The policy mix and its role for innovation: Insights from offshore wind in Germany

Abstract

Against the background of climate change, a decarbonization of the energy system constitutes a major objective in many countries. Renewable energy technologies (RET) play a key role for this – yet some of these technologies are still rather immature thus requiring further innovation to become more competitive. While innovation is often hindered by a number of failures and barriers, policy intervention may help removing these. Due to the multitude of failures, multiple policy instruments – so-called policy mixes – are required. Such policy mixes are in fact complex formations, exceeding policy instruments added up to instrument mixes. Yet the literature on policy mixes for innovation often neglects major policy mix components such as strategic elements or overarching characteristics, e.g. consistency and credibility. Therefore the first objective of this thesis is to develop an overarching concept of the policy mix for innovation in RET and for sustainability transitions more broadly that goes beyond policy instruments and that can serve as analytical framework for empirical analyses. An important prerequisite for successfully fostering innovation in emerging RET is a better understanding of the innovation impact of such a complex policy mix on these technologies. The second objective of the thesis addresses this issue – it is to explore the effects of such a comprehensive policy mix on innovation in RET. Such impacts are studied both at the level of firms as key innovators and at the innovation system level, providing for a systemic and more encompassing innovation perspective. The analysis is carried out for the case of offshore wind in Germany due to the importance of offshore wind for achieving renewable energy targets and to the rich policy mix in place for this technology in Germany. While the policy mix concept is developed based on a review of the literatures on innovation studies, environmental economics and policy analysis, the innovation impact of the policy mix is analyzed with a predominantly qualitative approach, including interviews, history event analysis and document analysis. The first finding of the thesis is the comprehensive policy mix concept consisting of a policy strategy and instrument mix, policy processes and policy mix characteristics. Second, regarding the impact of the policy mix on innovation in offshore wind in Germany it is found that several policy mix components (besides other factors) – particularly the policy strategy, the instrument mix and policy mix consistency – play a decisive role for corporate innovation activities. Furthermore, the policy mix does not only influence the development of the technological innovation system (TIS) of offshore wind in Germany but is also altered based on TIS developments. Finally policy processes have been found to be an influential determinant of TIS functioning. These findings point to a crucial role of the comprehensive policy mix for innovation. Policy makers aiming to foster offshore wind and RET in general should therefore consciously design the whole policy mix (not only particular policy instruments) considering, for instance, interactions between instruments, characteristics of instrument mixes and also the process of making and implementing policies.