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The arduous transition to low-carbon energy A multi-level analysis of renewable electricity niches and resilient regimes Prof. Frank W. Geels Manchester Business School + King Abdulaziz University 24 April 2014, Jeddah, KSA Conference organised by Faculty of Economics and Administration Structure 1. Introduction 2. Multi-level perspective 3. Empirical application and assessment 3.1. Positive developments in (global) renewable electricity niches 3.2. Negative developments in (global) electricity regimes 4. Conclusions 1. Introduction/background - Worldwide CO2 emissions rising fast - Current trends are in the upper scenario range - Timely transition will be difficult/arduous Addressing climate change requires major change in various sectors/systems (IPCC, 2007) Focus here on electricity supply Confusing picture with conflicting trends Some positive trends: • Rise of renewable electricity • Decreasing CO2 emissions in Europe and US (shale gas, recession, offshoring, renewables) • Many city initiatives But also negative trends • Increasing worldwide coal use • Steep emission rise Rising CO2 emissions mainly non-OECD (IEA, 2013) Aims of presentation 1. Introduce MLP as analytic sensemaking framework 2. Make empirical assessment of transition to renewable electricity a) Positive (niche) developments b) Negative (regime) developments (coal, gas, nuclear) 2. Multi-level perspective (MLP) Widely used in debate on socio-technical transitions. Some characteristics: • Looks at systems, but also at actors (different from system dynamic models) • Looks at multiple dimensions (multi-disciplinary!) • Socio-technical systems as meso-level unit of analysis (not entire society, not individual innovations) Socio-technical system (Geels, 2004) Regulations and policies (e.g. traffic rules,parking fees, emission standards, car tax) Road infrastructure and traffic system (e.g. lights, signs) Maintenance and distribution network (e.g. repair shops, dealers) Socio-technical system for transportation Culture and symbolic meaning (e.g. Freedom, individuality) Vehicle (artefact) Industry structure (e.g. car manufacturers, suppliers) Markets and user practices (mobility patterns, driver preferences) Fuel infrastructure (oil companies, petrol stations) Analyse social interactions in organizational field Supply chain: * material supliers * component suppliers * machine suppliers Users Production, industry: * firms * engineers, designers Research: * universities * technical institutes * R&D laboratories Societal groups: Policy, public authorities: * European Commission, WTO, GATT * Government, Ministries, Parliament * Local authorities and executive branches (e.g. Greenpeace, media, branch organisations) Static multi-level perspective (nested hierarchy) * Radical innovation in niches (variation/novelty) * Struggling against existing regimes * In context of broader ‘landscape trends’ Increasing structuration of activities in local practices Landscape System/regime Niches (novelty) 1) Existing regime is locked-in + path dependent Economic: a)vested interests b)sunk investments (competence, infrastructure) c)scale advantages, low cost Social: a)cognitive routines make ‘blind’ (beliefs) b)alignment between social groups (‘social capital’) c)user practices, values and life styles Politics and power: a)Opposition to change from vested interests b)Uneven playing field + policy networks 2) Niches for radical innovation •Nurturing of ‘hopeful monstrosities’ (Mokyr) •Protection from mainstream market selection •Carried by entrepreneurs, outsiders, small social networks Invading product Product performance Established product T (1) T (2) Time Time lag between invention and innovation (Clark, Freeman, Soete, 1981) electronic digital computers float glass fluorescent lighting helicopter jet engine magnetic taperecording radar radio synthetic detergents television transistor zipper Invention 1939 Innovation Time lag (years) 1943 4 1902 1901 1904 1928 1898 1943 1938 1936 1941 1937 41 37 32 13 39 1925 1900 1886 1923 1948 1891 1934 1918 1928 1936 1950 1923 9 18 42 13 2 32 3. Situated in exogenous socio-technical landscape •Exogeneous backdrop •Slow-changing secular trends (demographics, macro-economics, ideology, climate change) Socio-technical’ landscape Sociotechnical regime Landscape developments put pressure on existing regime, which opens up, creating windows of opportunity for novelties Markets, user preferences New socio-technical regime influences landscape Industry Science Policy Culture Technology Socio-technical regime is ‘dynamically stable’. On different dimensions there are ongoing processes External influences on niches (via expectations and networks) New configuration breaks through, taking advantage of ‘windows of opportunity’. Adjustments occur in socio-technical regime. Elements are gradually linked together, and stabilise in a dominant design. Internal momentum increases. Technological niches Small networks of