Making Space for Economic Democracy: The Danish Wind Power Revolution

This is part of a series of think pieces by scholars and practitioners working on a broad range of issues within the field of Social and Solidarity Economy. The series is being published in the build-up to the UNRISD conference “Potential and Limits of Social and Solidarity Economy”. The conference will take place on 6-8 May 2013 in collaboration with the International Labour Organization and the UN Non-Governmental Liaison Service.

This think piece illustrates through the example of the Danish renewables sector the role that innovative forms of collective and democratic ownership can play in tackling climate change. Although Denmark has been held up as a model for other countries to follow in forging a progressive and far-sighted approach to tackling climate change, there is relatively little recognition that this has been founded upon state intervention and localized forms of public ownership. The paper emphasizes the way that supportive regulation and legislation by national government institutions come together with grassroots initiatives to foster more localized and participatory forms of public ownership and decision making.

Andrew Cumbers is professor of geographical political economy at the University of Glasgow. He has written extensively on the different dimensions of economic globalization. Most recently, he has been concerned with the evolution and adaptation of regions to processes of globalization, and alternative strategies to combat unequal economic and social outcomes between places.

This paper is a summary of research written up at greater length in Cumbers 2012.

Introduction

In the field of energy policy Denmark has been held up as a model by the International Energy Agency for its far-sighted approach to tackling climate change. The country went from being completely dependent on foreign oil and gas for its energy needs in the 1970s to being self-sufficient in energy and generating a new renewable sector accounting for 28 per cent of its electricity needs by 2000 (DEA 2010). The cornerstone of this success was the emergence of a wind power industry which has not only been at the forefront of Denmark’s strategy to increase self-reliance and reduce CO₂ emission but has also created 20,000 jobs and given the country’s firms 50 per cent of the world market for wind turbine manufacture (DEA 2010).

Despite the international plaudits, there has been rather less recognition of the policies and institutional mechanisms that have been behind this shift, presumably because they fly in the face of much mainstream policy wisdom regarding the reliance on market solutions and private ownership in particular. Denmark’s wind power revolution has been based upon public ownership and planned interventions but is neither a top-down state-driven process nor a grassroots achievement. Instead, it reflects the combination of grassroots social mobilization, state action and a diversified set of public ownership arrangements operating at different geographical scales. While it reflects some important historical and geographically specific factors, it also offers some important insights for developing more sustainable and democratically based forms of economy.

From oil dependence to renewables role model

The oil crises of the 1970s exposed Denmark’s vulnerability to imported oil, accounting for around 90 per cent of the country’s energy demand by 1973 (Cumbers 2012). Rising oil prices over the course of the decade prompted a rethink of Danish energy policy. While the country lacked the vast oil and gas resources of the UK and Norway, there were still important discoveries in the Danish North Sea that enabled the country to reduce its dependence on imports during the 1980s. However, it still faced significant problems and some hard choices in achieving long-term security of energy supply.

In this context, there was an intense political struggle over the direction of energy policy. Much of the country’s political and business establishment favoured nuclear power as an alternative to oil, but was opposed by a coalition of green, left and rural communities brought together by an alternative vision of a more localized, decentralized model based on renewable energy. An important factor that probably helped to tip the balance away from nuclear power was the continuing tradition of interest in wind power as an alternative, and the existence of engineering and scientific communities that were able to showcase the viability of non-nuclear technologies in a populist way. This included effective use of the media to both promote wind power experiments such as the Tvind school’s giant windmill which generated an alternative discourse around “clean” and “pure” energy.

By 1979 there had been a decisive shift in Danish society against the nuclear option and in favour of the renewables sector and wind power in particular, which witnessed dramatic growth during the next two decades (Figure 1).


Source: Danish Energy Agency, http://www.ens.dk, accessed November 15^th 2011.

Decentralized public ownership and institutional supports in the emergence of the Danish wind energy sector

The critical element in the shift towards renewables was the development of a new model of economic governance around decentralized and localized forms of collective ownership. Three key aspects of government policy contributed to this shift:

• Government funding for 30 per cent of all investment in new wind turbines over the period from 1980 to 1990 gave an important boost to Danish windpower producers;
  
• The “Energipakken” compelled electricity distribution companies to purchase a certain quota of energy supply every year from renewable producers as part of nationally set targets. This was strengthened in 1993 through an amendment to the Renewable Energy Act to set up a “feed-in” fixed price tariff for “green energies” for 84 per cent of the utility’s production and distribution costs;
  
• Particularly pertinent to our analysis here, local and collective ownership of turbines was encouraged. This has occurred largely through a serious of laws, known as residency criteria or distance regulation laws , that limit ownership of wind turbines to those residing in the municipality where the turbine is built.

Although these ownership laws have been relaxed more recently, they gave critical political momentum to localized and collective forms of ownership which have had long-lasting effects. They have meant that wind turbine ownership remains dominated by either small-scale forms of private ownership (typically partnerships between local neighbours) or cooperative forms. The first Danish onshore wind farms, in the sense of larger scale activities that supplied more than a local neighbourhood, were all cooperatively owned. At its height in the late 1990s, it was estimated that around 150,000 families or around 10 per cent of the population was involved (Cumbers 2012).

