Governing the Energy Transition

Reality, Illusion or Necessity?

Geert Verbong, Derk Loorbach, Geert Verbong, Derk Loorbach

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136456626
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Industria energética

The Energy Transition, the inevitable shift away from cheap, centralized, largely fossil-based energy systems, is one of the core challenges of our time. This book provides a coherent and novel insight into the nature of this challenge and possible strategies to accelerate and guide such transitions. It brings together prominent European scholars and practitioners from the fields of energy transition research and governance to draw attention to the current complex dynamics in the energy domain, and offer elegant and provocative explanations for current crises and lock-ins. They identify multiple energy transition pathways that emerge and increasingly compete, and emphasize the need and possibilities for novel governance. By analysing the complexity of energy transition processes and the difficulties in shifting to sustainable pathways, this text questions the extent to which actually governing energy transitions is already reality, just an illusion, or a bare necessity.

1

Introduction

Geert Verbong and Derk Loorbach

1.1 Societal Challenges of the Energy Transition

On 14 August 2003, a blackout occurred in the Northeastern part of the US and in Lower Canada, causing, among other things, the normal flow of life to come to an abrupt standstill in New York City. Lots of people got stuck in elevators, the subway system halted and millions of New Yorkers came out into the streets, many of whom were forced to stay there for the night. Engineers managed to trace the origin of this blackout to Ohio: apparently, operators did not know how to deal with local disturbances and this caused several lines to get overloaded, which subsequently were switched off. The instability spread from one region to the next, resulting in the large-scale blackout (Schewe, 2007). Only a few weeks later, a major storm knocked down power lines near the Italian-Swiss border. Due to excessive loads on the remaining lines, officials decided to remove Italy from the European grid. Less than two minutes after this decision’s implementation, frequency instabilities caused a complete collapse of the Italian electricity system, virtually throwing Italy into darkness. In Rome, where the annual Notte Bianca festival was taking place, the power outage created chaos after the subway system stopped functioning, leaving thousands of festival visitors stranded. The death of at least four people was directly attributed to the power outage (Lagendijk, 2008).

Blackouts effectively demonstrate that without electricity the fabric of modern life immediately starts to disintegrate. Our modern society has become highly dependent on energy supply systems. We have become so used to a continuous and uninterrupted flow of electricity and other energy carriers that we only become aware of our dependency when a major disturbance occurs or becomes imaginable. In 2005 a controversy arose between Russia and Ukraine about natural gas and transit prices. When Russia cut off the gas supply to Ukraine on the first of January 2006, many West- European countries started to worry. Russia is one of the main suppliers of natural gas to this part of Europe, the Ukrainian pipelines serving as the main transport arteries. Although this particular controversy was settled within a couple of days, European governments had become painfully aware of this new dependency. That their concerns were justified became clear once again in January 2009, when a new dispute would cause a severe reduction of the supply of Russian gas (Pirani et al., 2010). Of course, the industrialized world has had to face disruptions of the energy supply before, the 1956 Suez crisis and the 1973 oil crisis being the best-known cases. Clearly, the uneven geographic distribution of energy resources has made energy supply systems vulnerable to political instability and turmoil, as well as to the strategic use of energy resources as a political weapon. Such events also have had a major impact on energy prices.

Another major challenge involves the finite nature of the earth’s fossil fuel reserves. At the same time when the control over oil fields was used as a strategic weapon in the early 1970s, the Limits to Growth report introduced the notion of the scarcity of fossil fuel resources and their future depletion to a large audience (Meadows, 1972). This report induced a frantic search for alternatives and ways to increase energy efficiency. The falling energy prices in the late 1980s temporarily eased the urgency of these policy goals, but the growing demand and the increasing efforts needed to maintain existing production fields or to find and develop new fields have put the scarcity of fossil fuels on top of the political agenda again. The output of many old fields is steadily declining. Some scientists argue that we have already passed the peak in oil production, whereas others, notably those with interests in the oil industry, tend to present more optimistic predictions (Bardi, 2009; Verbruggen, Marchobi, 2010). If this so-called Peak Oil debate will not be decided in the short term, all experts agree on the need for a transition to a different system of energy supply. The question is, however, which alternative pathways should be pursued and at which speed. That we are exploiting the earth’s limited resources in a highly unsustainable way has been generally acknowledged since the first oil crisis, but this awareness has become more prominent during the first decade of the twenty-first century, due to the growing concerns about climate change but also because of a steep rise of oil prices. From about the turn of the century, energy prices began to rise to levels above $140 per barrel (2008), followed by a rapid decline and a new, more gradual rise in the next year. Although energy rates are highly unpredictable, experts expect oil prices to be much more volatile in the nearby future (Jesse and Van der Linde, 2008).

