Energy: Roald A.A. Suurs, Marko P. Hekkert
Energy: Roald A.A. Suurs, Marko P. Hekkert
Energy: Roald A.A. Suurs, Marko P. Hekkert
Energy
journal homepage: www.elsevier.com/locate/energy
a r t i c l e in fo
abstract
Article history:
Received 9 November 2007
Available online 20 February 2009
The support of sustainable energy innovations has become a dominant topic on the political agenda of
many countries. Providing this support remains difcult, since the processes constituting such
innovation trajectories are poorly understood. To increase insight in such processes, this paper takes the
historical development of biofuels in the Netherlands as the topic of study. Special attention is paid to
the simultaneous development of two technology generations within the eld: a rst generation (1G)
and a second generation (2G) of biofuels. A critical question asked is whether deployment programmes
for a 1G technology may have positive effects on the development of later generations. Two archetypical
support strategies are identied: one is to keep investing in R&D concerning 2G technology, where the
expected outcome is a fast move from one technology generation to the other. The other strategy is to
focus on learning-by-doing in the 1G technology. In that way progress can be made in 1G technologies
but the effects on 2G technologies are uncertain. We apply a Technological Innovation System
perspective to analyse the strategies followed and their effects. From the results we draw lessons of
relevance for practitioners who aspire to understand and inuence emerging energy technologies.
& 2008 Elsevier Ltd. All rights reserved.
Keywords:
Biofuels
Technological innovation systems
Technology generations
The Netherlands
1. Introduction
Supporting the development and diffusion of sustainable
energy innovations has become a dominant topic on the political
agenda of many countries. However, providing this support
remains a difcult task for decision makers with a need to
inuence the course of technological change [13]. A traditional
method for policy makers to stimulate energy innovation
trajectories is to stimulate investments in research and development (R&D), thereby supporting learning processes often labelled
as learning-by-searching [4,5]. This is an effective method to
improve the technological performance of pre-commercial technologies and to increase their variety. However, investments in
R&D alone do not explain the outcome of technological trajectories in the energy sector. Additional efforts to promote market
diffusion of new energy technologies play a crucial role, especially
when it comes to translating results of R&D to changes in the
energy system [46]. Practical experiences in the market allow for
learning processes to take place that are not stimulated by R&D;
these are often labelled as learning-by-doing [5]. Learning-bydoing has proved to be critical in solving technological problems
and establishing cost reductions for new technologies.
Corresponding author. Tel.: +31 30 253 2782x1625; fax: +31 30 253 2746.
1
Alternative models employed within the evolutionary economics eld are
the chain-linked model [7] or the innovation system model [5,911].
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2. Research design
Our theoretical approach is based on the work by Carlsson and
Stankiewicz [9], Bergek [17], Jacobsson and Bergek [15] and
Hekkert et al. [16]. The method we use is derived from Abell [18]
and Poole et al. [19], and thoroughly illustrated by Hekkert et al.
[16], Suurs and Hekkert [20] and Negro et al. [21]. Since there is
already a lot of literature on this approach, both from a theoretical
and a methodical perspective, we limit ourselves to a condensed
account.
2.1. Theory
The TIS approach is part of a wider theoretical school, called
the Innovation Systems (IS) approach [5,911]. The central idea
behind the IS approach is that determinants of technological
change are not (only) to be found in individual rms or in R&D
networks, but also in a broader social structure in which the rm
as well as R&D networks are embedded. Since the 1980s, IS
studies have pointed out the great inuence of this social
structure on technological change and economic performance
within nations, sectors or technological elds. The structure of an
IS consists of actors, institutions and the network of relations
through which these are connected [22]. The TIS approach focuses
on particularly that structure that surrounds a specic technology.
We follow this idea in dening the Dutch Biofuels TIS (BIS) as the
network of actors and institutions that directly support (or reject)
the development and (eventually) the diffusion of biofuels, in the
Netherlands.
The TIS framework matches our conceptual focus on a specic
technological eld. It has also proven its heuristic value for the
evaluation of public and private intervention in relation to
complex innovation processes [23]. However, a weakness of past
innovation system studies is that they fail to address historical
features in dynamic terms [16,20]. Recent TIS literature suggests
that dynamics can be captured by pointing out positive (and
negative) interactions between system functions [1517,20].
