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Summary Energy Transition & Innovation
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Summary of the Energy Transition & Innovation course for all FEB Masters
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Lecture 1 - IntroductionsPolitics in the US energy transition: Case studies of solar, wind, biofuels and electric
vehicles policy - Stokes & Breetz, 2018
We identify four broad patterns in the politics of renewable energy policymaking:
1. First, policymakers and incumbent industries often underestimated new energy
technologies.
2. Second, omnibus legislation tended to provide key political opportunities for renewable
policies.
3. Third, once enacted, supportive policies were often sustained through incremental
extensions, despite moments of retrenchment due to expiring provisions
4. Fourth, as low-carbon energy technologies matured and began threatening incumbent
fossil fuel industries, they became more politically contentious. We conclude that
sustained political support for these technologies through long-term advocacy coalitions
will be necessary to complete the renewable energy transition.
Example of net-metering
But given the small scale of the solar PV industry at the time and the strict limits in the bill, these
arguments did not resonate. The bill passed the California Senate 25-7 and the Assembly 57-4.
All the Democrats in both houses and 75% of Republicans supported the bill. It was remarkable
that these poorly funded renewable energy advocates, in a coalition with environmental groups
and consumer advocates, were able to pass a net metering bill in California. In part, it benefitted
from simple logic: equal compensation for power bought and sold struck legislators as fair.
Further, it was easy to implement and would not cost the state money. Finally, the utilities were
very busy with political battles over deregulation by 1995, making NEM a minor issue by
comparison. In short, their attention was divided, and while IOUs voiced opposition, they did not
prioritize blocking this bill, given it was far less consequential than electricity restructuring.
Example of federal investment tax credit
The solar ITC was only meant to last for two years, expiring at the end of 2007. However, in
2006, the policy was extended one additional year. During the financial crisis in 2008, mere
months before the ITC would have expired, the policy was extended for another eight years. In
this way, the financial crisis created another policy window, allowing advocates to frame their
preferred policies as job creation and economic stimulus measures. The policy would have
expired again at the end of 2016—but by then the ITC and NEM policies had combined to
create new actors: solar leasing companies. Just before the credit would have expired once
again, the now much larger solar industry successfully lobbied for a long-term extension through
The Consolidated Appropriations Act of 2015. Currently, the ITC is scheduled to expire in 2021.
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,Example of the renewable fuel standard (RFS)
The regulation was revised only two years later. Rising oil prices and protracted war in the
Middle East deepened the public's concern with oil dependence. While Republicans saw the
issue as addressing national security, Democrats were more focused on clean fuels.
Electric vehicles
When Congress took up vehicles again in the Energy Policy Act of 1992, the emphasis shifted
from regulatory “sticks” to voluntary “carrots,” including tax incentives.
Discussion
In addition to these general similarities, the comparative case studies enable us to identify
common patterns in policy decision-making. Here we describe four patterns in the politics of
policy enactment and evolution and discuss how these contribute to the existing literature on the
politics of energy transitions.
Immature technology is underestimated or misunderstood
In the early stages of policy adoption, there is high uncertainty, and immature renewable energy
technologies’ potential are often poorly understood. Renewable technologies tend to be
underestimated, perhaps because they involve new entrants and initially high costs. On the
other hand, emerging technologies may be overestimated due to over-promising by investors
and technology developers. Either way, rather than being a barrier to policymaking, the
uncertainty around new technologies often helped facilitate initial policy enactment.
In multiple cases, incumbents underestimated the disruption that new technologies would pose
to their business models, such that they choose not to expend their political capital on fighting
these new entrants. This helps explain why “regime resistance” tended to lag the initial policy
enactment, especially in the US where renewable policies are simply “layered” onto existing
policy.
In other cases, policymakers overestimated the speed with which new technologies could be
commercialized, or underestimated the cost. This facilitated the enactment of overambitious
mandates at a very early stage of technology development (such as EV in California).
