Mainstream and democratic energy system priorities

The Energy Trilemma

Policy objectives for energy are sometimes framed in terms of a ‘trilemma’, shown below. The three competing objectives are energy security, environmental sustainability and affordability. However, each of these can be further broken down: security can mean securing access to imported fossil fuels through geopolitical maneuvering, the technical reliability of the infrastructure to meet our expectations of 24/7 access to industrial energy resources, or ensuring vital services e.g. hospital life-support machines can run reliably. Affordability can mean addressing fuel poverty and ensuring full access to basic energy services, or keeping the price of energy low in order to compete in the global economy. For some, environmental sustainability refers only to climate change, and means moving to low carbon forms of energy, including nuclear power and fossil fuels with carbon capture and storage, whereas others include local air quality, biodiversity, nuclear waste and land use impacts.

Figure caption: the Energy Trilemma

These different interpretations lead to different policy actions. Increasing prices could make energy efficiency financially attractive and reduce consumption, but could exacerbate fuel poverty. A rising block tariff, where a basic allowance of energy is priced at a low rate, could ensure universal basic energy access, but would require cross-subsidy, potentially risking national economic competitiveness. Reducing the reliability of supply could potentially achieve carbon savings through enabling greater renewable deployment with lower costs of flexibility and storage. However, achieving this in a way that protects well-being would require a substantial cultural and economic shift.

Currently, the UK energy system performs well in terms of reliability and low price, although fuel poverty is a problem for people with low incomes living in poor quality housing, and there is political fear about not being able to ‘keep the lights on’. Energy security and affordability are priorities because they are essential to achieving governments’ ‘core imperatives’ of national security and economic growth. However, the energy system does not perform adequately in terms of climate change. Transformational change is needed in order to achieve the UK’s share of international decarbonisation, and to comply with targets in the 2008 Climate Act.

Energy democracy values

In contrast to the Energy trilemma, Energy Democracy values involve:

• People having a say in how our energy is produced and consumed
• Shifting our energy system to be environmentally sustainable
• Ensuring that everyone has access to energy to meet their needs

These are also open to interpretation and proponents of energy democracy come from many different political and ideological backgrounds. Does having a say mean public ownership by the state, ownership by cooperatives and communities, direct or representative democracy?  Does environmental sustainability, a value shared with the trilemma approach, mean a focus on climate change or include other environmental issues? What is the basic amount of energy that everyone should have access to, and what level of inequality of access is OK?

For a more detailed definition of energy democracy, and description of who is talking about this concept, see Energy Democracy.

Democratic and commons thinking

The purpose of this guide is to inform the creation of an energy system which is good for humans and sustains the environment, grounded in understanding what is physically possible. 

Three sets of ideas are helpful in this: commons governance; environmental limits; and human needs.

Commons governance – how do we make decisions together?

The GB energy system has been through centralised, national state ownership, and a time of marketisation. The democratic energy system of the future could be different to either of these – more decentralised, and truly owned and run by the people who use and produce the energy. This may seem like a departure from the tried and tested ways of centralised and bureaucratic private and state systems, but this kind of people’s governance has a long history – in the co-operative movement, in traditional commons, in some forms of municipalism, and perhaps in ways that humans have overcome conflict throughout history. Elinor Ostrom’s rigorous research into the governance of commons can give us a lot of help.

Commons governance is about the idea that humans can be very skilled at making decisions and agreements to share a resource, share work, and look after an ecological system for future generations. Doing this effectively needs high participation, good communication, the ability to build trust and make agreements that are followed through and enforced, and the ability to deal with conflict effectively and fast.

Ecological limits- how do we live within limits and have enough?

Acknowledging that we need to live within ecological limits has deep implications for the growth-based assumptions that have underpinned mainstream economic thinking and global capitalism for the past 100 – 300 years.  If we accept the need to live within limits, it has implications for how we find stability in economic systems, how we experience abundance and scarcity, and how we share resources among humans, in a context where the starting point is hugely unequal. 

We need to rethink abundance and scarcity. What happens when we shift from a scarcity mindset to an abundance mindset, in terms of trust, ability to share and cooperate rather than compete, and the amount of material resources we need to feel OK?  What if we produce public luxury and private sufficiency rather than the other way round? What if we seek moments of wonder and gratitude in the world that is around us, rather than accumulating? These become personal and spiritual questions.

Development, wellbeing and needs – what is it to be human?

We are all vulnerable and have needs.  What are those needs? What motivates us? We are more than the rational, self-maximising ‘human’ imagined by neoclassical economics. Seeing humans as having basic shared needs, that we are all vulnerable, and all have capabilities and a need to participate and have a sense of personal power, is important.

