What Sustains Unsustainability? Examining Context, Explaining Obstacles, Devising Strategies For Renewables
Andrea Bunting and Stewart Russell
Abstract
What is involved in explaining the obstacles to the development and more widespread adoption of renewable energy technologies, and in understanding their prospects? It is crucial to focus on the institutional framework, not only of renewables research, development and commercialisation but also of the electricity industry and the energy sector more widely. The paper surveys insights, concepts and parallel work in technology studies and policy analysis which can inform both our understanding and strategies for intervention. It explores the possible impacts of electricity restructuring and warns that initiatives to support renewables may be overwhelmed by the effects of mainstream developments in electricity provision.
1 INTRODUCTION
There has been much reflection among the renewable energy community in Australia on the barriers to wider adoption of renewables technologies. Much of this has rested on practical experience in years of hard effort to introduce specific technologies or in general campaigning for their recognition and fair treatment. At ANZSES gatherings and elsewhere, there have been two currents. One is the elucidation of particular forms of obstacle: paucity of research funding compared to fossil and nuclear technologies, distortions in fuel prices and subsidies to conventional generation, information gaps, the scale or poor development of current industries or markets, lack of finance or unfair financial or tax regimes, inappropriate market signals, organisational conservatism, lack of knowledge or vision. This is often accompanied by carefully formulated demands for policy and action by government to overcome them (Blakers, 1985; Diesendorf, 1987; Healy & Outhred, 1990; Lowe, 1994; Blakers & Diesendorf, 1996; Sonneborn, 1996). The second is more philosophical thinking about the values or rationalities underlying Western societies’ failure to embrace renewables and the social reorganisation they might entail (Bannister, 1989 & 1990; Fisher, 1985).
Our contribution is pitched somewhere in between. Our objectives in this paper are:
• to examine what is involved in a systematic and comprehensive explanation of the marginalisation of renewables so far, and an understanding of what will determine the prospects of renewables under dramatically changing conditions in the energy sector;
• to suggest some underlying relations between the barriers, patterns and themes that have been identified;
• to show that these are examples of issues identified in a range of literatures in social and policy analysis of technologies and institutions, and to indicate where we take our theoretical inspiration;
• to offer some thoughts on the effects of current changes in the electricity sector on the prospects for renewables.
A further implicit purpose is to convince you that social and policy analysis should have much to offer. For us as historians and social analysts, understanding what sustains current patterns of energy provision is of intrinsic interest; insights from this area can be a window on the workings of our social institutions more generally and have important lessons for other areas of technology and policy. For you involved in renewables development and campaigning, we argue this exercise is vital—in understanding the context of your efforts and in identifying problems, opportunities and points of intervention in the future. We are in effect appealing for interdisciplinary cooperation in a thorough examination of the institutional context of all stages of the renewables innovation process, from R&D through to implementation and markets for their outputs.
Much popular writing on renewables in the last two decades—even some of the most eloquent and influential arguments for it—seems to assume that simply pointing out the problems of conventional sources and the merits of renewables will be enough to bring about change. Shortcomings of current patterns of energy provision have thus been seen as caused by irrationality, short-sightedness and anachronistic ideas; such errors will be corrected by exhortation and what are essentially technical arguments for alternative courses of action. We are sure people here long ago had any such naive expectation knocked out of them.
Yet when we find ourselves falling back to an insistence that industry leaders and policy makers should take certain measures, and express disbelief that they are not, it seems to indicate that we are still groping for an explanation of why it is not happening. The explanations are of course multilayered: behind every suggested reason for lack of progress there is a further question—why not? And when results are disappointing, there is a temptation to resort to conspiracy theories as explanation—that somehow renewables and energy efficiency and other self-evidently worthy developments have been intentionally nobbled. Of course, you may know examples of organisations and individuals taking self-interested action which has thwarted renewables projects or restricted markets. But such conscious tactics are only a small part of the story and to dwell on them misses the point.
The assumptions here are by contrast:
• that past and present energy arrangements correspond to and support certain economic and political interests;
• that renewables have been excluded, or accommodated only in the interstices of the sector, because of the challenges their introduction would represent, the political demands with which they are associated, or the economic and organisational conditions which their introduction would require;
• that their marginalisation has been more systemic than deliberate;
• that more widespread introduction will not come without substantial institutional reform for that purpose;
• and conversely that reform in the sector being undertaken for other reasons will have a profound effect on the prospects for renewables.
