Hamburg at forefront of global drive to reverse privatisation of city services
How to build a fairer city: German municipality to buy back utility grids after referendum vote to end private ownership of gas and electricity networks
Wednesday 12 November 2014
In December 2009, a dozen people scrambled up the trees in a small neighbourhood park in Hamburg, Germany’s northern port city. Determined to block the construction of a new 12km energy pipeline, which they said threatened three parks and hundreds of trees, the protesters built treehouses and small forts, occupying the park for three months in the dead of winter.
Today, Gählerpark is a quiet patch of green surrounded by blocks of flats. But during the occupation it was a hub of activity: banners were strung from branches reading: “This park belongs to us all!” and “Save the trees!” – and a steady stream of visitors came trundling down the park’s slippery paths and through the snow, bringing food and supplies to the occupiers.
“It was wonderful!” exclaims Astrid Matthiae, a long-term local resident and activist in the Moorburgtrasse Stoppen!
campaign against the pipeline, as she retraces her steps through the park, pointing out trees that were once scheduled to be cut down, and shivering theatrically at memories of that winter’s cold, damp and freezing winds.
The Gählerpark occupation was about much more than protecting local green space, however: the pipeline at the centre of the dispute would have connected Hamburg to an already controversial coal-fired power plant, under construction by Swedish energy giant Vattenfall across the river Elbe. Activists said the entire project was unacceptable because of climate change, and had to be stopped.
The protesters came down from the trees in March 2010, after a court
ruled to temporarily suspend the pipeline approval. But a spark had been lit: anger continued to grow over the prospect of a new coal plant in one of Europe’s “greenest cities”
and demands for greater local control over Hamburg’s energy system became increasingly mainstream.
Three years later, a mass campaign by dozens of environmental, consumer and religious groups culminated in a September 2013 referendum. And with a narrow majority, Germany’s second-largest city voted to take all available steps to completely take over the electricity, gas, and district heating networks that it had sold to Vattenfall and German energy company E.On only decades earlier.
In the process, Hamburg joined a growing number of cities worldwide deciding to end their experiments with privatisation. Since 2007, 170 municipalities in Germany alone
have brought energy services back into public hands. Globally, at least 100 cities have done the same with privatised water services over the past 15 years, including dozens of municipalities in France – once seen as a growing focus for water privatisation.
Some describe this little-known trend – called “remunicipalisation” in academic jargon – as a worldwide, local-level backlash against the period of neoliberalism under which basic services have for the past 30 years been subject to mass privatisation. Hamburg is the largest city in Germany to decide to buy back its privatised energy services; a similar referendum to remunicipalise energy in Berlin
failed, though the city did vote to buy back its water services
Germany’s northern industrial capital might have seemed an unlikely setting for such a move: Hamburg has been a hub for global trade and commerce for hundreds of years, and its port is still among the world’s largest
, handling much of Europe’s imports and exports. But last year Hamburgers decided that not everything should be left to the market – by voting to buy back the city’s energy grids, they chose to end one of their largest experiments in privatisation.
, every month there is a new town that is buying back its energy infrastructure. This is very common right now,” said Christian Maas, former state secretary for the environment and urban planning in Hamburg. “People are interested in local energy supply and that is contradictory to the centralised, high profit-orientated large utility.”
Satoko Kishimoto, co-ordinator of the water justice project at the Transnational Institute in Amsterdam, pointed to recent cases in the water sector in Africa and Asia, from Mozambique
: “This is not a minor trend: many municipalities have been disappointed with privatisation, with costs, with service quality,” she said. “Remunicipalisation is seen as a tangible response, a way to rebuild important social services, more democratically.”
“A lot of it has been happening off the radar screen,” said David McDonald, professor at Queen’s University in Canada and co-director of the Municipal Services Project international research network. “We have had this massive trend since the 1970s towards privatisation - an ideologically driven, powerful trend - which has created enormous debates. But now we are starting to see something happen, including outright reversals.”
In Hamburg, activists launched the Unser Hamburg, Unser Netz
(Our Hamburg, Our Networks) campaign in 2010 after noticing that the city’s existing contracts with Vattenfall and E.On were set to expire. The campaign brought out a wide range of supporters: environmental groups said buying back the grids would give Hamburg more control over its energy systems, and make it possible to really drive the city’s Energiewende
transition away from coal and nuclear power and towards renewable energy.