Commons

At its most basic, a commons is when there are shared, rather than individual property rights. 

 Academic David Bollier defines a commons as: “a resource + a community + a set of social protocols”. That means that it is more than just an area of pasture or a park – it is also the people who use it and the agreements they make and keep with each other. This means a commons is more about doing, than about a thing – so Bollier advises us to emphasise ‘commoning’ as a verb. Just as some wise people say ‘love is a verb’ – it’s about what you do to express love,  not something you get and put in a box.

There are many forms of commons, for example:

• Traditional commons: forests, pasture, fisheries and irrigation systems
• Knowledge commons: e.g. Wikipedia, academic knowledge, folk knowledge
• Urban commons: urban agriculture, parks, historic guilds
• Meta-commons: e.g. the property rules, contracts and financial system that enable a market to function

Commoning can also be seen as the opposite of commodification. These characteristics have pros and cons, which are discussed in more detail later:

Commoning	Commodification
Use, cultural and symbolic value	Exchange value
Rich relationships of reciprocity and trust	Anonymous price-based transactions
Integration of consumption and provision activities within one institution	Separation of consumption and provision activities
Culturally specific, place-based, historically contingent rules	Universalising principles of efficiency and optimisation

Extended version – to pop out on the website when scrolling over, for example.

Commoning	Commodification
Use, cultural and symbolic value: the inherent value of an object or natural resource is the most important aspect of it, e.g. valuing a tool because we can use it, a house because we can live in it, an item of clothing because of what it means about our identity, or an heirloom because it connects us to our ancestors.	Exchange value: the price that an item can be sold for in a market, e.g. valuing a house because of its expected increase in monetary value on the housing market, a warehouse full of books because of the profit that can be made from selling them, a university lecture hall because of the fees that students will pay to receive an education.
Rich relationships of reciprocity and trust: e.g. you stay in my spare room when you come to an event in my town because we are part of the same network of friends, you build a shoe-rack in my hallway in exchange for use of my washing machine.	Anonymous price-based transactions: e.g. I pay to stay in a hotel online, and book through a website, I walk into a shop and buy my groceries, I shop around for a good mobile phone contract.
Integration of consumption and provision activities within one institution: e.g. the farmers who use water from the irrigation system get together a few times a year to do maintenance work, the readers of wikipedia can edit and write wikipedia content through the same platform.	Separation of consumption and provision activities: e.g. goods are manufactured in a factory and transported across the world to a shop where they are bought by a completely separate set of people, who are on the ‘other side’ of the transaction of producer/consumer.
Culturally specific, place-based, historically contingent rules: e.g. over time, the rules of when and who can take wood from the forest have evolved to fit with the rhythm of the seasons, growth of trees, and breeding times of animals, or the maintenance day for  irrigation systems in the Swiss alps is announced in Church as everyone in the village goes there on a Sunday.	Universalising principles of efficiency and optimisation: e.g. economic efficiency is defined in a uniform way in all contexts, and seen to be maximised through competition and market liquidity. Measures such as the ‘churn rate’ are applied across all commodity markets, whatever they are selling and wherever in the world they are.

Excludability and Subtractability matrix:

The concept of ‘commons’ has at times been conflated with the concept of a ‘common pool resource’. Whether something is a commons or not depends on the ownership and decision-making rules that are used. Some economics textbooks assume that only resources identified as ‘common pool resources’ should be governed as commons. This comes from a worldview that sees private property as better than shared approaches to property in all contexts.

However, the definition of a common pool resource is a useful framework, and involves a two-by-two matrix of ‘excludability’ – meaning how easy it is to exclude unauthorised individuals from using a resource – and ‘subtractability’ (sometimes called rivalrousness*), meaning the extent to which one person using the resource subtracts from the amount available for others to use. 

*Ostrom prefers the term ‘subtractability’ to the more mainstream ‘rivalrousness’, because it refers to the physical characteristic of the resource, rather than making assumptions about the competitive or other human relations that will arise in response to this. A cake is clearly subtractible, but if it is shared nicely there isn’t necessarily a feeling that other cake-eaters are our rivals.

		Subtractability
		High	Low
		Commons
Excludability  (difficulty of excluding potential beneficiaries)	Difficult	Common-pool resources (CPR): groundwater basins, lakes, irrigation systems, fisheries, forests etc.	Public goods: peace and security of a community, national defence, knowledge, fire protection, weather forecasts etc.
	Easy	Private  goods: food, clothing, automobiles etc.	Club  or Toll goods: theatres, private clubs, daycare centres,  subscription magazines

This is a useful concept for thinking about different types of resources.  Units of energy are subtractible, in that if I use some kWh to keep my fridge cold, that energy is not available to someone else. On the other hand, network infrastructure is only kind of subtractible – it is designed so that there is enough for everyone to use it without too much restriction, but it can get congested, and when consumption patterns change dramatically e.g. by using electric cars and heat pumps rather than petrol and gas boilers.   