Put boldly like that, taking energy institutions as the starting point for our analysis does not sound startlingly new. Yet in the general energy literature, relatively little work has addressed in a systematic way the social forces which are behind patterns of unsustainable energy provision, which have caused them to persist even against challenge, which have marginalised alternatives, and which may continue to do so even when it is widely accepted at the level of rhetoric that they make good sense. Much energy writing still starts with the characteristics of technologies and the economic logic of choice between different energy forms, and assumes that institutional patterns somehow follow inevitably from there.
We outline our thoughts on theoretical insights in two broad categories: how processes of agenda-setting and patterns of thinking help reproduce current energy patterns; and on the energy sector as a complex political economy.
2 AGENDAS AND IDEOLOGIES
In terms of processes which lead to the marginalisation of renewables, there is a need to move away from a focus on overt decision-making and explicit debate, to much more subtle means by which issues are kept off the political agenda, and ideas, options, and ways of framing issues are marginalised. Much of the time no one is actively taking decisions not to provide opportunities for renewables; the routine operation of markets, political systems and economic appraisals reproduces their disadvantaged position. In the arenas that count, the possibility may simply be a non-issue.
These mechanisms through which agendas are formed, allowing passage of some issues and suppression of others, have been explored in general terms in political science. Bachrach and Baratz (1970) talk of ‘nondecision-making’ whereby particular groups exercise power by preventing demands and grievances from even entering the political arena. Within a political system, institutional procedures and practices operate systematically to benefit certain groups at the expense of others. Thus, for example, political processes that shape the Australian energy sector tend to favour the interests of the coal industry and large industrial consumers—without any overt exercise of power. We need to expose the mechanisms by which this is achieved.
Ideological constraints—the way that ideas, patterns of thought, assumptions and mental models favour certain outcomes or disadvantage others—are the sources of rigidity which are perhaps least understood and yet highly significant; the most effective exercise of power may be to prevent people from appreciating that something could be different. It has been suggested that public attitudes to renewables, and some underlying cultural incompatibility, are major obstacles. We believe ‘public’ perception is not the key problem; instead we need to explain why widespread support for renewables is not translated into policy and action. The key is still cultural or ideological in that sense, but the neglect of renewables can be attributed to the dominant ideologies of specific organisations and influential groups, imposed across the sector, rather than some amorphous ‘culture’ which disparate sections of society supposedly share. This set of beliefs, of what is and what is not possible, is taken for granted much of the time, but is readily mobilised by these dominant groups in the face of challenge, not just as general arguments but in elaborate forms of assessment that disguise dubious assumptions to produce foregone conclusions. We should examine then how it is possible for public support for renewables to be so readily dismissed, with a ‘it would be nice if … but you don’t understand the real world’ line. Of course, general public understanding of the energy sector may be limited—that in itself is a product of a longstanding lack of involvement of the broader community in energy provision. But this dismissal relies on denying the possibility of changing the technical and economic framework in which decisions are made or which in effect makes them automatically.
Several authors have argued that a coherent dominant ideology existed in the energy sector in the period of state ownership and vertically integrated competing fuel chains, and identified its elements as: the imperative to expand supply, and the dangers of not supplying; the difficulty of demand-side intervention; dismissal of the potential for renewables or energy efficiency measures; the primacy of competition and the commodity form; the need for closed expert decision-making; the inappropriateness of government ‘interference’; and particular interpretations of notions like ‘the consumer interest’ and ‘freedom of choice’. It is clear that this package of assumptions and associated language is undergoing important shifts as the structure and organising principles of the sector change. To some extent we can see continuities, but the implicit meaning of terms has changed: ‘competition’, for example, now reflects different market forms. Corporatisation and privatisation have not brought an abrupt shift of ideology, then; rather it has been evolutionary, mirroring the increasingly commercial terms of operation in the state enterprises and a shift of the dominance of particular professional groups in the industries.
