The role of lock-in mechanisms in transition processes: the case of energy for road transport

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Environmental Innovation and Societal Transitions

j o u r n a l h o m e p a g e :w w w . e l s e v i e r . c o m / l o c a t e / e i s t

The role of lock-in mechanisms in transition processes: The case of energy for road transport

Antje Klitkou

, Simon Bolwig

, Teis Hansen

, Nina Wessberg

aNIFUNordicInstituteforStudiesinInnovation,ResearchandEducation,P.O.Box5183Majorstuen,N-0302Oslo,Norway

bDepartmentofManagementEngineering,TechnicalUniversityofDenmark(DTU),Roskilde,Denmark

cDepartmentofHumanGeography&CentreforInnovation,ResearchandCompetenceintheLearningEconomy(CIRCLE),Lund University,Sweden

dVTTTechnicalResearchCentreofFinland,Espoo,Finland

a rt i c l e i n f o

Articlehistory:

Received18February2015

Receivedinrevisedform28June2015 Accepted5July2015

Availableonlinexxx

Keywords:

Pathdependency Lock-inmechanism Transitionprocess Roadtransport Renewableenergy

a b s t ra c t

Thispaperrevisitsthetheoreticalconceptsoflock-inmechanismstoanalysetransition processesinenergyproductionandroadtransportationintheNordiccountries,focussing onthreetechnologyplatforms:advancedbiofuels,e-mobilityandhydrogenandfuelcell electricalvehicles.Thepaperisbasedonacomparativeanalysisofcasestudies.

The main lock-in mechanisms analysed are learning effects, economies of scale, economiesofscope,networkexternalities,informationalincreasingreturns,technologi- calinterrelatedness,collectiveaction,institutionallearningeffectsandthedifferentiation ofpower.

Weshowthatverydifferentpathdependencieshavebeenreinforcedbythelock-in mechanisms.Hence,thecharacteristicsofexistingregimessetthepreconditionsforthe developmentofnewtransitionpathways.Theincumbentsocio-technicalregimeisnotjust fossil-based,butmayalsoincludematurenichesspecialisedintheexploitationofrenew- ablesources.Thisimpliesaneedtodistinguishbetweenlock-inmechanismsfavouring theoldfossil-basedregime,well-established(mature)renewableenergyniches,ornew pathways.

©2015Z.PublishedbyElsevierB.V.ThisisanopenaccessarticleundertheCCBY-NC-ND license(http://creativecommons.org/licenses/by-nc-nd/4.0/).

1. Introduction

Theconceptoflock-inhasbeenextensivelyusedtoexplainthepersistenceoffossilfuel-basedtechnologicalsystems despitethefactthattheirwell-knownenvironmentalexternalitiescontributetoclimatechange.Moreover,this‘carbon lock-in’inhibitsthediffusionandadoptionofcarbon-savingtechnologies(FrantzeskakiandLoorbach,2010;Unruh,2000).

Lock-incanbedefinedaspositivefeedbacksorincreasingreturnstotheadoptionofaselectedtechnology(Arthur,1994b;

Unruh,2000,2002).Asaresult,incumbenttechnologieshaveadistinctadvantageovernewentrants,notbecausetheyare necessarilybetter,butbecausetheyaremorewidelyusedanddiffused.Positivefeedbackmechanismsdecreaseproduction costsandcreateadditionalbenefitsforusers.Astableincumbentregimeistheoutcomeofvariouslock-inprocessesandit favoursincrementalasopposedtoradicalinnovation.Thecostandperformanceofanewtechnologyaremoreuncertain comparedtoincumbenttechnologies(SandénandAzar,2005).

∗ Correspondingauthor.Fax:+4722595101.

E-mailaddresses:antje.klitkou@nifu.no(A.Klitkou),sibo@dtu.dk(S.Bolwig),teis.hansen@keg.lu.se(T.Hansen),nina.wessberg@vtt.fi(N.Wessberg).

http://dx.doi.org/10.1016/j.eist.2015.07.005

2210-4224/©2015Z.PublishedbyElsevierB.V.ThisisanopenaccessarticleundertheCCBY-NC-ND license(http://creativecommons.org/licenses/by-nc-nd/4.0/).

Thediscussionoflock-inmechanismsinthispaperismotivatedbyourinterestintransitionprocesses,especiallytransi- tionstowardsmoresustainableenergyandroadtransportationsystems.Inthisregard,initially“minorchangesandmarginal developmentsmayevolveintomassivestructuralconfigurationsthatthenrestrictthevarietyofdirectionstofuturechanges”

(VoßandKemp,2006:13).Suchtransitionprocessesare,therefore,path-dependent.Inthispaper,wedonotfocusonpro- cessesofpath-creation,butratheronthelock-inmechanismsthatsetthepreconditionsforthesenewpaths.¹ Lock-in mechanismsareconceptualisedasmechanisms,whichreinforceacertainpathwayofeconomic,technological,industrial andinstitutionaldevelopmentandcanleadtopath-dependency.

Acoreargumentofourpaperisthatthepersistenceofexistingsocio-technicalsystemscanbeexplainedbyusingmore specificconceptsthanniche,socio-technicalregimeandlandscapeasprovidedbythemulti-levelperspective(MLP)(i.e., Geels,2004;Kempetal.,1998).IntheMLPframework,theconceptofaregimeisdefinedas:

“therule-setorgrammarembeddedinacomplexofengineeringpractices,productionprocesstechnologies,product characteristics,skillsandprocedures,waysofhandlingrelevantartefactsandpersons,waysofdefiningproblems—all ofthemembeddedininstitutionsandinfrastructures”(RipandKemp,1998:338).

Itisarguedthatthedifferentelementsofsuchacomplexsystem–thematerial,organisationalandconceptualdimensions ofthesystem(SandénandHillman,2011)–arealignedwitheachother.Thus,theexistingsocio-technicalsystemhas astabilisinginfluenceoninnovationdynamicsandtechnologicalchangeandpreventstheintroductionofradicallynew technologicaltrajectories.

However,akeycritiqueoftheMLPframeworkisthatitdescribeslock-ininarathertotalisingway,withfewspecifications ofthespecificmechanismsthroughwhich lock-insbecomemanifested.Wearguethatdistinguishingbetweenvarious technologicalandinstitutionallock-inmechanismsimprovesourunderstandingofthepersistenceofthedominantsocio- technicalregimesandthedifficultiesforemergingnichestoupscale.Thus,thisspecifiesthewaysinwhichexistingregimes setthepreconditionsforthedevelopmentofnewtransitionpathways.Asdifferentregimesarecharacterisedbydifferent lock-inmechanisms,theopportunitiesforupscalingagivennichedependsonthespecificcharacteristicsoftherelevant regime.

Acomparativeperspectiveonlock-inmechanismsinongoingtransitionprocesseshelpsdevelopaclearerunderstanding oftransitionprocessesasbeingtheresultofan“interplayofpathdependence,pathcreationandpathdestruction”(Martin andSunley,2006:408).Inthispaper,weanalysethetransitionfromfossilenergytorenewableenergy-basedroadtransport systemsintheNordiccountriesandwespecifytheroleofvariouslock-inmechanismsinthistransitionprocess.Wefocus onpossibletransitionpathwaystowardsmoresustainableenergyandtransportationsystemsinfourNordiccountries– Denmark,Finland,NorwayandSweden–andposethefollowingresearchquestion:

Howdodifferentlock-inmechanismsofsocio-technicalregimesinfluencenewtransitionpathways?

Thepaperis basedona comparativeanalysisofcase studiesof fourNordic countries.We selectedonetechnology platformforeachcountry:advancedbiofuelsforFinlandandSweden,batteryelectricalvehicles(BEV)forDenmarkandfuel cellelectricalvehicles(FCEV)andhydrogenforNorway.

