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December 03, 2014

Public Works Needed for Low Carbon Transition
    by Robert Kropp

A 2013 briefing by academics from the University of Greenwich argues forcefully for the management by the public sector of a transition to renewable energy, and is cited in Naomi Klein's book This Changes Everything. -- In her book This Changes Everything: Capitalism vs. the Climate, Naomi Klein emphasizes how instrumental has been the neoliberal agenda of privatization and austerity in preventing anything approaching an adequate global response to climate change. Public infrastructure works on the scale of the New Deal are what are really needed, not an economy built on consumption and inequality; it is our misfortune that awareness of the climate threat coincided with the triumph of the neoliberal gospel.

One of the sources cited by Klein to support her argument prioritizing the public sector was a 2013 briefing published by the Public Services International Research Unit (PSIRU) of the UK-based University of Greenwich business school. Entitled Renewable energy depends on the public not private sector, the report cites numerous cases to buttress its argument that “private companies and electricity markets cannot deliver investments in renewables on the scale required.”

In Europe, the report states, “climate change measures will mean that an unconstrained market model is not feasible, because the cheapest options, fossil-fuel plant must be discouraged in order for greenhouse gas emission targets to be met.” The EU's efforts to generate a market-based solution through its Emissions Trading Scheme (EU ETS) “has failed badly after 8 years of experience with prices at a small fraction of the real additional cost of reducing carbon emissions.”

The success stories in Europe thus far—in Germany, for example—an ambitious plan to convert the nation to renewable energy has been accompanied in cities such as Munich by a process of remunicipalization, in which electricity generation is taken back from private hands and returned to the public sector. “The city of Munich,” the report states, “has simply decided that all its energy will come from renewables by 2025, and all of it will be generated by the public sector – because the private sector cannot be relied on.”

Even in the UK, traditionally a leader in privatization of public resources, the Energy Bill “seems to simply override the EU electricity market laws.” Published in 2012, the law “will effectively override the market and create a government agency to make investment decisions, and finance them,” according to PSIRU.

The report pointedly questions the reliability of the private sector in renewable energy projects, citing two projects in Africa—Desertec in the North Africa desert, and Grand Inga in the Democratic Republic of Congo (DRC)—which private partners simply walked away from. And the agenda of exporting unrestrained free market ideology, often via World Bank loans, to Asian nations such as Vietnam and Indonesia has failed. In Indonesia, for example, efforts to establish public-private energy agreements have failed, in part because “the private sector was still deterred because it is reluctant to observe laws protecting forest areas.” These same forests, of course, are essential carbon sinks; deforestation is the primary reason why Indonesia is a leading global emitter of greenhouse gases.

“The development of the energy sector in any country must be determined by transparent, accountable and participatory democratic processes,” the report concludes. “ The development of renewable energy should not be based on a framework which privileges private company interests, enforced by the same kind of brutal, undemocratic conditionalities used by development banks in the 1990s to impose privatization in the sector.”

“The public sector provides not only a means of financing investment in renewables, but also a collective resource of knowledge embodied in workers who are securely employed, paid a decent wage, and working in conditions that prioritise safety for both workers and public.”

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