Dominant ideas in the energy industries can also be examined using the concept of ‘technological paradigm’: the idea that a powerful determinant of the direction of technological developments is embodied in the mental and material practices of the relevant group of technologists (Dosi, 1982). Their collective mindset—models, problem definitions, focuses of effort, assumed natural trajectories of improvement—is a product of training and socialisation, but is reinforced by group norms and defended by the marginalisation of dissent. Seemingly technical assumptions and practices thus embody social assumptions and political commitments. In the absence of conscious decisions to pursue a particular direction, it may be these patterns of thinking that restrict technological options.
A more specific engagement with ideologies and their embodiment in debate and appraisal should mean a more hopeful prognosis: we may not need to reorientate the whole value system of Western culture—whether we might think that desirable or not—in order to achieve some introduction of renewables. In terms of action, this sort of analysis means that we need to challenge in detail the ways issues are framed and discussion is constrained, in order to make renewables more visible, reinstate possibilities in people’s minds, get them onto political agendas, and get them more fairly treated in formal appraisals.
3 INSTITUTIONAL STRUCTURES
Our second focus is on ways of understanding the complex and changing organisation of the energy sector—which itself, as we have indicated, fosters and sustains particular practices and ideas—and its effect on the fortunes of renewables. Here we need to look beyond the simple logic of economic relations and formal political mandates, and try to understand the sector as a complex set of interdependencies and power relations. We shall go on to outline how some of these themes illuminate a concrete example—the electricity supply industry (ESI): its own failure to develop grid-connected solar and wind energy, and the profound influence it has on the prospects of renewables, either through the need for them to be connected or through competition over end uses.
Here we can draw on contributions to interorganisation theory and Benson’s analysis of public policy sectors in particular (Benson, 1983). He argues that a public policy sector is multileveled. The obvious surface level—the policy orientation, administrative arrangements and resource dependencies between organisations within the sector—are constrained by ‘rules’ at a deeper level: the interests and power structures embedded in the sector; and the function of the sector in the larger social formation. Changes at one level occur when a mismatch develops between that and deeper levels. Changes at the surface level seldom present a threat to dominant interests, even though they may be opposed by certain groups; they will not move beyond the boundaries set at the deeper level or they will quickly be brought into line.
We would argue in this vein that the functioning of the ESI is primarily geared to the interests of industry and commerce, and those interests as currently structured are largely incompatible with ecologically sustainable energy provision. The current restructuring of the electricity sector is not driven primarily by environmental or resource concerns, but is the result of the mismatch that had arisen between the structure of the sector—developed in and suited to a time of high growth—and the changing requirements of the broader economy and social system as interpreted by industrial and political strategists. Privatisation, of course, will open up a major area of economic activity to national and international capital.
We can readily identify current costs as a major obstacle to renewables, but we must examine and challenge the many ways that the economics which determines patterns of energy provision is itself determined by the character of the institutions in the sector. Fundamentally the economics is shaped by political decisions, nondecisions and assumptions—through the structuring of organisations and markets, through setting in place physical systems and investments which then determine prices or constrain subsequent decisions, and contingently through the detail of appraisal criteria, selectivity or flexibility in their application, pricing, financial parameters and so on.
This was true in the period of publicly owned monopoly utilities, in that prices, target returns, discount rates, borrowing terms, buyback rates for independent generators, appraisal criteria and so on, depended on the legal and financial framework set by government and the few industry players, a framework which could and did vary. It is just as true now, though in dramatically different ways. Markets in the energy sector—especially the electricity markets being introduced now—are not an ideal form unleashed by somehow removing the distortions of state monopoly, as the rhetoric of ‘levelling the playing field’ implies, but are entirely artificial creations which could be different. The experimental reconfiguration and adjustment of market conditions by government and regulators in the British and Victorian experience, in response to criticism, unpredicted market behaviours, counterproductive signals and other problems, shows the degree of choice available to system designers.
While all this implies the need for a broader notion of the term ‘politics’ in examining the sector, clearly the policies, actions, or inactions, of governments themselves are crucial in many ways in influencing the uptake of renewables. Accordingly we stress the need both for political intervention to improve their prospects, and to defend resolutely any gains made. There is a large number of possible measures governments may in principle take—in structuring energy industries and markets, in imposing appropriate modifications on markets, and in directly supporting renewables. There is great variation in their use in different states and countries. Where governments are reluctant to support renewables, it is frequently depicted by critics as a lack of political will. This, however, indicates questionable assumptions and unrealistic expectations about the role and interests of government. Rather, we see a need to analyse governments’ policies and actions as resulting from their primary function in maintaining the viability and legitimacy of a particular economic system, and the often contradictory pressures which influence and constrain their attempts to do so (Ham & Hill, 1993).
