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Sustainability, Subsidies and Regionalism in the Energy Market

Posted by Devin Cole  December 30, 2011 02:45 PM

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Hessenbruch.Arne__.Headshot_1_.jpegThe recently released film "Iron Lady" features Margaret Thatcher's acceptance speech upon first becoming prime minister, quoting Francis of Assisi: "Where there is discord, may we bring harmony. Where there is error, may we bring truth. Where there is doubt, may we bring faith. And where there is despair, may we bring hope."

In the 1980s and 1990s, Thatcher's political opponents used this speech as a voiceover with footage showing the violence her politics wrought, such as clashes between British police and coal miners. The point was of course to argue that she brought discord, doubt and despair to the many mining communities whose livelihood was wiped out. But from her perspective, British coal mining simply was not viable without subsidies, and the subsidies were wasting tax payers' money.

Change is always resisted, the more so of course when livelihoods are at stake. US coal fired power plants are being retired to understandable howls of protest in coal rich West Virginia. US energy politics is understandably not only partisan but also a patchwork of regions. Sustainability makes sense in New England but is almost a dirty word in West Virginia or Texas. Representatives of the carbon based energy industry disapprove of government subsidies for renewables and supporters of renewables point to the much higher and systemic subsidies for coal, oil and gas.

Nothing new under the sun there. In Denmark, where I am from, there is next to no oil and gas industry, and so it also has no political representation. The Danish wind turbine industry, by contrast, dominates the world market. Guess what energy politics is like? Well, it is squarely in favor of renewables – so much so that a plan to become entirely independent of fossil fuels by 2050 was announced this year, drawing wide political support. By 2050, Denmark should run on electrical vehicles only, be supremely energy efficient and be able to store energy from renewables (so that the intermittency of wind is no longer an issue). Provided that Denmark remains a global leader in wind energy and grid management, it is a plan that also supports the bolstering of Danish livelihoods.

Contrast this with the 2011 trend in US energy. In New England, Cape Wind faced yet more obstacles, and construction was delayed yet again. And the big nationwide story in US energy is shale gas. Shale promises a bonanza of new livelihoods over huge swathes of the US (North Dakota already does) and very low prices of natural gas. The hopes and aspirations of many Americans is tied up with shale gas, the hopes and aspirations of many Danes is tied up with renewables.

The overarching arguments for renewables are twofold: they reduce the dependence on oil rich countries, many of which are not stable political partners, and they help us avoid a climate armageddon. Now, shale promises to reduce the dependence on oil imports, and while its global environmental impact is unclear (it could replace dirty coal or it could replace even cleaner renewables), the people and industries whose livelihoods depend on shale are unlikely to care. However, in
2011 the impact of shale on local environments became the main story. Several stories about pollution of ground water and the strong arm tactics of shale gas prospectors seem to bring into being local resistance to shale gas development that will make the resistance to Cape Wind seem trifling.

The Iron Lady wrought deep changes that undoubtedly caused much suffering locally, but arguably made sense in the longer term for Britain as a whole. In 2011, we are on the threshold of similar change in the US and elsewhere. There will inevitably be losers, but let us hope that overall we will all gain

Arne Hessenbruch is a Danish expat and the founder of Boston Denmark Partnerships, where he connects Danish companies with an interest in doing business in Boston.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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