Thepaperis organisedasfollows:inthenextsection,wereview theacademicliteratureonpath-dependencyand lock-inmechanismsanddeveloptheanalyticalframeworkforthecomparativeanalysis.Inthethirdsection,wedescribe themethodologicalapproachanddataused.Inthefourthsection,wediscussthetechnologicalandinstitutionallock-in mechanismsatworkintheselectedtechnologyplatformsforeachcountry.Section5discussesthelock-inmechanisms acrossthedifferentcasesandthevalueoftheconceptsoflock-inmechanismswhenanalysingtransitionprocesses.Finally, wedrawconclusionsforfurtherresearch.

2. Theory:lock-inmechanismsrevisited

Therehavebeenanumberofstudiesoftechnologicalchangeandinnovationineconomicsandinorganisationandinstitu- tionalresearch,whichattempttoconceptualisedifferentlock-inmechanismsineconomic,institutionalandorganisational development.

EarlystudiesbyBrianArthurandPaulDavidhavefocusedonincreasingreturnsofadoption,positivefeedbacksandpath dependency(Arthur,1988,1989,1994b)andontheroleofhistoricalsmalleventsandelementsofchanceinachievinga dominantmarketpositiontorealiseeconomiesofscaleanddecreasingcostconditions(David,1985).Whileneoclassical economictheoryisbuiltonthegeneralparadigmofdiminishingreturnsandequilibriumofpricesandmarketshares, Arthurarguesthatresource-basedsectorsandknowledge-basedsectorsfollowdifferentlogics.Resource-basedsectorsand factor-intensivetechnologies,likeagriculture,bulkgoodsproduction,miningandpowergenerationaremostlysubjectto

“diminishingreturns,”whiletheknowledge-basedpartsoftheeconomyaresubjectto“increasingreturns”ofadoption (Arthur,1990,1994a:25,1994b:3).Thisdifferenceisexplainedbylargeinitialinvestmentsinresearchanddevelopmentand toolingintheknowledge-basedeconomy,whererathercheapfollow-upinvestmentsinincrementalinnovationaresufficient

1 ThisissueisconsideredinapaperthatanalysesselectedpathcreationprocessesinNordicenergyandroadtransportsystems(Hansenetal.,2015, inpreparation).Thepaperalsodiscussthetheoreticalframeworkforpathcreation(i.e.,GarudandKarnøe,2001),whichhighlightstheimportantroleof agencyincreatingnewtrajectories.

toimprovetheprocessesandproducts(ibid.).Asaresult,thecostofproducinghigh-techproductsfallsovertime,whilethe benefitsofusingthemincrease.Thisgivestheproduceranadvantagebecauseofseveralmechanismssuchas(a)beingable toproducegreaternumbersofproductsatlowercost;(b)developinghigherqualityproductsandimprovingprocessesby incrementalinnovation,and;(c)achievingakindofearlydefactostandardsettinginnetworkswhichrequirecompatibility.

Arthurcallsthesemechanisms‘networkexternalities’.Increasingreturnsmechanismscanalsocauseeconomiestobecome lockedintoaninferiordevelopmentpathway,whichisdifficulttoescape(Arthur,1990,1994b:10).Technologieswhich havebeenchosenforsoundengineeringreasonsbecomelocked-inbecauseofuserexternalitiesand,therefore,adopting moreadvancedandmoreappropriatetechnologiesbecomesmoredifficult(Arthur,1994a:25).Sunkcosts,learningeffects andcoordinationcostscontributetosuchlocked-intrajectories(Arthur,1994c).

Latercontributionsfromothersocialsciencefieldssuchasorganisationtheory,institutionaltheoryandtransitiontheory, haveaddressedlock-inmechanismsfromadifferentperspective.Importantly,Foxon(2002)emphasisesthattechnological lock-inshouldbedistinguishedfrominstitutionallock-in.FoxonfollowsPierson(2000)inhisunderstandingoftheinter- lockingeffectsoftechnologicalandinstitutionallock-ins,whichcompoundtheinteractionbetweentechnologicalsystems andgoverninginstitutions.Alsoininstitutions,increasingreturnsareatwork,butheretheyarerelatedtotheacceptance ofinstitutionsandtheiradoptionbyorganisations(Lachman,2013).

Northpointsoutthatsymbioticrelationshipsexistbetweeninstitutionsandorganisationsthathaveevolvedasaresponse totheincentivesputinplacebythoseinstitutionsandthatthesesymbioticrelationshipsfavourincrementalchangesinstead ofradicalchanges(North,1990:7).FollowingNorth’sworkoninstitutionalchange(1990),Foxonidentifiesthefollowing factorsasinstitutionallock-inmechanisms:

“thecentralroleofcollectiveaction;thehighdensityofinstitutions;thepossibilityofusingpoliticalauthoritytoenhance asymmetriesofpower,andthecomplexityandopacityofpolitics”(Foxon,2002:3).

Geelsetal.(2004:6f.)summarisethemechanismswhichleadtoincreasingreturnstotheadoptionofatechnology andfinallytopathdependencyas,“...economiesofscale,leadingtolowercost,learning-by-using,networkexternalities, informationalincreasingreturns,andtechnologicalinterrelatedness”.Theyalsofindthatinstitutionalaspectsareimportant, includinguserroutines,cognitiveroutinesandformalregulations.Firmshavesunkinvestmentsandbuilt-upcapitalto consider,whilesuppliersandusershavedevelopedinterdependentnetworks.Lastly,consumptionpatterns,userpractices andlifestylesalsocontributetopathdependency(BüttnerandGrübler,1995;KallisandNorgaard,2010;Marechal,2009).

Insummary,wefindthatliteraturefromdifferentdisciplinesfocusesonvarioustypesoflock-inmechanisms.While empiricalstudieshaveunderlinedtheimportanceoftheselock-inmechanismsindividually,asynthesisinganalyticalframe- workoflock-inmechanismshasnotyetbeenestablished.Wearguethatsuchaframeworkisparticularlyimportantinorder tounderstandtransitionprocessesthatarehighlycomplexsuchasroadtransportsystemssincemultiplelock-inmecha- nismsmaybeimportantinexplainingpathdependencies.Specifically,wedistinguishbetweenninelock-inmechanisms.

Thesearepresentedbelowandtheiroperationalisationinthecurrentstudyisalsoexplained.

2.1. Learningeffects

FollowingArrow(1962)whoaddressedtheeffectsoflearning-by-doingonincreasingproductivity,Arthur(1990)points outthatincreasingreturnsleadtolearningeffects:theyfacilitatethedevelopmentofhigherqualityproductsandthe improvementofprocessesbyincrementalinnovation.Learningeffectsoccurwhenknowledge,skillsandorganisationrou- tinesincreasewithcumulativeproduction.Increasedadoptionmayalsoleadtolearning-by-using,providingimportant feedbackabouttheneedsofusersforincrementalproductdevelopment.Thelearningeffectsleadtolowercosts,which eventuallycanbemeasuredbylearningcurves(Juningeretal.,2010).Thissequenceofhistoricaleventspointstotherole ofnationalscientificandtechnologicalspecialisation(Cimoli,1994;KlitkouandKaloudis,2007).Cimoliconcludesthat:

(1)technologicallearningandtheaccumulationofincreasingreturnsinteractwithnationalconsumptionpatterns,and;

(2)unfavourableconsumptionpatternsinagivensectorcombinedwithhighdynamic increasingreturnsandlearning capabilitiesmay“resultinaprocessoffallingbehind”(1994:141).

Inthecontextofourspecificstudy,wehavetracedlearningeffectsbyanalysingarangeofphenomena:thespecialisation ofbusinessactorsactivein thedevelopmentanddeploymentofthetechnology;clusterdevelopmentforthedifferent technologies;specialisationandstrengthofR&Dorganisation;strengthofdesignatedRD&Dprogrammesandtheeducation oftechnicalpersonnel.

