Prof. Frank W. Geels Manchester Business School + King Abdulaziz University

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)* 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. Time lag between invention and innovation (Clark, Freeman, Soete, 1981)

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 • 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) Relative composition (%) of electricity in 2011

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 (2011-2012) • 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. 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. 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