Omnibus energy legislation provides windows of opportunity and political cover
Our cases largely agree with the conventional wisdom that high profile events–including spikes
or crashes in commodity markets, acute environmental problems, and the financial crisis–drive
the energy policy agenda in the U.S.. These crises thrust energy onto the agenda and created
windows of opportunity for major policy reforms. Our cases further show that, during these
windows, renewable energy provisions were often added to complex energy bills and policy
packages. The omnibus bills provided a political vehicle for renewable energy policies that were
not salient or popular enough to independently make it onto the agenda. Moreover, the high
profile, politically controversial items attracted much of the political attention and lobbying,
providing political cover for lower-profile renewable provisions.
Thus, unlike in many European countries where renewable advocates pushed for
comprehensive energy transition programs, in the US important renewable energy policies
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,started off as minor additions within crisis-driven omnibus energy bills. This pattern, which might
be called “policy opportunism,” may be one reason that energy transition policies in the US are
pursued piecemeal through institutional layering, and also helps explain why these policies can
be initially enacted without major resistance.
Policy incrementalism
Once initial policies were enacted and implemented, renewable energy policies tended to grow
incrementally. At both the state and federal level, additional policies were layered on to help
facilitate growth in these sectors.
Many of the policies, particularly the tax policies but also the ZEV mandate, had sunset
provisions or expiration dates. In most cases, these policies were extended over time. One
reason is that by the time they were to expire, new entrant low-carbon industries had grown and
gained political power.
Increasing politicization as mature technology threatens incumbents
After an initial period of policy incrementalism, renewable energy policies often became more
controversial over time. New technologies grew to the extent that they threatened incumbents,
giving rise to more active regime resistance. The growing scale of renewable deployment also
led to escalating costs. Consequently, policies driving the US energy transition become more
controversial, with opponent interest groups, fiscal conservatives, and consumer groups seeking
to repeal policies. To understand the politics of energy transition policies, we therefore need to
consider how political support evolves with technological maturity, scale of deployment, and
policy costs.
Conclusion
Across both sectors (energy & transportation), we found similar sequences of policymaking.
Initially, these technologies’ potential was often underestimated or misunderstood. They
received important boosts when policies to drive these technologies were packaged as part of
complex, omnibus energy bills, which provided opportunities for enactment with reduced
political scrutiny. After these policies were implemented, they were incrementally revised. In
some cases, the policies were weakened or delayed in response to challenges with technology
deployment. But in many cases, the policies were repeatedly expanded and extended beyond
the original targets. Over time, as renewable technologies scaled up and policy costs escalated,
the policies often became more politically controversial. Attacks from incumbent opponents are
growing, creating partisan and public opinion polarization on renewable energy. These
dynamics are not confined to the US. As the energy transition has accelerated around the world,
political backlash has grown.
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, The ongoing energy transition: Lessons from a socio-technical, multi-level analysis of
the Dutch electricity system (1960–2004) - Verbong & Geels, 2006
Given our interest in transitions, we use the multi-level perspective (MLP), which looks at
interactions between niche-innovations and existing regimes, situated in a broader environment.
The MLP stems from evolutionary economics and sociology of technology.
The socio-technical regime forms the meso-level in the MLP. It consists of three interlinked
dimensions:
(a) network of actors and social groups; in the electricity regime important actors are utilities, the
Ministry of Economic Affairs, large industrial users, and households;
(b) formal, normative and cognitive rules that guide the activities of actors; examples of formal
rules are regulations, standards, laws; examples of cognitive rules are belief systems, problem
agenda’s, guiding principles, search heuristics; examples of normative rules are role
relationships, behavioural norms,
(c) material and technical elements; in the case of electricity, these include resources, grid,
generation plants, etc.
Existing socio-technical regimes are characterised by path dependence and lock-in, resulting
from stabilising mechanisms on the three dimensions:
(a) incumbent actors have vested interests; social networks represent ‘organizational capital’,
(b) regulations and standards may stabilise regimes; cognitive routines may blind actors to
developments outside their focus;
(c) existing machines and infrastructures stabilise through sunk investments and technical
complementarities between components.
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