Confronting Energy Poverty: An interview with Professor Stefan Bouzarovski

This is a short summary of an interview I conducted with Professor Stefan Bouzarovski, for the Energy and Innovation Podcast, with the first episode to be released on Friday, September 21, 2018

Autumn is approaching. The nights are getting colder and for homeowners in the Northern hemisphere, the chill is upon them. Energy poverty is a hidden nemesis that plagues not just the poor households, but affects people living in energy inefficient homes. Energy poverty affects not just the thermal comfort of individuals, but their self-perceptions and can lead to feelings of social exclusion and isolation as they struggle to live in cold homes.[1]

“One of my main points, energy poverty is not a subset of income poverty. If you look at energy poor households. There is a group of energy poor, but are not considered income poor,” stated Professor Stefan Bouzarovski.

There are different recognitions of the issue of energy poverty. France is pointed out as a good example of a country tackling energy poverty through housing measures, while traction on the concept is active in Poland.

Energy poverty is complex issue due to issues like housing, which can be owned or rented by occupants. Family and age status, whether there are children or pensioners occupy the dwelling. This is relevant because people are at home all day long and it can be difficult to get ‘out of the cold’ in the winter. These complexities mean there needs to be a range of policy issues that come together to assist people with their heating – or cooling – needs. In 2017, The European Commission established the EU Energy Poverty Observatory (EPOV). Professor Bouzarovski is the chair of the EPOV steering committee.

A quick overview of the EPOV demonstrates it is full of data and case studies on energy poverty. Exploring and working with the data on the website shows how important data is in understanding and comparing the extent of energy poverty. Some very interesting findings emerge by clicking through the data sets with the website set up for making quick charts and comparisons. For example, creating a map on the inability of households to keep a warm home, indicates both regional and national disparities, demonstrated in figure 1.

Figure 1: Map of Europe indicating the inability to keep homes warm (Source: EU Energy Poverty Observatory)

 

Creating a chart on arrears on utility bills provides an interesting perspective on shifting policies and what percentage of households were unable to pay for household utilities like, gas, water, and electricity. Figure 2 demonstrates diverging abilities across the EU on households’ abilities. At one extreme is Hungary (1), demonstrated its energy policy resembling a drunken sailor between economic growth, private ownership, then regulated rates. While Germany and the UK (2) indicate, moderate shifts over the same period, and Poland and Lithuania (3) demonstrate a sustained (if vacillating) push in reducing utility arrears. The EPOV data and ability to quickly analyze it provides a snapshot on a range of issues indicating and affecting energy poverty. This is very useful for both students and researchers producing quick summaries or more in-depth studies on energy poverty.

Figure 2: Arrears on Utility Bills (Source: EU Energy Poverty Observatory) – with my commentary

 

 

 

 

The approach towards examining energy poverty is expanded in Professor Bouzarovski’s new (open access – free) book, ‘Energy Poverty (Dis)Assembling Europe’s Infrastructural Divide’ published by Springer. In chapter 1, he outlines the emerging field of energy geography as a providing the ability to shift away from the one-dimensional analysis of energy poverty, encompasses a nuanced accounting of institutional change and place influencing the patterns of energy poverty. In particular, (as related in the forthcoming Energy and Innovation podcast interview, to be published on Friday, September 21, 2018), Geography enables the ‘how’ and ‘why’ aspects of energy poverty to be explored and explained (and possibly answered).

Energy Poverty
(Dis)Assembling Europe’s Infrastructural Divide, 2018, by Stefan Bouzarovski, full book can be downloaded from here

Reflecting on his multiple leadership roles in policy and academia, Bouzarovski states in the interview, “if we are academics, we are placed in a unique place, which is to be thinkers, to be the place where new ideas get generated, and where critical evaluation happens, nowhere else in society does that happen.” He points out there is a social relevance for our research and we shouldn’t underestimate the impact it can have.

In an age of populism when science and academic freedom are under attack, these observations of Professor Bouzarovski are highly relevant. Uncovering negative social and policy impacts in the politically charged topic of energy won’t win friends and influence all people, but as Bouzarovski identifies, can lead to “progressive outcomes.” These outcomes, and the research leading to a greater contribution to tackling energy poverty can be found on the EPOV website and in Bouzarovski’s prolific output. As he concludes his Energy Poverty book, energy poverty and vulnerability, persist due to particular power interests and ideologies. Academics can make a strong effort to uncover these disparities and develop solutions for society.

