Raimund Bleischwitz

1
VARIATION IN INNOVATION SYSTEMS THROUGH
COMMUNITIES

• Raimund Bleischwitz
• Wuppertal Institute, Germany
• College of Europe Bruges, Belgium
• Contribution to the Workshop "Innovation and Path
  Dependency. Institutions for the management of
  diversity in innovation systems", Zürich April
  16-17, 2007

2
1

• The Challenge

3
The decoupling challenge How to enhance
quality of life with less use of nature?
IPCC Fourth Assessment Report, EU Climate Change
Policy EU Thematic Strategy on Natural Resources

Sustainable Production and Consumption
Sustainable Society
Qualityof life
Sustainable Production
Economicgrowth
Use of nature
4
EU Strategy aims at accelerating resource
productivity trends up to 3 p.a. (WI 4-5 /
p.a.)
Source EU Thematic Strategy 2005
5
System innovation

• ....needed to cope with the challenges ahead -
  but what is it about?
• A product-related system (i.e. a value chain
  including development of new services),
• A material flows related system (e.g. use of
  copper),
• A functional system (e.g. energy supply),
• A system providing basic services such as
  housing, nutrition etc.,
• An economic, social or a political system
  (institutional innovation such as the
  introduction of parliamentary democracy)
• gt Significant eco-efficiency improvement, e.g.
  by a factor 2

6
System innovation, other types of innovation and
sustainability

• Sustainability certainly reqires system
  innovation, but other types of innovation can
  also lead to major improvements and, thus, are
  necessary too.
• gt Variety of different IS

7
Scope Communities

• Research interest the ability of communities to
  pursue system innovation via RD activities,
  demonstration projects, networks etc. as well as
  variations that inevitably arise when those
  community efforts are compared
• Community variety of economic and/or
  technological activities within a limited
  regional scope conducted under a common legal
  frame
• Use of EU NUTS classification
• R2H cities, islands, remote areas, regions
  (www.roads2hy.com )
• Hypothesis Community involvement in other levels
  (both at the meso and at the macro level) is
  pivotal for the success of system innovation
  intra-community institutions and participatory
  processes won't do it alone. Furhermore,
  variation in system innovation is enhanced if
  communities are actively involved because of the
  inherently pluralistic approaches that
  communities develop.

Roads2 HyCOM
8
2

• Analysing
• Industries and Innovation Systems

9
Importance of Communities

• The early steps of disseminating system
  innovation for SD often are done via
  demonstration projects that usually start at a
  community level gt involve end users, test both
  feasibility and acceptance.
• Some successful communities (as for H2
  potentially NRW, London, Iceland) might develop
  as a first larger lead market for other
  communities to follow.
• Clusters and networks often start off at the
  community level. There is good evidence from
  growth theories that communities (incl. regions)
  act as engines of economic development
• Industry, SMEs and universities, however strong
  their relationships outside communities might be,
  usually are embedded in community ties
  focussing on communities offers advantages
  especially for horizontal innovation.

10
Importance for H2

• Hydrogen distribution can be done economically if
  communities become larger and interconnected.
  Identifying suitable regions throughout Europe
  will lower the set-up costs for an H2
  infrastructure (as for other energy carriers).
• Hydrogen Lighthouses will need to have a
  community relation at least for a considerable
  number of lighthouses.
• Hydrogen/environmental technology communities
  seem to be mostly embedded in regions that are in
  general regarded as innovative

11
Variety

• Variety results from the variety of communities
  throughout Europe because of
• different types of demonstration projects and
• different conditions within communities (both
  actors and institutions.
• Communities (i.e. a variety of communities) thus
  can be seen as a laboratory necessary to test the
  feasibility of sustainability technologies
  towards system change.
• gt Knowledge-creation through variety and
  competition

12
Selection

• However a selection needs to be made for
  economies of scale and cost reduction, and
  communities will have to adapt. How can these
  selection processes work
• given that competition still is in a very
  premature stage when system innovation starts and
• other criteria (positive externalities,
  sustainability potential) are be needed too.
• Assessment criteria gt EE publication
  (Bleischwitz 2007)
• Hypothesis community involvement in other levels
  (both at the meso and at the macro level) is
  pivotal for the success of system innovation
  intra-community institutions and participatory
  processes won't do it alone.

