Energy democracy and public ownership: what can Britain learn from Latin America?
| Author | Chavez, Daniel |
Uruguay and Costa Rica are world leaders in clean, public, democratically accountable energy. Their success owes much to state-owned companies with the power to drive systemic change.
In the United Kingdom, 'public ownership' in the energy sector has become a major demand for the Labour Party. Its real meaning, however, remains ambiguous. Neither the format nor scale of public ownership in the energy sector have been clearly outlined. Many issues remain unresolved. How will public ownership be designed at the local, regional and national level? What functions will be owned publicly, and what will be left in control of the private sector? These are deep, vital questions for the Labour Party to answer in order to deliver lasting change.
Latin America has a long history of public ownership--particularly in the energy sector--and has waged a struggle against privatisation and fossil fuels since the 1990s. In particular, two countries, Uruguay and Costa Rica, have gained international attention for their rapid shifts towards renewable energy, much to the credit of their state-run energy utilities. Stories from Latin America offer a fresh perspective on the role of the state in the energy transition: stories that could be invaluable in designing the next system in the United Kingdom.
This article begins with an outline of ongoing exchanges over energy democracy and public ownership, and the options for a progressive restructuring of the energy system. It then turns to the Latin American power sector and analyses some encouraging outcomes, particularly that of Costa Rica and Uruguay. Finally, it reflects on the role of the state in national energy transitions in order to extract relevant lessons for the United Kingdom.
Current debates on energy democracy and public ownership
Citizens around the world are increasingly demanding a transition to renewable energy sources, while challenging the big corporate interests of the old regime under the banner of energy democracy. Public ownership has been a key galvanising strategy in achieving energy democracy. A freshly-published report maps 835 international examples of de-privatisation across sectors, illustrating how citizens and progressive governments are reclaiming public services worldwide. (1)
The British Labour Party explicitly stated in its 2017 manifesto that it will 'bring key utilities back into public ownership to deliver lower prices, more accountability and a more sustainable economy', including 'the creation of publicly owned, locally accountable energy companies and co-operatives'. (2) Party leader Jeremy Corbyn has explained how the Labour Party's renationalisation proposal would bring energy prices back down by dismantling the false market that allowed an oligopoly of private gas and electricity companies known as 'The Big Six' to make abusive profits. Corbyn, however, has repeatedly clarified that the strategy cannot be 'a return to the 20th century model of nationalisation but a catapult into 21st century public ownership', and that 'the future is decentralised, flexible and diverse with new sources of energy large and small'. (3)
However, it remains unclear how the Labour Party's small-scale local, municipal or regional companies could meet the required decarbonisation targets. As a recent report by Trade Unions for Energy Democracy (TUED) explains, the scope of climate change and the need for a massive and rapid response requires a substantial intervention with state-owned and state-managed programmes. (4)
Some analysts have rejected the emphasis on public ownership. Peng and Poudineh argue that 'a purely state-based, centralised and hierarchical structure cannot adequately deal with fast-paced changes' in the energy sector, and therefore 'a more holistic integrated thinking that seeks to understand and align both horizontal relationships... and vertical relationships among levels of coordination in the power sector' is needed. (5) At first glance this argument seems to undermine the role of the state, but its call for horizontal coordination actually reclaims the space of energy policy as an essential mission that cannot be left in the hands of private actors. These have much less reason to look beyond their own corporate doors. The analysis of Latin American experiences could contribute to the design of a 'twenty-first century' model of public ownership that integrates both horizontal and vertical planning for a new energy system.
Energy policies and public ownership in Latin America
The institutional contours of the electricity sector in Latin America have gone through a series of changes in recent decades. Almost every country in the region carried out market-oriented reforms in the 1990s, adopting variations of the neoliberal recipe by opening markets and promoting private investment. In recent years, the trend has reversed drastically. The changing profile, achievements and pitfalls of the Latin American energy sector offers opportunities for reflection on the United Kingdom's pursuit of public ownership.
Chile pioneered market reforms in the region. The government launched a wave of privatisation in 1982 under General Augusto Pinochet's brutal military dictatorship. Following the neoliberal dogma of the 'Chicago Boys', Chile became the first country in the region to deregulate its power sector. It was soon followed by many of its neighbours. Argentina was the most radical among them, privatising public services on a massive scale. The state regained partial control of the energy sector during the twelve-year (2003-2015) tenure of presidents Nestor Kirchner and Cristina Fernandez de Kirchner, but the process was subsequently reversed.
Brazil, Latin America's largest country, followed an alternate path that largely rejected privatisation, until recently. In the mid-1990s, the government began to implement a near carbon copy of Margaret Thatcher's...
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