References:

[1] Bouzarovski et al., “Unpacking the Spaces and Politics of Energy Poverty.”

“Energy Poverty – (Dis)Assembling Europe’s Infrastructural Divide | Stefan Bouzarovski | Palgrave Macmillan.” Accessed September 18, 2018. https://www.palgrave.com/gb/book/9783319692982.

Put People First: Linking human development and energy innovation

There’s a century old quote of physicist and Nobel Laureate Wilhelm Ostwald that succinctly captures the link between innovation and energy. “If it were possible to invent a transformer that would yield only a few per cent more, that would bring the working classes more relief than all the welfare institutions in the world.”[i] This focus on people is important to maintain as new technologies and policies are developed. The Global Innovation Index 2018[ii] focus on innovation in the energy sector provides a succinct, but lengthy, overview of how countries are lifting their citizens out of poverty or leading the world in technology transformation. The report provides a global overview of progress in transforming the energy sector, it also provides in-depth discussion of the opportunities realized if a clean energy future becomes a reality. The report delivers both a global and local perspective, essential for understanding the state of our energy system.

Wilhelm Ostwald, photo credit

Studying the energy sector often requires a focus on the large macro picture of statistics and charts or unique case stories. These methods emphasize different aspects of how technology impacts at a global or local level representing policy choices or people and businesses. This macro/micro lens means it is hard to straddle to account for diversity while comparing country-to-country progress.

Working through the GII 2018 is like leafing through an energy systems encyclopedia. Spanning over 400 pages, I found the chapter on India most representative and concise for representing the findings of the report.[iii] India still has 35 million people without energy services and 780 million without clean cooking facilities. That is, they rely on ‘traditional’ biomass methods in the form of animal dung and other organic material for cooking and heating. While advances in biomass make it an excellent choice for advanced economies, as the report states, the small scale cooking fire, can be replaced by still simple but much safer technologies, like cook stoves or liquified biomass. Thus Ostwald’s call for greater efficiency in energy technologies provides a means to focus our efforts on relieving suffering and making a tangible difference in those regions where advanced technologies are not fully diffused to populations that need them.

Important in the chapter on India is how the authors connect with the Human Development Index to demonstrate the improvement of conditions for Indians. Topping the list is Iceland, with India ranked with very low quality of life (see below). I like this chart, since it is both simple and draws from a complex scoring mechanism that compares countries health, education and income measurements. From this we can start to paint a picture of the social requirements of energy. People do need energy services to access other areas that improve and enable them to live a healthy life. The chapter authors give a thorough review of the inter-connected aspects of the energy system with how people utilize energy technologies.

Human Development Index (source: Global Innovation Index 2018, p 144

The people of India need solar PV and nuclear energy to power their electric cars and create a cleaner environment while also lifting the living standards of all income groups. As the report states, electrification is the key way the country can improve access to energy resources. While biomass technology is important to distribute for cooking needs and providing access to resources, on the larger scale of the national economy, development growth needs to progress with electrification and movement away from fossil resources. This leads to the other key paradox of the report. Advances in energy supply technologies (mainly generation sources, like solar PV and wind) need to play a foundational role in a new energy system, the innovation and deployment is actually occurring in the area of energy end-use technology. Thus, the tremendous impact LED lighting technology has made (such as in India) is massive and measurable, deploying more innovative technologies to power the LEDs is required.

Inverted policies and efforts

Just as there is a macro and micro perspective on the energy system, there are also two sides of the energy system, split between ‘supply-side’ and ‘demand-side’, or ‘energy end-use’, as described in the report. Here the findings of the report are very interesting for identifying the strong state led efforts that are focused on the production of energy supply, rather than finding ways for consumers to reduce and benefit from efficiency improvements on the demand side. The chart below identifies where innovation efforts reside, demonstrating a huge misalignment between innovation efforts (going into energy supply), yet a huge impact on innovation outcomes and objectives on the energy-use side comes from  the smaller input. Overall, the indication a strong misalignment between the resources going into energy innovation and where the benefits are seen.

