From the State to the Market and Back: Policy Implications of Changing Energy Paradigms
| Date | 01 May 2012 |
| Author | Andreas Goldthau |
| Published date | 01 May 2012 |
| DOI | http://doi.org/10.1111/j.1758-5899.2011.00145.x |
From the State to the Market and
Back: Policy Implications of
Changing Energy Paradigms
Andreas Goldthau
Central European University
Abstract
Like almost no other sector, energy reflects changing paradigms. Following a statist approach in which energy services
were subject to public provision and administered by state companies, the free market paradigm took over in the
1980s and 1990s, making energy subject to private provision instead. More recently, the world has witnessed a new
era of interventionism. Assessing these different phases, this article advances three arguments. First, paradigms matter
in energy as they provide for crucial policy prescriptions. Second, agendas have become more complex, adding
sustainability and energy poverty to traditional supply security. Third, paradigms are inextricably linked to rule-setting
power, putting the non-OECD world in charge of defining the next paradigm. With regards to the latter, it is argued
that it will likely be one characterised by fragmentation, with elements of state and market coexisting.
Policy Implications
•Energy policy has shifted from a liberal market model to an interventionist one. Understanding the nature of this
paradigm shift is essential for western policy makers and businesses to navigate effectively in this new energy envi-
ronment.
•Established OECD energy consumers are about to lose their rule-setting power in all three major energy arenas –
security, access and sustainability.
•Energy priorities set in non-OECD, notably Asian, countries will determine policy pathways for rule takers. Incum-
bents need to embrace these shifts fully to formulate future policies effectively.
•The market as dominant governance model in energy is increasingly contested. Businesses need to be prepared to
adapt to fragmented environments between state dirigisme and market liberalism.
The energy world is changing. New consumer heavy-
weights emerge in Asia, climate change threatens to
fundamentally affect human lives and existence, energy
poverty has risen to the top of development agendas,
and nation states have come to regard energy as a hard
security issue again. To curb global warming at 2 degrees
Celsius, carbon emissions would need to peak by the end
of this decade (IEA, 2010b, p. 53; IPCC, 2007). An esti-
mated 1.4 billion people live without access to clean and
modern forms of energy (IEA, 2010a), while global energy
demand will rise by 36 per cent until 2013, with virtually
all of the increment stemming from the non-OECD world
(IEA, 2010b, p. 77). These challenges are vast, necessitat-
ing committed and clear-cut policies. Yet, their urgency
and scope tend to mask an important aspect: finding the
right policy answers depends on what one regards as the
core of the problem. Take energy security, for instance: it
is not a new issue and has remained high on political
agendas ever since oil prices quadrupled almost over-
night in 1973, following the Arab oil embargo. Still, poli-
cies aimed at tackling the energy security challenge
differed tremendously throughout the last decades. Why
is this so? The answer lies in the simple, but important,
insight that one and the same problem has come to be
viewed in very different ways over time. These different
views, as this article argues, reflect nothing less than
deep shifts in paradigms informing economic policy mak-
ing and the ramifications they have for how to deal with
energy.
This contribution is not the first to consider paradigms
in energy. Scholars (notably Helm, 2007) have used the
term to assess shifts in national energy policies from
Global Policy Volume 3 . Issue 2 . May 2012
ª2012 London School of Economics and Political Science and John Wiley & Sons Ltd. Global Policy (2012) 3:2 doi: 10.1111/j.1758-5899.2011.00145.x
Special Section: Research Article
198
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