2.2. Economiesofscale

Economiesofscaleemergewhensunkcostsfromearlierinvestmentsinproductioncapacityarespreadoveranincreasing productionvolumeinthesocio-technicalsystem.Economiesofscalecanbeexplainedbyincreasingreturnsasfixedcostsare spreadovermoreunitsofproductionoutputandbythefunctionsofthebuilt-upinfrastructure,especiallyforlargertechnical systemssuchasenergyproductionortransportation(Hughes,1983,1987).Infrastructuresuchaselectricitygenerationor transportsystemsbecomesmoreefficientandgainsmomentumwhenmoreusersarepluggedintothesystem.However, theinertiaofthisinfrastructurelocksthesystemintoachosendirection.However,Arthur(1989:117)alsopointsoutthat notalltechnologiesachieveincreasingreturnsregardingeconomiesofscale,e.g.hydroelectricpowerplantsbecomemore costlyasthesizeofthedamsincreases.

Weanalysedeconomiesofscalebyscrutinisingthenumberofregisteredalternativecars(BEVs,biofuelcars,FCEVs),the volumeofproducedadvancedbiofuel,importsoffirstgenerationbiofuel,thenumberoffillingstationsforbiofuels,BEV chargingpoints,fastchargers,batteryswitchingstationsandhydrogenfillingstations.

2.3. Economiesofscope

Thewidespreaduseofatechnologymayallowforeconomiesofscope,i.e.costadvantagesinducedbytheproduction anduseofavarietyofproductsratherthanspecialisingintheproductionofonetypeofproduct.PanzerandWillig(1981) emphasisethepotentialofachievingcostefficiencyasaresultofeconomiesofscope.Thisisconnectedtoproductdiver- sificationindifferentnichemarkets.Economiesofscopehavebeenidentifiedbystudyingemergingnichemarketsforthe respectivesustainableroadtransporttechnologieswhichcombineinvolvedinfrastructurewithothertypesofbusiness:

parking,amenities,ICT-basedservices,theemergenceofnewactorsinallpartsofthevaluechains,notjustcarproducers, andproductdiversificationinbio-refineries.

2.4. Networkexternalities

Networkexternalitiesemergebecauseofearlydefactostandardsettinginindustrialnetworks,whichrequirecompati- bilityandbecausemanyconsumerspurchasecompatibleproducts(KatzandShapiro,1986).Thismechanismisespecially importantforinfrastructuredevelopmentinICTorrailroadsystems,butalsofortheadoptionoftechnologybyendcon- sumerssuchasmobilephones,computersoftwareandBEVs.Toidentifynetworkexternalities,weidentifiedbusinessactors whowereactiveinthedevelopmentofinternationalstandards,andthecompatibilityofexistinginfrastructurewithnew infrastructure(jointinfrastructureorseparatedevelopment).

2.5. Informationalincreasingreturns

Informationalincreasingreturnsoccurbecausetheadoptionofatechnologymeansthatitreceivesgreaterattention whichinturnstimulatesotheruserstoadoptit(VandenBerghandOosterhuis,2008:158).Todiscussinformationalincreas- ingreturns,weanalysedreportsonpublicopinionregardingalternativecarsandfuels,consumerinterestinalternativecars measuredbythenumberofnewlyregisteredalternativecars,theeducationofmaintenancepersonnel,thevisibilityof alternativecarsinuserforums,informationcampaigns,thedeploymentofdistinguishingmarksforBEVsorFCEVs,and discussionsonhealthandsafetyissuesforbiofuelsandhydrogen.

2.6. Technologicalinterrelatedness

Technologicalinterrelatednessoccursbecausetheadoptionofatechnologyfavoursthedevelopmentofcomplementary technologies,decreasestechnologicaluncertainty,whilepotentialusersmayadapttheirexpectationsregardingquality, enduranceandtheperformanceofthetechnology.Technologieswhichareincompatiblewiththedominanttechnological regimeare,however,lockedout(VandenBerghandOosterhuis,2008:159).Thislock-inmechanismwasanalysedbyexam- iningthecompatibilityorincompatibilityoftheincumbentenergyandtransportsystemwiththeemergingroadtransport technology,thecompatibilityorincompatibilityofthenewtechnologywithothertypesoftechnology,andbyinvestigating thecompetitionbetweendifferentgenerationsoftechnology,e.g.firstgenerationbiofuelsvs.advancedbiofuels,normal chargingpointsvs.fastchargers,andhydrogenforcombustionenginesandforFCEVs.

2.7. Collectiveaction

Collectiveactionreferstotheemergenceandsubsequentreproductionofsocietalnorms,customs,consumptionpatterns andformalregulationthroughcoalitionbuildinginassociatednetworksofindividualsandorganisations(Foxon,2002).These werestudiedbycomparingthedominantandemergingnormsinsupportofprivateandcollectiveroadtransportsolutions.

Acomparisonoftheshareoftransportbycarvs.bybusandcoachwasconducted.Additionalrelevanttopicsincludethe publicprocurementofmoresustainablepublictransportvehicles,newtypesofcollectiveownership(carsharing),new typesofoperatorsformobilityserviceswhichtakeadvantageofloweroperationalcosts,andtheemergenceandstrength ofinterestorganisations.

2.8. Institutionallearningeffects

Institutionallearningeffectsaretheoutcomeoftheincreasedadoptionofinstitutions,whichmakesthemrathercom- plexanddifficulttochange,evenwhenmistakeshavebeenclearlyidentified,whileatthesametimeprovidingimproved coordinationandadaptiveexpectations(Foxon,2002).Herewestudiedthecoordinationofpolicydomainsinfavourof theincumbent regimeor a newtrajectory, forexample, energy, transport and taxation,policy coordinationbetween

Table1

Interviewsforthecasestudies.

Firminterviews Stakeholderorganisationinterviews

Denmark 1 1

Finland 2 2

Norway 3 2

Sweden 2 2

municipalitiesandregionalauthorities, theemergenceofnon-governmentalinstitutionsfor knowledgesharingvs.the existingknowledgenetworksfortheincumbentregime,andpublicR&Dprogrammesforsustainableroadtransport.

2.9. Differentiationofpowerandinstitutions

Asymmetriesofpower,institutionalcomplementaritiesandsymbioticrelationshipscontributetoinstitutionallock-in.

Asymmetriesofpowermeansthatstrongpoliticalactorscanimposerulesonothersandforcechangestotherulestoenhance theirpower(Foxon,2002).Institutionalcomplementaritiesmeansthatdifferentinstitutionsarecomplementarywhenthe enhancementofoneassiststheprovisionoftheother(Ostrometal.,1993).Forexample,complementaritiesexistbetween corporategovernanceandlabourregulations.Institutionsandorganisationsdevelopsymbioticrelationshipsasaresponse totheincentivesputinplacebythoseinstitutionsandfavourincrementalinsteadofradicalchanges.

Herewestudiednationaltargetsregardingtheuseofrenewablesourcesinroadtransport,theuseoftaxexemptions andotherincentivesforalternativecarsandfuels,andtheexistenceofstrongstate-ownedindustryplayersspecialisedin productionofelectricity,cars,andbiofuelswhichencourage/discouragenewtrajectoriesforsustainableroadtransport.

3. Methodologicalapproachanddata

Thepaperisbasedonacomparativeanalysisofcasestudiesontheroleoflock-inmechanismsforpath-dependencies infourNordiccountries.Wedrawontheresultsofselectedcasestudiesinajointprojectasexamplesoftheinfluenceof lock-inmechanismsintransitionprocesses:e-mobilityinDenmarkbasedon(Borup,2014)andafollow-updocumentary anddatareview,advancedbiofuelsinSwedenandFinland(HansenandCoenen,2013;WessbergandEerola,2013)and hydrogenandFCEVcasestudiesinNorway(ScordatoandKlitkou,2014).Whenselectingthecases,ourintentionwasto coverthemostadvanced,butalsodifferenttechnologyplatformsintherespectivecountries.

