Shareholder liability: key to energy systems transformation

01/08/2013 – Assigning full liability for environmental impacts to the shareholders of corporations would reduce the rigidity of the fossil-nuclear energy economy and help establish an alternative energy system, a new study shows. Without such changes of regulation, a dynamic lock-in pattern of the energy economy dominates: Capital flows to the established corporations and technologies instead of flowing to nascent alternative and more sustainable ones, this pattern is known as the ‘success to the successful mode’. The paper by Jérôme Dangerman of the International Institute for Applied Systems Analysis and Hans Joachim Schellnhuber, director of the Potsdam Institute for Climate Impact Research, will be published this week in the US Proceedings of the National Academy of Sciences (PNAS).
Shareholder liability: key to energy systems transformation
Chemical factory. Photo: thinkstock

“Shareholders owning corporations today are not held responsible for most relevant effects of their investment – namely emissions of greenhouse-gases leading to climate change, or radioactive residues lasting for many centuries,” Schellnhuber points out. “This is a unique situation - short-term thinking seems to be built into current corporate law.” The paper presents a thorough analysis of the structural mechanisms shaping the contemporary energy system and of possible solutions in  regard to the transformation of the energy economy.

Even though both the conventional and the alternative energy system have multiple equilibria, the path dependence of the system based on fossil and nuclear fuels leads to a structural imbalance. This is reflected for instance by the allocation of state subsidies: in the period 2007-2010, 496 billion Dollar went to conventional energy, excluding nuclear, and 61 billion Dollar to alternative energy. Even perturbations like the one by the world financial crisis tend to reinforce the persisting pattern – alternative energy production is perceived as a more risky investment.


Article: Dangerman, A.T.C.J., Schellnhuber, H.J. (2013): Energy Systems Transformations. Proceedings of the National Academy of Sciences (PNAS). Early Edition [doi:

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