The Dynamics of Sustainable Innovation Journeys

Frank Geels, Marko Hekkert, Staffan Jacobsson

• Publisher: Taylor & Francis
• Year: 2013
• Print ISBN: 9780415618663
• eBook ISBN: 9781317981732
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This book shows that sustainable development should be analysed and managed as an innovation journey in which social, technological, political and cultural dimensions become aligned. The 'journey' aspect captures the open and uncertain nature of sustainable developments and highlights the agency dimension, with actors navigating, negotiating, groping and struggling their way forward (and sometimes backward). The book addresses the following research questions: What are the key processes and micro-dynamics of innovation journeys? Which policy lessons can be drawn for managing sustainable innovation journeys? To conceptualize the multi-dimensional nature of innovation journeys the book draws on insights from industrial economics, evolutionary economics, sociology of technology, political science and cultural studies. The book develops several new conceptual frameworks that make different crossovers between these disciplines. These frameworks are empirically tested with case studies on biofuels, onshore wind power, low energy housing, photovoltaic solar cells, biomass and fuel cells. The empirical studies are also used to derive several robust lessons as to how policy makers can influence sustainable innovation journeys. This book was published as a special issue of Technology Analysis & Strategic Management.

The dynamics of sustainable innovation journeys

1. The contribution of innovation studies to the solution of persistent environmental problems

Since the 1970s, environmental problems have risen on the political agenda. Many environmental problems (such as water pollution, local air pollution, acid rain) have since been solved or substantially reduced by policies and incremental clean technologies (e.g. fuel gas desulphurisation in power plants, three-way catalytic converters in cars), but other problems have grown worse, e.g. climate change, loss of biodiversity, deforestation, depletion of fish stocks and of clean water supplies. The incremental approach is less likely to work with these problems. With regard to climate change, for instance, global CO₂ emissions must be cut by 80% by 2050 if the risks are to remain within acceptable limits (Stern 2006). It is difficult to achieve such cuts with incremental technical changes. Hence, more radical ‘green’ innovations are needed.

Although ‘green’ technologies with less CO₂ emissions have emerged, their further development and the transformation of (fossil-fuel based) energy system into more sustainable directions will require a massive effort. This effort is massive for three reasons. First, the global energy system is extremely large and growing rapidly. The global power production increased from 6000 TWh in 1973 to 17,000 TWh in 2004, and is expected to grow to 25,000–35,000 TWh in 2050. Even with fossil-fuel or nuclear technologies it will be difficult to meet this growing demand. To transform this expanding energy system into carbon neutral directions will require even more effort, including large investments in the creation of new industrial structures. Second, the time scale for these changes is relatively short. Historical studies show that large scale transformation processes often takes many decades to unfold (Carlsson and Jacobsson 1997; Geels 2002). The challenge is to stabilise atmospheric CO₂ concentrations in the next four decades (by 2050). This is difficult to achieve, because of timelags in the climate system. Analysts therefore estimate that we have a change window of about a decade to start reducing CO₂ emissions (Stern 2006). Giving the previously mentioned expansion of energy demand, this time period forms an unprecedented challenge. Third, ‘green’ innovations face several obstacles that hinder rapid diffusion. Schumpeter (1934, 86–87) already noted that most innovations with a substantial degree of novelty face such problems:

In the breast of one who wishes to do something new, the forces of habit rise up and bear witness against the embryonic project …. The reaction of the social environment against one who wishes to do something new, may manifest itself first of all in the existence of legal or political impediments. …. Any deviating conduct by a member of a social group is condemned. … Even a mere astonishment at the deviation … exercises a pressure on the individual.

Such obstacles are particularly large in the case of the energy system. Unruh (2000) therefore appropriately characterised the current situation as a ‘carbon lock-in’. We mention three prominent problems.

• (1) Initially, sustainable technologies tend to be more expensive and have lower performance (in mainstream dimensions) than existing technologies. Usually, market niches provide early footholds for radical innovations, with particular users accepting teething problems because the innovations offer advantages in that application domain. This mechanism is more complicated for ‘green’ innovations, because a clean environment is a collective good. ‘Green’ innovations provide benefits (reduced emissions) for society at large while costs are borne by individual users. The resulting (free rider) problems to form early niche markets hinder the innovation process (Jacobsson and Bergek 2004).
• (2) Uncertainties about future market and regulations also hinder the commitment of firms to the development of sustainable technologies. On the one hand, many large energy firms and car manufacturers do invest in ‘green’ technologies, because they recognise the climate change problem (e.g. Shell in hydrogen, Toyota in hybrid cars, Ford in fuel cell cars). On the other hand, they do not (yet) fully commit to these innovations, because of market uncertainties and fear of cannibalising their existing products. Many green innovations therefore remain on the shelf or are paraded only on demonstration shows. The continuation of uncertainties prevents firms from strong commitment to the development and marketing of ‘green’ innovations.
• (3) Existing technologies and sociotechnical systems are stabilised by lock-in mechanisms (Walker 2000; Unruh 2000). Long periods of dynamic increasing return (e.g. learning by doing and using, scale economies, network externalities) put them in advantageous positions. Standards, favourable regulations, sunk investments (in capital, competencies, social networks, infrastructures) and vested interests also provide existing technologies with stability. Subsidies (e.g. for coal), user lifestyles and behavioural patterns may provide further stability. Sustainable technologies may, therefore, face additional barriers when they have a ‘mis-match’ with aspects of existing systems (Freeman and Perez 1988). In sum, ‘green’ innovations do not compete with existing technologies on ‘level playing fields’.

