Abstract and Table of Contents

Abstract

This thesis sets out to explore some of the key dimensions in the process of sociotechnological change inherent in the shift to a low carbon economy. This is done in two parts, the first focusing on theory, the second, empirical case studies. Out of the diversity of interactions between actors, technologies, and policies surrounding this process, one key question emerges: can societies really shift the structure of their economies so fundamentally to achieve a low carbon future within a reasonable timeframe? Chapter One develops an integrated approach to economic and political change to interrogate this question. This synthesizes a review of literature (Part One) examining the role of technology within some of the main theories of economic change in the social sciences. Two broad paradigms are distinguished.

First, a paradigm based around the notion of equilibrium, notably the standard welfare approach of neoclassical economics; and secondly, an evolutionary paradigm, which views the economy as a complex adaptive system – such as exemplified by theories of path dependency. This theoretical background provides a broad narrative to frame and inform Part Two of the thesis. First in Chapter Four, socio-technical change is investigated in the context of the diffusion of energy efficient lighting in Germany. This study investigates the relationships between human behaviour and attitudes, lamp technology and the evolving nature of institutions, to provide a framework with which to consider the contentious issue of individual freedom versus government control in the politics of change to lower-carbon emissions.

In Chapter Five, the case for the creation of a market for CO2 pollution permits is developed. In making this case, the strengths and weaknesses of emissions trading are compared and contrasted with other policy instruments and the broader political economy of the various policy options discussed. Chapter 6 builds on this to examine the political economy of implementing an emissions trading scheme in Australia and the impact the Kyoto Protocol has had on domestic politics and GHG mitigation. Chapter Seven continues with the theme of building ‘a political ecology of the state’ by investigating the politics and economics of greenhouse gas mitigation in Russia.

Finally, Chapter Eight recapitulates the aims, nature and conclusions of this research and draws out its implications for policy as well as mapping out some areas for further research. In particular, the need to bring a greater sense of politics back into the study of the economy is highlighted as a vital part of building a renewed, more sustainable economic paradigm in the wake of the financial crisis and, as a way of strengthening the connection between social values and market outcomes.

Table of Contents

Acknowledgements

Chapter 1 Introduction

1.1 The aims and motivation for this research
1.2 An Integrated approach to economic and political change
1.3 Methodological approach
1.4 Thesis structure
1.5 Conclusion

Part One: Theory: On the nature and direction of technological change

Chapter 2 Equilibrium – the basic neoclassical model and extensions

2.1 Introduction
2.2 Demand, supply and the market mechanism
2.3 The theory of consumer choice
2.4 The theory of production, cost and the firm
2.5 Technology and the production function
2.6 The cost of production
2.7 Cost functions for electric power
2.8 The theory of market failure
2.9 Technology and economic growth theory
2.10 Classical growth theory (late 1700s to early 1900)
2.11 Neo-classical theory (1950s – 1980s)
2.12 Post neo-classical growth theory (1980s onwards)
2.13 Technological externalities
2.14 The ‘New’ Paradigm
2.15 ‘Endogenous’ growth theory
2.16 The theory of induced innovation
2.17 Conclusion

Chapter 3 Evolution – path dependency and new path creation in a complex adaptive system

3.1 Introduction: Inside the technological ‘black box’
3.2 What is technology?

3.2.1 General and specific purpose technologies

3.3 Process and product innovation: distinguishing between incremental
(marginal) change versus radical (non-marginal) and qualitative change
3.4 Socio-technological change

3.4.1 Using institutional economics to understand technological change

3.5 Why is economics not an evolutionary science?
3.6 What is path dependency?
3.7 Equilibrium or evolution?
3.8 The mechanics of change
3.9 The contribution of network or systems theory
3.10 Strategic niche management and an integrative evolutionary multi-level perspective on technological transitions
3.11 What are complex systems and why is ‘complexity theory’ important?
3.12 Three emergent patterns of complex adaptive systems in the economy

3.12.1 Oscillations: no equilibrium in sight
3.12.2 Punctuated ‘equilibrium’ –stability and flexibility in the evolving
economy
3.12.3 Power laws: a theory of unexpected events

3.13 Conclusion: Out of Equilibrium

Part Two: Empirical Analysis: Four chapters on the shift to a low carbon economy

Chapter 4 On the question of individual freedom versus state control in climate policy: a study of the diffusion and regulation of CFLs in Germany

4.1 Introduction
4.2 Freedom versus the state and the drive for greater energy efficiency
4.3 The shift towards energy efficient lighting in Germany
4.4 Public Awareness and the incentives and barriers to CFL adoption
4.5 Conclusion: beyond freedom versus the state

Chapter 5 The making of a market: the case for carbon dioxide emissions trading

5.1 Why create a market for pollution?
5.2 Market failure
5.3 Market Failure, Policy Choice and Socio-economic Organization
5.4 Emissions Trading in Context
5.5 Discount rates and policy choice
5.6 Theory and practice and the case for ‘silver buckshot’
5.7 The essential elements of an Emissions Trading Scheme
5.8 Cap and trade schemes
5.9 Setting the cap and commitment period
5.10 Allocation methods
5.11 Management of price volatility
5.12 Baseline and Credit Schemes

5.12.1 Reduced Emissions from Deforestation in Developing Countries

5.13 Conclusion

Chapter 6 The political economy of greenhouse gas mitigation in Australia

6.1 Introduction
6.2 The Veil of Kyoto
6.3 Post-2007 policy development
6.4 Conclusion

Chapter 7 The political economy of Green House Gas pollution in Russia

7.1 Introduction
7.2 The structure of Russian greenhouse gas emissions
7.3 Climate change in post-Soviet politics
7.4 Economic modernisation, innovation and energy efficiency
7.5 Climate change and Russia’s effort to join the World Trade Organisation
7.6 Emissions trading and the Kyoto Protocol
7.7 Gas exports to Europe and the potential to fuel a Chinese ‘dash-for-gas’
7.8 Low public and official awareness
7.9 Conclusions

Chapter 8 Conclusion and summary for policy-makers

8.1 Out of equilibrium: crisis and the response offered by evolutionary economic geography

8.1.1 Positivist versus normative ideas in economics

8.2 Summary of research conducted in this thesis
8.3 Recommendations for policy makers: ‘Not a heavy hand, not an invisible hand, but a guiding hand’

8.3.1 A shift in analytical framing: from equilibrium to evolution
8.3.2 Dynamic reflexive policy design
8.3.3 ‘To tax or to trade?’ is not the question: universalist ideas of optimal policy are wrong
8.3.4 Institutionalising policy learning to encourage flexibility

8.4 Future Research

8.4.1 The geography of carbon markets
8.4.2 Evolutionary economic geography case studies of renewable energy diffusion

8.5 Conclusion

References

Next Page – Ch 1: The Aims and Motivation for This Research