Consumer organisations, meanwhile, argued that Vattenfall and E.On were at the same time the owners of the energy networks, and primary producers and buyers of energy - a bad situation for competition and for consumers. Religious and anti-poverty groups added that energy networks should not be the object of private property, but run as public resources instead. Remunicipalisation rallies brought middle-aged men in crisp suits out alongside students and dreadlocked musicians.
There is little international research on remunicipalisation and no exact figure of how many have already happened, or how many are under way. But a list of 180 known cases in the water sector
, compiled by the Public Services International Research Unit (PSIRU) at the University of Greenwich and the Transnational Institute, includes cities in every region: from Bordeaux, France and Bielefeld, Germany to Budapest (Hungary), Buenos Aires (Argentina), and Badung Bali (Indonesia).
McDonald sketches out a range of motives: “In the US, a movement for in-sourcing has often come from very conservative governments who see they can save money by bringing things back in-house. Sometimes cities have no choice – nobody is actually bidding for the contracts. Sometimes private contractors leave. And other times there are political movements, grassroots protests to get private companies out for different reasons.”
There are still some cities, however, where little mention is ever made of remunicipalisation as a serious policy option.
In the UK, a serious movement to remunicipalise like other major European cities has yet to emerge. “There are some isolated critical voices, but the main three political parties are basically OK with the status quo, linked up with the Washington consensus – that the private sector is efficient and this is not questionable,” said Emanuele Lobina, principal lecturer with the PSIRU.
Lobina says bringing water services in England back into public hands could yield savings in the range of £900m a year and that these resources could help tackle rising water poverty
. He blamed what he calls a “Westminster consensus” for ignoring “all empirical evidence of the possible savings that could be achieved through remunicipalisation, and the problems of water privatisation in England and Wales”.
Cities can face a range of obstacles, said McDonald, in trying to regain control of once-public services: “Getting everyone on board can be very challenging. You can have very strong internal resistance. There can also be high legal costs, and companies suing for loss of contracts … [And] if you’ve had a private company delivering services for 10 or 20 years, you may no longer have trucks, or an IT system.”
“It can be a very David and Goliath battle, if you’re thinking of ending a contract with a big company,” he warned.
In Hamburg, the referendum to remunicipalise passed, but narrowly - with just 50.9% of the vote. “It was a really tough political fight. It was very, very long-running and in the end it was a very, very close referendum,” said Jens Kerstan, head of the Green party in Hamburg.
A similar referendum in Berlin, also over the remunicipalisation of energy services, failed narrowly
just two months after Hamburg’s vote.
The motorways running in and out of Hamburg are lined with giant windmills, slowly churning the air, constant reminders of the country’s ambitious green goals. Shifting the city’s energy transition into higher gear was one of the key promises of remunicipalisation.
Maas said the big private companies in town hadn’t wanted to touch small, decentralised energy projects. Remunicipalisation, on the other hand, offers the chance to “give something to the city, change the energy system, provide stable energy prices for the people, make the city less dependent on foreign imports and fossil fuels”.
Ahead of the referendum, Hamburg had already bought back a 25.1% interest in the energy grids, but campaigners said this was not enough: only a complete take-over would give the city the power to do things differently.
Nothing is happening overnight, however, as the city is waiting for its existing contracts with the energy companies to expire - a process that will take several years.
In February 2014, Hamburg closed a deal to pay Vattenfall €550m to buy the city’s electricity grid from the company. Karen Kristina Hillmer, Vattenfall’s spokesperson in Hamburg, said the price was determined by jointly appointed external experts, and based on common valuation standards.
“The agreement is a fair deal for both Vattenfall and for the city of Hamburg and its citizens,” she said. “Although Vattenfall has not disconnected from the electricity grid easily, this agreement avoids disputes and provides a good basis for a long-term future for Vattenfall in the region of Hamburg and a continued good co-operation with Hamburg.”
The contract for Hamburg’s gas network is up next in 2015. But it will probably be 2019 before the much more valuable district heating grid is back in public hands. In this case, Günther Hörmann, at the Consumer Centre of Hamburg, warned that there was real concern that the city might be overpaying to take it back. Reports suggest the pricetag could exceed €1bn.