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Ivan Scrase and Gordon MacKerron

Harnessing renewable energy and using energy efficiently are not new ideas. Burning wood, using sails and drying food in the sun are as old as civilisation itself. Using modern technological approaches to reduce fossil fuel use is a relatively modern concern, dating from the first oil crisis of the early 1970s. By the late 1980s a range of modern technologies to improve energy efficiency and to harness biomass, wind, solar and wave energy had been identified and developed. This set of technologies is still held by many, including authors in this book, as central to the challenge of reducing GHG emissions in the twenty-first century. If these technologies are available, and as promising as their advocates say, why then have they remained marginal in all but a handful of industrialised countries' energy systems?

There is a 'common sense' reply here, which is that renewable energy technologies, or their developers, have failed to prove themselves in the market place. Investors or customers, in this view, are unwilling to take up what they have been offered, given that the technologies have proven troublesome and expensive. In this chapter this 'common sense' perspective is picked apart, and shown to be flawed. Moreover it is a perspective that is only very selectively applied as a guide in technology-related policymaking.

When technologies are deemed to be sufficiently important to a nation's interests, governments do not attempt to be 'technology neutral' or to let the market decide. Rather they invest directly in research, development and demonstration (RD&D), and help ensure there is 'demand pull' for the technologies produced. For example, weapons industries benefit from domestic military demand and also government efforts to secure bilateral arms deals. Having a well equipped army for national security purposes, one might argue, is also 'common sense', so here the view of technical change as a process of market competition is set aside. Renewable energy technologies have not been so favoured in many countries, suggesting that cutting fossil fuel use has not yet been seen as sufficiently important that government 'intervention' and spending are seen as justified.

Some elements of orthodox economic theory can be used to justify taking a 'hands off' approach. Governments are concerned to control their spending, and, increasingly, to appear to be adhering to principles of 'small government' and 'free' markets. Therefore very strong grounds are needed for looking at broader economic theory and other lines of evidence that support a more active role for government. The argument here is not that economic theory has inevitably driven government inaction on climate and energy, but that market liberalisation and free market ideology make action more difficult, and that certain kinds of narrow economic analysis are drawn upon in justifying inaction when it suits governments' other political priorities.

This chapter explains elements of neoclassical and evolutionary economic thinking that are relevant to government action (or inaction) in steering technological change. It then considers the special case of promoting certain technologies with a view to reducing carbon emissions in a social, technical and economic 'regime' that favours inertia rather than change. Insights from economics, history and sociology point to what governments could do in the future to steer technological change to favour sustainable energy. Comparing this to what governments have actually done shows how implicated they have been in creating conditions for the limited success of renewable energy and energy efficiency technologies in the last three decades.

But the argument is not that all of the slow progress in low carbon technology has been a direct result of government 'obstruction' - rather it is that technological and political systems develop momentum, and that once systems are 'locked in' to a particular path it is difficult to move them on to a new path. In recent years, for example, there have been large and growing subsidies for renewable energy in the UK, but rather limited progress in establishing them on the ground. This chapter uses ideas of 'lock in' to explain why this is so, and why governments need to act more radically if new low carbon paths are to be established.

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