Local Energy Concepts in Germany – An Environmental Alternative to Liberalisation?

Abstract

Liberalisation in the energy sector continues as a dominant theme in the European Union in the 1990s but little attention is being given to its potential environmental implications. However, issues of regulation, structure, ownership and scale of operation are crucial determinants in the environmental performance of the energy sector. This paper examines the situation in Germany where, as both federal energy policy measures and activities of the large energy companies have given limited attention to environmental matters, an increasing number of local councils and municipally owned energy companies have been adopting so-called local energy concepts with environmental concerns as a main driving force. It is shown that while countries like the UK struggle to induce their privatised energy companies into environmental activities, local public companies in Germany are at the forefront of implementing more environmentally benign energy systems. It is argued that, at a time when many decision-makers are preoccupied with promoting greater competition and private ownership, the benefits of local public ownership and decentralised planning in at lease part of the energy sector may be overlooked. If the political priorities at the local level are skewed in favour of the environment, local, integrated energy plans, implemented by public utilities, can reap substantial environmental benefits.