how do lcd innovation differ: specificities of low carbon technologies and energy systems
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How do LCD innovation differ: specificities of low carbon technologies and energy systems. Globelics Seminar: Learning, Innovation and Low Carbon Development, Copenhagen, April 4-5, 2013. Rainer Walz Fraunhofer Institute for System and Innovation Research ISI Karlsruhe, Germany. Content. - PowerPoint PPT PresentationTRANSCRIPT
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G l o b e l i c s S e m i n a r : Le a rn i n g , I n n o v a t i o n a n d Lo w C a r b o n D e v e l o p m e n t , C o p e n h a g e n , A p r i l 4 - 5 , 2 0 1 3
HOW DO LCD INNOVATION DIFFER: SPECIF IC IT IES OF LOW CARBON
TECHNOLOGIES AND ENERGY SYSTEMS
Rainer Walz
Fraunhofer Institute for System and Innovation Research ISI
Karlsruhe, Germany
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Techno-economic specificities of energy and low carbon technologies
forms of co-evolution high importance of regulation structure of actors and ownership, and political economy The “energy efficiency paradox” and low speed of adapting
routines
Content
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Low carbon technologies low carbon energy supply
renewable energy carbon capture and storage (CCS)
energy efficiency buildings and appliances cross cutting and process specific
industrial technologies
Transportation and mobility low carbon vehicles and fuels modal shift towards rail and ships
material efficiency recycling material efficient products and processes
energy systems
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Techno-economic characteristics
high(er) capital intensity energy supply and related infrastructure energy efficient technologies compared to low
efficient technologies high asset durability
energy supply and related infrastructure buildings, some industrial technologies
Consequences high path dependency, because of limited opportunity for re-
investment capital availability a critical factor
asset durability coal fired power stations: 40-50 a
specific investment power stations:1000 € /kW for coal power plant3000 €/kW wind turbinefor comparison: installed capacity Germany =170 GW, China =1000 GW
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technological trajectory
beginning: many different concepts, until dominant design emerges
consolidation, economies of scale, incremental innovations
co-evolution: institutions are adapted, path dependency increases
lower innovation dynamics, competition with new technological paradigmthis kind of co-evolution not specific for LCD
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Co-evolution in a multi-level perspectivelow carbon innovation
specific co-evolution between
ecological system and technological system changing norms and values
on landscape level interaction with
technologies (e.g. emissions, environmental effects)
technological co-evolution due to systemness of electricity supply: niche and regime must co-evolve niche requires electricity
grid, which has to be adapted
meeting demand requires mixture of existing capacity and growing niche of renewables
systemness very high for fluctuating renewable supply
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Triple Regulatory Challenge 1st regulatory challenge (not LCD specific): government policies with
regard to R&D 2nd regulatory challenge: dealing with environmental externality
rationale for LCD are lower external costs without environmental policy only limited demand specificity: speed and direction of innovation
depends on governmental policy 3rd regulatory challenge
grid based infrastructure forms monopolistic bottleneck access and adaptation of grid key for renewables regulation of public utilities key for renewables and energy efficiency
(pricing, smart grids) different regulatory arenas must be integrated to enhance innovation
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Structure of actors and political economy Public utilities
regulated in some countries publicly owned=> impact on innovation behaviour?
other fossil fuel suppliers large companies, some multinationals some publicly owned
companies active in low carbon innovation first movers very often newcomers, SME followers sometimes spin-offs from
larger companies importance of NGOs, community groups for LCD
political economy of global warming: intertemporal and global externality!
powerful actors, very well integrated into power structure
actors less integrated into established power structure
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Areas most affected by climate change
degradation of water resources
increase in flooding
Reduction of agricultural output
migration
Main areas effected
Different constellations of conflict:
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Innovation system of low carbon technologies
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Demand for low carbon energy technologies
Public utility regulation
Inte
rnat
iona
l tec
hnol
ogy
trade
/ el
ectri
city
con
sum
ers
(inte
rnat
iona
l) po
licie
s
General framework conditions for innovations
Research System
Suppliers of technology
R&D Policy
Policy-coordi-nation
Environmental regulation
Context factors for policy design
and impacts
Transmission and distribution
Investors, financial sector
Conventional generation
Market Regulation
consumers and stakeholders
Environmental problemsresource availability
Industrial policy
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Energy Efficiency Paradox high path dependency and lock in into fossil fuel supply good
explanation for problems for renewables energy efficiency
can be better adapted to existing system, is, by and large, even more economical than some forms of
renewables, but seems to be much less dynamic than renewables
explanation based on perception of incentives information asymmetries, energy not visible part of product more emphasis on purchase price than on total cost of ownership
explanations with slow changing routines routines which are not tested every day are slower to be changed routines which are not part of key business are slower to be changed uncertainty reduces speed of change in routines energy issues are not part of key business, have to be decided on
very often on a irregular basis, and are shaped by historic experience of ups and downs of prices
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Summary and conclusions energy is a basic need, huge pressure to fulfill demand techno-economic specificities and co-evolution support high path
dependency => is carbon lock in less strong in the South? Opportunity for leapfrogging?
regulation a key factor integration of regulatory arenas, long-term policy commitment involvement of many actors intertemporal and global externality problem => new mission oriented approach beyond traditional “man to the
moon” projects=> need for new international cooperation schemes
political economy skewed in favor of fossil fuel incumbents => need that winners link up with NGOs
how does specific structure of actors affect innovation dynamics=> we need innovation studies of public dominated sectors
energy efficiency not main business of enterprises, or key product features=> need to study innovation process of such products
What are the economic opportunities for different countries=> connect to research on first mover early follower research
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Thank you very much for your
attention
Address further questions to:Rainer [email protected]
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Negative power price spikes
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Intertemporal marginal generating costs increasing or
decreasing capacity from existing power plant increases costs
inflexible demand: opportunity costs of taking off line (start-up costs, loss of revenue in subsequent time periods)
negative electricity prices can be profitable for inflexible supply
high supply from renewables plus low demand make negative power spikes more likely
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Technological advantage
traditional supply
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supply curve for energy efficiency
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spread in industrial energy intensity
0
0,1
0,2
0,3
0,4
0,5
0,6
0,7koe/$0
5
Energy intensity of industry (in constant US$) (2009)
Energy intensity of industry (in constant US$, purchasing power parities) (2009)
Source: ENERDATA Global Energy and CO2 Database
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specific energy consumption for steel production
Algeria
Argentina
Austria
Brazil
Chile
China
Egypt
FinlandGermany
India
Indonesia
Iran
Japan
Kazakhstan
Mexico
Pakistan
Philippines
Poland
Russia
Singapore
South Africa
South Korea
Taiwan, China
ThailandTunisia
Turkey
Ukraine
United States
Venezuela
All countries
Most efficient BOF
Most efficient EAF0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0,9
0% 20% 40% 60% 80% 100% 120%
toe/
t cru
de s
teel
share of electric steel in crude steel production
Distance to benchmark
Nigeria: 1.3 toe/t
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Cost share of industrial energy consum-ption in value added of manufacturing
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Technology characteristic eco-innovations
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20070
50
100
150
200
250
300
350
400
450
500
all patents energy supply energy efficiency material efficiencytransport water waste
Eco-innova-tions are medium-high tech tech-nologies
Dynamics differs between fields
above average patent dyna-mics for some fields