Institutional constellations and policy instruments for offshore wind power around the North Sea

Abstract

This paper analyses how institutional constellations and their associated mode of risk allocation are reflected in the choice of policy instruments for the promotion of offshore wind power. Using the Varieties of Capitalism framework we expect that governments in Liberal Market Economies (LME) tend to use policy instruments that privatise investments and risk-taking, while those in Coordinated Market Economies (CME) use policy instruments that facilitate investments and shared risk-taking in the earlier, more riskful phase of technological development. We test our expectations through a longitudinal comparative analysis of the use of policy instruments and the deployment of offshore wind power in Denmark, the United Kingdom, Germany and the Netherlands between 1990 and 2020. Our results confirm the market oriented nature of policy instruments employed by the LME case of the United Kingdom throughout, while we witness initially lower levels of market orientation among the CME cases of Germany, Denmark and the Netherlands. Though the market orientation of Germany's policy instruments declined half way to build up domestic momentum, we generally see an increased use of market oriented policy instruments over time by the CME. Putting the trajectories together we witness an overall convergence in the use of policy instruments which we attribute to the liberalisation of the energy sector in the EU as well as to policy-learning effects. The results have generic relevance and can also be used to inform future national strategies and policies for deploying new low-carbon technologies, such as electrolysis for green hydrogen, which face similar risks and challenges.