That is not to say the outlook is entirely gloomy. Periods of turmoil in the energy sector create openings and renewed interest for renewables, and proposals for organisational and policy reform that include some reference to sustainable energy practices. And although the primary role of the electricity industry and the trends we outline here have continued under both Labor and conservative governments, we acknowledge that Labor governments have at times made concessions to the environmental movement. Such measures as are obtained, however, are often fortuitous or incidental outcomes and largely the result of skilful political intervention by renewable energy advocates to open up new spaces or defend existing ones in otherwise hostile conditions. Though the initiatives may give a significant boost to particular projects, they have all too often been short-lived and of limited effect. It would be a stretch of the imagination to depict them as ever having been indicative of a sector changing fundamentally and purposefully towards more sustainable energy practices.
The British renewables experience since privatisation of the ESI does show how accidental combinations of circumstances and expedient seizing of opportunities can make a significant difference, even when the restructuring is motivated by anything but sustainability. The main renewables support mechanism, the NFFO, provides a secure market at favourable rates for power from selected renewables projects. There has been a significant development of wind power: there is about 318MW of wind capacity installed throughout the UK, with contracts awarded for significantly more. The small amount of renewables support, however, was sneaked into the NFFO on the tail of its main purpose—continued government support for nuclear electricity generation—and accepted more through embarrassment than commitment (Mitchell, 1996). At the same time this support for near commercial technologies has masked declining support for renewables R&D (Elliott, 1994). The other significant positive environmental outcome of the British privatisation was also incidental rather than planned. A rapid program of building combined cycle gas turbine (CCGT) plant, and the early closure of coal capacity, will allow the generators to meet SOx/NOx emission standards and the UK to meet its greenhouse gas reduction targets. This ‘dash for gas’ was driven not by environmental concerns but by the availability of cheap gas, the threat of having to retrofit FGD on coal stations, the speed of construction of CCGTs, and a desire by the two main generators thereby to restrict the entry of new independent companies.
None of these observations about the compromised position of governments is to be taken as denigrating those who work within and through government agencies towards better treatment of renewables and energy efficiency. But we do need to acknowledge the constrained scope of their work and the limitations of the strategies to which their agencies are assigned. They are no doubt themselves conscious enough of those limitations.
4 RENEWABLES AND THE ELECTRICITY SECTOR IN AUSTRALIA
While we claim that electricity institutions have been a barrier to the more widespread use of renewable energy, two points need to be reiterated: first, that its exclusion has not been intentional or conspiratorial; and second, that we need to understand the mechanisms by which that neglect has come about. Otherwise we may misread current changes in the structure of the industry and their likely impacts on renewable energy. That the structure of the industry has altered significantly over the past two decades yet with little improvement in the fortunes of renewables indicates a need to focus not only on what features have changed, but what underlying characteristics have persisted.
The state-run electricity utilities not only did little for renewable energy but were a major obstacle to its adoption. During the post war boom, the electricity utilities evolved into large, technocratic, supply-orientated, expansionist monopolies seemingly unresponsive to community and environmental concerns, and with little accountability to governments, though they were supported and used as agents of industrial development. The entrenched paradigm constituted a certain set of technologies, practices and beliefs: a commitment to large generation units, the development of local fossil fuel and hydro resources and an unquestioned conviction that electrification equalled progress. With an overriding focus on the ‘means’—technologies of power generation and associated technical practices—there was little questioning of the ‘ends’—the values embedded in electrical systems and institutions (Kellow, 1996). The utilities’ disdain for community and environmental concerns which dared to interfere with their construction programs are illustrated by the Newport power station dispute and the controversies over the flooding of Lake Pedder and the Franklin River. But these partly successful challenges to the ESI did have an enduring outcome—they effectively exposed some of the mechanisms by which patterns of energy supply were maintained.
