Rediscovering municipal socialism

During the recent Labour leadership campaign, Jeremy Corbyn extolled the virtues of Germany as the model for energy renationalisation in Britain. Much lauded by both Greens and the more forward thinking socialists, the German approach to energy transition, marked by the proliferation of new decentralised forms of public and community owned energy companies, has much to commend it. Whether this model can be transplanted so easily to Britain or Scotland, given Germany’s different history and geography of energy policy is another matter.

In the energy sector, Germany has been at the heart of a massive remunicipalisation drive with over 100 city and regional electricity distribution networks coming back under public ownership since 2007, while 44 new municipal energy companies (‘Stadtwerke’) have also been established. There have been two drivers behind this process. First, growing public anger with the effects of privatisation in the gas, electricity and power generation sectors. In particular, the way that poor service delivery has gone hand-in-hand with providing healthy economic returns to privatised franchises has generated cross-party coalitions that combine conservatives, greens and leftists in rural and urban areas to take back public control. In consequence, Germany has been re-discovering an interesting mix between municipal socialism and rural mutualism.

The second has been the strong environmental agenda in Germany where the retreat from nuclear power and setting of strong national renewal energy objectives has led many policy makers and activists at the local level to question the power of the big four private utilities and their links to carbon based energy (specifically gas and coal). Fulfilling Germany’s climate change obligations requires massive investment of somewhere between €25bn and €42bn in infrastructure renewal alone. The more progressive local politicians across political divides realise only renewal of public ownership and investment can achieve this.

In Frankfurt, where the city council is a coalition between CDU and Greens, the local Stadtwerke, Mainova is investing €100m financed by the state owned regional investment bank (‘Landesbank’) to construct an integrated energy system that reduces waste and deals with storage and capacity issues arising from complex sourcing of different forms of power. Hamburg has recently held a referendum where the public voted to take its energy grid back into public control to achieve similar efficiencies in the shift to renewables.

The relevance of the German model for Scotland is limited in the current political conjuncture. Germany has a decentralised energy system and, even before the present retreat from privatisation, there was far more local control over energy policy and infrastructure and far more ownership diversity than here. Cooperatives and Stadtwerke led the way in the Germany renewables revolution where the share of renewable generated electricity has risen from 6% to 25% in 10 years and is forecast to hit 40% by 2020 while local individual and cooperative ownership of windfarms is over 50% of the total.

In contrast, Britain has a centralised system and Scotland has very little autonomy within this, with few powers over energy devolved. As the furore over closing Longannet power station shows, the lack of control over the grid, its centralised structure, and the ownership of most of power generation in private hands means there is no local strategic capacity to achieve a similar public energy revolution. Scotland also lacks the German system of local and regional state cooperative banks, which have been so critical to funding renewable and energy modernisation projects.

We need public ownership and control of the electricity and power generation grids in Scotland to effect the post-carbon transition while also ensuring security of supply and getting to grips with the costing and pricing structure of the current energy ‘market’. This requires much more fundamental political reform than is currently on offer with the existing Westminster government. However, there are still things can be done at local and city level. Rural community ownership is, of course, on the policy agenda at Scottish Parliament level and this can be extended further.

But some of the more interesting initiatives from Germany could be adopted now in Scotland’s cities with the right political will. The potential for new municipal energy companies is massive in the development of combined heat and power and district heating systems, which can start on a small scale and begin developing their own clean and efficient energy networks across the city. In England, the more progressive green cities such as Bristol are talking of the Hamburg model, where the local public electricity company, Hamburger Energie, set up in 2009, has over 100,000 customers. The potential for what are called ESCOs (not-for-profit local public energy supply companies) is enormous. Aberdeen City Council, for example, already has its own award winning heat and power company. Glasgow University is developing its own CHP system with some discussion about extension outwards across the city. But the missing piece of the jigsaw here would be the establishment of local public banks – in Germany ‘Sparkassen’ – to supply the finance to allow a new green municipal socialism to flourish.

Andrew Cumbers is professor of urban and regional political economy at the University of Glasgow