This dissertation has examined drivers of low-carbon innovation that underlie the necessary and urgent transition towards a climate friendly energy system. It offers a perspective on key factors capable of speeding up low-carbon innovation in the energy sector so that it effectively contributes to climate change mitigation. The research presented in this dissertation is motivated by a combination of theoretical constructs and concepts from innovation studies and evolutionary, environmental and ecological economics. The underlying rationale is that innovation is essential for further development of low-carbon energy with the primary aim to reduce GHG emissions.
In order to contribute to the investigation on optimal policy design to support low-carbon innovation, Chapter 2 examined the formation of lead markets in the wind power industry in China, Germany and the USA. By developing an extended framework to analyse such formation, it has shown that lead market positions at the country level strongly benefit from national policy support. However, at odds with the original idea of conquering a stable leading advantage at the sector level, the findings indicate that competitive advantage tends to shift among countries and along the supply chain of the wind power industry. Due to the international nature of energy markets, the unavoidable interaction among industry players from different countries adds ‘investment leakage’ to the traditional risk of knowledge spillover involved in innovation. As shown by the rapid growth of the Chinese wind (and solar) manufacturing capacity, the benefit of investment in diffusion can shift to foreign countries. Indeed, the quick scaling-up of wind power capacity in Germany and the USA has largely benefited the Chinese industry. In addition, it has speeded up the consolidation of the
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global wind power industry, thereby reducing advantages of earlier (and more costly) investments in innovation, notably in other countries, as well as fostering a dominant design, which reduces technological diversity and may hinder further innovations and even lead to an early, undesirable lock-in.
The particular dynamics of low-carbon innovation are characterised by a strong impact of technology recombination as well as intra and inter-sectoral knowledge spillovers. This raises interest in the role of diversity for technological change in this realm. Chapter 3 was devoted to this. It studies the link between low-carbon innovation and diversity by developing a framework of nine indicators, covering technologies, markets and actors (countries and firms). This is then applied to the solar photovoltaic (PV) industry. Looking at the evolution of solar PV technologies for the years 2000-2010, the dominant trend was an increase of diversity in terms of patents, international markets, cost and pricing among the different technologies available. Such trajectory of increasing diversity was then contrasted with the fact that policy support has shown a lack of direct or specific incentives to stimulate an increase in the production of alternative solar PV technologies. This has important implications as diversity is key to keeping options open to be flexible and able to adapt to different economic and technological trajectories in the long run. Moreover, a higher diversity offers additional benefits to innovation by reducing the chance of lock-in into one technological option, and by fostering experimentation and spillovers. Hence, accounting for diversity as a relevant stimulus to technological change offers an important path to increase the effectiveness of policy support to low-carbon innovation.
The contribution of low-carbon innovation to climate change is highly dependent on the pace of technological change. Speeding up innovation is crucial since the transition to a low-carbon energy system needs to happen in the next decades. As a result, deepening the understanding of the knowledge dynamics underlying low-carbon innovation becomes essential. Chapter 4 offered a contribution to this literature by linking the development of scientific knowledge to the technological trajectory of wind turbines. In contrast to the dominant literature using patents as proxy for knowledge dynamics, this study makes a novel contribution by developing a new approach based on the analysis of scientific publications. A dataset based on bibliometric information was built up, using two algorithms for the analysis of citation networks which map the evolution of scientific knowledge underlying the technological trajectory of wind turbines. The results show a synchronous pattern between scientific research and wind turbine up-scaling. Moreover, the citation networks unravel an extended view of technology trajectory to highlight the importance of accessory technologies
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such as modelling and simulation. In addition, this study suggests that using scientific publications may entail a strong advantage compared to patents depending on the appropriability system around the technology studied. As the case of wind turbines has shown, secrecy agreements may reduce or even prevent patenting, but have less impact on publications.
Another challenge involved in speeding up low-carbon innovation is the problem of
‘path dependency’ in knowledge production. Mostly newly developed, low-carbon technologies strive to overcome the limitations imposed by a reduced knowledge base compared to the incumbent technologies. Hence the importance of external knowledge sources as a mechanism of accessing new knowledge in quick and costly efficient way.
Against this background, Chapter 5 analysed the results of a survey involving 508 research organisations to compare the impact of external knowledge sourcing on innovation in solar and wind power. The results show that the effect of external knowledge sources differs between sourcing strategies and technology fields. A broad knowledge search strategy drawing on a large number of external knowledge sources is found to be more suitable to innovation on solar power, while the intensive use of a more limited number of external sources is found to be more beneficial for wind power.Hence, optimising external knowledge search seems to involve a trade-off between perusing the largest number of sources available and deepening knowledge obtained from a reduced number of sources. Two main characteristics of the technology field are found to be relevant to establish the suitability of different knowledge sourcing strategies: technological turbulence and innovation novelty.
Highly turbulent technological environments and radical innovation by speeding up knowledge obsolescence tend to favour deeper knowledge sourcing, whereas a larger pool of knowledge sources is more suitable for stable technological environments and incremental innovation.
Finally, Chapter 6 had the aim to assess the current contribution of low-carbon innovation to GHG emissions reductions, a comparison is made between installed capacity and actual power generation of wind power in four countries that have led its diffusion during the last decade: namely, China, the United States, Germany and Spain. The results unravel a considerable mismatch between installed capacity and power generation for the case of wind power. Significant shares of untapped capacity of wind power generation are found for all countries studied. This suggest that relatively cheap opportunities to reduce GHG emissions are not seized. Comparing potential causing factors among the countries indicates the need to account for the risk of underutilisation of wind power capacity in decision making about, and
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policy support of, expanding capacity installations. Further innovation to create more efficient technologies (e.g. wind turbines, system operation techniques, wind forecast methods) as well as extended integration of wind power electricity into the (inter)national electricity system are key factors to improve wind power output.