The effects of higher energy prices have been highly illustrative for the interrelatedness of the divergent domains in society: higher fuel prices have put pressure on the transport system and contributed to a greatly intensified search for alternatives. One option, the substitution of oil and natural gas by biofuels, has meanwhile attracted a lot of negative attention, because the production of biofuels directly competes with the production of food. Although some organizations and politicians have argued that the production of biofuels has led to food shortages and high prices for basic staples, causing severe political disturbances in several regions (Rosegrant, 2008), the situation seems rather much more complex. For one thing, the demand for agricultural feedstock—largely used to feed cattle, pigs and chicken— has also increased substantially. The meat goes in particular to consumers in emerging markets such as China and India. In many ways these countries have adopted to the Western model of industrialization, based as it is on extensive use of fossil fuels, and a food pattern that includes daily consumption of meat as a major ingredient. Moreover, in the past few years, harvests in several countries were poor, which is to be attributed at least in part to shifts in regional climates that cause droughts and desertification in some parts of the world and flooding and destruction due to excessive rainfall in other parts. Increased agricultural production on a global scale has made this sector much more energy-intensive, both directly, through the use of machinery, and indirectly, due to the massive use of fertilizers. Fertilizers are produced from fossil fuels in an energy-intensive production process. Higher demand, higher energy prices and lower output inadvertently have led to higher food prices. Moreover, agricultural policies, such as those of the EU, tend to protect local farmers and markets. Closed markets in turn have made it very difficult for rural farmers in developing countries to sustain or improve their production, contributing to the massive urbanization that has occurred worldwide. This example underscores that processes of production and consumption have grown intricately linked on a global scale. There is at least one important lesson to be drawn from this story: we need an integral solution that takes the interconnections between the various social domains into account. Put differently: we need a systemic perspective on both the various problems involved and their solutions.

The rising pressure on our system of energy supply also follows from another effect of the way we have organized our system of energy supply. Evidence is mounting—even though it does not go uncontested—that the increasing levels of greenhouse gases (CO₂) contribute to climate changes worldwide. The International Panel on Climate Change (IPCC) has published extensive studies on the changes in the earth’s atmosphere and the consequences for the earth’s climates. The impacts will be dramatic, in particular for vulnerable regions in less developed countries, such as densely populated delta areas or small Pacific islands. Levels of CO₂ in the atmosphere have been rising since the late eighteenth century, with a marked acceleration after the Second World War. To most experts, the cause of this rise is quite obvious: the Industrial Revolution, which started in England and subsequently spread across the world, marked a dramatic change in human production and consumption patterns. Instead of relying on organic sources of energy (wood, wastes, horsepower), manufacturing began to rely increasingly on energy produced from coal and, later on, oil and gas. The same was true of professional activities in the sphere of farming, crafts and office work (electrical rather than manual devices), as well as in the sphere of mobility and domestic consumption (such as energy for heating houses). The ensuing increase of the concentrations of greenhouse gases in the atmosphere is inherently linked to our system of energy supply, as the combustion of fossil fuels not only produces useful energy but also CO₂. Energy use accounts for about 75 percent of all emissions, or, in the words of David Mackay: “The climate change problem is principally an energy problem” (2009: 16).

Finally, although the energy crisis and the economic crisis of the 1970s produced a temporary slowdown, a new phase of exponential growth in energy consumption set in during the 1990s, now fueled by rapid economic growth in China, India and other emerging economies. This has in fact launched a new global race for securing strategic reserves of oil and natural gas—but also other natural resources, such as particular precious metals—in which both old and new players participate.