Besidestheselectedcasestudies,wedrawfromanumberofothercasestudiesonadvancedbiofuelsinroadtransport (AmerandBolwig,2013;BolwigandAmer,2013;Ericssonetal.,2013;Fevolden,2013a,b;Klitkou,2013;Wessbergand Eerola,2013),onBEVs(Iversenetal.,2014;Røste,2013),onFCEVsandhydrogen(Ihonen,2013),whichinformourdis- cussionoflock-inmechanismsfortheselectedcases.Thecasestudiesarebasedonareviewoftherelevantliteratureand semi-structuredinterviewswithkeyactorsinindustryandstakeholderorganisations,althoughtheDanishcaseismainly basedondocumentaryreviews,whiledrawingoninterviewswithparticipantsinalargeBEVdemonstrationprogramme inDenmarkcarriedoutaspartoftheInnoDemoproject(Klitkouetal.,2014).Thereviewedliteratureincludescorporate reportsandpresentations,industryanalyses,datafiles,mediareportsaswellasacademicliterature.Theinterviewsfocused onattemptingtounderstandthebarriersandopportunitiesforthewiderdiffusionofthegiventechnologyplatforms.This includedspecificattentiontotheroleofindustrialcharacteristics,upanddownstreamactorsandtheinstitutionalcontext.

Table1liststhenumberoffirmsandstakeholderorganisationsinterviewed.

Eachofthefourcasestudiesgivestheempiricalbackgroundforthediscussionoftheninelock-inmechanismsspecified inthetheoreticalframework.

4. Caseanalyses

Thissectiondiscussesthemainlock-inmechanismsoftheNordiccountries’energy-basedroadtransportationsystems andconcentratesonthreetechnologyplatforms:(a)advancedbiofuelsinFinlandandSweden;(b)renewableelectricityand BEVsinDenmark,and;(c)hydrogenandFCEVsinNorway.Wediscusstheroleoftechnologicalandinstitutionallock-in mechanismsforenergyproduction,roadtransportandrelatedinfrastructure.Further,wedistinguishbetweenthenegative andpositiveeffectsofthelock-inmechanismsonthedevelopmentofthetechnologyplatformsthushighlightinghowthe preconditionssetbythelock-inmechanismsmayalsosupportatransitiontowardssustainableroadtransportationsystems.

4.1. BEVsinDenmark

ThehighandincreasingshareofwindpowerintheDanishenergysystemfavourssolutions,whichcanhelptolevelout thevariableelectricityproduction,e.g.e-mobilityandsmartgrids.Therehavebeensignificantlearningeffectswithinthis area:TheDanishregimeiskeenonstimulatinglearningprocessesrelatedtoenergystorageandflexibledemandduetoa highlyvariablerenewableenergysource(wind).Thisregimetraitfavourselectricalvehiclesystemintegration.Ahighshare

ofpublicRD&DfundinghasbeenallocatedtoelectricitytransmissionanddistributionandtheDanishgovernmentandthe EuropeanUnionhavesupportedseveralRD&Dprojectsonelectricvehiclesystems,infrastructureandsmartgridintegration overthelast5–10years(Borup,2014).TheDanishEnergyAgencyfundedelectricvehiclepilotprojectswithatotalofDKK 50millionovertheperiod2008–15withtheaimofgainingpracticalexperiencewithBEVsandrelatedinfrastructure.This includesademonstrationprojecttotest200BEVsoverfouryearsincludingtheautomatedcollectionofgeo-referenceddata ontheoperationofBEVsaswellastechnicalandbehaviouralanalyses(Klitkouetal.,2014).TheDanishTransportAuthority alsosupportsseveralBEVinitiativesincludingthelatteraswellastheuseofBEVsincarsharingarrangements.Moreover, e-mobilityisoftenakeycomponentoflearningprocessestakingplacethrough‘smart’and‘low-carbon’cityprojects.

Concerningeconomiesofscale,thefactthatDenmarkhasadenserandmoreevenlydistributedpopulationcompared tootherScandinaviancountriesmakestheestablishmentofnation-widecharginginfrastructureforBEVsmorefeasible.

DenmarkwasthefirstEuropeancountrytoimplementBetterPlaceBEVinfrastructure.Between2010and2013,thecompany installed17batteryswitchstations,8fast-chargingstationsand1400chargingpoints(plugs)(Borup,2014).However,Better Placefailedtoattractenoughcustomersfortheirnewserviceinfrastructure,whicheventuallyledtothefirm’sbankruptcy in2013.Today,Denmarkhasaround500publiclyaccessiblechargingstations(seebelow),whichonlyservicearound3000 vehicles.

EconomiesofscopeinBEVsarecreatedbythecombinationofconventionalformsofelectricitydistributionandthe operationofEVcharginginfrastructure.Denmark’slargestelectricitydistributor,DongEnergy,wasoneofthemainshare- holdersinBetterPlacebeforethebankruptcy.Today,electricitycompaniesdominatepublicEVcharginginfrastructure:E.ON Denmarkoperates341normalchargingstationsplus13fastchargers.FiveDanishutilitiesjointlyownthecompanyCLEVER, whichoperates346chargingpoints,ofwhich330arefastchargers.Ownershipofparkingfacilitiesandamenities(service stations,restaurants,etc.)incitiesandalongmajorhighwaysofferseconomiesofscopefortheplacementofrecharging infrastructure,whichisillustratedbynewcollaborationsbetweencharginginfrastructureownersandmunicipalitiesand vehiclefuelretailers.

Regardingnetworkexternalities,Denmarkhasnoautomobileproducersand,therefore,littleinfluenceonstandardsfor electricvehicles.Worldwidedifferent,mutuallyincompatiblesystemsforrechargingofelectricvehiclesexist.TheEuropean CommissionhasstipulatedthatType2togetherwiththeCombo2plugbethecommonEuropeanstandardforbothslow andfastchargingconnectionsandthatMemberStatesmustincorporatethisstandardintheirnationalpolicybytheendof 2016.Theintroductionofthisstandardwillreduceinvestmentcostsandincreaseuseraccess.

InformationalincreasingreturnshavebeenhitbythebankruptcyofBetterPlace,whichcontributedtouncertaintyamong potentialEVusersinDenmark.However,theincreasingnumberofchargingstationsandcarmodelsonthemarketislikely tohaveincreasedDanishconsumerinterestinBEVs.Asurveyfrom2014suggeststhatsince2013consumershavebecome lessscepticaltowardselectricvehicleswhilesaleshavedoubled.However,69%ofDanishconsumersarestillreluctantto buyaBEVastheirnextcar(MichelinNordicAB,2014).Attheendof2014,therewerelessthan3000BEVsontheroadswith aboutthree-quartersbeingownedbypublicorprivateenterprises,andonlyone-quarterbyprivatehouseholds.

TechnologicalinterrelatednessisofsignificantimportanceinDenmarkastheelectrificationoftheDanishenergysystem isdrivenbyincreasedwindpowerandfavours–andpartlydependson–theelectrificationofroadtransportover,e.g.

biofuels.Inthisregard,vehiclescanbechargedattimesofrelativelylownetelectricitydemand(i.e.,demandminusany fluctuatingrenewableproduction),whichtypicallyoccursatnight.Ithasbeenestimatedthatitwillbepossibletocharge 200,000electricvehiclesduringthenightin2020withoutaddingextracapacitytotheenergysystem(Christensenetal., 2012).Suchintelligentchargingwillincreaseoverallsystemefficiency,improvetheeconomyofwindpower,andputless strainonlocalelectricgrids(Ibid),althoughitsimplementationrequiresthatconsumersareincentivisedtochargevehicles duringoff-peakhoursthroughtimevariabletariffsorothermeans.Providingsucheconomicincentivesforoptimal(from theviewpointofvehicleowners)chargingwillresultintheincreasedintra-dayflexibilityofthepowersystem,butnot inincreasedstorageorday-to-dayflexibility(Delikaraoglouetal.,2013).Theincreasingnumberofprivatehome-based photovoltaicsystemscanbeusedtochargeelectricvehiclesinlieuofsellingtheelectricitytothegridatalowprice.There were90,000suchsystemsinstalledin2014.

