The Governance of Energy Finance: The Public, the Private and the Hybrid
| Date | 01 September 2011 |
| DOI | http://doi.org/10.1111/j.1758-5899.2011.00104.x |
| Published date | 01 September 2011 |
| Author | Peter Newell |
The Governance of Energy Finance:
The Public, the Private and the
Hybrid
Peter Newell
University of Sussex
Abstract
Strong and effective systems of governance are required to steer energy finance towards the fulfilment of policy goals
around energy security, energy poverty and sustainability. This article assesses and explains the nature of the
contemporary governance of energy finance. It first provides a typology and analysis of the different governance
dimensions associated with: (i) the public governance of public finance; (ii) the public governance of private finance; and
(iii) the private governance of private finance. It then identifies and seeks to account for key cross-cutting trends in
these patterns of governance. Overall, while it finds evidence of significant activity in each of these areas, there
remains a substantial imbalance towards governance for energy finance over governance of energy finance. This has
important implications for constructing effective solutions to the multiple challenges that energy policy currently faces.
Policy Implications
•The tremendous proliferation in actors and institutions involved in the governance of energy finance has created
significant challenges of coordination and policy coherence. For example, we see mandate convergence among
organisations promoting renewable energy and tackling climate change and conflicts between and within institu-
tions seeking to address energy poverty and climate change simultaneously.
•There is an untapped opportunity for states and international institutions to integrate concerns with energy poverty
and climate change into trade and investment agreements, as well as to use regulation, tax and other policy levers
to promote lower carbon energy pathways.
•Levering private finance to address energy poverty, energy security and climate change needs to be balanced with
significant disincentives for business-as-usual investments in energy that undermine the achievement of these policy
objectives. This implies a substantial, but gradual, shift of subsidies and support from the fossil fuel economy to a
low carbon economy.
•The procedural aspects of governance strongly affect the distributional elements of governance. Greater attention is
therefore required to opening up energy policy making to a broader range of affected stakeholders in order to
deepen deliberation around the complex trade-offs associated with different energy financing options.
Energy is central to all aspects of human development.
Its extraction, generation, financing, distribution and con-
sumption implicate a vast array of actors whose actions
have an effect on who gains access to which type of
energy and on what terms. Governance is, therefore, crit-
ical to ensuring that energy is directed towards those
who need it most in an affordable and accessible way
(energy poverty); that it can be supplied in a regular and
predictable manner (energy security); and that it can be
done in a way that minimises environmental externalities
(sustainability).
Finance is critical to the realisation of each of these
goals. The governance of finance refers to the ensembles
of actors, policy-making processes and institutional
arrangements set up to steer energy finance towards the
achievement of these goals (Florini and Sovacool, 2009).
It refers to collective acts of steering and management
aimed at raising and screening, allocating and distributing
finance in the form of aid and investment from the public
and private sectors. This framing is consistent with classic
definitions of governance, which in its broadest sense
‘relates to any form of creating or maintaining political
order and providing common goods for a given political
community on whatever level’ (Risse, 2004, p. 289). In
terms of global governance specifically, Rosenau suggests:
Governance occurs on a global scale through
both the coordination of states and the
Global Policy Volume 2 . Special Issue . September 2011
ª2011 London School of Economics and Political Science and John Wiley & Sons Ltd. Global Policy (2011) 2:SI doi: 10.1111/j.1758-5899.2011.00104.x
Research Article
94
To continue reading
Request your trial