The conclusion to be drawn from the challenges we face in relation to our dependency on our energy supply system—its vulnerability to political instabilities and wars, its highly undesirable side-effects because of climate change, its ultimate unsustainability on account of resources depletion—seems inevitable: we need to change drastically the way we generate and consume energy. In the updated version of the EU Energy strategy, the European Commission has stressed that “Energy is the life blood of our society” (European Commission, 2010). Our energy supply system is a critical infrastructure indeed, because all sectors in our society—including transport and mobility, housing, food production and healthcare—depend on a reliable and affordable system of energy supply. Furthermore, access to energy is also a condition for human development. Many people do not have access to reliable and affordable energy; in India over 400 million people still depend on traditional biomass. Such a transition, therefore, implies a task that is even more daunting: “The energy challenge is one of the greatest tests our society has to face. It will take decades to steer our energy systems onto a more secure and sustainable path” (European Commission, 2010). This also calls for huge investments in energy generation and infrastructure. Still, the European Commission is not very positive on the progress made so far: the existing strategy seems inadequate for reaching the long-term goals (European Commission, 2010).

For several decades now we know that somehow we need to change our system of energy supply and consumption. But despite the many efforts and resources aimed at reducing our energy consumption, diversifying our energy sources and developing alternative energy technologies, we are still highly dependent on fossil fuels. Even worse, the general expectation is that energy demand will increase substantially and that we have to rely on the use of fossil fuels to meet this demand until way into the twenty-first century. Why, then, is it so difficult to change this system?

In this respect, many would immediately refer to the convenience of fossil fuels. Coal, oil and gas contain energy in a quite condensed form. Generation of the same amount of energy based on wind energy, biomass, or solar energy (PV or CSP) requires large surface areas because of the much lower energy density of the energy flows. As a result, we have become highly addicted to the continuous supply of (relatively) inexpensive fossil fuels. This also explains that the need and the options for change are highly contested almost by definition. Because there is a multiplicity of problems related to our current energy system, as outlined above, while each problem comes with a variety of proposed alternatives, it is impossible to address the whole issue from a single perspective or from the angle of one actor.

The debate on CO₂ emissions—and the need to reduce them—offers a case in point. If the media debate on climate change has become polarized by contributions of the climate skeptics, this also applies to the discussion on alternatives. Some experts have argued that we need to implement a radical shift toward full-scale renewables, but other experts argue that we can sustain fossil fuel production if we successfully implement Carbon Capture and Storage (CCS). Again others have claimed that the diffusion of renewables will involve too slow a process and that they will not be able to meet the energy demand, implying that we need to invest in nuclear power to bridge the time needed for switching to fully sustainable systems of energy supply. Basically, these different pathways, proposed by highly heterogeneous actor groups and backed by different interests and lobby groups, are mutually exclusive. Changing our prevailing energy systems also involves the challenge of dealing with a society in which power and politics do not always follow a scientific logic and/or adopt the best alternatives available.

A significant obstacle, too, is that our current systems of energy supply have co-evolved with modern society. Our society has fully adapted to the fossil fuel-based energy system, which in turn is deeply entrenched in all social domains and practices. The vested interests are enormous, ranging from those of the oil producing countries and the giant oil companies to those of consumers filling their cars with gasoline or turning on the air-conditioning of their home to regulate the indoor climate. Changing the ways in which we provide and organize the supply and usage of energy therefore presents a host of major challenges: we have become completely locked-in in our current fossil fuel-based and centralized systems. Because energy systems are critical to all domains of society, this adds greatly to the complexity of the challenge. There are no simple solutions because every major intervention in the energy domain may produce a chain of unexpected and potentially unwanted reactions in other domains.

1.2 Understanding the Energy Transition

Our current energy systems are deeply entrenched in our economy, consumption patterns, regulations and infrastructure. The diverse and various problems described above, in combination with the increasing vulnerability of our energy systems, could possibly lead to more fundamental and non-linear changes. In the dynamics involved new alternatives may start to compete, dominant options may begin to experience pressures, and tensions may increase between different actor strategies, powers and institutions. The uncertainties around many of these developments are high, which is one of the reasons for different actors to make different assessments regarding the urgency of the problem and the desired direction. Understanding the past, present and possible future dynamics requires a perspective covering a sustained, long-term period; considering interactions at and between different levels of scale, actors and domains; and enabling multi- and interdisciplinary research. The transition approach, as the central point of departure in this book, in fact provides such perspective.