Formalregulationintermsoftaxexemptionsisthesinglemostimportanttypeofcollectiveactiontopromotethe adoptionofBEVsinDenmark.Electricvehiclesareexemptfromallregistrationfeesandroadtaxes,andelectricitydelivered bychargingstationsistaxedatalowerratethanforprivatehouseholds.Thetaxexemptionshouldbeseeninthecontext ofveryhighregistrationfeesforconventionalcars.Thetaxexemptionistypicallyextendedby3yearswiththecurrent exemptionrunningtotheendof2015.Inlate2014,theDanishEnergyAssociationandtheDanishElectricVehicleAlliance, togetherwithE.ON,publiclyvoicedconcernsthatadecisiontoextendthetaxexemptiontotheendof2018hadnotyet beenmadearguingthatsuchadecisionisessentialforthefutureofBEVsinDenmark.Agradualreformofthevehicletax systemwouldovertimefavourBEVsaswindandotherrenewablesreplacefossilfuelsintheDanishenergysystem.Public opiniongenerallysupportsthesepositions(YouGov,2014).Emerginge-mobilityoperatorscantakeadvantageofratherlow operatingcostsforBEVstherebygivinge-mobilityrenewedmomentum(Dijketal.,2013).TheexperiencewithBetterPlace has,nevertheless,shownthatcustomersarehesitanttoadaptthesebusinessmodelssinceitmeansrentingandnotowning thebatteries.Insum,perceiveddelayedpoliticalactionhascreateduncertaintyintheEVmarketinthemidstofcareful optimismregardingBEVsalesandconsumerperceptions.Asecondkeyregulatoryissueconcernsthenon-implementation oftime-variableelectricityprices,which,asnotedabove,meansthatBEVownerspresentlyhavenoincentivetochargetheir vehiclesatoptimaltimesforoverallpowersystemflexibilityandperformance.

Concerninginstitutionallearningeffects,municipalitiesandregionalauthoritieshaveintroducedBEVsintheirfleetsin ordertoreduceCO₂emissionsandlocalairpollution.Knowledge-sharingnetworkshaveexistedformunicipalitiesand regionssince2009andsince2014forprivatefirms,whiletheCapitalRegionofDenmarkhasasecretariatdedicatedtothe promotionofelectricvehicles.Demonstrationprojectssuchastheonementionedabovetesting200BEVshaveoftenbeen implementedthroughcollaborationbetweenaverywiderangeofstakeholders(Klitkouetal.,2014).Atthenationallevel, energyandtransportaretraditionallytwoseparatepolicydomains,butsomecoordinationregardingBEVdeploymenttakes place,e.g.withsupportschemes.Theoverridingimportanceoftaxexemptionmeansthatcoordinationisnecessarybetween thetwolatterpolicydomainsandthatoftaxation.Anumberofnon-governmentalinstitutionshavebeeninvolvedinbuilding knowledgeonEVsystems,charginginfrastructureandsmartgridintegration.TheseincludetheDanishnationaltransmission systemoperatorforelectricityandnaturalgas,theDanishEnergyAssociation,theDanishElectricVehicleAlliance,energy companiesandcharginginfrastructureoperators,carrentalandleasingcompaniesandotherfleetmanagers,aswellas universities.Theseinstitutionalinitiativeshaveoftenbeendevelopedasareactiontopolicyinitiativesandhavereinforced eachother(Borup,2014).

Finally,withregardstodifferentiationofpower,Denmarkhasnoautomobileproducerssothemaineconomicinterests ine-mobilityarerelatedtocharginginfrastructure,smartgridintegration,electricityproduction,EVimportsandretailing, andEVfleetoperation.DanishcompaniesandknowledgeinstitutionsinvolvedintheseactivitiesfoundedTheDanishElec- tricVehicleAlliancein2009undertheConfederationofDanishIndustry,whichhas50membersincludingseverallarge companies.

4.2. HydrogenandFCEVsinNorway

LearningeffectshavecontributedtoearlyexperimentswithhydrogeninFCEVs.Theselearningeffectscomefromtwo differenttechnologicaltrajectories:Statoilwasmainlyinterestedinusingnaturalgastoproducehydrogen,whileNorsk Hydrofocussedonelectrolysistoproducehydrogenfromabundanthydroelectricpower.Sincethe1980sand1990s,Nor- wegiancompanieshaveengagedinR&Dondifferentfuelcelltypes,hydrogenproductiontechnologyandhydrogenstorage, withStatoil,NorskHydroandKværnerbeingthemostprominentcompanies(GodoeandNygaard,2006;Klitkouetal., 2007).Inthe1990s,despiteco-fundingfromthepublicresearchfundingagency,NTNF,thebigindustrialR&Dprojects– NorCellIandIIandMjøllner–failed(GodoeandNygaard,2006).Thenaturalgastrajectorywasdismissed,whiletheelec- trolysistrajectorydevelopedfurther,butwithmuchlesseconomicfundingthanthenaturalgastrajectoryandinvolving otheractors.SomeimportantpublicresearchorganisationsareactiveinthefieldofFCandhydrogeninNorway(Klitkou etal.,2007).However,themainchallengeisthatthereisnostrongdomesticindustrytosupporttheongoingresearchatthe publicresearchorganisations.Competenciesinsomefieldssuchashydrogenstorageandelectrolysershavebeendeveloped byindustrialactorsandhavecontributedtotheongoingexperimentswithhydrogenandFCEVsinNorway.However,the maintenancepersonnelforvehiclesandtherefillinginfrastructureareeducatedtoservethefossilfuelroadtransportsys- tem,whileknowledgeontheFCEVsandhydrogenfillingstationsisstilllimitedtoanumberofprojectswithasmallnumber ofexperimentalfillingstations,publicfuelcellbusesinOsloandparticipationinEuropeanhydrogenprojects.Therehave beensomelearningeffectsregardingtheassessmentofrisksandsafetyissues.Hereoneofthemainglobalcertification bodies,DNVGL,hasusedcompetenciesdevelopedfortheoilandgassector.

Economiesofscalehavedis-incentivisedinvestmentsinhydrogenandFCEVs.Firstly,thesignificantNorwegianoiland gasindustryfavourstheuseoffossilfuelsoverhydrogen.Secondly,hydropowerfavourse-mobilitywithBEVswithout the“detour”viahydrogen.Thirdly,Norwaydoesnothaveadomesticcarproductionindustrytodrivethedevelopment ofhydrogenpoweredcars.However,economiesofscopearebecomingmoreimportantassomeNorwegianfirmshave specialisedintheproductionofsomekeyproductsforrealisingFCEVsinNorway,suchashydrogenproductionunitsvia electrolysisorvialandfillconversionandcompositetanksforthestorageandtransportationofhydrogen.Cooperationwith otherforeignnicheactors,especiallyinDenmark,hasbeenessential.

Networkexternalitiesofthedominantfossiltransportregimehindertheintroductionofnewinfrastructureforhydrogen fillingstations.However,standardsforsafetyissuesforhydrogenfillinginfrastructuredevelopedininternationalprojects withtheparticipationofstrongNorwegianactorssuchasDNVGLhavealsocontributedtotheearlydeploymentofhydrogen andFCEVsinNorway.

Informationalincreasingreturnsarelimitedtothecapitalregionandarenotsowelldeveloped.InNorway,allBEVsare markedwithELontheirlicenseplateandallFCEVsaremarkedwithHYandfuelcellbusesaredecoratedwithlargebanners identifyingthemasFCEVs.Informationcampaignsforalternativevehiclesaresupportedbythepublictransportationagency andregionalandmunicipalauthorities.ThisincreasesthevisibilityoftheFCEVs,althoughtherearestilltoofewofthese vehiclestohavemadeanimpactsofar.Ifsafetyissuesareclearlydealtwith,publicacceptanceofFCEVshasthepotential tobegreaterthanforBEVsduetothelongerrangeofFCEVs.

