About
Background
In the Netherlands, the debate on energy has never been a broad-spectrum debate, and has mainly focused on specific aspects of energy supply, such as nuclear energy. Over the past few years, topical issues have been the environmental impact of energy use and the liberalisation of the markets. Only recently, attention has shifted again to the security of supply. It is extremely important for the quality and continuity of energy supply in the Netherlands to discuss the subject in all its breadth and complexity, and indeed to facilitate the smooth transition to a more sustainable energy supply. This debate must contribute to a coherent and integrated vision on energy and environmental policy, also on a European level.
The possibilities of using renewable energy to meet the demand are still limited, and it will take major efforts to increase the proportion of sustainable energy within the energy mix. These efforts should lead to technologies that will make sustainable energy commercially attractive. Nevertheless, fossil fuels will continue to be a major source of energy for a long time to come. This means that current developments to limit the number of harmful emissions from fossil fuels (‘clean fossil') are very important. The same is true of energy-saving measures. At the same time, in addition to market conditions and environmental concerns, security of supply is also an integral part of the energy issue, and as such deserves our attention. After all, in Western economies energy is important for maintaining prosperity, while in developing countries it is crucial for increasing prosperity.
Bringing together the various stakeholders in the increasingly European debate on energy is not only extremely important for government decision-making, but also for the companies that supply these services to consumers. Market conditions should be such that timely investments can be made, consumers pay a reasonable price for services, technical developments receive sufficient stimulus and market distortions are avoided as far as possible. In addition, the market mechanism should strengthen the preconditions for sound policies on environmental issues and security of supply.
The past few years have been marked by a fundamental shift in the relationship between the state and the market. This change has been caused amongst others by ongoing European integration and the choice of a market regulation in which the government, as the guardian of public interest, is less inclined and able to act as a producer; instead, there is a greater or even total emphasis on regulation and supervision to secure that public interest. The government still sets and monitors the market conditions and the environmental and the security of supply objectives, but leaves the execution as far as possible to private organisations. The fundamental change in the relationship between state and market can also be seen in the gradual liberalisation and privatisation of the energy markets in Europe and the United States. The energy crisis in California has further highlighted the fact that this is a process fraught with many uncertainties and internal ramifications.
Discussion has recently arisen in the Netherlands about the import capacity of electricity, now that it turns out that when the price of oil (and, linked to it, the price of gas) is relatively high, Dutch gas-fired power stations cannot compete with lignite-fired plants in Germany and (subsidised) nuclear power stations in Belgium and France. It is argued that in the interests of security of supply (not to be confused with security of delivery), the liberalisation of the European market should not impinge too far on the Dutch production capacity. In addition, the effect of liberalisation is problematic from an environmental point of view, since relatively ‘clean' electricity production in gas-fired plants is being replaced with, for example, lignite-fired alternatives.
At the same time, Europe, the United States and Asia are becoming increasingly dependent on imports for their energy supply. In the future, these imports will come from a decreasing number of energy-exporting countries and regions. As a result, the competition for scarce primary energy sources will become even more political and strategic.
The major changes that are also imminent on energy markets in the Netherlands must therefore be understood in the context of the ongoing international economic and political developments. Measures aimed at strengthening market forces (particularly in Europe) and, in a general sense, the government's withdrawal from the energy market as a producer must be balanced against the public interest with regard to the environment and security of supply. In its new role, the government will be regulating the balance between the market, the environment and security of supply.
The integrated approach to energy requires a combination of various policy domains and objectives which are not always compatible and which are not always simultaneously achievable; moreover, they strongly interact with international (or European) political and economic developments, and thus the influence of national governments can be limited. The simultaneous pursuit of a liberalised market (or the introduction of certain market conditions), security of supply and environmental objectives may regularly give rise to strong tensions. The government tries to reach agreement on these areas of policy at a national, supranational and international level. At a national level, the government not only sets the policy conditions, but also has a supervisory role. This can be a delicate balancing act: by paying insufficient attention to (or failing to acknowledge) one or two of the three policy areas, the government might over-emphasise the importance of the other area(s). Political decision-making and the influence of lobby groups on this decision-making, whether at national, European or international level, are determining factors. In addition, priorities in other policy areas (e.g., security, economic growth, employment or education) may affect the government's policy on integrated energy supply. As a result, whether consciously or not, the government may become the cause of market failures, fail to meet its international agreements or be under-prepared for an energy supply crisis.
So far, the energy debate has failed to address the issues regarding the development of supply and demand of the various energy carriers, the environment, market forces and security of supply in a sufficiently integrated manner. The transition to more sustainable energy would benefit not only from a more integrated approach, but also from welcoming new technologies that allow the use of traditional (fossil) energy carriers in a 'cleaner', more environmentally-friendly way. Moreover, it should be acknowledged that, through the decision to meet the public interest in part through the market, companies play an even greater part in achieving environmental objectives and security of supply. The increasing amounts of sustainable energy and all the accompanying technological innovation this requires will have to be produced mainly by companies. Introduction of market mechanisms is not a goal in itself, but rather a sorting mechanism that ensures that production and consumption of energy proceed as efficiently as possible within the boundaries of the public interest. The government (national, supranational and in collaboration with others) remains responsible for defining the public interest.
All these developments must be placed in an international perspective. Energy supply has a strategic significance for both consuming and producing countries, and in the past it has repeatedly been a source of international tension. It is essential to ensure that the strategic importance of an uninterrupted and relatively environmentally-friendly energy management programme is firmly based in government policy, which is what other important energy-importing countries do as well.
Supported by twenty-two institutions from the public and private sector, the Clingendael International Energy Programme (CIEP) seeks to make a major contribution to the energy debate outlined above.