actors support novelties on the basis of expectations and future visions. Learning processes take place on multiple dimensions. Different elements are gradually linked together in a seamless web. Time Transitions involve multi-dimensional struggles between niche-innovations and existing regimes (in context of wider landscape change) • Business/firms: New entrants vs. incumbents • Economic: Competition between ‘grey’ and ‘green’ technologies in uneven playing field • Political: Political struggles over adjustments in policies. Status quo defended by incumbent ‘elites’ (politicians, big firms). • Cultural: Discursive struggles about importance and framing of problems (e.g. ‘market failure’ vs. ‘planetary boundaries’) 3. Empirical application and assessment of low-carbon electricity transition 3.1. Positive developments in (global) renewable electricity niches 3.2. Negative developments in (global) electricity regimes Overall MLP-interpretation: Niche-innovations are gaining momentum, but regimes are not (yet) falling apart Resilient regimes hinder transition 3.1. Positive developments in (global) renewable electricity niches World-wide growth in installed capacity of renewable electricity options (in GW): wind, solarPV and bio-power 300 250 200 Wind 150 Solar-PV Bio-power 100 50 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 - Most investments (cumulatively) in Europe (2004-2012), but 29% decrease in 2012 - China single largest country investor - US: boom and bust pattern New investment in renewable energy (excluding large hydro) (Frankfurt School, 2013): billion $ Cumulative world-wide investment ($ billion) per type (data from Frankfurt School, 2013) - Most investments in wind and solar-PV - Global investment decreased in 2012 300 250 Marine 200 Geo-thermal Small hydro Bio-power 150 Biofuels Solar Wind 100 50 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Investment in Europe led to substantial rise in renewable electricity From 12.2% in 1990 to 19.6% in 2010: - Old renewables (hydro, biomass/wood) - New renewables (wind, solar, biogas) Relative composition (%) of electricity in 2011 - Europe is global leader in ‘new’ renewable electricity Global renewable electricity = 20.5% ‘old’ renewables dominate Germany one of European leaders in new renewables, after Portugal (41.2%), Denmark (32.9%) and Spain (29.5%) China relatively small % new renewable (despite investments) Driving factors of positive niche-developments 1) Price/performance improvements in wind turbines and PV-modules (overproduction and dumping) 2) New political discourse (‘green growth’, ‘transitions to green economy), targets (e.g. Europe 2020 goals) and some favourable policies, e.g. generous feed-in tariffs 3. Rising public concerns after 2005: Hurricane Katrina (2005), All Gore’s movie (2005), Stern Review (2006) , IPCC report (2007), Nobel Prize (2007) Public attention to climate change (UK) normalized: max=1 The Guardian 1,0 The Times 0,8 The Independent Daily Express 0,6 0,4 0,2 2011* 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 0,0 4. Green stimulus packages (2009): $522 billion Varying country commitments - Korea + China - UK low green stimulus But also some weakening of drivers 1) Decline in public attention for climate change 2) Decline of global investment in 2012 3) Weakening of green policies a) Reductions in feed-in tariffs (UK, Germany, Spain, Italy) b) No successor of Kyoto; no international action until 2020 c) Green stimulus packages winding down (2011-2012) d) EU ETS is not (yet) working: carbon price is low and variable d) EU ETS carbon price: low, decreasing, fluctuating 3.2. Negative developments in (global) electricity regimes 1) Shale gas revolution • started in US and now spreading to China, UK, Poland • IEA (2011) predicts ‘golden age for natural gas’ Lower gas prices in US Double edged sword • Positive: gas replacing coal in US (gradually) US power generation (IEA, 2013) Negative effects a) Immediate risks (groundwater, tremors) controversial debates b) May wipe out renewables investment wave c) May lock us into new fossil fuel (for next 30 years) d) cheap US coal flooding world-market, leading to 6% increase in coal use in Germany in 2012 and 32% increase in UK 2) Nuclear renaissance? • Nuclear seemed on its way out (expensive, risky) • Nuclear phase-out in Germany, Japan, Belgium • But made comeback as low-carbon option + energy security But ‘nuclear renaissance’ in UK, China, India, Russia • Also IPCC, IEA argue for doubling of nuclear capacity to address climate change • This will be quite a challenge given recent stagnation Worldwide installed nuclear capacity (in GW(e)) Actual decrease since 2006 (Schneider and Froggatt, 2013) - New nuclear expansion would compete with renewables - Probably requires public subsidies (to cover risks) 3) Coal expansion “For all the talk about natural gas and renewables, coal unquestionably won the energy race in the first decade of the 21st century” (IEA, 2011) • South Africa (93%), Poland (90%), China (79%), Australia (70%), India (69%), US (45%), Germany (44%) • Coal-fired generation grew 45% between 2000 and 2010 • Projected to keep growing in line with 6-degree climate change • Coal regime actors defend themselves with ‘clean coal’ discourse and promise of CCS • Slow CCS progress (90 Mt CO2 is less than 1% of power sector CO2 emissions) • Leads to ‘capture ready’ promise (contested) CCS capacity by region and project status, 2012 (IEA: 2013: 25) 4) Regime conclusion: Fossil fuel regimes are resilient + adaptive Renewables mainly additional to fossil fuels We can only burn 1/3 of proven fossil fuel reserves to stay within 2-degree target (Berners-Lee and Clark 2013; IEA, 2013) So, we need accelerated diffusion of green niche-innovations (investments, market creation, cultural enthusiasm) and managed decline of ‘grey’ regimes (taxes, regulations, standards) Transition research should also look at destabilisation of existing regimes 4. Conclusions Conceptual • Transitions are complex, multi-dimensional processes • MLP is useful heuristic framework, not a ‘truth machine’ • MLP is ‘outside-in’ framework focusing on overall patterns • But one can ‘zoom in’ further and develop ‘inside-out’ understanding (actors, searching, groping, struggling, debating) Empirical conclusions • Substantial (European) progress in green electricity • But renewables face uphill struggles against regimes • Regimes (coal, gas, nuclear) relatively stable, because of commitment from government and industry • Transition will be arduous and likely more contentious in next 5-10 years • We should not just study ‘green’, but also existing regimes + more attention for political economy Transition pathways a. Technological substitution b. Regime transformation (endogenous) c. Regime reconfiguration d. De-alignment and re-alignment a. Technological substitution Increasing Landscape structuration developments of activities in local practices Sociotechnical regime Specific shock Markets, user preferences Industry Science Policy Culture Technology Nichelevel Time b. Transformation pathway Increasing structuration of activities in local practices Landscape developments Landscape pressure Socio-technical regime Adoption of symbiotic niche-innovation Niche level Time c. Reconfiguration pathway Landscape level Regime/systems level Niche level 1) Novelties emerge in technoscientific niches in context of stable system architecture 2) Diffusion and adoption of innovations in existing system 3) Reconfiguration of elements leads to new system architecture d. De-alignment and re-alignment Increasing structuration of activities in local practices Landscape developments Markets, user preferences Socio- Industry technical regime Policy Science Culture Technology Niche-level Time Two pronged policy strategy 1) Niche-level: Stimulate variety/innovation - Long-term visions + short-term action (projects): learning-bydoing, network building 2) Regime-level: Tighten selection environment (taxes, regulations, incentives) Varieties of capitalism: different policy styles • No single policy recipe for system innovation • Different policy styles : a) Liberal Market Economies (e.g. USA, UK, Canada). b) Coordinated Market Economies (e.g. Germany, Denmark) c) State-influenced Market Economies (e.g. France, Japan, Korea) d) State capitalism (China, Russia) Different policy mixes and instruments Commandand-control (top-down steering) Market model Policy networks (convening, (incentivize bottom orchestrating processes) up agents) Governance instruments Formal rules, regulations, laws Financial incentives (subsidies, taxes) Foundation scientific disciplines Classic political Neo-classical science economics Learning processes, projects/experiments, vision/scenario workshops, strategic conferences, public debates, platforms Sociology, innovation studies, neo-institutional political science Niche-innovation initially carried by local/urban projects Global niche-level (e.g. the emerging field of PV solar cells) … is carried by projects in different local practices Sequence of projects enables niche development trajectories (Geels/Raven, 2006) Global level (community, field) Shared rules (problem agendas, search heuristics, expectations, abstract theories, technical models) Framing, coordinating Local projects, carried by local networks, characterised by local variety Aggregation, learning Emerging technological trajectory Dynamic model of niche development (relations between mechanisms) Accepted visions and expectations (on functionality) form agenda of emerging field Global level (emerging field) Adjust expectations Cognitive, formal and normative rules (knowledge, regulations, behavioural norms) Learning, articulation aggregation Global network of actors (emerging community) Enrol more actors Resources + requirements (finance, protection, specifications) Outcomes and new promises by local actors Local practices Artefact-activity: Projects in local practices (R&D projects, pilot projects)