The participation of communities in the ownership and development of the technology has been a critical factor in the successful growth of renewable energy capacity. Surveys suggest around 70 per cent of the population are in favour of wind farms with only around 5 per cent against (Soerensen et al 2003), figures that are far higher than found elsewhere. More critically, beyond the fact of mass collective ownership, the wind power revolution resonates strongly with wider calls for more participative and deliberative forms of economic governance. The combination of national state action and grassroots mobilization has been important in harnessing Denmark’s historical traditions of collective learning and cooperative organization to create the conditions for greater public participation, deliberation and economic democracy in the energy sector.

At this point it is also worth emphasising the decentralized, democratic and cooperative nature of the electricity distribution system, which contrasts with the experience of many other countries. The electricity distribution sector is still heavily decentralized with around 100 local distribution companies (primarily cooperative and municipally owned) and 10 regional transmission networks (which are amalgamations of the 100 local cooperatives) (DEA 2007). It is important to emphasize the continuing democratic constitution of these organizations with local and regional cooperatives and two associations whose main boards are subject to elections. Boards of municipal authorities (which tend to be the main urban centres) are appointed by the municipal government, whereas the cooperatives (which tend to be rural) are democratically elected by meetings of consumers. The regional companies are in turn elected by the representatives of the local boards. While it has to be recognized that this doesn’t mitigate against the capture of organizations or policy making by elite or special interests, it does necessarily add important layers of deliberation and public participation to economic decision making.

The depth of cooperative relations and associationalist culture in Danish civil society has also been important to the extent that most citizens are involved in a range of different associations, thereby constructing complex and overlapping relations of identity formation. The strength of the Danish decentralized model of public ownership in the energy sector means that different interests are represented, though of course this may not always lead to the policy outcomes favoured by progressive opinion.

Emergent challenges and possibilities

By the mid-1990s, some of the limits of this more ‘localized’ model were becoming apparent (Moller 2010). The original spread of wind power infrastructure was often chaotic and poorly organized in environmentally sensitive areas (ibid) with little overall coordination or regulation. At the same time, many older turbines had, by 2000, reached the end of their productive lives and needed replacing. Improvements in turbine technology enabled the construction of much larger and more powerful machines while the more ambitious national policy goals that were being articulated arguably required larger scale projects. Set against these trends, however, more locally-owned control and participation had been an important element in the public acceptance of wind power, while the greater visibility and scale of turbine development raised growing fears about environmental impact. The result was a new wave of legislation from the early 1990s onwards requiring environmental impact assessments and involving greater planning restrictions and the creation of national and regional planning zones to regulate projects. This led to a steep decline in new onshore projects and heightened public resistance to the large-scale turbines, in a context where public participation and ownership was declining.

Government policy continued to change when a centre-Right coalition came into office in 2001. Anders Fogh Rasmussen’s government immediately cancelled three new offshore projects and cut government support for the previous policy of domestic energy conservation (Moller 2010). Interestingly, the major offshore wind projects that have been established since 2000 have been developed by the municipal and publicly owned utility companies or by partnerships between the latter and forms of cooperative. Perhaps the best example is the massive Mittlegrunden wind farm, which was constructed off the coast of Copenhagen in 2001 and which provides 40 megawatts of electricity, equivalent to 3 per cent of the capital’s electricity needs. Acceptance of the project by the local population was facilitated by the ownership structure which was divided half and half between the local utility company, Copenhagen Energy (itself owned by the city council) and a bespoke cooperative, created with the aid of the city council’s energy department and the support of local residents’ groups in which individuals were able to buy shares. Over 10,000 residents took up the option (Soerensen et al 2003). Schemes such as these might well prove to be an important new form of public ownership, combining civic participation with control and strategic direction from the state at the local scale.

Conclusion

On a broader canvas, the Danish experience demonstrates the importance of a more equitable approach to resource development that at the same time builds popular participation through multiple interests and associations in support of the important goal of combating climate change. It shows the possibilities for spreading ownership and decision-making rights beyond a small group of interests to the community as a whole but in ways that allow diverse perspectives and positions to be represented, articulated and deliberated in the formation of economic policy.

However, it also points to the need to go beyond a recent tendency in much critical thinking that celebrates a virtuous bottom-up process of participatory economic democracy. Instead, it highlights how supportive state institutional and regulatory mechanisms at the national and local levels are important in promoting and fostering more decentralized forms of collective and public ownership.



References
Cumbers, A. 2012. Reclaiming Public Ownership: Making Space for Economic Democracy. Zed, London.

Danish Energy Agency. 2007. Danish Electricity Supply: Statistical Survey. Danish Energy Agency, Copenhagen.

Danish Energy Agency. 2010. Danish Energy Policy 1970 – 2010. Danish Energy Agency, Copenhagen.

Moller, B. 2010. “Spatial analyses of emerging and fading wind energy landscapes in Denmark.” Land Use Policy, Vol. 27, pp. 233-241.

Soerensen, H.C., L.K.Hansen, K. Hammarlund, J.H. Larsen. 2003. Experience with and Strategies for Public Involvement in Offshore Wind Projects. Seminar on National Planning Procedures for Offshore Wind Energy in the EU, Institute for Infrastructure, Environment and Innovation, Brussels, 5 June.