Institutions and the Energy Transition: A comparative analysis of decarbonisation pathways in European countries

Abstract

What role do governments, firms and energy cooperatives in European countries play in decarbonising the energy system? And to what extent can differences in the roles assigned to them by national institutional arrangements explain how the energy transition unfolds differently in different countries? These questions are central to this thesis. For each country, the presence of fossil fuels (coal and fossil gas), natural resources (abundant hydropower) and national technological choices (nuclear power) are important explanations for the implementation of national energy systems as they appeared around the turn of the century. These resources and choices explain for a large part how energy supply, particularly the power system, varies between countries. Oil, which is used primarily for transportation, shows much less variation between countries. In the early decades of this century, the energy transition played out first and foremost in the power system, with solar power and wind power becoming available at scale. This transition is again shaped by a variety of nationally differentiating factors, ranging from the quality of wind and solar resource to societal pressures from climate activists and efforts by powerful social, economic, and political actors. This study argues that nationally determined institutions concerning the roles of government, firms and citizen initiatives in markets co-determine energy transition pathways. Here “institutions” are the human-made constraints that structure political, economic, and social interaction. Such institutions jointly influence both components of the energy transition; both the phasing out of fossil fuel-based technology and the introduction and scaling up of low-carbon technology. As a contribution to the knowledge of energy transitions, the aim of this study is to map which concepts are needed to better understand and describe the effect of national institutions on national energy transitions. For this, the study embraces historical institutionalism and the literature on “carbon lock-in”, the aspects that hinder the energy transition. Second, the study needs concepts about the rise and fall of certain forms of technology, for which it refers to the paradigm of “technology life cycles”. Third, in order to systematically distinguish differences in the political-economic system of different countries, a typology of the general institutions in countries regarding the roles of government, firms and citizen initiatives is needed. To this end, the study draws on a paradigm from comparative political economy, the “Varieties of Capitalism” (“VoC”) model. In particular, the study examines how the distinction between what is known as the Rhineland model in contrast to the Anglo-Saxon model has implications for national energy transitions. Compared to the Anglo-Saxon model, the Rhineland model is characterised by a government that has a larger role in market processes, for example with government support, and by a relatively large role for government ownership. Within VoC, the term “Coordinated Market Economy” (“CME”) is used for the Rhineland model (typically Germany), and “Liberal Market Economy” (“LME”) for the Anglo-Saxon laissez-faire model (typically the United Kingdom). The study investigates what a difference in institutions regarding roles in market processes means for national energy transitions, but also what role technology life cycles play in this and what the effect of these kinds of processes is on the scope for citizen initiatives. We explore the phasing out of coal in different European countries, the roll-out of offshore wind energy in different European countries, and the consequences of the increasing role of market forces in renewable energy for citizen initiatives in the Netherlands. With this approach and these case studies, the study explores how nationally institutionally determined socio-economic roles for government, firms and citizen initiatives have consequences for the shape of national energy transition pathways.