In such a setting there could be little role for non-hydro renewable energy. An electricity system which included renewable energy sources would be more heterogeneous, dispersed and perhaps less predictable. It would necessitate a more flexible approach to system development, one which seemed incompatible with the culture and planning techniques of the industry. The neglect of demand-side measures was another outcome of this approach, and the legacy of this—the enormous scope for increased efficiencies in current energy use patterns—now eclipses the opportunities for renewable energy.
We also need to ask why the ESI evolved into this form. Although the detail differs in each state, by the early 1950s the ESI had come under the control of state governments. The ESI had not been a profitable undertaking, and its development required massive amounts of capital; thus the private sector as a whole did not resist the nationalisation of the ESI. For governments, it represented an important tool for developing state resources and fostering industry development. The early decades after WW2 were a period of high growth and the expansionist, supply-orientated technocratic electricity institutions were well suited.
By the mid 1970s, the economic boom was over. The traditional structure of the ESI was less suited to changing and uncertain times. Furthermore, the oil crises put energy firmly on the political agenda, and the environmental costs of power generation were becoming more apparent. Governments started to take a bigger role. One of the earlier attempts to reform the ESI took place in Victoria after the election of a Labor government in 1982. The State Electricity Commission of Victoria (SECV) was made more accountable to the state government, and a Victorian Energy Plan was introduced promising integrated energy planning and community involvement in the formulation of energy policy. The SECV Act was amended to include reference to cogeneration, use of renewable resources, energy conservation and consideration of environmental issues. Victoria also had a statutory authority promoting renewables: the Victorian Solar Energy Council. Through its ten year period in office the state government also released several policy statements on renewable energy. So the 1980s in Victoria should have been a propitious time for the development of grid-connected renewable energy. Not only were conditions favourable, but there was funding for renewable energy research and development (albeit small compared to that for coal), and by the late 1980s the state of the environment was a major political issue, yet to be overshadowed by the 1990s recession.
The received history of this period indicates that grid-connected wind power made some headway during this period: there was a wind monitoring study of the Victorian coastline, a demonstration wind generator was installed and monitored, a 10MW wind farm was planned, and the SECV outlined scenarios with up to 650MW of wind generating capacity (SECV, 1989). All this might suggest there was a grand strategy for wind power in Victoria. But a closer inspection (Bunting, in press) shows that there was no plan. Each development was an isolated incident, though built on previous developments; each came from a particular group making a push when the energy sector was in flux.
But what stayed the same during this period? For the government, the energy sector, particularly the SECV, was primarily an agency for industry development. Throughout the 1980s, the government was fully committed to attracting energy intensive industries to the state and regarded the state’s fossil fuel resources and electricity generating capacity as a vital resource in attracting industry and stimulating economic growth in Victoria. No talk of a move towards more sustainable energy practices could challenge this. Early enthusiasm for community involvement quickly waned, the main thrust of the government’s renewable energy policy became the development of a Victorian manufacturing industry for solar products, and coal-fired power station construction continued unabated.
What of current changes in the Australian energy sector? The restructuring and liberalisation of the ESI (Crawford-Smith et al., 1996; Outhred, 1996 & 1997) is part of the federal government’s microeconomic reform agenda. It is clearly intended as a means of increasing productivity in the ESI and delivering lower electricity prices to industry. There has been little, if any, concern for improving the prospects of renewables—only an assumption that restructuring will offer new opportunities through liberalised access to the grid.
NSW is the only state where mechanisms have been put in place to reduce the emissions of greenhouse gases in the electricity sector. The licensing conditions for electricity retailers require them to develop strategies for greenhouse gas reductions, and the government has established the Sustainable Energy Development Authority (SEDA), a body which is undertaking a range of programs with the aim of transforming the marketplace for renewable energy, energy efficiency and cogeneration.
5 WHAT PROSPECTS FOR RENEWABLES?
What of the prospects for grid-connected renewable energy in a restructured electricity industry and market? Many of the current developments in the sector are double-edged, and their impact on the prospects of renewables are difficult to predict. As we move from monolithic public utilities—in which a strong technological paradigm and corresponding government policies marginalised renewables and energy efficiency in predictable ways, if not always for obvious reasons or through obvious mechanisms—to a competitive structure and market-determined patterns of use, investment, pricing, etc., the dynamics and effects are much less predictable. As for our own optimism or otherwise about the future of renewables in Australia, we therefore hedge our bets: we can identify upsides and downsides of each set of changes.
