Alternative Liquid Fuels: Governance, Security
and Transitions in the Inter-War Period
Victoria Johnson
Peter Pearson
Fionnguala Sherry-Brennan
BIEE conference, St John’s College, Oxford
17-18 September 2014
Outline
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Historical analyses for understanding future transitions
– Observe the drivers of shifts in governance dynamics
– Examine the significance of economic aspects in decisionmaking
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Macro-historical context
The case-studies
– Power alcohol made by Distillers Company Ltd. (DCL)
– Petrol-from-coal made by Imperial Chemical Industries (ICI)
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Insights from case-studies
Insights for low-carbon transitions
Why historical analyses?
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Provide new insights from the analysis of past transitions that
are relevant for shaping future low-carbon transition pathways
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Inform thinking and decisions about future pathways through
increased understanding about the process of change
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Useful for understanding social and political dynamics of
transitions
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Explore how key market, government, and civil society actors
and their objectives interacted, were challenged and changed
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Communication tool
Why these case-studies?
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Informs understanding about the coal to liquid fuel
transition within the transport sector
– a precursor of the wider transition to an oil-based
economy
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ICI and DCL both mergers that were the product of the
second industrial revolution
Possible partial analogue for contemporary energy
challenges
– technological substitutes
– understanding state support for R&D and production of
two alternative fuels
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But…there are limitations to historical analyses
Framing the historical context
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WWI and rearmament for WWII
Government support for ‘strategic
industries’
Fuel security concerns: scarcity,
sovereignty, militaristic
Post-WWI economic slump and Great
Depression
– High unemployment
Free-market vs. interventionist
approaches
Desire to develop the UK’s chemical
industry
Mobility and growth of the motor car
industry
Power Alcohol - Distillers Company Ltd
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Made by fermentation of imported
molasses
‘Superior’ quality fuel compared to
petrol
– Anti-knock, better starting in cold
conditions
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Blended with petrol or benzole
DCL also made industrial alcohol
Declining whisky sales led to
overcapacity and the search for
new markets
Received government allowance
(1921)
Allowance/subsidy withdrawn in
1945
Imperial Chemical Industries Ltd.
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Petrol-from-coal made using the Bergius
process / coal hydrogenation
State interest in coal hydrogenation
ICI acquired patent rights on formation
(1927)
ICI driven by:
– New markets to address overcapacity and
potentially stranded assets
– International competitiveness
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International Hydrogenation Patents
Agreement / International Hydro Cartel
British Hydrocarbon Oils Production Act
(1934), renewed in 1938, withdrawn in
1946
Plants post WWII
Wonders of World Engineering, 1937
Similarities
Both companies were ‘combines’ and the
product of the Second Industrial Revolution
 Relationships with oil majors – ‘The Combine’
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– International and national scale cartels
– Domestic fuel blending and distribution
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Receipt of government support
– Direct subsidies
– Indirect support, e.g. Fuel Research Board
Findings
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Energy security
– Fuel scarcity, dependence on imported fuels
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Government–Industry interactions
– Wartime supply contracts ensured close working
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State support
– Formation of research associations; fuel research
and testing
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Oil major hegemony
– No government regulation of fuel distribution
network
Insights
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Energy security
– Dynamic concept, means different things, at different
times, to different people.
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Significance of economic aspects (economic
appraisal effect on decision-making)
– ‘Special commodity’, not subject to ‘pure’ market
conditions – states will always intervene to ensure
security
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Governance
– ICI and DCL involved in hybrid forms of governance
(tension between market and state-intervention)
Governance and security dynamics
Insights
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Policy environment
– Conflicting policies
Government support for home-produced fuels
 Unwillingness of state to regulate the significant market
power of The Combine and their distribution network
(making it difficult for independents to gain access)
 Distribution network a ‘natural’ monopoly because high
cost of infrastructure.
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Insights for low-carbon transitions
‘Special’ nature of energy
 Security can trump economic concerns
 Complexity of energy systems and related
policies
 Difficulties of creating certainty in hybrid
governance environment
 Tensions between long-term planning and
political cycles
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What do new fuels require?
Entrepreneurial vision
 Investment
 State support
 Access to distribution infrastructure
 A conducive and stable regulatory
environment
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Thank you for listening
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