Policy brief: Why 2018 should be a distributive year

By Claire Roumet on 18 January 2018

The year has got off to a good start: like in Germany, which had a 100% renewable supply for the first few hours of the year, or in the United Kingdom, which last summer recorded an entire day of coal-free energy, an unprecedented achievement since the beginning of the industrial revolution (which happened precisely because of using coal to fuel industrial processes).

So, yes! 2017 was marked by continuity in the profound changes to the energy systems under way since the early 2000s: deployment of renewable energy, new rules for the energy markets, ambitious climate and energy targets.

The year was also marked by the central role played by the energy transition in national debates. It is proof that it is no longer a distant horizon and that our energy systems are entering a deep transformation phase. In Belgium, the interfederal energy agreement (a sharing of efforts between the regions and decision-making on the energy mix) is currently a source of disagreement within the national government. As for the new Dutch government, it decided not only to ban internal combustion engine vehicles by 2030 (thus following the announcement made a few months earlier by the United Kingdom and France for 2040), but in particular to phase-out coal.

It is evident that lines have changed. The clearer the horizons become, the fiercer the discussions about the directions (linear or not) to follow are, as if in an attempt to put off the inevitable investment for a little longer still.
Some fundamental questions, however, have not yet been broached and must be examined to ensure that the right investment decisions are made. Distribution issues are the most important of these.

Let’s start with the obvious one, energy distribution. In the discussions currently taking place at EU level on the energy market rules, for example, it has been suggested that distribution networks could be managed by local players. This is already possible in some States, but was totally unthinkable in many others just a few years ago. In parallel to the discussions on the European regulatory framework, negotiations are in full swing between network managers and owners (the cities) for the next concession period. This is the case in France, and soon in Portugal, among other countries. These are the sector’s first post-liberalisation negotiations, a window of opportunity that only opens once every 20 or 30 years.

Distribution (or sharing) of resources (and costs/benefits). A way will have to be found to ensure that the energy systems of the future are carbon-free, of course, but also “distributive by design” as suggested by Kate Raworth in her Doughnut economics blog. Management and distribution of resources (including monetary ones) must be at the heart of the economic model. We would therefore move from a redistribution model (where the benefits are first aggregated before being redistributed) to a distributive model where the resources are accessible to all. To be “distributive by design”, investments in the energy system of the future must therefore rely on a different economic model from that based on the volume of consumption. They must encourage resource regeneration. But who will pay for the network? How can fairness be designed into a decentralised energy system? In South Africa, Cape Town is now imposing a new, exorbitant tax to repair the water networks. Drought, combined with the conventional economic model, has resulted in a disastrous situation. And sourcing water from more distant areas is too costly. The same fate awaits our energy networks! Different management models of distribution networks exist already, as this consumers cooperative in a Danish town who manage the district heating network, on which we can learn and draw new ways to organise the energy system.

Finally, distributing or sharing decision-making, about the economic model of the networks, as just mentioned, or production and marketing. In 2017, a number of European cities began setting up electricity marketing companies and are looking for models whereby investments and decision-making are shared with citizens.

Energy Cities can draw on the exchange of experience. And we have the strength and knowledge needed to put each city on the transition path. I hope that in 2018 we will be able to discover and share “distributive by design” proposals in favour of the energy transition!

by Claire Roumet, Executive Director of Energy Cities

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Catalysing European Local Climate Action
Tuesday 21 May

Covenant of Mayors webinar: reporting framework revision
Tuesday 21 May 10:30-12:30

Energy Cities Annual Conference
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Le photovoltaïque en milieu urbain
Wednesday 22 May

Urban Future Global Conference #UFGC19
From 22 to 24 May

Covenant of Mayors workshop at UFGC: Covenant cities leading long-term climate strategies
Wednesday 22 May 13:30-14:30

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