If we are dissatisfied with the current performance of markets and regulatory regimes, we should recognise that they can be structured differently. Relatively minor changes in market operation or regulatory framework, or small schemes for positive support, could make significant differences in the prospects for renewables, and from a position of limited introduction, a significant increase in total capacity. This has been the case in the UK for both windpower and other renewables (Mitchell, 1996) and for cogeneration (Russell, 1996). However, if renewables are not designed in, as they could be, then they are likely to be forever condemned to a marginal position in physical, policy, economic and image terms. They will remain crucially dependent on exceptionally favourable conditions, opportunistically created spaces, or precise values of parameters, in a system whose main concerns and dynamics do not relate to sustainability at all. They will be tolerated in the interstices of the sector only so far as they do not threaten to disrupt mainstream plans and developments. The danger is not just that they will remain buffeted by unpredictable conditions, but that all the achievements of gaining favourable adjustments to market and regulatory conditions will be swamped by developments in mainstream generation and distribution, themselves resulting from unpredictable dynamics unleashed by the form of restructuring. Already the prospects for renewables are dampened by huge overcapacity; if major generating companies seek to build new natural gas-fired CCGT capacity for whatever reason—to gain experience, to diversify their portfolios, or to make entry more difficult for potential competitors—then the problem will be exacerbated for decades. And the suppression of prices—from the lowering of contestable-customer thresholds, or from the developing national electricity market—will have a similarly damaging effect.
Another hopeful feature of the disaggregated and competitive structure towards which Australian states are moving is access to the grid for distributed generation. It is not clear in practice, however, that the terms of connection and sale of electricity for small generators are going to be more advantageous. Similarly, increasingly market-determined pricing may favour renewables in certain respects by opening up niche markets: in particular, reduced subsidies for rural grid connection should favour renewable-based supplies. The downside is that prices set by competition—as in the contestable retail markets—may open up differentials according to market power rather than reflecting the real cost of production and distribution, if that itself does not become an endlessly contested question. Regulation of retail revenue might give incentives to electricity companies to diversify and become energy service providers, but the pressures and incentives are not clear. We are ambivalent too about voluntary Green Power schemes. While they will doubtless produce some increased renewables capacity—and significantly for the first time they give consumers a way of intervening in the choice of generation technologies—they send mixed signals about the status of renewables and are a pale alternative to other support mechanisms.
It is hard not to be sceptical when weighing hopeful new developments against the disappointing record of the past couple of decades. While the establishment of SEDA in NSW should certainly be hailed as a victory for renewable energy advocates, it is constrained to work within national legislative, policy and market frameworks like the National Electricity Market. It cannot introduce mechanisms such as a carbon tax or a levy like the British NFFO which could substantially transform the opportunities for grid-connected renewable energy. Given this constraint, and the vast scope for improved energy efficiency, it is not surprising that SEDA is focusing particularly on energy efficiency measures (SEDA, 1996). Working within the limits of a system designed to provide cheap energy for industry and for which sustainability is an incidental issue, small groups like SEDA, essentially a political add-on, have a tough job ahead of them. On the other hand a group of dedicated people may achieve outcomes we never thought possible. It is important to defend gains such as the establishment of SEDA, but also to be aware that mainstream developments in the energy sector may overwhelm its achievements.
It is a moot point in many cases whether the interventions in markets and regulation that renewables advocates are calling for constitute removal of unfair disadvantages or market imperfections, or would themselves be distortions of a supposedly ideal market. We should recognise, however, that such measures do represent political intervention, and will meet ideological opposition as the assumption becomes entrenched that the market is the best way of deciding energy provision. And while privatisation will not mean an end to government involvement in the sector, certain forms of intervention will become more difficult and less legitimate, and governments will certainly retreat from formulating strategy and from any planning function in the sector. Energy companies have barely tolerated levies directed to energy efficiency and renewables in countries where they have been enforced; any attempt to extend their scope has been met with concerted opposition, and their depiction as a political imposition and unwarranted interference in markets has gained sufficient credibility. Enforced internalisation of pollution and social costs—the form of costing which would profoundly affect the balance of attractiveness of competing energy technologies—will be resisted by established industry interests and found correspondingly unpalatable by governments.
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