Direction and objectives of Innovation efforts and outcomes (Source: Global Innovation Index 2018, p 123)

The bigger question then is who benefits from this misalignment? And that question will have to be taken up in another post. But it is clear centralized top-down efforts led by government and large companies still directs the money. Households, irrespective of the level of development, get the short-end of the funds while the supply-side giants consume huge amounts of R&D budgets and incentives.

In a sense, nothing really has changed much in the past 100 years of expanding our energy system. Referring to Ostwald’s quote again, the efficiency improvement in the transformer is reflective of an expansionist and supply driven focus. This reflects the time of building out of large scale centralized systems. In our current example of India, this is still needed. But as the authors note, efforts in energy efficiency – not just in LED, but in heavy industry, have reduced demand by 83 billion Kilowatt hours in 2015-2016, and making Indian industry more internationally competitive. Less energy consumed by consumers or devices, means more consumers or devices can be powered with less generation. Less generation means money can be spent elsewhere in the energy system.

Maybe Ostwald’s quote can be updated to read, “If it were possible to invent an innovative energy system that would bring the global working classes more relief than a centralized one, it would be focused on the needs of the working class rather than the politicians and large companies building dirty coal fired power plants, gas and oil pipelines, funneling money to offshore companies, neglecting energy efficiency for households and attempt to understand how people use energy for heating and cooling and double efforts to build a clean energy system that protects our environment and improves our health, instead of funding pet electric projects that do not substantially displace oil fueled vehicles from our cities, instead politicians allow citizens to die in higher numbers from air pollution and chemical additives in our water. Investing in people and their energy needs would bring the working classes more relief than all the welfare institutions in the world.”

Yes, I think Ostwald would say this. After 100 years, it is time to invert the chart.

References

[i] Janet Stewart, ‘Sociology, Culture and Energy: The Case of Wilhelm Ostwald’s “Sociological Energetics” – A Translation and Exposition of a Classic Text’, Cultural Sociology, 8.3 (2014), 333–50 <https://doi.org/10.1177/1749975514523937>.

[ii] ‘Global Innovation Index 2018: Energizing the World with Innovation’, ed. by Soumitra Dutta, Bruno Lanvin, and Sacha Wunsch-Vincent (Cornell SC Johnson College of Business; INSEAD; WIPO, 2018) <https://www.globalinnovationindex.org/home> [accessed 21 August 2018].

[iii] Anil Kakodkar, ‘India’s Energy Story: A Quest for Sustainable Development with Strained Earth Resources’, in Global Innovation Index 2018: Energizing the World with Innovation, ed. by Soumitra Dutta, Bruno Lanvin, and Sacha Wunsch-Vincent (Cornell SC Johnson College of Business; INSEAD; WIPO, 2018) <https://www.globalinnovationindex.org/home> [accessed 21 August 2018].

Make Innovation Great Again: Creative construction and destruction of energy innovation

In 1841, ‘The National System of Political Economy’ was put forward by Friedrich List attempting to explain how Germany could overtake England in industrial development.[1] National competition and attempts to understand this competition have a long history. Today, one of the many ways this is expressed is in statistical analysis and case study research. The latest example is the Global Innovation Index 2018 which focuses this year on energy innovation. The report provides a robust account of how nations innovate and in one sense, how nations beat other nations at the innovation game.[2]

What I like about the report is that innovation in the energy sector is viewed as a driving force that must save the world from climate change. This is why the topic of innovation holds such power over the energy sector: Just maybe we hold the keys to prevent our own demise. To improve our ability to prevent the destruction of the Earth and of the human race, we must innovate. An innate desire to improve our living by harnessing ideas and technologies. Nations innovate and compete. Those that do not stagnate and decline. Those that erode the means and complex interactions speed their demise.

The Global Innovation Index (GII) project was launched by Professor Dutta at INSEAD in 2007 with the simple goal of determining how to find metrics and approaches that better capture the richness of innovation in society and go beyond such traditional measures of innovation as the number of research articles and the level of research and development (R&D) expenditures (pg 55).