Continuing on the above discussion, we conclude that three often mentioned response strategies to environmental problems are insufficient. We briefly discuss these strategies and then introduce the fourth approach, which is central to this special issue.

• (1) Neo-liberal strategies focus on ‘getting the prices right’. Neo-liberal thinkers argue that environmental problems lead to scarcity, which translates into higher prices, which will trigger changes in the behaviour of consumers (demand for ‘sustainable’ products) and firms (investments to develop these products). Market failures may occur for collective goods, which require governments to introduce measures that internalise external costs (e.g. taxes, tradeable emission permits). For some environmental problems and under certain conditions (rational agents, full information, perfect markets) this approach can be effective and efficient, but it is more problematic for radical innovations and transitions, which are characterised by uncertainty about technologies, user preferences, and market institutions. In such conditions, rational calculations are likely to be less prominent than search processes, power struggles, learning and negotiations. Neo-liberal approaches are also less effective when there are no level playing fields on which old and new technologies can compete or when existing systems are stabilised by lock-in mechanism. Also the development of radical innovations, which may take decades as this special issue shows, is under-addressed in neo-liberal approaches (which sometimes portray new technologies as ‘manna from heaven’, i.e. exogenous events). Price signals alone are unlikely to deliver the speed of change required for dealing with climate change (only dramatic price increases may achieve this; but it is politically unfeasible to achieve this through heavy taxation, as the UK fuel protests a few years ago indicate).
• (2) Ecological modernisation focuses on clean technology. This approach maintains a belief in core modernist principles such as science, technical progress, control, and economic growth. Instead of rejecting modernity, it wants reorientation into more sustainable directions (e.g. Mol 2001). Smart innovations and clean technologies are supposed to create win–win situations: continued economic growth and sustainable development. It rejects end-of-pipe solutions which only deal with effects, and shifts attention to sources such as industrial production processes, which need to be redesigned. Examples are process-integrated solutions, reuse and recycling, eco-efficiency, dematerialisation, closing of material loops (as in industrial ecology). Ecological modernisation introduces a welcome ‘supply-side’ perspective. Many critics, however, question its sufficiency for sustainable development and argue for more radical changes (e.g. Langhelle 2000; York, Van Driel, and Rosa 2003).
• (3) ‘Deep ecology’ and eco-centrist approaches focus on ‘green values’ and behavioural change. These approaches argue that environmental problems are fundamentally related to the values of modernity. These values should therefore be rejected and replaced with ‘deep green’ life styles and localism (Næss 1973; Katz, Rothenberg, and Light 2000). Less radical versions exist, which may propose community-based initiatives where villages or neighbourhoods collectively adopt, maintain and administer ‘green’ technologies (e.g. biogas plants, solar panels, wind turbines), encouraging each other to change behaviour, roles and responsibilities (see Walker and Devine-Wright 2008, for an overview). While this approach usefully highlights social innovations, its radical overtones and (sometimes) technophobia may restrict it to a niche activity.

While these three approaches offer useful elements with regard to problems such as climate change, they are partial and insufficient to bring about the required system changes. They are also fairly abstract, addressing sustainability as a general issue. This special issue elaborates on a fourth position, socio-technical transitions, which addresses changes at a more concrete sectoral or systems level (Rochracher 2001; Jacobsson and Bergek 2004; Smith, Stirling, and Berkhout 2005; Geels 2005; Hekkert et al. 2007). This fourth position sees sustainability problems as a formidable societal challenge, whose magnitude is comparable to hygiene and infectious disease problems in nineteenth century ‘Western’ countries. The latter were addressed through a hygienic transition, which involved technical changes in water supply, sewer systems, housing and food, as well as behavioural changes in washing, bathing, relieving oneself, and cooking, and institutional innovations in local government and service provision (Geels 2006). In analogy, dealing with environmental problems requires shifts to new transport systems, energy systems, food systems, etc. Such transitions not only entail new technologies, but also changes in markets, user practices, policy and cultural discourses, and governing institutions. This fourth position thus aims to overcome the narrow focus of the previous approaches on either markets, technology or behavioural change. Hence, it looks at dynamic interactions and co-evolution between these elements, which as shorthand are labelled ‘socio-technical’.