13
Sustainability Impact Assessment -gt Policy
integration and innovation assessment
14
Case study on networks e.g. ProKlima
Cooperative Climate Protection Funding on a local
Level

• Combines management interests (utility), consumer
  needs, public local interests in the region of
  Hanover
• Promotes energy efficiency climate protection
• Designed to a deregulated energy market through
  promotion of regional responsibility innovation
  leadership
• Implements the 1996 declaration of German
  corporate sector on global warming prevention on
  a regional level.
• gt High involvement of energy utility, funding
  mechanism at low transaction costs

15
Evolutionary Competitive Market Processes

• V. Hayek, W. Kerber competition is viewed as a
  dynamic process of rivalry in which the interplay
  of creative (innovative) and adaptive (imitative)
  forces produces and reinforces permanent dynamics
• Creation of knowledge as fundamental challenge,
  incomplete information, bounded rationality -gt
  competition as source of learning and knowledge
  creation
• Routine helps, but individuals and organisations
  alike need to adapt, i.e. to innovate (adaptation
  and diffusion are innovative too)
• Evolutionary competition as a test of hypotheses,
  open-ended process of experimentation

16
Systemic Competitiveness

• Microlevel and Macrolevel analysis ought to be
  added by Meta- and Mesolevel
• culture, why and what for of competition
  and development,
• institutions between state and market, pressure
  for performance.
• Papers e.g. by K. Eßer / J. Meyer-Stahmer (1996),
  R. Nelson (1992), M. Porter (1990, 2004)
• Recent efforts by e.g. World Economic Forum
  (2005)
• EU policies in line (regional policy,
  subsidiarity, Kok-report on Lisbon Process)

17
Implications for the concept of transition
management

• Firms as agents open boundaries, need to
  integrate knowledge and incentives from outside
  (see knowledge-based theory of the firm) ltgt
  stakeholder dialogues a rational strategy! But
  decision-making on levels different to
  communities!
• Diversity important competition ought to select
  superior technologies, products. See e.g. wind
  energy!
• Dynamic efficiency, adaptive efficiency more
  important than static allocation efficiency gt
  legitimacy for long-term targets and RTD.
• gt Refers not only to firms, but also to
  importance of communities, both as knowledge
  catalytic converter and as source of diversity.

18
Technology development, SD and Systems change
STD needs clear and long-term targets, new
instruments (information-basednetwork type) for
early majorities, economic incentives and
regulation for long-term diffusion
costs
Scenario radical change
Standards
Scenario intelligent STD policy
time
2010
2020
2030
19
Communities matter most in stage I and II
Source Stake 2006
20
New governance approaches, multilevel governance
and economic incentives

• New Types of instruments in addition to MBIs
  information-based knowledge creating, flexible,
  analytically closer to innovation industrial
  economics
• Information (e.g. Triple bottom line reporting,
  accounting requirements, indicator measurement
  harmonisation)
• Networks (e.g. technology platforms,
  EnergyPlus, EcoProfit)
• Agencies qualification programmes, SME checks,
  dissemination of best practices, support
  implementation of eco-efficiency potentials
• Market introduction programmes demonstration and
  implementation, unlock systems, align
  responsibilities among various actors (eco town
  program Japan)
• Minimimum tax requirements for energy use and
  resource use at EU level
• Challenges some regions are ahead, while others
  may be stucked gt a role for EU regional policy,
  market integration and cohesion.

21
3

• The
• Hydrogen
• Economy

22
The future energy system? Combining large and
small FCs (CHP) plus central H2-production and
local H2-networks?
23
Results from a Survey on H2 Communities
Roads2 HyCOM
24
Driving forces for H2 communities

• Policy-driven projects driven by the local
  authority/government The main driver is job
  creation, followed by climate change and local
  air quality concerns. Increased use of renewable
  energy sources and introduction of new energy
  technologies within the community also appear to
  be important factors. These projects are thought
  to have strong potential to evolve into a larger
  scale hydrogen community.
• Technology-driven projects mainly driven by
  industry The main drivers are development of
  hydrogen and/or fuel cell technologies and
  investigation of their feasibility (both through
  RD and demonstration projects).

Roads2 HyCOM
25
Barriers to H2 communities
Roads2 HyCOM
26
Success factors

• Existence of a highly prioritized environmental
  agenda at regional level
• Active support to the regional industry
• Active involvement from the regional authorities
  in promoting public acceptance of hydrogen and
  fuel cell technologies
• Existence of some kind of financial support for
  hydrogen and fuel cell projects at regional level
• Active involvement in project initiation and
  assistance to overcome non-technical barriers
• Local authorities support is important to
  legitimize and increase confidence in
  demonstration projects within the community
• Presence of technology/component suppliers within
  the region
• Proximity of high quality universities and
  research institutes

Roads2 HyCOM
27
Distribution of H2 - communities need to cooperate
28
Conclusions

• Communities are important elements of innovation
  systems
• Test feasibility and acceptance
• Attract pioneers and early majority
• Demonstrate a larger context for further
  development
• Communities can also contribute to formulate
  targets, timetables and other forms of
  policy-making, thus acting as facilitator of
  reflexive policies.
• On the other hand, communities
• Can hardly replace policies for internalization
  of negative externalities
• Can hardly overcome funding and business
  development deficits
• Need a kick in from others when large
  majorities and laggards have to be addressed.
• To be complemented by national policies, EU and
  sectoral approaches.

29
Thanks for your attention
www.wupperinst.org, www.coleurop.be www.roads2hy.c
om