In one sense innovation got us into this environmental mess. The inventions that produced steam power, harnessed coal and facilitated mass transportation created more and more CO2. We must now redevelop our global energy system to prevent further environmental destruction. What makes the topic of innovation so exciting is it brings together issues of economy, society, politics and the environment. We must find new ways accelerate and foster innovation to deploy new technologies and reduce the use of natural resources.

The Global Innovation Index 2018 attempts to highlight the winning areas and combination of factors that facilitate energy innovation. The report provides both a global snapshot of technology trends and detailed case studies of how countries and companies drive and use innovation to transform the energy sector.

The GII 2018 provides an effective snapshot of the structure that surrounds the energy sector (see below). There are two primary categories, ‘Innovation Input’ and ‘Innovation Output’. The first includes, institutions, human capital and research, infrastructure, market sophistication and business sophistication. The second, of outputs, is focused on knowledge and technology outputs in the creative process. These factors are measured and mapped to produce a scoreboard of success (and failure). The report emphasizes successful examples, but it’s important to also take the inverse view of see those that don’t or choose not to succeed.

Figure 1 Inputs and Outputs for Global Innovation Index (source: Global Innovation Index 2018)

 

On the successful side, the ultimate goal of all this coordination and cooperation is to build successful clusters of industries where, as Freeman[3] finds references to 1890 when observations of “the secrets of industry were in the air”. Likewise, the GII 2018, has a special section on clusters identified by patent filings and journal publications, these outputs represent the agglomeration of other innovative factors that lead to the outputs (see above). These inputs and outputs based around academic and industry cooperation are important for a country’s standing in the global innovation index.

Making countries worse

On the unsuccessful side – in an inverse example, if a country wanted to become less competitive and less innovative than other countries in its category or neighboring countries, it would seek to shut down and kick out institutions and people that file patents and publish scientific articles. By contrast, if a country wanted to increase its ranking as an attractive and innovative place with a cluster of innovation – where “the secrets of industry were in the air”, then it would seek to attract and build strategies and implement policies to increase the number of people carrying out these activities in their country.

France and French President Macron’s appeal and invitation to scientists after US President Trump’s assault on climate change research is an example of a country actively building up its economy. Hungary’s Prime Minister Orban kicking Central European University (CEU) out of the country or shutting down gender studies programs is an example of a country choosing to become less competitive and innovative and choosing to become closed minded and static 🙁 . Underscoring this example is that if CEU moves to Vienna then all the journal publications would be counted in the favor of Vienna and Austria (ranked 66th) which already has a strong identifiable cluster of innovation. Budapest is not even on the global list, while regional peer Warsaw is ranked 98th. (see map below and pages 204-207).

Innovation clusters and public policy and politics go together taking decades and centuries to develop. If a country or city wants to become an innovation hub and foster a more dynamic economy, then it needs to facilitate an innovation focused local environment (it’s not lost here, that the Orban government has also taken funding away from the Hungarian Academy of Sciences – thereby preventing it from excelling like it’s Polish peer)

Figure 2: Map of Innovation Clusters in Europe (Source: Global Innovation Index 2018)[4]

Politics Trumps Innovation?

Warsaw’s 98th place in the cluster ranking and the Polish Academy of Sciences as the top scientific organization (near 20% of publications), as identified in the GII 2018 report, is notable for the only location and organization in Eastern Europe (outside of Russia) to be in the top 100 (ahead of two Chinese cities). Creating the environment for top performance of a city or region requires not just industrial engineering output, but as the report states, input from the creative industries.

As Freeman identifies, “List’s clear recognition of the interdependence of tangible and intangible investment has a decidedly modem ring. He saw too that industry should be linked to the formal institutions of science and of education.”[5] Freeman quotes List:

“There scarcely exists a manufacturing business which has no relation to physics, mechanics, chemistry, mathematics or to the art of design, etc. No progress, no new discoveries and inventions can be made in these sciences by which a hundred industries and processes could not be improved or altered. In the manufacturing State, therefore, sciences and arts must necessarily become popular” (my emphasis).[6]

Clustered innovative regions and cities go together with open mindsets and fostering of relations between universities and industries. A recent conversation with Professor Andreas Goldthau highlighted this Macron initiative to both attract scientists to France and solve the world’s environmental problem.

