1. 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

2. 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

3. 1. Introduction/background
- Worldwide CO2 emissions rising fast - Current trends are in the upper scenario range - Timely transition will be difficult/arduous

4. Addressing climate change requires major change in various sectors/systems (IPCC, 2007)
 Focus here on electricity supply

5. 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

6. Rising CO2 emissions mainly non-OECD (IEA, 2013)

7. 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)

8. 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)

9. Socio-technical system (Geels, 2004)

10. Analyse social interactions in organizational field

11. Static multi-level perspective (nested hierarchy)
Static multi-level perspective (nested hierarchy) * Radical innovation in niches (variation/novelty) * Struggling against existing regimes * In context of broader ‘landscape trends’

12. 1) Existing regime is locked-in + path dependent
Economic:
vested interests
sunk investments (competence, infrastructure)
scale advantages, low cost
Social:
cognitive routines make ‘blind’ (beliefs)
alignment between social groups (‘social capital’)
user practices, values and life styles
Politics and power:
Opposition to change from vested interests
Uneven playing field + policy networks

13. 2) Niches for radical innovation
Nurturing of ‘hopeful monstrosities’ (Mokyr)
Protection from mainstream market selection
Carried by entrepreneurs, outsiders, small social networks

14. electronic digital computers 1939 1943 4 float glass 1902 41
Time lag between invention and innovation (Clark, Freeman, Soete, 1981)
Invention
Innovation
Time lag (years)
electronic digital computers
1939
1943 4
float glass
1902 41
fluorescent lighting
1901
1938 37
helicopter
1904
1936 32
jet engine
1928
1941 13
magnetic tape-recording
1898
1937 39
radar
1925
1934 9
radio
1900
1918 18
synthetic detergents
1886 42
television
1923
transistor
1948
1950 2
zipper
1891

15. 3. Situated in exogenous socio-technical landscape
Exogeneous backdrop
Slow-changing secular trends (demographics, macro-economics, ideology, climate change)

17. 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’)

18. 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

19. 3.1. Positive developments in (global) renewable electricity niches
World-wide growth in installed capacity of renewable electricity options (in GW): wind, solar-PV and bio-power

20. Most investments (cumulatively) in Europe (2004-2012), but 29% decrease in 2012
China single largest country investor
US: boom and bust pattern

21. New investment in renewable energy (excluding large hydro) (Frankfurt School, 2013): billion $

22. Cumulative world-wide investment ($ billion) per type (data from Frankfurt School, 2013)
Most investments in wind and solar-PV
Global investment decreased in 2012

23. 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)

24. Europe is global leader in ‘new’ renewable electricity
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)

25. Driving factors of positive niche-developments
Price/performance improvements in wind turbines and PV-modules (overproduction and dumping)
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

29. 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)

30. 4. Green stimulus packages (2009): $522 billion
Varying country commitments
- Korea + China
- UK low green stimulus

31. But also some weakening of drivers
Decline in public attention for climate change
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 ( )
d) EU ETS is not (yet) working: carbon price is low and variable

32. d) EU ETS carbon price: low, decreasing, fluctuating

33. 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

34. Positive: gas replacing coal in US (gradually)
Double edged sword
Positive: gas replacing coal in US (gradually)
US power generation (IEA, 2013)

35. 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

36. 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

37. Worldwide installed nuclear capacity (in GW(e))

38. Actual decrease since 2006 (Schneider and Froggatt, 2013)
- New nuclear expansion would compete with renewables
- Probably requires public subsidies (to cover risks)

39. 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%)

40. Coal-fired generation grew 45% between 2000 and 2010
Projected to keep growing in line with 6-degree climate change

41. Leads to ‘capture ready’ promise (contested)
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)

42. 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

43. 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)

44. 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

47. Transition pathways a. Technological substitution
b. Regime transformation (endogenous)
c. Regime reconfiguration
d. De-alignment and re-alignment

48. a. Technological substitution

49. b. Transformation pathway

50. c. Reconfiguration pathway

51. d. De-alignment and re-alignment

52. Two pronged policy strategy
1) Niche-level: Stimulate variety/innovation
- Long-term visions + short-term action (projects): learning-by-doing, network building
2) Regime-level: Tighten selection environment (taxes, regulations, incentives)

54. 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)

55. Different policy mixes and instruments
Command-and-control (top-down steering)
Market model (incentivize bottom up agents)
Policy networks (convening, orchestrating processes)
Governance instruments
Formal rules, regulations, laws
Financial incentives (subsidies, taxes)
Learning processes, projects/experiments, vision/scenario workshops, strategic conferences, public debates, platforms
Foundation scientific disciplines
Classic political science
Neo-classical economics
Sociology, innovation studies, neo-institutional political science

56. Niche-innovation initially carried by local/urban projects

57. Sequence of projects enables niche development trajectories (Geels/Raven, 2006)

58. Dynamic model of niche development (relations between mechanisms)