The biggest obstacle Governments in industrialised economies have to overcome in achieving a transformation to a low-carbon and sustainable economy, quickly enough to meet the challenge of climate change, is to establish the appropriate balance between markets and regulatory intervention, and the legitimacy of their actions. At root, this is a move from the still fundamental position of industrialised countries of prioritising efficient economic development over sustainability to an acceptance that sustainable development has to be delivered and its cost paid for, although that cost should be minised as far as possible. This means that Government has to prioritise sustainability over short term economic decisions and take long term strategic decisions about shaping energy systems
A priority of this is to ensure that energy regulation is designed to encourage electricity, heat and liquid fuel markets (and services), investment, stakeholders and networks capable of delivering sustainable and secure energy. Some industrialised countries or large States (eg Denmark, Germany) are better than others (the UK) at this. The former are better because they already accept (1) a degree of pro-technology intervention; and (2) the underlying technical requirements of managing secure electricity and heat systems necessarily limits market reach as higher proportions of , and links between, sustainable energy is deployed.
A sustainable energy trading/market and network arangement requires (1) priority access (for both connection and fuel-free low carbon and flexible dispatch for electricity); (2) a system payment to ensure flexible peak generation and back-up capacity within electricity; (3) a single buyer electricity and heat market where the energy demand side can be incorporated and electricity dispatch can be by fuel-free carbon and flexible. Additional support mechanisms are needed which complement, rather than create tensions, with these market and network arrangements for electricity, heat and transport. For the UK, this means re-regulation. For other countries, this may be a (limited) extension of what is already in place (eg Germany).
There are many difficulties for Government in overcoming this obstacle but the two central issues are internal (the degree to which the underlying characteristics of the political paradigm in place would find such a move acceptable) and external (the force of the momentum of current energy systems, including social, political and institutional factors, which keep the same practices going.
Catherine Mitchell, University of Exeter