President Macron’s speech, now labelled as the “Make our Planet Great Again” has put serious money into the initiative. France put up €30 million and Germany €15 million, Professor Andreas Goldthau is benefiting from this Franco-German partnership. He is now developing a research project to examine the impact of the energy transition on the global south. Countries that want to be competitive invest in innovative ideas in areas of education and industry to tackle are most pressing societal and environmental needs. Countries that deny or ignore these issues fail to innovate in meaningful and impactful ways that improve the lives of their own citizens and those around the world.

” Societies that manage to create or attract critical masses of talented people (inventors, entrepreneurs, scientists, engineers, researchers) and give them the tools and environments to be creative have, in the long run, come out ahead.”

Peter Engelke

The GII 2018 is a great example of how nations compete in the area of innovative energy technologies and solutions. At a deeper level, the leaders in the field demonstrate the impact decades of building up institutions and cooperation between industry and academia. The connections are not always clear, but open societies where arts and free thinking are allowed flourish, in turn they benefit the industrial output of nations. This mindset and public policy make economies grow for the benefit of societies. Conversely, politicians like Trump and Orban that attempt to control academic output and thought push the human drivers of any industrial complex out or away from elevating a nation’s innovative eco-system to a new level. Better design, better social engagement are stamped out by the political machine that only is focused on elusive industrial output.

As Freeman states[7], just because the Soviet Union put greater resources into R&D didn’t guarantee better innovation, qualitative factors affecting the national system of innovation also are at the heart of a countries industrial output. Gas pipelines and nuclear plants feed industry, but it is the social scientist or artist that develop or influence social policy to ensure industry benefits society. It is the job of the politician to create the environment for these two spheres to come together for the benefit of society and the planet.

References

[1] Freeman, Christopher. “The ‘National System of Innovation’ in Historical Perspective.” Cambridge Journal of Economics 19 (1995): 5–24.

[2] Dutta, Soumitra, Bruno Lanvin, and Sacha Wunsch-Vincent, eds. “Global Innovation Index 2018: Energizing the World with Innovation.” Cornell SC Johnson College of Business; INSEAD; WIPO, 2018. https://www.globalinnovationindex.org/home

[3] as cited from Foray 1991; Freeman, “The ‘National System of Innovation’ in Historical Perspective,” 9.

[4] Dutta, Lanvin, and Wunsch-Vincent, “Global Innovation Index 2018: Energizing the World with Innovation,” 202.

[5] Freeman, “The ‘National System of Innovation’ in Historical Perspective,” 6.

[6] List 1841, cited by Freeman, 6.

[7] Freeman, 12.

Misdirected US Sanctions for Nord Stream 2: Empower European consumers instead

The US is getting ready to impose sanctions on Russia and companies building the Nord Stream 2 pipeline, running between Russia and Germany under the Baltic Sea. According to the Wall Street Journal, the US is aiming sanctions against firms and banks building and financing the construction. This would affect European based firms as well. The imposition of sanctions is a blunt and weak tool for the US to exert its influence over European energy policy. In particular, a limp response to extract Eastern Europe away from Russia’s leverage over European gas supplies.

There are two divisions in Europe over Nord Stream 2. The pipeline is opposed by most East European countries taking delivery of Russian piped gas through the Soviet era gas system. It will enable Ukrainian transit to be discontinued, resulting in higher priced gas shipped from Germany to be delivered to the Central Eastern European (CEE) region. The former Eastern bloc countries vehemently oppose the construction (except for Hungary, which weakly does – but as a enabler of Russian policy in NATO, the EU and the world, we shouldn’t be surprised).

The German argument for the expanded pipe, is Germany (and Austria) have been buying Russian gas since the Cold War. This co-dependency attempts to exert some financial influence over Russia by enabling important market access to West European markets. In addition, energy relations provide important areas of cooperation and relationship building between countries. The resource of gas and the pipelines provide an important area of cooperation between countries.