The socio-technical approach focuses on multiple actors and social groups, not only firms or consumers/markets. The appropriate analytical level is thus communities or organisational fields, which DiMaggio and Powell (1983, 148) define as:

those organizations that, in the aggregate, constitute a recognized area of institutional life: key suppliers, resource and product consumers, regulatory agencies, and other organizations that produce similar services or products. The virtue of this unit of analysis is that it directs our attention not simply to competing firms …, or to networks of organizations that actually interact, …, but to the totality of relevant actors.

Studied from an organisational field or community perspective (Van de Ven 1993), radical innovation implies not just the emergence of new knowledge and products, but also the creation of a new community, new networks and the rules/institutions that coordinate activities. Several terms have been advanced to emphasise heterogeneity, multi-dimensionality and co-evolution, e.g. ‘seamless webs’ (Hughes 1986), ‘techno-economic networks’ (Callon 1991), ‘technological systems’ (Carlsson and Stankiewicz 1991), ‘socio-technical ensembles’ (Bijker 1995), and ‘techno-institutional complex’ (Unruh 2000).

The multi-dimensionality of socio-technical change implies that sustainability transitions are complex processes. This special issue investigates these processes under the heading of ‘sustainable innovation journeys’. We use the term ‘innovation journey’ to capture the open and uncertain nature of radical technological change, which is full of search and exploration processes, twists and turns, etc.¹ The ‘journey’ aspect also highlights the agency dimension, with actors navigating, negotiating, and struggling their way forward (and sometimes backward as some articles will show). The term also indicates that a transition process can be characterised as a journey of which the final destination is not exactly known. There may be a sense of general direction (towards a sustainable society) but the precise journey changes as the traveller gains more knowledge and experience. We use the term ‘sustainable’ for two reasons. First, this special issue focuses on the dynamics of sustainable technologies, mainly in the energy domain, such as wind, solar and biopower, alternative fuels and low energy housing. Second, innovation journeys need to be sustained for long periods of time, often decades rather than years.

With regard to the four policy approaches discussed above, we observe that current sustainability debates are dominated by first and second position. This is unfortunate, in our view, because they are not appropriate for dealing with major environmental problems such as climate change and unlikely to bring about (with sufficient speed) the required structural changes and sustainability transitions. On these topics, innovation studies have important contributions to make to the debate, because of their insights in the dynamics of socio-technical change. These insights also have implications for the kinds of policy instruments that are considered in response to climate change. Economic instruments such as taxes, carbon trading, and R&D subsidies currently dominate. While these instruments are important for socio-technical transitions, innovation studies’ insights suggest additional policies that are related to networks, community building, visions, experiments/learning, etc. Socio-technical approaches refrain from simple policy recipes, because they highlight co-evolution, multi-dimensionality, complexity and multi-actor processes. They argue that constellations of policy instruments should vary, depending on specific challenges, opportunities and problems in sectors, technologies and social networks. While this message may be unpleasant for policy makers who hope for silver bullet solutions, we argue that a deeper understanding of socio-technical dynamics provides policy makers (and other actors) with a more solid base for policy interventions. This special issue aims to contribute to this deeper understanding and to provide insights into effective policy strategies.

Based on these considerations, the papers in this special issue are guided by the following questions:

• (1) What are the micro-dynamics of innovation journeys? What are key processes and how should they be conceptualised?
• (2) Which policy lessons can be drawn for managing sustainable innovation journeys?

With regard to the first question, we know that multiple disciplinary approaches and conceptual frameworks exist, some of which are used or elaborated in the different papers. Without aspiring to fully answer the first question, Section 2 briefly reflects on the reasons for this variety. That discussion also suggests that each disciplinary approach highlights some key processes and backgrounds others. More sophisticated frameworks therefore tend to arise from crossovers between approaches, something that all papers in the special issue practice. Building on this discussion, Section 3 not only introduces the papers, but also provides some tentative ideas on strengths and weaknesses of different frameworks.

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Table of contents

• Cover
• Title
• Copyright
• Contents
• 1. The dynamics of sustainable innovation journeys
• 2. Strategic niche management and sustainable innovation journeys: theory, findings, research agenda, and policy
• 3. Multi-niche analysis of dynamics and policies in Dutch renewable energy innovation journeys (1970-2006): hype-cycles, closed networks and technology-focused learning
• 4. 'Legitimation' and 'development of positive externalities': two key processes in the formation phase of technological innovation systems
• 5. Cumulative causation in biofuels development: a critical comparison of the Netherlands and Sweden
• 6. Discourse and innovation journeys: the case of low energy housing in the UK
• 7. Socio-political embedding of onshore wind power in the Netherlands and North Rhine-Westphalia
• Index