These system functions are processes that foster the shaping
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Table 1
Innovation system functions
System function
Denition
2.2. Method
The analysis of a developing TIS requires a methodology that
captures the micro-dynamics that contribute to its realisation.
Traditional empirical methods fall short here. For example,
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Table 2
Event types as indicators of innovation system functions
System function
Event types
Subsidy programmes
Lobbies, advice
2
The 1G biofuels being biodiesel, pure plant oil and ethanol from agricultural
crops and 2G biofuels being dme, FischerTropsch diesel, htu products and
cellulosic ethanol. The generic category contains those events which did not imply
a choice between those specic technological options.
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673
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GAVE installs a subsidy scheme [F6] aimed at guiding entrepreneurs towards the realisation of demonstration-scale fuel chains
[F4] [62]. The scheme consists of two tenders for a total budget of
approximately 2 million Euros. The rst step is to stimulate the
formation of coalitions [F3] and to support assessment research
[F2]. The 80% CO2-reduction criterion still holds.
All projects that are supported by GAVE are directed at 2G
options [F1]. Two experiments [F1] focusing on combining
biomass gasication with FischerTropsch synthesis, are characteristic for this episode. If successful, they would enable the
production of biodiesel from practically any biomass source [F4].
The projects are set up by two networks [F3]the Shell-ECN
network and the TNO-Nuon networkand various other actors,
such as banks and a car company [63]. The projects are successful
[F4], particularly with respect to solving technological bottlenecks
related to cleaning the synthesis gas that is required for the
FischerTropsch process [F2] [64].
The next stage of the programme is to realise a commercial
demonstration. By the end of 2002, possibilities are considered [F4],
as both alliances are viable candidates and GAVE has a sum of
5 million Euros to offer [F6]. Unfortunately, both parties decide
to discontinue [F1]. The main reason is that the building of a
commercial-scale plant would cost far more than 10 million Euros.
According to the candidates, such an investment is not feasible
without a anking market stimulation programme, e.g. tax exemption measures [F5] [56,65]. The subsidy programme stops [F6].
From a purely technological perspective, the approach of GAVE
has resulted in important successes. But the absence of Market
Formation activities forms a critical barrier to the development of
2G demonstration projects [56].
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that now numerous projects [F1] start all over the country,
especially in rural areas [7276].
Now multiple system functions are being fullled. Remarkably,
it is, again, regional authorities and entrepreneurs that take the
BIS forward with their Entrepreneurial Activities. The anticipation
on Market Formation policies, to be issued through the EU
directive, plays an important role. National policy makers realise
that their scheme has failed because Market Formation was
completely neglected. In accordance with this, GAVE now changes
its role, from an R&D catalyst, to a facilitator of Knowledge
Diffusion and Market Formation. In the process, the concept of a
stepping stone technologyfrom 1G to 2Ghas gained popularity. The 1G fuels are now explicitly regarded as a bridging option
[56,68]. This can be regarded an important paradigm shift, having
a large inuence on the further unfolding of BIS dynamics.
675
Despite the strong position in terms of Knowledge Development, entrepreneurs are generally hesitant to initiate Entrepreneurial Activities. The problem in general, for potential 2G biofuel
producers, is the uncertainty on the biofuels market [F5]. After all,
it remains to be seen whether 2G biofuels can eventually compete
with the 1G biofuels [F4]. This uncertainty is the more striking in
the face of cheap imports from Brazil and Eastern Europe. In fact,
even 1G biofuel producers have a hard time competing with the
biofuel imports [F4, F5]. Reason for some entrepreneurs to call for
market protection policies in biofuels trade, especially since some
of the biofuels imported are deemed unsustainable [F7] [77].
The latter point relates to a more stringent issue: a renewed
rise of the biofuels controversy. With the increasing market
diffusion, scientists and environmental organisations have continued to stress that biofuels are not a solution but a problem
[F4, F7] [80,81]. Their distress calls are heard by politicians and
the Dutch government picks up on this by reaching back on the
original distinction between 1G and 2G biofuels, although it is a
more ne-grained distinction this time around. A system of
sustainability criteria is developed that should allow policy maker
to incorporate the CO2-reduction potential and land-use of
particular biofuel chains [82]. The most recent development is
that a debate has started, on the EU level, about the question
whether the biofuels directive should be adjusted to take into
account such sustainability criteria. Dutch policy makers have a
large say in this discussion since they have already started to
develop sustainability criteria, as a response to the early rise of a
biofuels controversy in the Netherlands [77].