The US government is attempting to interfere in this relationship. This is consistent US policy. President Reagan imposed export restrictions on US technology for compressor stations used to build the original pipelines from the Soviet Union to Germany and Austria. This slowed down the building and operation of the pipelines (the Soviet replacements kept breaking down), but it did not stop it. Potential US sanctions will have the same effect. They will slow down but not stop the energy relation between Russia and Germany – or the EU perspective supporting Nord Stream 2. In fact, due to the deteriorated relations between Trump and Merkel, US opposition will only reinforce German (and French) support for Nord Stream 2.

The US opposition is self-serving due to the attempt to increase LNG exports to Europe. Consistency in policy is apparent in this, but so is the self-interest to increase US LNG exports to Europe. Which is a bit short sited, since LNG is market based and only limited bilateral relationship can overrule market prices to force countries and companies to take US gas. US LNG must still be globally competitive for European firms to buy and trade US gas over other LNG sources or against Russian pipeline gas.

A view from the deck of the LNG regasification ship (FSRU) Independence sitting in the harbor in Klaipada, Lithuania

If the US move is a geopolitical gesture to ensure the CEE region, from the Baltic states to the Hungary continue to have gas deliveries via Ukraine – and bring in transit payments to Ukraine, then the US should build a new energy strategy directed at the CEE region. One of the reasons I’ve stopped writing about Russian pipeline politics is the palm on the face idea of ‘why should we even use Russian gas?’ US policy should be directed at diversification of CEE energy technology and resources. The goal should be to reduce the need for Russian gas and use alternative American (or European) energy technologies.

Obviously, this includes supporting and encouraging the building of LNG facilities. The LNG terminal in Lithuania is a great example of diversification that erodes Russian leverage over the country and places Russian gas on a market basis with LNG. The US support for the Krk LNG terminal in Croatia is also a long standing one. LNG, just as US shale gas and hydraulic fracturing technology is also obviously self-serving examples of US attempting to export technologies and services to make money. It has a hegemonic ring to it. With the CEE region already balancing EU energy market rules with Russian resource dependency, US gas exports add an extra layer of complexity which only deliver superficial moral support to the idea of gas diversification.

Instead, the US needs to more actively engaged across the whole energy system. The EU has already linked the idea of energy security to energy efficiency and innovation. In the Energy Union, the core tenet for diversification and increase of security of supply is to create a competitive integrated energy market. Investment into energy innovation (as broad and undefined as this is) is a priority. Energy efficiency measures are also pushed on countries. However, policy implementation compared to the huge scale of needs is a drop in the bucket.

Sixty-eight percent of EU imported gas is used in the heating sector, according to the European Commission. If the US wants to counter Russian influence in the CEE region, then it needs to address directly what matters to the region’s politicians and citizens. Heating bills hold a direct leverage over political decision making. A disagreement with Russia holds the potential to aggravate and increase the price of gas – and heating. Lithuania directly challenged Russia and was met with higher import prices compared to its Baltic neighbors. The answer of Lithuanian politicians and business community was building up a biomass heating industry, from forest to city. A plethora of existing (US) technologies exist to alter and lower heating bills. From solar water heating to energy efficiency measures.

Importantly, the US should engage financially with consumers in the CEE region. The US government should invest through international financial institutions, such as the European Bank for Reconstruction and Development (EBRD) and private national and regional banks, to create a ‘green’ fund for consumers to borrow or receive grants to modernize their heating (and cooling) systems. EU and national institutions are failing to make an impact in this area. The US has an opportunity to build on EU policy initiatives and through a simple financial engagement go directly to the consumers of Russian gas. Rely on the already established financial system and infuse the region with the financial resources necessary to diversify and reduce the demand for Russian gas.

The cherished ‘masonry heater’

I can speak from my own personal experience attempting to renovate my flat and install a new electricity and gas central heating system. There is government and private bank financing available, but both the terms and complexity of getting it and paying it back can be difficult for the average consumer. My main heating unit sitting in the corner of the living room dates to 1925, when the building was built. My solidarity with the average CEE citizen is deeply felt in the wintertime. There is a lack of practical and affordable funding to modernize both individual flats and buildings (as I also know with my neighbors, as retired residents are unable to take out loans).

