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What Does the Technological Shift Have in Store for the EU? Opportunities and Pitfalls for European Societies Read chapter Read first chapter

2021 | OriginalPaper | Chapter

3. Technological Discontinuities and the Climate Transition in Europe: The Role of Policy in Two Traditions of Economic Thinking

Authors : Staffan Jacobsson, Björn Sandén

Published in: The European Union and the Technology Shift

Publisher: Springer International Publishing

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Abstract

This chapter discusses how different analytical perspectives affect what policy interventions are deemed warranted and effective in supporting the industrial transformation required to reach climate neutrality. The development of wind and solar power over the last 40 years gives hope and provides useful examples of successful policies. However, the European Commission has for long opposed many of these policies, due to a narrow focus on market failures and static cost efficiency derived from a neoclassical economics perspective. Recent documents in the EU indicate a new focus on innovation and industrial change, which may enhance the EU’s ability to lead the climate transition. For this, a broader analytical perspective is required, such as the technological innovation systems approach, which stresses dynamic long-term efficiency, acknowledges the need for technology-specific policies, including market formation, and uses system weaknesses as guide to policy intervention.

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Footnotes
1
The case of Denmark is based on Karnøe (1990) and Karnøe and Garud (2012).
 
2
Initially, the market support consisted of a reduced tax and then guaranteed electricity price for investors in wind turbines.
 
3
The case of Germany is based on Bergek and Jacobsson (2003)
 
4
The case of solar cells is largely based on Jacobsson et al. (2004).
 
5
Already in 1999, the Commission argued for a deployment policy leading to static cost-effectiveness, that is that ‘the electricity is generated and sold at minimum costs’ (European Commission 1999).
 
6
The focus on cost-effectiveness and technology-neutrality continued after 2014. For example, in the Directive 2018/2001, the following was written (EU 2018, p. 94): ‘Directive (EU) 2015/1513 called on the Commission to submit, without delay, a comprehensive proposal for a cost-effective and technology-neutral post-2020 policy’.
 
7
The European Commission (2014b: 58) explained that technology-specific aid should not be granted for more than 5 per cent of the planned new electricity capacity from renewable energy sources per year, which, with the large capacity of new offshore wind farms, excluded a technology-specific market formation policy in Sweden.
 
8
One example is the EU Commission’s (2020a) Hydrogen Strategy where they write that (pp. 2 and 6) ‘today, the rapid cost decline of renewable energy, technological developments and the urgency to drastically reduce greenhouse emissions, are opening up new possibilities. The priority for the EU is to develop renewable hydrogen, produced using mainly wind and solar energy.’
 
9
The twins are ecological and digital transitions.
 
10
Creating markets is also emphasized in European Commission (2020a: 3): ‘Driving hydrogen development past the tipping point needs critical mass in investment, an enabling regulatory framework, new lead markets, sustained research and innovation into breakthrough technologies’.
 
11
An opening to more system-oriented approaches besides conventional economics is possibly indicated in European Commission (2019: 18): ‘Conventional approaches will not be sufficient. Emphasising experimentation, and working across sectors and disciplines, the EU’s research and innovation agenda will take the systemic approach needed to achieve the aims of the Green Deal’.
 
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Metadata
Title
Technological Discontinuities and the Climate Transition in Europe: The Role of Policy in Two Traditions of Economic Thinking
Authors
Staffan Jacobsson
Björn Sandén
Copyright Year
2021
Book
The European Union and the Technology Shift

Print ISBN: 978-3-030-63671-5

Electronic ISBN: 978-3-030-63672-2

Copyright Year: 2021

DOI
https://doi.org/10.1007/978-3-030-63672-2_3