How Do LCD Innovations Differ?: Challenges and Specificities of Low Carbon Technologies and Energy Systems

How Do LCD Innovations Differ?: Challenges and Specificities of Low Carbon Technologies and Energy Systems

Rainer Walz (Fraunhofer Institut Systems and Innovation Research, Germany)
DOI: 10.4018/978-1-5225-0135-0.ch011
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Low Carbon Development (LCD) implies to reduce carbon emissions into the atmosphere and to foster inclusive development. This requires systemic innovations, which can lead to disruptive changes, and the build-up of capabilities to enhance the innovations. LCD offers opportunities to reduce energy costs and to export low-carbon solutions. Various specificities constitute a lock-in into the existing fossil fuel based energy system: technological specificities of grid based infrastructure systems, dependence on regulation to overcome market failures, and the political economy of the energy innovation system. There are also systemic reasons why decisions routines for energy related decisions adapt very slowly to new challenges. The empirical analysis indicates that there is considerable heterogeneity among the countries with regard to their starting positions to overcome the various obstacles and to build the comparative advantages which will enable them to supply the global markets with low carbon technologies.
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Low Carbon Development Challenges And Opportunities

Energy is not a typical consumption product, which consumers buy according to their taste. The demand for energy is derived from the basic needs which make access to energy services critical to inclusive growth. Bazilian et al. (2010) summarize the importance of access to energy services in the following way: “It is well understood that it is difficult to make advances on key dimensions of development (such as improved health, gender equality, wealth creation, and the advancement of peace and security) without access to energy services.”

It is estimated that currently almost 3 billion people rely on traditional biomass for cooking and heating, and about 1.5 billion have no access to electricity. However, there are estimations that these numbers will not change very much in absolute terms until 2030 (Bazilian et al. 2010). Thus, improving access to energy services has to be classified as a critical policy issue.

Key Terms in this Chapter

Specificities of LCD Innovation Systems: LCD innovation systems are typically more influenced by public needs and regulation than “traditional” sectoral or technological innovation systems. R&D-externalities, environmental externalities, and economic sector regulation lead to a triple regulatory challenge. Furthermore, energy related innovation systems show a high level of path dependency.

Energy Efficiency Paradox: Energy efficiency improvements very often pay-off in the short run even under existing economic framework conditions. Despite their high profitability, they are often not implemented; this is called the energy efficiency paradox. The reasons for the energy efficiency paradox are seen in institutional and organizational obstacles, information problems, and inflexibilities of adapting decisions routines to changing framework conditions.

Low Carbon Development (LCD): LCD requires to reduce carbon emissions into the atmosphere in order to mitigate global warming to a temperature increase of 2°C, and to simultaneously foster inclusive development.

Technical Innovation System: Innovation is a social process, which requires interaction between the different actors. The heuristics of systems of innovation provides for a systemic view of the innovation process. An innovation system consists of the actors, their networks and communications, and the institutional arrangements. The innovation system heuristic has been developed for national, regional, sectoral and technological systems.

Path Dependency Leading to Carbon Lock-In: Innovation paths show a cumulative pattern and are embedded in social development. Factors relevant for high path dependency of energy systems, also labeled as carbon lock-in, are co-evolution of technologies and institutions, but also technical systemness (dependence on a grid system), high capital intensity and asset durability, and uneven level playing fields of political economy.

Co-Evolution of Technical Innovation and Institutions: The innovation process along a technological trajectory is embedded in production of knowledge and socioeconomic development of institutions. The innovation process occurs along a technological trajectory: Selection processes push technological innovation, and institutional systems co-evolve and support the technological paradigm. Thus, a new technology has not only to compete against a traditional one, but against a system consisting of a traditional technology together with institutions which have been co-evolving around this technology.

Low Carbon Innovations: innovations which enable to reduce CO 2 -emissions. Low carbon innovations comprise very different technological fields, especially energy efficiency technologies, low carbon energy supply technologies and transport technologies. A circular economy and material efficiency reduces the demand for energy intensive materials, and indirectly lead to a decrease in CO 2 -emissions. The technological innovations have to be complemented by organizational and institutional innovations.

Multi-Level-Perspective (MLP): Heuristic which aims at explaining the process of substitution of a technological paradigm. MLP distinguishes three perspectives: landscape, regime and niche. The landscape represents the broader picture of socioeconomic system, the regime consists of the established technological paradigm. A radical alternative has to grow in a niche, before it is able to compete with the established paradigm.

Capabilities for LCD Innovations: Moving towards LCD require competences to develop and absorb low carbon solutions. Scientific and technical communities have been moving much closer together, and existing technologies must be adapted to local circumstances and permanently upgraded and improved (learning). Capabilities for LCD innovations resemble the competences to quickly diffuse them. Measuring technological capabilities can draw on the experience with innovation indicators (such as publication, patent or foreign trade indicators).

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