If the US is serious about countering Russian influence and re-engage with the CEE region then they should engage financially. For example, my simple idea is to set up a €1 billion fund for the CEE region to be distributed through private banks where a mortgage and home energy improvement loan can be distributed together. The idea of how this funding facility could work is not original nor difficult to implement. The financial risks are very small for funders. But if imported gas and the politics behind it are such an issue, than reducing this dependency at the source of demand needs to be done. The other advantage of working directly with commercial banks, through international financial institutions, local politician can be avoided who have a strong track recording of stealing and misdirecting funds (Hungary, again is a very good example of this).

A €1 billion investment is certainly less complex than sanctions and enforcement of these on European financial firms. Why €1 billion? It can be more, but invest a sufficient amount that begins to change consumption patterns and puts a dent into gas consumed for heating purposes and reduces the social pressure on politicians to ensure good relations with Russia exist just to assure low energy prices in the CEE region. But by all means, find a way to avoid the dirty hands of politicians. Incentives banks that must comply with international oversight.

Avoiding the pitfalls of politics enables a direct connection to the people and undermines politicians maintaining the status quo with Russia. Hungary’s close relation is an example of a country ideologically aligned with Russia’s interests. It also must keep gas prices low to prevent social pressure for political change. Economically, the Hungarian regime is dependent on Russian energy prices. Hungarian consumers are forced by the government to maintain their serfdom to Russia through gas prices. Relieving this price pressure reduces Russia’s political leverage in the CEE region.

US interests in the CEE region should extend beyond LNG exports and terminals. The US should draw on its established strength in financial markets and begin to engage directly in the CEE region through energy investments. Reagan attempted to prevent the expansion of Soviet and Russian gas in Europe. Gas geopolitics will not go away. The US can work to undermine the long term impact gas prices have over European consumer and politicians. Constructive engagement through construction and renovating heating systems holds a larger policy impact than sanctions.

Our Relation to Energy: Why study energy systems?

Energy can range from the excitement we feel zipping down a slide to the steam billowing from a coal fired power plant. We all have a different intimate experience with energy. For the mechanical engineer, how a car engine works is just as important as a sociologist studying how people are affected by the influx of rig operators in a remote community. The study of energy is not an isolated experience of mechanical levers or crime statistics. Rather, to understand how our energy system works, how it evolves and how we solve pressing environmental problems – from a variety of angles – we need both a broad overview of the energy sector, but also draw on specific academic and professional disciplines to improve current practices and products. This post justifies a need to learn a holistic perspective on the energy system.

Academic disciplines abound to study specific sectors of science or the economy. However, an academic discipline of ‘energy’ does not exist. Rather, this hybrid topic touches on all types of academic disciplines. Nonetheless, there is a need to understand both the importance of teaching and learning about the broad energy system to develop deeper understandings within a discipline, or even within a job or organization dealing with the energy sector.

Why study energy?

Both the study and the teaching of energy requires tactile and experiential interactions with the topic. The accountant sitting in an oil and gas firm may only see numbers all day, but are they aware how those numbers fit into the goals of the company? Energy firms and technologies are not static. Assumptions in the past, when monopolies reigned strong and infrastructure lasted decades, may have required a go-slow approach to internal and external changes. Certainly, the evolution of technology did occur as did pressure for profits from shareholders; but global markets and global diffusion of technologies reduce protected markets. The refinement of wind technology in China or Demark quickly affects power output and performance in the US wind power industry. The gas turbine business of both GE and Siemens are now low performers because of the global strength of the renewable power business.[i]

Past infrastructure like nuclear power plants, oil and gas pipelines are still useful integrated parts of the energy system. But any new expansion of plants or networks are met with arguments for investments into other technologies. New transmission lines can be replaced by localized energy storage technologies, while oil pipelines can be met with calls to increase the electrification of transport. The creation of monopolies to ensure financial returns on large scale power projects, like nuclear or hydroelectric facilities, are harder to justify as renewable and gas generation offer reduced financial risks and lower environmental impact. Replacing the old with the new takes time, money, and innovative thinking to create new services and products that (hopefully) propel the energy sector towards a more sustainable path.

