Leadership for the Energy Transition: Developing Socially and Economically Shared Objectives and Contracts to Ensure A Green Future – Part 1: A Change of Systems

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The energy transition is one of the most important challenges of our century. In fact, it is one of the most important challenges of our millennium. As Prof. Jan Rotmans – a leading academic in the field of climate change and sustainability – in his much too less watched speech at TEDxMaastricht states, it is one of these transformative changes on our planet that happens only every few centuries. Rather than living in an era of change, we are, in fact, experiencing a “change of eras.” As this period is so transformative it requires action by each and every one of us; be it the government, businesses, or private citizens. 

Why is this transition so “transformative”? And why does it require the development of shared values and responsibilities amongst all actors in our society? 

Our earth is falling short of resources – the world´s population is constantly growing while, even by the most optimistic estimations, many of our most important energy sources will be depleted soon. The excessive consumption of almost any kind of goods which took place in the industrialized countries over the last century will not be possible on a global scale without harming our planet in an irreversible way. To ensure a livable planet for future generations we have to get rid of the current linear economic system of take-make-waste and transform to a circular economy. According to the Ellen MacArthur Foundation, a circular economy “entails gradually decoupling economic activity from the consumption of finite resources and designing waste out of the system.” It is based on three principles – designing out waste and pollution, keeping products and materials in use, and regenerating natural systems. Its actors are much more intertwined than ever before. A new form of doing business is slowly becoming normal in which companies aim to create value in different areas as, for instance, economic value, ecological value, and social value. According to Prof. Pennink from the University of Groningen and Prof. Jonker from Radboud University, businesses create shared value for different stakeholders besides the owners (e.g., for employees or the civil society). But to make the energy transition a success, the same level of self-responsibility and responsibility for others must not only happen on a corporate but also on an individual basis. 

The fundamental driver for this notion is the concept of Glocalization. The economy becomes globalized on the one hand, with increased international trade activity and improved connectiveness. On the other hand, we clearly see evidence for an increased localization of production and consumption. For instance, in the finance sector “the shift in investment to decentralized actors will involve more locally based lending, including more informed assessment of sustainable energy investments” as stated by Prof. Eyre from the University of Oxford. The new energy production system also incorporates this concept: energy is produced in private citizens’ backyards or on their rooftop but, at the same time, it is traded on a national as well as on an international level.  As Eyre argues: “With microgeneration, actors whose role in the energy system has previously been that of consumers thereby become generators as well, somewhat blurring the traditional distinction between supply and demand, and therefore between consumption and production.” Consumers become Prosumers; producers, and consumers at the same time – the amount of energy they do not consume themselves is fed in in the energy grid system and sold. Prosumers enjoy a very different level of autonomy than consumers. Consumers are at the bottom of a top-down pyramid (as our current energy system is designed) with little to no decision power, whereas prosumers are part of a wider network structure and a very complex system with different nodes and connections between the actors. According to Jan Jonker, this is also reflected in the co-creation of initiatives (e.g.., a collective organizing between organizations and communities, citizens and organizations, etc.). Take as an example energy co-operatives in Germany which have grown from a total number of eight to over 800 within in a decade until 2016. Decentralized and bottom-up initiatives will prevail in the circular economy instead of the top-down pyramid, making the existence of shared objectives between actors more important than ever before. Due to a much stronger collaboration between the civil society, private organizations and the government all actors share – in the best case – the same objectives: producing a sufficient amount of energy, doing that in a socially acceptable manner, and having monetary benefits from it.  

Sources:

1. Becker, S., Moss, T., Naumann, M. (2016). The Importance of Space: Towards a Socio- Material and Political Geography of Energy Transitions. In: Gailing, L., Moss, T. (eds.), Conceptualizing Germany’s Energy Transition, Palgrave Macmillan, 93-108.

2. Ellen MacArthur Foundation (2017). Concept. What is a circular economy? A framework for an economy that is restorative and regenerative by design. Accessed: 02.03.2019. Available at:  https://www.ellenmacarthurfoundation.org/circular-economy/concept 

3. Eyre, N. (2013). Decentralization of governance in the low-carbon transition. In: Roger Fouquet (ed.) Handbook on Energy and Climate Change, Edward Elgar Publishing, 581-597.

4. Harvey, R. (2016). NIMBYism, co-operatives and Germany’s Energy Transition. Thenews.coop. Accessed: 19.01.2017. Available at: https://www.thenews.coop/108839/sector/energy/nimbyism-co-operatives-germanys-energy-transition/ 

5. Hendriks, C. (2008). On Inclusion and Network Governance: The Democratic Disconnect of Dutch Energy Transitions. Public Administration, 86(4), 1009-103. 

6. Jonker, J. (2012). New business models. An exploratory study of changing transactions creating multiple value(s).  Working Paper, Nijmegen School of Management.

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8. Pennink, B. (2014). Dimensions for Local Economic Development: Towards a Multi-level Multi Actor Model. Journal of Business and Economics, 5(1), 249.

9. Rotmans, J. (2014). Sustainability: Jan Rotmans at TEDxMaastricht. Accessed: 19.12.2017 Available at: https://www.youtube.com/watch?v=9furIv2jg50 

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