Technologicalinterrelatednesscanbetracedforfirmsengagedintechnologiesrelatedtothetransportandstorageof hydrogenandothertypesofgasandrelatedtechnologies.Thisinterrelatednessresultsinsomesynergiesforactorswhoare activeinbothfieldssuchasHexagonandDNVGL.

Regardingcollectiveaction,societyisbasedonnormswhichsupportindividualcaruse,maximummobilityandroad systemsandlessoncollectivesolutionsorsharedownershipmodels.Theshareofpassengertransportonlandbypassenger carisat87.7%thehighestintheNordiccountries.Theregulationsaremainlyorientedtowardsprivatelyownedcars.FCEVs

havebeenratherexpensivewhichhaslimitedtheiruseascollectivetransportsolutions.Publicprocurementofafewfuel cellbuseshasbeentoolimitedtohavemadeadifferencetopublictransport.InterestorganisationsforhydrogenandFCEVs collaboratewithlocalandregionalauthorities,researchersandtheemergingfirms,whichstrengthenstheirposition.

Institutionallearningeffectshavedis-incentivisedtheintroductionofFCEVsinNorway.Somepublicactorsengageinthe strategicprioritisationofFCEVSsuchastheAkershusregionalauthorities,andthetransportationagency,whichhasfunded demonstrationprojects.However,atthegovernmentlevel,thishasalowerpriorityeventhoughtheMinistryofPetroleum andEnergyandtheMinistryofTransportandCommunicationsjointlyestablishedtheHydrogenCouncilin2005withthe mandatetoactasanadvisoryboardinmattersrelatedtohydrogen.ThegovernmentsupportspublicR&Dprogrammeson renewableenergyandCCS,butdoesnotprioritiseR&DonsustainabletransportandespeciallyFCEVs.

Differentiationofpoweroccursespeciallybecauseofasymmetriesofpowerwhichstrengthenthefossiltransportregime.

However,theNorwegiangovernmenthasimposedrulestopromotemoresustainablesolutions.Allfuelcellelectricvehicles benefitfromanumberofincentives:theyareexemptfrompurchasetaxandVAT,receivea90%discountonannualroad tax,paynotollormunicipalparkingfees,getfreeferrypassageandhaveaccesstobuslanes.However,hydrogenisnot freeasopposedtothefreeelectricityprovidedatpublicrechargingpointsforBEVs.BothFCEVsandBEVscanmakeuseof theveryhighshareofE-RES(105.5%in2011).Anexampleofasymbioticrelationshipisthecloseconnectionbetweenthe state-ownedStatoilcompanyandanumberofR&Dorganisations,whichfavourR&Donoilandgas,whileR&Donhydrogen andFCEVsislackingbusinessfunding.

4.3. AdvancedbiofuelsinFinland

TheforestindustryhasbeenanimportantexportindustryinFinlandsincethe1600sandstronglearningeffectshave contributedtothedevelopmentofadvancedwood-basedbiofuels.Thiswoodprocessingexpertiseisusedbytheforest company,UPM,whichstartedtoproducewood-basedbiodieselin2015inEastFinland.Theproductionplantislocatednext toapulpmillandutilisestalloilasarawmaterialfromthepulpmill.

AnothersignificantlearningeffectinFinlandisthelearningclusterinadvancedbiodieselsthathasdevelopedaround thefuelindustry,inparticulartheenergycompanyNesteLtd.,whichstartedin1954asanoilrefineryprocessingimported fossilfuel.Neste’sspecialisationindieselproductionhasstimulatedincrementalcompetencedevelopmentwithinbiofuels.

NesteOilinitiatedtheproductionofbiodieselfromcertifiedpalmoilinthe2000s,andthecompanyhasrecentlystartedto cooperatewiththeDanishcompany,Inbicon,toproduceadvancedbiodieselfromstraw.

Thepulpandpaperindustry,andenergyproductionrelatedtoit,havetraditionallybeenanimportantindustrialsector inFinlandandhas,hence,createdeconomiesofscale.Economiesofscalelock-inmechanismsarealsofoundaroundthe existingfossilfuelbasedroadtransportregime—mostofthevehiclesusedareICEcarsusingfossilfuelsorblendswithbiofuel.

EnergyproductionprocessesintegratedwithpulpmillscreatealargeshareofrenewableenergyproductioninFinland.Itis, therefore,commontoseepulpmillsintegratedwithenergyproductionaswellaswithtransportfuelproduction.Transport fuelproductionisbulkproductionwhichtakesadvantageoflarge-scaleproductioncapacityandlargemarketswiththe potentialforeconomiesofscopeemergingduetothepotentialofproductdiversificationinpulpmillbasedbio-refineries.

Networkexternalitiesofthedominantfossiltransportregimeinhibitthespreadofothertransportenergytechnologies suchaselectricityorhydrogeninFinland.However,fossilfuelcarsanddistributionnetworkareavailablefordrop-in(bio- ethanolorbiodieselblendedfuels)andadvancedwood-basedbiofuels.Biofuelsare,hence,technologicallywellintegrated withtheexistingfossilfuelregime.

Concerninginformationalincreasingreturns,suchdrop-inbiofuelsarewidelyacceptedbyFinnishcarowners.Atfirst, in2010,consumerswerescepticalandwaryofthe10%biofuelsuitabilityofcars,butnowtheyareusedtoitandbelieve thatthebiofuelwillnotharmtheircarsandthatitisalsousableatlowtemperatures.Finlandisalarge,sparselypopulated countrywhichisbasedonnormswhichsupportprivatecaruse(collectiveaction)withthecurrentregimefavouringfossil fuelcars.However,inthefourlargestcities,publictransportsystemsarewelldevelopedandarecontinuallydeveloping.

Regardingcollectiveaction,theFinnishgovernmenthassetanationaltargettoincreasetheuseofbiofuelinroadtrans- portto20%by2020.Thus,contrarytoSweden(seebelow),theFinnishgovernmenthassetamoreambitioustargetthan thatrequiredbytheEU.ThisrepresentsachangeasFinlandisalatecomertotransportbiofuelpolicydespitesomeearly statementsintheearly1980s(KivimaaandMickwitz,2011).Supportforfirstgenerationbiofuelswaslacking,butin2009–10 FinnishpolicychangeddramaticallyandbegantotargetadvancedbiofuelswhileFinnishoilcompaniesdecidedtoproduce advancedbiofuels(LovioandKivimaa,2012:785).DuetoEUregulations,biofuelsfromwasteproductscancounttwice.Tall oilisregardedasawasteproductofpulpmillsand,hence,abiofuelproducerusingtalloilcancountbiofuelfactorstwice, whichmakesthefuelproductionevenmoreprofitable.

Concerningdifferentiationofpower,thereisabattlegoingonbetweenthewood-basedbiofuelproducers,suchasUPM, andchemicalindustryactorswhoaretryingtodevelopadvancedchemicalsmadefromwood,especiallyfromtalloil.Atthe sametime,thepriceoftalloilisincreasingonthemarket,whichreducestheprofitsofthechemicalindustryinparticular.

Theforestindustryisalsoworriedthatstatesubsidiesmayshapetheenergysystemsothatforestownersselltheirtimber toenergyproducersinsteadoftheforest-basedindustries.Forestenergyusemayleadtoanincreaseinthepriceoftimber andtimberprocessingsideproductsandinthatwayaffectthemarket.

4.4. AdvancedbiofuelsinSweden

Learningeffectshavebeenveryimportantforthediffusionofbioethanolfortransport inSweden,inparticular,the existenceofrelevantandrelatedcompetencieswithinpulpandpaper,anindustrywhichisofkeyeconomicimportance toSweden.SulphitepulpingmillsdevelopedunitstoproducebioethanolasasubstituteforimportedfuelsduringWorld WarII.Consequently,ethanolproductionwascarriedoutat32Swedishpulpandpapermillsinthemiddleofthe20th century.Whilepulpmillsweregraduallyabandoningtheproductionofethanolforfueluseinthepost-warperioddueto therenewedavailabilityofimportedpetrol,acompetencebasehadbeendeveloped.Buildingonthis,substantialresearch activitiesinto,firstly,methanolandsubsequentlyethanolfuelproductionhavebeenconductedinSwedensincethe1970s.