The sustainable energy trajectory the world is on, can be exemplified in one example of the Trump administration attempt to subsidize and prioritize old coal and nuclear facilities over new gas and renewable energy technologies (below). The administration failed in their arguments to the US federal energy regulator that these older technologies were needed. The failed effort demonstrates the competitiveness of smaller and more nimble energy technologies. It also exemplifies who does determine the shape of the energy system: People. The energy sector is defined as the “conversion and use of energy by people,” then energy systems are also controlled and changed by people. Over long-periods of time, new energy systems are created by altering both the technologies and how energy is used.[ii] Just as people and industry moved on from cassettes to store and listen to music, so have they moved on – even just gradually – where they get their energy from.

 

Source: Puko, Timothy. “Federal Regulators Rule Against Trump Administration on Power Plants – WSJ.” Wall Street Journal, January 8, 2018, online edition. https://www.wsj.com/articles/federal-regulators-rule-against-trump-administration-on-power-plants-1515451534.

 

Our place in the energy system

Mindsets on technologies and ways of doing business can dramatically shift. The growth in low-cost airlines and the dramatic change in travel patterns demonstrates the power of market competition. A similar transition occurred in the energy sector. The introduction of competitive energy markets pushes firms and governments to adjust (on a smaller timescale) to newer technologies that affect both energy production and consumption. There is an important reason to gain a broader knowledge of the energy system. This can assist individuals to understand how an individualized or group effort adjusts to continual technological, regulatory, environmental and societal changes. Gaining a basic knowledge of the integration of the energy system assists in noticing changes, adapting to imminent challenges (such as economic downturns) and planning for the future. Firms, governments, society and the environment benefit by gaining a holistic perspective of the energy system and how they sit within a larger environmental, economic and political process of change.

So how can we begin to understand our place within the energy system and how the energy system works? The ‘traditional’ energy system diagram is represented through a stepped approach of components of the power system. This chart encompasses the interconnection between natural resource use and end-user services and the conversion technologies along the way. It is a good first step in a holistic understanding. The problem, it leaves out people.

Source: Global Energy Assessment. “Global Energy Assessment: Toward a Sustainable Future,” 2012. P 43 http://www.iiasa.ac.at/web/home/research/researchPrograms/Energy/GEA-Summary-web.pdf.

Another way to represent the energy sector is in Chart 2. Here, the two ends of the chart express characteristics of the Earth. ‘Resources’ are the tangible elements we feel and draw on everyday. ‘Environment’ is the conceptual element that expresses how we understand and experience our interaction with the environment around us. This experience can influence our decision making. From the outside-in, we can work the chart to arrive in the center where our jobs and the institutional structures reside. Here ‘people power’ can drive change to influence the choice of technologies and perceptions in society. We actively construct both our jobs and state institutions that allow the activities that affect the use of resources and the quality of the environment.

Energy System with the Environment and People

Fundamental to this chart and understanding the outside-in approach, is our individual and social roles in giving institutions permission to exploit or protect the environment. Examples abound of individuals and communities taking action to protect and improve their environment, to allow or deny the use of specific energy technologies. While there are examples of despot regimes isolated from the problems and ravaging both people and the environment, there are also plentiful examples of societal pressure inducing changes. The global switch and proliferation of renewable energy technology demonstrates how communities and nations can make a switch towards environmentally sustainable energy technologies.

How we understand energy systems changes over time. The job we hold, the personal experiences we gain from travel, the solar panels on our neighbor’s roof, energy infrastructure is all around us. The environmental impact of our energy choices is also becoming more and more apparent. The interlinkages in our energy system affects us, our communities and even global corporate giants embedded in the global political-economy. The untouchables, become touched by social and technological shifts in the energy system. Developing a broad understanding of the energy system can impact the transition towards a more sustainable energy system.

 

[i] Crooks, Ed, and Patrick McGee. “GE and Siemens: Power Pioneers Flying Too Far from the Sun.” Financial Times, November 12, 2017. https://www.ft.com/content/fc1467b8-c601-11e7-b2bb-322b2cb39656.

 

[ii] Cherp, Aleh, Vadim Vinichenko, Jessica Jewell, Elina Brutschin, and Benjamin Sovacool. “Integrating Techno-Economic, Socio-Technical and Political Perspectives on National Energy Transitions: A Meta-Theoretical Framework.” Energy Research & Social Science 37 (March 1, 2018): 175–90. https://doi.org/10.1016/j.erss.2017.09.015.