At the time of writing, the biofuels controversy rages on,
undermining the long-term perspective for all biofuels development, 1G and 2G alike. It seems that the BIS is on a tipping point.
Either, the BIS actors, including the international ones, manage to
establish a consensus on what biofuel options are worthy of
support, or else the BIS will dissolve and break down as the result
of ever increasing uncertainty.
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4.3. Discussion
This study should be regarded as an application of evolutionary
economic ideas in the specic technological eld of Dutch biofuels
development but it provides a more general contribution as well.
Although many other studies have been published that apply an
innovation system perspective, these have not focused on the
specic topic of competing technology generations. In fact,
innovation system studies usually take technological features
into account only as a background factor (see Sanden et al. [83] for
an elaborate argument along these lines). In this sense this study
is a step towards a better integration of our understanding of the
interactions between technological and social systems.
Another key contribution of this study, especially compared to
other innovation system analyses, is the explicit focus on
decision-making strategies. There are not many studies that
combine knowledge of strategies of individual policy makers
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5. Concluding remarks
We have analysed and evaluated the dynamics of 1G and 2G
biofuel technologies and have related these to four possible
strategies of dealing with different technology generations. The
strategies identied are a wait-and-see strategy, a R&D strategy, a
diffusion strategy and a bridging strategy aimed at combining
R&D and market diffusion. To map the dynamics of the Dutch
biofuels developments we adopted the Technological Innovation
Systems (TIS) framework and analysed the build-up of system
functions over time as related to these four strategies. What
follows now is a general reection on the results from this
analysis.
The dominant support strategy changed during the development of the BIS. The 1G biofuels developments started out with
marginal practical trials by small entrepreneurs and local
authorities that could count on very little support. Government
policies were absent, despite some ad hoc tax exemptions for
specic projects (wait-and-see strategy). Nevertheless some
entrepreneurs succeeded in developing a protected niche for 1G
biofuels and started practical trials in market-oriented businesses
(diffusion strategy). For 2G biofuels a positive Guidance of the
Search was established rather late in the form of the GAVE R&D
programme (R&D strategy). From that moment on 1G biofuels
started to become excluded, as GAVE did not support these
technologies. Recently, with the European biofuels directive, 1G
biofuels gained credit again and the Dutch government started
regarding 1G biofuels as a stepping stone towards 2G biofuels
(bridging strategy).
We have discussed the strengths and weaknesses of BIS
development as related to these four strategies. It turned out
difcult to reach a denitive conclusion. One important issue is
that the BIS was successful in facilitating Knowledge Development
and Knowledge Diffusion around 2G biofuels. It also succeeded,
though very late, in contributing to Market Formation, but the
activities were exclusively related to 1G biofuels. Despite government support, 2G biofuels never got close to a demonstration. This
could be regarded as a radical failure of the R&D strategy, which is
understandable as the enormous risks involved with developing a
supply infrastructure of 2G biofuels can only be overcome when
uncertainties in the demand side are minimal. A market needs to
be already organised for this type of investments to be made. This
is exactly what 1G technology could have done: pave the way for
2G technology by creating the necessary legislative infrastructure
and a rst market. But so far, Market Formation activities were
only loosely coupled to 2G development.
Next to this stepping stone mechanism, it also has other
advantages to start with deployment of 1G technology. This is
somewhat speculative but learning-by-doing effects may increase
signicant performance increases in 1G technologies that make
them better t for future sustainable energy systems. Given the
long time span of technology development this is not such a
strange thought. Along similar lines we should consider that the
promise of 2G technologies still needs to be lived up to. In other
words, the 2G biofuels may never deliver what is expected from
them. Always waiting for a better alternative is in the long run
most benecial for incumbent fossil fuel-based technologies. The
introduction of new technologies always involves technologies
that are in the beginning of the learning curve and, therefore, have
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Acknowledgements
The authors would like to thank two anonymous reviewers for
their constructive comments on an earlier version of this article.
The Dutch Knowledge Network for System Innovations and The
Dutch Science Foundation (NWO) are thanked for nancial
support.
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