While the ‘excludability/subtractability’ matrix gives some interesting insight, it shouldn’t be taken as an absolute guide to whether commons or other governance approaches should be used.

The invisibilisation of the commons

Commons institutions have been created by humans around the world for a long time, but Garett Hardin’s famous 1968 article claimed that they were always tragic.  However, his catchy title ‘the tragedy of the commons’ would have been less catchy if he’d more accurately named it the ‘tragedy of the unmanaged, laissez-faire, common-pool resources with easy access for noncommunicating, self-interested individuals”, (Lewis Hyde, cited in Bollier, 2014, p. 25). 

Benefits of commoning

Commoning can provide opportunities for participation, allow collective agency to flourish, keep wealth in local economies, and provide belonging, identity and responsibility in non-materialist ways, based on relationships and being individually known. This could enable rich human flourishing with less environmental impact, and provide opportunities for everyday participation, vital to develop the skills required for robust democracy.

Commons give the poor basic access to resources for survival. As commons are enclosed, poor people are excluded and dispossessed of subsistence. This is documented for example by Jane Hummphries (1990) who examined the contribution that gathering fruit, gleaning leftover crops from fields and grazing a cow on common land would make to a poor woman’s income in 18th Century England. Children could come along too, unlike factories which employed child labour.

The economist Alfred O. Hirschman defined two different ways of addressing an unsatisfactory situation: exit, and voice. 

Exit is defined as removing custom, leaving a situation or organisation. The other side of the same mechanism is entry, defined as creating a new institution, resource or service. This adds to Hirschman’s original definition.

Voice is defined as “any attempt at all to change, rather than to escape from, an objectionable state of affairs” (Hirschman, 1970, p. 30).

Our current neoliberal economic system puts all of the emphasis on exit, and gives very little opportunity for voice. Voice is the only way in which we can negotiate, make agreements, build trust, and think together collectively – all essential for living well within environmental limits. A commons and democratic approach gives space to voice as part of the governance of economic goods and resources, and so is an important shift to make.

Ostrom’s design principles

When we do choose to govern a resource as a commons, how do we do it well? Nobel Economics prize-winning scholar Elinor Ostrom analysed hundreds of case studies of traditional commons from around the world, to understand what those which sustained their resource over the long term were doing.  From this, she distilled a set of ‘design principles’ or rules of thumb for successful management of commons, which also apply to many forms of collaborative groups.

The eight design principles essentially mean the following:

1. Define clear group boundaries, and boundaries of the resource.
2. Match rules governing the use of common goods to local needs and conditions, and fairness of contribution and use.
3. Ensure that those affected by the rules can participate in modifying the rules.
4. Develop a system, carried out by community members, for monitoring members’ behaviour, and monitoring the state of the resource.
5. If rules are violated, escalate sanctions gradually depending on seriousness and context.
6. Provide accessible, low-cost means for dispute resolution.
7. Make sure the rule-making rights of community members are respected by outside authorities.
8. Build responsibility for governing the common resource in nested tiers from the lowest level up to the entire interconnected system.

A good resource for vast amounts of academic and other information on the commons is the Digital Library of the Commons, set up by Ostrom.

Problems with commoning

No system of governance is without its faults, and each can fail in different ways. State and market based systems have their own types of failures.  Commons based economic systems have particular weaknesses to look out for:

Boundaries: risk of exclusion

Clear boundaries of who can and can’t access a resource are needed to successfully manage a commons, as seen in Ostrom’s first design principle.  This is one of the most difficult design principles to digest, as many modern commons-enthusiasts like to think of ‘the commons’ as being for everyone, without exclusion. In practice, being completely open causes a problem for groups. While some traditional commons establish access based on property ownership or inherited membership of a group, it is also possible to develop open and clear criteria for becoming a member, which do not discriminate against anyone based on irrelevant characteristics. The co-operative principle of voluntary and open membership is a good example of this.

Community accountability: risk of scapegoating

Design principles 4, 5 and 6, on monitoring, conflict resolution and consequences, work together as principles for community accountability.  In many cases community accountability can create potential for restorative justice, compassionate relationships and understanding of the context in which things happen, and good accountability of those doing the accountability.  This can be a good alternative to oppression by external bodies, such as the systemic racism in the police force in the UK. However, community accountability has risks of perpetuating unjust power dynamics within communities, and can also lead to scapegoating where outsiders within a community are held responsible for everything that goes wrong for the community. Connection and mutual accountability between different groups, or support from an external body to develop good accountability processes, can help mitigate this problem.

