Democracy and Electricity: Institutions, Industrial Representation and Technology Deployment Rates

Democracy and Electricity: Institutions, Industrial Representation and Technology Deployment Rates

Dr Zeynep Clulow, University of Cambridge
Dr David Reiner, University of Cambridge

Overview

It is widely agreed that significant emissions cuts need to be undertaken in the electricity sector to meet the targets adopted in the Paris Agreement (IPCC 2018). Yet despite its urgency, many countries have been slow to transition to low-carbon technologies, leading to widespread concern that the international community will fail to meet its shared mitigation target. Countries’ divergent energy preferences have been attributed to several factors such as, for example, the political influence of interest groups (Marques et al. 2010; Cadoret and Padovano 2016) and their repercussions on the national economy (IEA 2017; Teske et al. 2018; Brown et al. 2018). Yet all of these explanations originate from the assumption that political actors design energy policy with one fundamental goal in mind – to remain in power by deploying the most politically expedient energy sources. We contribute to this literature by investigating the effects of two observable sources of political returns attached to electricity deployment decisions – the level of democracy in countries’ formal political institutions and the strength of industrial interest groups.

Relevance

While our work touches on the three themes of the BIEE conference, it is most relevant to the social theme: We explore industrial energy preferences and their interactions with formal political institutional settings and identify which conditions appear to be more favourable for the deployment of certain technologies. Our work is particularly relevant to the sessions on consumers, as we investigate electricity consumers’ preferences for various energy technologies and scales of deployment and, given our focus on domestic formal political institutions and democratic pathways to influence energy policy, speaks directly to the session on governance and policies.

Methods

While numerous studies have found that political factors influence electricity deployment (e.g. Henisz and Zelner 2006; Cadoret and Padovano 2016; Teske et al. 2018), most quantitative work focuses on cross-sectional differences between countries, which creates the possibility that observed correlations might be due to other (unmodelled) factors rather than political drivers. To explore such possibilities, we employ a three-level hierarchical model consisting of country-years, countries and regions, to isolate the effects of fluctuations in the levels of democracy and industrial strength within the same country and region, thereby eliminating the possibility for confounding.

We test our hypotheses on the worldwide electricity sector using country-year energy deployment data spanning 136 countries from 1990 to 2018 (IEA 2019). Specifically, we investigate the effects of the democratic attributes of a country’s formal political institutions and political influence of industrial energy consumers on the annual deployment rate of solar, wind, hydro, gas, coal, oil and nuclear energy for electricity generation, ceteris paribus.

Results

Our findings indicate that even when country and regional clustering are accounted for, democracy does indeed have a significant effect on the deployment of most energy technologies (namely: solar, wind, hydro, gas and nuclear). We also find strong evidence that industrial strength significantly increases the positive effect of democracy on the deployment of modular, small-scale technologies such assolar and wind and inhibits the deployment of centralised large-scale power options such as hydro, gas, coal and nuclear energy.

Conclusions

We find that democracy plays a significant role in shaping the deployment rates of solar, wind, hydro and nuclear energy and industrial representation increases the positive marginal effect of democracy on the deployment of decentralised small-scale electricity sources, while inhibiting the deployment of large-scale technologies. Our results also provide strong evidence that industrial energy consumers prefer small-scale, decentralised energy options to traditional, centralised ones.

Keyword list

Industrial energy consumers, democratic institutions, energy deployment rates, energy technology, energy deployment scales.