Angela's message to the energy sector

The Merkel government’s nuclear U-turn, argues EER's editor Karel Beckman, is a game-changer for the energy sector. It shows that in today's political climate public opinion counts more than anything else. This has profound implications for the industry: energy companies will have to come out of the corridors of power and start engaging the public directly.

Chancellor of Germany Angela Merkel (photo: World Economic Forum)
Much has been said about the Merkel government's abrupt nuclear reversal, but one obvious conclusions stands out above all. By deciding to close down all of Germany’s nuclear power stations, Merkel and her Ministers made it clear that to them, public opinion is all that counts. Angel and her team demonstrated that, when the chips are down, they don’t care one whit what business leaders want. Nor what the long-term economic costs are of their decisions. The thing that matters to them above all is the next elections.

Surely the German government is not the only one to hold this attitude. I am convinced nowadays governments in other democratic countries feel exactly the same way, for reasons I will return to in a moment. This is certainly the case in my own country, the Netherlands, where recently the current right-wing government suddenly decided to scrap a long-standing project to store CO2 underground, to the consternation of the energy industry. The reason? Local voters had expressed their opposition and there were important local elections coming up. I have no doubt that readers in other countries can come up with examples from their own experience.

What this means, then, is that in democratic western societies public opinion has become the all-important factor in political decision-making.

Political establishment

One may ask of course, is this something new? To be sure, politicians have always kept a careful eye on public opinion. But I believe that in the past they were more inclined to heed the interests of special interest groups, including business lobbies, and less inclined to follow the whims of the electorate. It is no coincidence that all the conferences one goes to nowadays, business leaders are crying out for ‘political leadership’. What they really mean by this is that they want politicians to ignore what the public wants and do ‘what is in the best interest of the economy’ (i.e. what they want).

The problem for the current generation of politicians, however, is that the force of public opinion has become much stronger than in the past. There are several reasons for this. First of all, the media landscape has changed beyond recognition. Everyone knows about the internet revolution and the

If Marine le Pen becomes the next French president and Geert Wilders the next prime minister of the Netherlands, it could well mean the end of the EU as we know it
social media, but what is often forgotten is that the traditional media landscape – especially that of radio and television – has also changed radically in recent decades. The number of (independent, commercial) television and radio stations has multiplied and the new stations are not part of the political establishment anymore (or they have become part of new political groups). This means that politicians cannot control the media anymore the way they used to (unless they own their own media outlets of course).

Secondly, the voters too have changed, partly as a result of the same media revolution, but also as a result of broader sociological trends. Old loyalties, which used to be based on more or less stable ideologies (socialism, christianity, liberalism), have gone in the dustbin. People identify less with their class or social background and have become more individualistic. As a result, they have become more pragmatic and more fickle. They will vote for whomever they feel serves their interest or follows their preferences at any particular moment. In this they are just as much inclined to focus on specific issues than on grand political ideologies. Thus, the German voters happen to be against nuclear power, and they perceive this as an overriding issue at this particular moment, so they will vote for whomever supports them on this. After all, they know they can always change their minds at the next election.

Marine le Pen

All this has led to a highly unstable, fragmented political climate. In many European countries as well as in the US, “populist” parties have become too strong to be ignored by incumbent politicians. And Europe has an additional problem, called the European Union. As the EU has become larger and more powerful, it is increasingly being resented by people across Europe. People increasingly feel that democracy, as they know it, is not possible in a grand union with 27 different countries, all with different (political) cultures, habits, preferences and languages. The Greek crisis has made them become aware that such a centralised system encourages free ridership: the costs of political measures (financial and otherwise) are spread over so many people that no one has an incentive – or is able – to control them anymore.

As voters in member states feel resentful and powerless in the face of the EU, they vent their anger on the politicians that they are still able to control to some extent: their own national and local politicians. At the same time, as the power of the EU increases, these politicians feel increasingly helpless to control the destiny of their own countries. This makes them all the more ready to follow national public opinion when they have half a chance to do so. See the Merkel decision.

One can only speculate how this will end. It is no exaggeration to say that the future of the EU currently hangs in the balance. If, for example, Marine le Pen becomes the next French president and the popular Dutch anti-European politician Geert Wilders the next prime minister of the Netherlands, it could well mean the end of the EU as we know it.

Harmful

So what we are faced with is a fundamental change in how democratic politics works in our societies. And this has profound implications for energy companies. I think it is possible to draw at least three lessons from the Merkel Gamechanger.

First of all, it is no longer sufficient for the industry to communicate only or mostly with policymakers. Business leaders have traditionally tended to shun public exposure and preferred to lobby behind the

Business leaders have traditionally tended to shun public exposure and preferred to lobby behind the scenes with policymakers to achieve what they want
scenes with policymakers to achieve what they want. That approach has become obsolete. They only way they can influence policymakers today is indirectly, through public opinion. This means they will have to make much more effort to win the public over to their point of view. If they want to achieve anything that has a political or public dimension, such as building a power station or putting CO2 in the ground, they will have to come out of their ivory towers and engage the public (and the media) directly.

This immediately brings us to the second lesson. To communicate successfully with the public, companies have to become much more aware of the total context in which they operate. It is not enough to merely expound on their own activity. They must be able to compare the costs and benefits of their own projects to possible alternatives. For example, an energy company may argue that nuclear power is safe and efficient, but when people believe they have a better alternative available, in the form of renewable energy, they will not be convinced. The company will have to explain why, in its view, renewable energy will not do as an alternative or will even be harmful.

The third lesson, which follows from the second, is that the energy industry will have to try to enhance the level of the public debate. This was the message that Gertjan Lankhorst, CEO of Dutch gas company Gasterra, recently gave in an interview with European Energy Review. He said the public energy debate tends to be ill-informed and superficial, and noted that the industry should do much more to increase energy literacy among the public. It seems a point well taken, in view of the Merkel U-turn, which happened two weeks after the interview took place. The energy industry can no longer rely on politicians to do what is ‘in the best interests of the country’ – it will have to help shape people’s perceptions of what this best interest is.

Not an easy task, to be sure, but it does seem to be the reality today. It is, perhaps, an interesting challenge to the bloated communication departments of many energy companies. Who knows, it might even be a noble task for the Brussels-based lobby groups and industry associations if and when the EU breaks down.