DesignatedresearchprogrammesforethanolresearchfundedbytheSwedishEnergyAgencyhavebeenrunningsince1993 (JoelssonandTuuttila,2012),andtheshareofpublicRD&DbudgetsonenergyforbiofuelsishighestinSweden.Asecond importantlearningeffectisthestrongSwedishcompetencieswithinvehiclemanufacturing.Forexample,theSwedishtruck andbusproducerScaniainitiatedanR&Dprojectintheearly1980swhichfocusedondevelopingbusenginesspecifically forrunningonethanol,whichledtotheintroductionofthefirstethanolbusin1985,whichhassincebeenimproved successively(JohnsonandSilveira,2014).Insummary,competenciesfromexistingindustrieshavesignificantlyinfluenced opportunitiesfordevelopinganddiffusingbioethanolfortransportinSweden.

Economiesofscalehavemainlydis-incentivisedinvestmentsinlignocellulosicbioethanolfortransport.Firstly,thesig- nificantSwedishhydroelectricpowerandnuclearpowerproductionfavoure-mobilityoverbioethanol.Secondly,thepulp andpaperindustryhastraditionallyfocusedonlarge-scaleproductionofalimitednumberofproductswithlittleattention toproductdifferentiation.However,economiesofscopearebecomingincreasinglyimportantasthedemandforpaper decreases,openingupforfurtherdiversification.Still,thedegreetowhichlignocellulosicbioethanolwilltakeupacentral positionintheproductportfolioofadiversifiedpulpandpaperindustryremainstobeseen.

Technologicalinterrelatednessbetweenconventionalfossilfuelcarsandbioethanolpoweredcarsisageneraladvantage ofbioethanolrelativetoe-mobilityasitonlyentailsminimalchangestoenginedesign,refuelling,drivingstyleandrange.

Thus,usersperceivethestepfromconventionalfossilfueltobioethanolasrelativelysmall.Arelatedaspect,categorised asanetworkexternality,whichisofcentralimportancetotransportinSwedenis,asinmostothercountries,theexisting fuellinginfrastructure.IntheSwedishcase,theE85pumpinfrastructureiswelldevelopedandintegratedwithconventional fuellinginfrastructure,therebysignificantlysupportingthediffusionofbioethanolfortransport.Asecondimportantnetwork externalitywhichinfluencestheuseofbioethanolfortransportisthattheSwedishautomobileindustryhasbeeninvolved instandardsettingforbiofuels.

Asinmostothercountries,informationalincreasingreturnshavesupportedthediffusionoffossilfuelbasedcarsin Sweden.Whilethegrowingvisibilityofbioethanolislikelytohavesupportedthenowsignificantdiffusionofthistechnology inSweden,anumberofpublicdebatescontinuetoquestionthebenefits.Firstly,thefoodvs.fuelissuecontinuestobedebated, inparticularbecausemostoftheethanolisimportedfromdevelopingandemergingeconomies.Secondly,questionshave beenraisedconcerningthenegativeeffects onenginesresultingfromrunningonethanol.Consequently,anincreasing numberofownersofflexiblefuelcarsarechoosingconventionalpetroloverethanolaccordingtotheSwedishEnergyAgency.

Andthirdly,researchershaveraisedconcernsregardingthehealtheffectsofusingbioethanolinvehicles(López-Aparicio andHak,2013;SundvorandLópez-Aparicio,2014).

Regardingcollectiveaction,individualcaruseisstillthedominantnorminSweden.Americanisationhassignificantly influencedSwedishsociety,includingtheperceptionofthecarasacentralelementineverydaylife(O’Dell,1997).Fur- thermore,beingalargeandsparselypopulatedcountry,publictransportandeventoalargeextente-mobilitycannotfulfil thetransportationneedsofalargeshareofthepopulation.However,biofuelpoweredcarsfitquitewellintothedominant norm.

Theimpactofinstitutionallearningeffectsthatfollowfromincreasinglycomplicatedregulationandcoordinationofall aspectsofcaruseinSwedenaresimilartomanyotherwesterncountries:theconventionalfossilfuelcarisfirmlyembedded inSwedishsociety.However,whiletheinstitutionsregulatingcarusearecharacterisedbyinertia,aquitesignificantpolicy- pushhasbeeninitiatedbytheSwedishgovernmentinrecentyearstopromotebioethanol.Manyoftheseinitiativesbuildon conditionsdescribedunderthepreviouslock-inmechanisms,e.g.theSwedishPumpAct,whichrequiredlargergasstations tosellrenewablefuels,orthepublicprocurementofflexiblefuelvehiclesfromtheautomotiveindustry.

Finally,concerningthedifferentiationofpower,thedecision-making poweronmostkeyissuessuchasfundingfor thedevelopmentanddemonstrationofnewtechnologiesresideswiththecentralSwedishgovernment.Still,likeallother membersoftheEU,SwedenmustfulfilEUrequirementsconcerningtheuseofrenewableenergyinthetransportsector,but thecurrentuseoffirstgenerationbioethanolallowsSwedentomeetthisobligation(HillmanandSandén,2008;Hillman etal.,2008).However,thishasbeenfoundtohamperthediffusionofadvancedbiofuelsinSweden(Hillman,2011)astheEU providesnoclearincentivestomovebeyondfirstgenerationbioethanol(seealsothesisterpaperonpath-creation:Hansen etal.,inpreparation).

5. Discussion

Inthefollowing,wediscusstheresultsofthefourcasestudiestoanswertheresearchquestion.Thesectionhasthreemain topics:(1)theimportanceofthedifferentlock-inmechanismsforthetransitiontowardsaNordicsustainableenergyand

roadtransportationsystem;(2)theinterconnectednessofthelock-inmechanisms,and;(3)theimplicationsfortransition theory.

5.1. Importanceofthedifferentlock-inmechanisms

Inordertosummarisetheeffectsofthelock-inmechanisms,Table2highlightstheroleofeachoftheninelock-in mechanismsforeachofthefourcases.Importantly,thepreconditionssetbythelock-inmechanismsdonotnecessarily inhibitthedevelopmentofagiventechnologyplatform,butmayalsoeffectitpositively.Table2distinguishesbetweensuch positiveandnegativeeffects.

5.1.1. Learningeffects

Learningeffectsareacentrallock-inmechanismforreinforcingpath-dependenciesintheNordiccountriesandthey favourtheselectedtechnologicaltrajectoriestodifferentdegrees.Theyarebasedontheindustrialspecialisationofthe fourcountries:thedeploymentofwindtechnologyinDenmarkandrelatedeffortstomanagethevariableelectricitypro- duction,theforestandpulpandpaperindustryinFinlandandSweden,theautomobileindustryinSweden,andtheoil andgasindustryandelectro-chemicalindustryinNorway.Learningeffectsalsooccurinthereplacementoffossilfuelsby biofuels,bothinFinlandandSweden.Theseeffectsarereinforcedbypublicfundingprioritiesforresearch,thedevelopment anddemonstrationofnewtechnologies,theeducationoftechnicalpersonnel,favourableconsumptionpatterns,andthe formationofknowledgeclustersaroundcentralcompanies,especiallyinFinlandandSweden.

5.1.2. Economiesofscale

Economiesofscalehaveinfluencedthefourcasesdifferently.ThesignificantNorwegianoilandgasindustryfavoursthe useoffossilfuelsoverhydrogen,whilelargehydroelectricpowercapacityforproductionfavourse-mobilitywithBEVs.

Swedishhydroelectricpowerandnuclearpowerproductionfavoure-mobilityoverbioethanol.InFinland,thereisalarge incumbentpulpandpaperindustry,whichtriestoexploitthepotentialofadvancedbiofuelsonalargescale.InDenmark, windenergyproductionislargeandgrowingandthecostofoff-shorewindpowerisdecreasing,which,incombinationwitha denselypopulatedcountrymayfavoure-mobilityincludingthedeploymentofBEVrechargingandsmartgridinfrastructure.

