How much diversity

The advantages of diverse technology portfolios in hedging risks have already been explored in this chapter. For innovation policy, the support of a diverse array of low carbon technologies makes a great deal of sense for other reasons too. Lack of perfect foresight means that it is not possible to know in advance which of these technologies will yield large reductions in emissions, and which ones will fail. But how far should diversity be embedded into governments' low carbon priorities?

While maximising diversity sounds like an inherently good idea, there are several reasons why choices need to be made about which low carbon technologies are supported more than others within a technology portfolio. The first of these concerns the type of diversity that is seen as desirable. In government policy documents, diversity is often associated with energy security (DTI, 2007a, p. 5). Diverse routes for imported fuels, such as oil and gas, and diverse sources of energy (for example, solar and biomass heating as well as gas heating in homes) are both likely to be good for security. But diversity is about more than just having a lot of different options in an electricity-generating mix or a low carbon innovation portfolio.

Andy Stirling has identified three distinct sub-properties of diversity: variety, balance and disparity (Stirling, 1998). Variety is a simple measure of the number of different options that are supported or deployed within the portfolio. Balance refers to the profile of shares of these different options within the portfolio. For example, an innovation portfolio in which one option accounts for 60 per cent of the budget and four further options account for 10 per cent each might be less diverse than a portfolio of five options that are allocated 20 per cent each. Finally, disparity captures the extent to which constituent options are different from each other. An innovation portfolio that supports ten different lower carbon coal technologies is less diverse than a portfolio that supports ten renewable energy technologies. This is because the 'renewable energy' category includes many more disparate options.

There is, of course, a tension between diversity and limited resources. Funding all of the available low carbon technologies from a national budget carries with it the risk that finite resources will be spread too thinly. While countries with large budgets such as the US and Japan can fund substantive programmes of support in most technology areas, countries with more modest budgets such as the UK cannot. Even if the UK's spending were to rise considerably, it would be difficult to allocate meaningful resources to all possible technologies. This is particularly the case if the portfolio is to include the considerable sums that would be required to help larger-scale technologies such as CCS to cross the 'valley of death'.

This leads on to a further consideration. Constituent technologies within a low carbon portfolio will not be deployed in isolation from each other. While some analyses appear to imply that technologies and measures are purely additive (Socolow, 2005), this may not be the case. Technological options are developed and deployed within a common energy system and therefore some interaction between options is to be expected. The phenomenon of technological 'lock-in' (Unruh, 2000) is important here too. Technologies that do not fundamentally challenge the technical and institutional architecture of the current energy system may be easier to develop and deploy - and may dominate a portfolio if the implications are not thought through. A number of studies have drawn attention to this with respect to the government's wish for new nuclear power construction (e.g. Mitchell and Woodman, 2006). This may have knock on effects on the political and economic resources available to support other low carbon technologies. It could also limit willingness to change established infrastructures and market rules so as to facilitate the uptake of technologies at much smaller scales, such as micro-generation or smart meters.

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