Technological trajectories in low carbon innovation in China, Europe and India
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1 Technological trajectories in low carbon innovation in China, Europe and India Technological Trajectories Conference Bonn, 7 April 2014 Tilman Altenburg, DIE 2008 Deutsches Institut für Entwicklungspolitik
2 What motivated our research? 2008 Deutsches Institut für Entwicklungspolitik 2
3 Technological innovation key for climate change mitigation Does the (expected) shift to a low carbon technological paradigm lead to path disruption or incremental reform of existing trajectories? Will there be major reshuffles and power shifts within and across countries? Low carbon pathways reflect country-specific priorities and political frameworks: Will this create divergence? Europe and emerging Asia among the most committed: Do Asian latecomers exploit leapfrogging opportunities? Can China and India challenge old industrialised Europe? 2008 Deutsches Institut für Entwicklungspolitik 3
4 Re Research questions: Main: How and why do low carbon technological trajectories differ between China, India and Europe? Why is the relevant? Climate change mitigation: Under uncertainty, experimenting with many options better than early lock-in of one dominant design National competitiveness and wealth creation: New technological paradigm devalues old assets => opportunities for newcomers, threatens incumbents 2008 Deutsches Institut für Entwicklungspolitik 4
5 Re Research questions: Main: How and why do low carbon technological trajectories differ between China, India and Europe? Secondary: What does this imply for international competition: Can emerging Asian (here: China and India) leapfrog and challenge the technological leadership of old industrialised economies (here: Germany, France, Denmark)? 2008 Deutsches Institut für Entwicklungspolitik 5
6 Electric vehicles China CHEN Ling, Doris Fischer, SHEN Qunhong, YANG Wenhui Electric vehicles India Chaudhary, Ankur Electric vehicles France Schamp, Eike Electric vehicles Germany Altenburg, Tilman Wind turbines China DAI, Yixin, Yuan ZHOU, Di XIA, Mengyu DING and Lan XUE Wind turbines India Narain, Ankita, Ankur Chaudhary and Chetan Krishna Wind turbines Germany and Denmark Lema, Rasmus, Johan Nordensvärd, Frauke Urban and Wilfried Lütkenhorst Lessons for technology collaboration Bhasin, Shikha 2008 Deutsches Institut für Entwicklungspolitik 6
7 Collaborative research Joint development of research agenda Research teams even doing interviews together Publications One Special issue published: Innovation and Development Eight Discussion papers (finalised /almost finalised) Special issue in preparation: Science and Public Policy 2008 Deutsches Institut für Entwicklungspolitik 7
8 Conceptual underpinnings 1: Technological trajectories, divergence and convergence 2008 Deutsches Institut für Entwicklungspolitik 8
9 1. Technologies & institutions co-evolve in historically and spatially embedded processes 2. Early choices reduce options at a later stage: path dependency, lock-in 3. Different initial conditions across time and space give rise to contextspecific trajectories 4. Dominant designs often emerge as technologies and markets mature in a globalising economy but path dependency /lock-in are continuously challenged by agency (Schumpeter) => path disruption and path creation 6. Dialectic process of path stabilization/ lock-in and path disruption/ new creation 7. Experimentation and alternative pathways likely to be associated with paradigms shifts and other market shake-ups, such as entry of emerging Asia 2008 Deutsches Institut für Entwicklungspolitik 9
10 Conceptual underpinnings 2: What is special about low carbon technological innovation (and why divergence of trajectories is particularly likely) 2008 Deutsches Institut für Entwicklungspolitik 10
11 Low carbon technologies have four specificities: 1. Need to internalise environmental costs => politically defined second-best markets Technology development does not reflect market prices (externalization of climate costs)... depends on subsidies and socially constructed, artificial markets (ETS, RPO, CDM...)... Technological priorities and ways market are constructed differ across societies Deutsches Institut für Entwicklungspolitik 11
12 2. Unprecedented urgency and scale of low carbon transformation => speed up policies under uncertainty To avoid > 2 C global warming, industrialised countries need to reduce emissions by 80-95% in 2050 relative to Delays make it more difficult and costly. Tipping points. Cost of current rate of global warming in 2050: 14% GDP (OECD 2012) Rapid replacement of carbon-intensive technologies => Proactive phasing out & deployment of clean alternatives 2008 Deutsches Institut für Entwicklungspolitik 12
13 3. Political legitimacy created via co-benefits (jobs, protect competitiveness of incumbents, exploit leapfrogging opportunities, energy security, health) and not primarily via decarbonisation narrative => emergence of different coalitions of change Policy frameworks designed in function of the expected cobenefit => different priorities and policies 2008 Deutsches Institut für Entwicklungspolitik 13
14 Mitigation Different policy priorities of countries Country A Competitiveness Poverty / jobs Country B Energy security 2008 Deutsches Institut für Entwicklungspolitik 14
15 4. Systemic character of low carbon transformations requires deeper government intervention What needs to changes are not some artefacts but systems: energy system, transport system, landuse systems implies deep oordination and information failures... In sum: all four specificities call for social consensus about national transformation projects to be moderated and implemented through non-market governance national differences play out strongly! 2008 Deutsches Institut für Entwicklungspolitik 15
16 Regulatory standards (here: admissible fleet emissions) drive technology choice McKinsey 2011: Boost. Transforming the powertrain. p Deutsches Institut für Entwicklungspolitik 16
17 Conceptual underpinnings 3: Old industrialised European powers vs. emerging (why many other differences in initial conditions matter) 2008 Deutsches Institut für Entwicklungspolitik 17
18 Comparing old industrialised Europe with emerging Asia (China &India) interesting, different initial conditions: Expanding home markets in China and India, contraction in Europe Sophisticated consumers mainly in Europe, emerging consuming middle classes in China India, demand simpler goods but economies of scale More established innovation systems & more related variety in Europe Different strategies for technology adoption. In emerging Asia huge role for FDI, M&A, return migration, tapping into OECD-IS Energy security valued higher in Asia than carbon emissions... Lower labour costs in Asia..... But differences also within regions: Concepts of Industrial and Innovation Policy more state-led in China and France than Germany and India... Financial power in China > India, and Germany > France Deutsches Institut für Entwicklungspolitik 18
19 Do different initial conditions lead to different patterns of technological specialization? If so, are technological trajectories in emerging Asia... just transitory second-best solutions?... or frugal innovations with non-oecd market potential?... or patterns of national specialisation that will evenually also win over OECD markets? 2008 Deutsches Institut für Entwicklungspolitik 19
20 We hope you are motivated to learn more! 2008 Deutsches Institut für Entwicklungspolitik 20
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