However,thelownumberofBEVsontheroadhascontributedtotheunderutilisationoftheexistingcharginginfrastructure anddis-incentivisesfurtherinfrastructuredevelopment.

5.1.3. Economiesofscope

Todate,economiesofscopehavemainlybeenachievedinthebio-economy,butproductdiversificationisstillmuch lessdevelopedthaninthefossileconomy.However,economiesofscopearebecomingincreasinglyimportantinallfour casesandareeasiertoachieveforsmallereconomiesthaneconomiesofscale.Thiscanbeexplainedbythecrisisofthe traditionalpulpandpaperindustryandproductdiversificationoftheup-comingbio-refineries,nichemarketsforhydrogen technologiesandtheco-locationofrecharginginfrastructurewithparkingfacilities,servicestationsandamenities.Product diversificationtowardshighervalueproductsinbio-refineriesmay,however,alsohaveanegativeimpactontheproduction ofadvancedbiofuelsthatareofrelativelylowvalue.InSweden,bio-refineryoperatorsare,thus,increasinglyregarding biofuelsaslessprofitableby-products.

5.1.4. Networkexternalities

Thefossiltransportfuelinfrastructureiswelldevelopedinallfourcountriesandbiofuelsareusedasadrop-inandare, therefore,well-integratedintheinfrastructure.Thenatureofinfrastructuresystemsfortransportationisimportanthere asthesesystemsarenotjustnational,butcrossbordersandhavetointegratethetransportsystemofseveralcountries.

Thereisaninterplaybetweenthedifferentinfrastructuresystems(FrantzeskakiandLoorbach,2010).Thesupplementary infrastructuresystemforhydrogencompeteswiththefossilfuelandthebiofuelinfrastructure(i.e.providingverydifferent typesoffuels),buttheco-utilisationofinfrastructuresystemsisalsopossible.Fore-mobility,wehighlighttheco-evolution ofthecharginginfrastructureandtheelectricitysystem,andtheco-utilisationofsmartgridinfrastructuretofulfildifferent tasksandtoallowadaptationtofluctuationsinnetdemand.

Standardsareimportantinmostofthecases:TheSwedishautomobileindustrycontributedtonationalandEUstandard settingforbiofuels,whileNorwegiancompaniesandotheractorshavebeenactiveininternationalnetworks,whichdevel- opedsafetystandardsforH₂/FCEVinfrastructure.InDenmark,thedeploymentofEUstandardsforchargingBEVswillallow networkintegrationandnetworkexternalitiesforBEVuserscrossingtheDanishborders.Thiswillcontributetoreduced investmentcosts.

5.1.5. Informationalincreasingreturns

Informationalincreasingreturnscanbeachievedbybecomingmorevisibletothepublicthroughdifferentchannels:

(1)Informationcampaignsbypublicandprivateactors;(2)Publicdebateontheadvantagesanddisadvantagesofthe competingtechnologies;(3)Accesstodifferentvehiclemodelsandrelatedinfrastructure;(4)Thedevelopmentofuser forumsandmobilephoneapplications,and;(5)Theeducationofmaintenancepersonnel.However,concernsregardingthe sustainabilityofasolution,highcosts,rangeanxiety,safetyandhealthissuesandeconomicconstraintsinhibitinformational

Table2

Summaryofpositiveandnegativeeffectsoflock-inmechanisms.Boldtextindicatesanegativeeffectofalock-inmechanismforthedevelopmentofa giventechnologyplatform,whiletextinitalicsdenotesapositiveeffect.

Lock-inmechanism Denmark

Batteryelectricvehicles (BEVs)

Finland Advancedbiofuels

Norway

HydrogenandFCEVs

Sweden Advancedbiofuels

Learningeffects Publiclyfunded,often multi-stakeholderRD&D projectshavebeen importantforbuilding competencesonBEVuseand fleetmanagementandon theroleofBEVsinthepower system

Competencesin incumbentindustries havebeenimportantto advancedbiofuel technologydevelopment

Competencesinpartsofthe incumbentindustries(Norsk Hydro)andstrengthof publicR&Dactorshavebeen importantforearly experimentswithhydrogen technologyforroad transport

Competencesin incumbentindustries havebeenimportant toadvancedbiofuel technology development

Economiesofscale ThelownumberofBEVs ontheroadmeans under-utilisationof existingcharging infrastructureandisa disincentiveforfurther infrastructureinvestment

Pulpindustryaswellas theexistingfossiloil basedtransportregime createeconomiesof scale,whichaccelerate thedevelopment towardsadvanced biofuels

Economiesofscaleinoil

&gasandinhydropower havedis-incentivised investmentsinhydrogen andFCEVs

Existingeconomies ofscaleinenergy production dis-incentivise investmentsin advancedbiofuels

Economiesofscope Electricitycompaniesexploit existingelectricity distributioninfrastructure andcompetencesinthe deploymentand managementofrecharging infrastructure.Placementof rechargingstationsat parkingspacesandservice stationscreateseconomies ofscoperegardingtheuseof thisinfrastructure

Increasingimportance ofeconomiesofscopein thepulpandpaper industryprovides opportunitiesfor advancedbiofuel production

Economiesofscopeare becomingimportantdueto specialisationinkey elementsfordeploying hydrogeninroadtransport

Increasingimportance ofeconomiesofscope inthepulpandpaper industryprovides opportunitiesfor advancedbiofuel production Product diversificationin bio-refineriesmight turnbiofuelsinto lessimportant by-products Network

externalities

ThedeploymentofnewEU technicalstandardsforslow andfastcharging connectionsincreasesuser accessandreduces investmentcosts

Utilisationofexisting fuellinginfrastructure supportsadvanced biofueldiffusion

Networkexternalitiesof thedominatingfossil transportregimehinder theintroductionofnew hydrogeninfrastructure

Utilisationofexisting fuellinginfrastructure supportsadvanced biofueldiffusion

Informational increasing returns

Consumershavebecomeless scepticalofBEVsandsales areincreasingfromavery lowbase.Greatest acceptanceisamongprivate andpublicenterprises

Drop-inbiofuelsarewell acceptedbyFinnishcar owners

Informationalincreasing returnsarelimitedtothe capitalregionandnotso welldevelopedingeneral duetostrongpositionof incumbentICEs

Knowledgeabout advancedbiofuelsis limitedrelativeto conventionalfossil fuelpoweredICEs Technological

interrelatedness

BEVsareapotentialsource ofneededintra-day flexibilityinanenergy systemincreasinglyreliant onvariablerenewable energysources,whileBEVs canbenefitfromcheaper electricityatoff-peakhours (lownetdemand) Regulatoryfailureto introducevariable electricitypricesmeans sub-optimalcharging practices

Advancedbiofuels benefitfromhigh technological interrelatedness betweencarsrunning onbiofuelsand conventionalfossilfuel

Hydrogentechnologyfor roadtransportbenefitsfrom interrelatednesswithother typeofgasrelated technologies,especially naturalgas

Advancedbiofuels benefitfromhigh technological interrelatedness betweencarsrunning onbiofuelsand conventionalfossil fuel

Collectiveaction Mostconsumersperceive BEVsasinadequatefor long-distancetripsand evendailyneeds TaxexemptionofBEVs enjoysbroadsupportamidst absenceoflong-term politicalcommitment

Advancedbiofuelsfit wellwiththedominant norms,whichemphasise individualuseand frequentlong-distance trips

Thedominanttransport normsfavourindividualcar useandmaximummobility, whichcouldfitwithFCEVs FCEVsarelesscompatible withcollectivesolutions orsharedownership modelsduetohighcosts despiteoftaxexemptions

Advancedbiofuelsfit wellwiththe dominantnorms, whichemphasise individualuseand frequentlong-distance trips