Reciprocity: risk of abandoning the weak

In a system based on relationships of reciprocity, people are entitled to benefit by virtue of making a contribution. This risks disadvantaging those who are less able to contribute, and at its most extreme can mean abandonment of the most vulnerable. This is particularly the case in a system where everyone is expected to contribute in a particular way. Protection of people with disabilities and those who are not seen to contribute in socially recognised ways is a challenge for any society, as has been seen in struggles over disability rights in the UK.

Tradition: risk of social conservatism and risk of lack of innovation

Finally, commons institutions may sustain themselves by changing slowly and incrementally, and relying on tradition and custom. Indeed many commons rules are upheld by ‘customary law’. In a system held up by custom and tradition, there can be a risk of lack of innovation, or exclusion of people who don’t conform to traditional social roles. However, it is not clear that this is more of a problem in a commons system than in any other human institution – complexity and incrementalism of change is also a problem in the GB energy system, with its industry-governed codes. The ability to break out of social conformity and the freedom of anonymity enjoyed in city life is a benefit of the ability to ‘exit’ – to create a life that is not dependent on a particular community. Perhaps this freedom needs to be protected, alongside the importance of belonging and accountability that community can offer.   The novel ‘The Dispossessed’, by Ursula le Guin, explores some of the tensions between individual creativity and egalitarian communalism.

Changing our narratives: – energy as a market to energy as a commons

Policy narratives can be shifted from a market paradigm to a commons paradigm as shown in the table below, both in relation to energy and in relation to the economic system more broadly.

	Market paradigm	Commons paradigm alternative
Innovation and performance	Competition: competition for survival in the market is seen as the main motivation of innovation and good performance.	Diversity and autonomy: many different organisations exist and are free to innovate, but they do not necessarily compete. It is autonomy, rather than competition, that is needed for innovation.
Pricing	Cost reflectiveness: the cost of production is reflected in the cost passed on to consumers.	Socialising of costs: the cost of production is shared across society, e.g. paid for by tax, rather than passed on proportionately to consumers.
Economic objectives	Growth: economic growth is a central objective for the economy as a whole.	Prosperity: rather than growth, a broader understanding of prosperity is seen as an economic goal.
Redundancy and slack	Efficiency: economic efficiency, achieving the greatest material output per financial input, is seen as a primary goal.	Resilience: the ability to continue following shocks or changes is valued. Redundancies and inefficiencies are valuable ‘slack’ that can be drawn on when needed, rather than a waste.
Interactions and transactions	Transaction cost: time spent in transaction with others is seen as a cost.	Relationship building: time spent in transaction with others is seen as a benefit of enjoying and nurturing relationships.
Worth of people	Meritocracy: people are valued differently based on their ability to contribute (to financially measured economic efficiency).	Equality: all people are valued equally and given equal dignity.
Access to a resource	Access based on ability to pay: this is tied to cost-reflectiveness. Only those who can pay the price can access a resource.	Access based on need: a basic access to a resource is available to all, regardless of their ability to pay financially. This is enabled by socialising the cost.
Limits	Supply must meet unlimited demand: Although efficiency measures aim to reduce demand, it is not limited other than by ability to pay or through other price mechanisms. The ‘system’ is designed to meet anticipated demand.	Limits to consumption: consumption is limited, by agreements, rules or physical limits
Consumer role	Demand: consumers of a resource can make demands on the system, and are entitled to have these demands met if they can pay. Lifestyles are not negotiable.	Use/consumption: avoiding the language of ‘demand’, and using the more neutral words ‘use’ or ‘consumption’ to refer to units of energy consumed, which are often referred to as ‘demand’ when quantified.
Public role	Customer: end users of service and the general population are increasingly referred to as customers, which narrows the frame to a particular relationship within a market exchange.	User/citizen: a more neutral word, ‘user’, is favoured for those who consume a resource, which allows diverse contractual or property relationships to be imagined. The general population are citizens with rights and responsibilities rather than customers paying for a service.
Role of market	Market as default: there is a lack of freedom to choose the rules of collective action, freedom only within market – freedom of Hirschman’s ‘exit’.	Voice in choosing rules of collective action: market as an option, freedom to choose alternatives such as commons or public ownership, and voice in shaping rules of market.
Exchange vs reciprocity	Exchange: transactions are based on exchange, usually of a commodity for money. These can be one-off, and rely on trust in the monetary system.	Reciprocity: transactions are based on relationships and expectation of repeated interactions and give and take. This builds trust between people.

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