Rethinking Energy Deregulation’s Green Dividends

The European Commission proposed new rules today to break up Europe’s energy monopolies and I must say it makes me wonder whether they aren’t trying to fix something that isn’t broken–at least as far as the environment is concerned.

Commission President José Manuel Barroso told reporters today that: “We need a common European response to combat climate change, to achieve greater energy security and provide abundant energy at a fair price for citizens. This is only possible if we have a competitive gas and electricity market.” But that assumed connection between responding to climate change and competition is worth questioning.

Certainly, the EC’s proposal to take control of power transmission grids out of the big utilties’ hands seems a good bet, giving innovative new players such as wind farm developers a better chance of gaining access to the grid. In fact, the European Wind Energy Association says the EC should go farther and force utilities to sell their interest in power transmission. “Allowing power generation companies to own the transmission grid makes as much sense as allowing an airline company to own the sky,” comments EWEA CEO Christian Kjaer in a press statement issued today.  

However, one of my conclusions from reporting on China and the U.S. is that the increasing drive towards deregulation–in particular the conversion of utilities from state-owned entities into profit-focused firms–can make it more difficult to drive change in energy technology. As I reported in Part II of my feature for Technology Review, China’s Coal Future, China’s move to a more open economy hampered efforts to deploy that countries first gasification coal-fired power plant. 

In 1993, China’s leading power engineering firm, China Power Engineering Consulting in Beijing, began designing the country’s first gasification power plant for the monopoly utility of the era, the State Power Corporation. This demonstration plant was to be the beginning of a transition to cleaner coal technology. Instead, the plant went on a roller-coaster ride to nowhere. The project was delayed by cost concerns in the mid-1990s and then revived in the late 1990s, only to be cut adrift after 2002 by the breakup of the State Power Corporation.

Anyone who’s breathed the air in China recently knows that was an immense lost opportunity.

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One thought on “Rethinking Energy Deregulation’s Green Dividends

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