re­duc­ing pol­lu­tion. 15

Pub­lic re­sources are cur­rently spent on sub­si­dis­ing the pri­vate sec­tor when that money could be in­vested di­rectly to pro­duce rev­enues for the state.

In con­trast to the way pri­vate cor­po­ra­tions con­cep­tu­alise elec­tric­ity as a com­mod­ity, LEAN con­sid­ers en­ergy a pub­lic good or es­sen­tial ser­vice, and sees gov­ern­ment own­er­ship as in the pub­lic in­ter­est, stat­ing: “The mar­ket does not best serve the pub­lic in­ter­ests when it comes to things we all need. Profit should not be the only driver in the de­liv­ery of key ser­vices.”

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In this way, LEAN di­rectly chal­lenges the dom­i­nance of cap­i­tal­ism and the idea that the role of gov­ern­ment should be lim­ited to that of reg­u­la­tor, ask­ing why pub­lic re­sources are cur­rently spent on sub­si­dis­ing the pri­vate sec­tor when that money could be in­vested di­rectly to pro­duce rev­enues for the state.

They in­stead pro­pose that state­con­trolled en­ergy pro­duc­tion is the most di­rect way to en­sure that the ben­e­fits of the cur­rent tran­si­tion reach every­one, by us­ing prof­its to pro­vide more af­ford­able en­ergy; en­sure ac­cess to low-in­come house­holds and ru­ral and re­mote com­mu­ni­ties; cross-sub­sidise other pub­lic goods and ser­vices; and de­liver lo­cal, long-term job cre­ation and train­ing op­por­tu­ni­ties.

While LEAN has been suc­cess­ful in

their cam­paign to win a com­mit­ment from the Queens­land La­bor Gov­ern­ment to cre­ate a ‘Clean Co’, 17 time will tell whether it can dis­rupt the sta­tus quo and move past the pol­i­tics that have plagued re­form in the en­ergy sec­tor so far.

Queens­land al­ready has two gov­ern­ment-owned gen­er­a­tors, but on­go­ing ties to coal and gas ex­trac­tion – whether through State rev­enues or elec­tric­ity gen­er­a­tion – will prob­a­bly mean that ac­tion to catal­yse large-scale shifts to re­new­able en­ergy will con­tinue to de­pend on which way the po­lit­i­cal winds blow.

Im­pli­ca­tions for a Post-cap­i­tal­ist Fu­ture

These three case stud­ies not only rep­re­sent dif­fer­ent ways to gen­er­ate and dis­trib­ute elec­tric­ity, but three con­trast­ing eco­nomic mod­els that en­gen­der dis­tinct eco­nomic and po­lit­i­cal pos­si­bil­i­ties.

The pri­va­tised model rep­re­sented by AGL points to a strength­en­ing of the cap­i­tal­ist sta­tus quo in that, as a cor­po­rate en­tity, it is de­signed to trade a com­mod­ity com­pet­i­tively to max­imise prof­its, ex­pand its mar­ket share and min­imise the im­pacts of reg­u­la­tion.

In con­trast, CORE ex­em­pli­fies a post-cap­i­tal­ist model of pro­duc­tion, hold­ing the po­ten­tial to democra­tise the elec­tric­ity sys­tem by de­cen­tral­is­ing own­er­ship, re­dis­tribut­ing prof­its and en­sur­ing fi­nan­cial and other ben­e­fits flow to the lo­cal com­mu­nity. In this way, CORE chal­lenges the cap­i­tal­ist sta­tus quo and holds the po­ten­tial to un­der­mine the abil­ity of large pri­vate or pub­lic cor­po­ra­tions to mo­nop­o­lise ac­cess to an es­sen­tial ser­vice.

The LEAN model dif­fers again, in that it ad­vo­cates that con­trol rest with the State, which cap­tures and rein­vests prof­its into ser­vices for the pub­lic good, re­ly­ing on the bal­lot box as a means for en­sur­ing en­ergy democ­racy.

All three ex­am­ples can tran­si­tion Aus­tralia to 100% re­new­able en­ergy pro­duc­tion. All three share fi­nan­cial and other ben­e­fits with the broader com­mu­nity. But as we nav­i­gate this time of tran­si­tion, there are still many ques­tions yet to ex­plore: What do these dif­fer­ent sys­tems mean for how power and wealth are con­cen­trated or dis­trib­uted? Who do we want con­trol­ling a re­source on which in­di­vid­ual well­be­ing de­pends, as well as so­ci­ety’s abil­ity to func­tion? And is ac­cess to elec­tric­ity a hu­man right, a pub­lic good or a com­mod­ity to be traded?

These are big ques­tions that not only hold se­ri­ous ram­i­fi­ca­tions for our abil­ity to mit­i­gate the im­pacts of cli­mate change, but for democ­racy it­self. Un­der­pin­ning them is the fun­da­men­tal is­sue of whether we want to fur­ther con­sol­i­date the very same cap­i­tal­ist re­la­tions of pro­duc­tion that have driven cli­mate change and that con­tinue to ex­ac­er­bate grow­ing lev­els of so­cioe­co­nomic inequal­ity.

Post-cap­i­tal­ist al­ter­na­tives that re­dis­tribute wealth and power al­ready ex­ist. But not all al­ter­na­tives are equal. Whether or not they will de­liver on their po­ten­tial to chal­lenge the cap­i­tal­ist sta­tus quo to cre­ate a more eq­ui­table and re­silient fu­ture is not a ques­tion of tech­nol­ogy, but of pol­i­tics.

Where do we go from here? Well, that’s up to us.

Is ac­cess to elec­tric­ity a hu­man right, a pub­lic good or a com­mod­ity to be traded?

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