Scholars from several disciplines have studied transitions as a phenomenon. Originally, the term “transition” was used to describe the “phase transitions” of substances going from solid to liquid to gas, but since then the concept has been applied to a wide variety of different types of systems to describe shifts between qualitatively different states. The shift is not a linear one but a chaotic and non-linear process of change. This model is called “punctuated equilibrium” (Eldredge and Gould, 1972; Gould and Eldredge, 1977), and it has been applied in ecology, psychology, technology studies, economics and demography (Gersick, 1991). The sociological concept of transition has its roots in population dynamics. Davis (Davis, 1945) describes the demographic transition in which initially both birth rates and death rates are relatively high. Via a nonlinear drop in these rates, a new stable situation is reached with relatively low birth and death rates.

During the 1990s, this concept found its way into research of socio-technical innovation and sustainability (Rip and Kemp, 1998; Schot, Geels, Rotmans, Kemp, Schot et al., 1998; Rotmans, 2000; Rotmans, Kemp et al., 2001). The coupling of the socio-technical research perspective on transitions with the governance and sustainability perspective on non-linear systemic societal change laid the foundation for the new field of Transition Studies (Rotmans, Grin et al., 2004). This new field of research investigates transition processes from a variety of system-perspectives: socio-technical systems (Kemp, Schot et al., 1998; Geels, 2002; Berkhout, 2004), innovation systems (Smits, 2004) and complex, adaptive systems (Rotmans, Kemp et al., 2001; Loorbach, 2004; De Haan, 2006; Van der Brugge, 2009).

In the field of transition studies, transitions refer to large-scale transformations within society or important subsystems during which the structure of the societal system fundamentally changes. Examples are the demographic transition and the transitions from an industrial to a service economy, from extensive to intensive agriculture, and from horse-and-carriage to individual car-mobility (Geels, 2002). Transitions comprise the shift of a relative stable system (dynamic equilibrium) that undergoes a period of relatively rapid change, during which the system reorganizes irreversibly into a new (stable) system again (Rotmans, 1994). Transitions have the following main characteristics (Grin, Rotmans and Schot, 2010):

• Transitions are co-evolutionary processes that require multiple changes in socio-technical configurations.
• Transitions are multi-actor processes, involving a large variety of social groups.
• Transitions are radical shifts (in scope) from one configuration to another.
• Transitions are long-term processes on a macro-level.

A transition is a complex process with a huge number of driving factors and impacts that involves co-evolving markets, networks, institutions, technologies, policies, individual behavior and autonomous trends.

From a scientific perspective, the concept of transition integrates views, approaches and methodologies from an array of different sub-disciplines. In the past, scholars from different disciplines—such as climate change research, innovation studies, sustainability science, technology studies and policy sciences—have often run up against quite similar problems. All these disciplines, for example, deal with issues of multi-level dynamics, multi-actor networks, radical innovation and uncertainty, and the impossibility of full control. In this sense, the transition concept does not only fit very well in the new emerging scientific discourse around complex societal change processes; it also provides focus and direction for this debate by bringing these different schools of thought together. The transition concept thus provides a framework for scientific integration, but it also offers a common language for interdisciplinary debate. It triggers discussions and new thoughts about the dynamics of transitions and their governance as much as it evokes ideas and experiments regarding their implementation.

Smith, Voss and Grin (2010) argue that innovation in the context of sustainable development calls for a re-assessment of the process of technological change. To understand the challenge of innovation processes that can bring about transformations in socio-technical systems in favor of sustainable development, a broader analytical perspective is needed. The Multi-Level Perspective on socio-technical transitions (MLP) offers such a framework (Rip and Kemp, 1998; Geels, 2002; Geels and Schot, 2007; Markard and Truffer, 2008). The MLP, which has been proposed and developed by several scholars in Transition Studies, is one of the central notions in this book (along with transition management).

The MLP (see Figure 1.1) conceptualizes transformations as the result of processes occurring at and between three interrelated levels: niches, regimes and landscape. Socio-technical regimes are the dominant rule-sets supported by incumbent social networks and, as such, embedded in dominant artifacts and prevailing infrastructures. They are considered dynamically stable: regime change is of an incremental nature and aimed at strengthening the regime, rather than challenging it. The socio-technical landscape is considered exogenous and provides the environment in which regimes evolve. It consists of features such as the geographical position of the land, climate and available resources, as well as softer features such as political constellations...