Path dependence path creation: roles for incumbents in the low carbon transition?
Several studies have emphasised the path dependent, locked in states of incumbent high carbon technologies and industries 'carbon lock in' and their potential capacity to delay the development and penetration of low carbon technologies and practices (LCTs) Even if LCTs have similar attributes to existing technologies, apart from low carbon, if the existing technologies are already under pressure to improve, then LCTs may face a moving target. However, other analyses point towards the possibilities of path creation and creative accumulation by incumbents. This paper examines these issues, explains why history and incumbents matter in the low carbon energy transition and investigates the roles that might be played by incumbents both in delaying and sometimes in actively advancing the transition. Studies of large technological systems in energy, show the positive and negative aspects of path dependency. Arapostathis et al. (2014) for example, shows both the advantages how the development of the UK's natural gas system benefited from the earlier construction of a 'backbone' distribution pipeline system for LNG and the disadvantages how previous history constrained the development of the system before WWII to the point of 'incoherence' and how this was changed by nationalisation in 1948. The 'sailing ship' effect (SSE) or the 'last gasp effect of obsolescent technologies' (LGE) occurs where competition from new technologies stimulates improvements in incumbent technologies/firms. Recent analyses of energy related industries threatened by technological discontinuities offer insights into: why incumbent technologies might show a sudden performance leap; how current analyses may overestimate new entrants' ability to disrupt incumbent firms; and underestimate incumbents' capacities to see the potential of new technologies and to integrate them with existing capabilities (e.g. Bergek et al. 2013) The paper argues that while incumbent technologies and firms can exert constraining influences on the success of low carbon technologies and policies, there may also be positive opportunities for system actors and policies to overcome lock in, accumulate new competences and help create new low carbon paths. It is argued that the urgency of a low carbon transition, the short time scales and the existing infrastructures mean that it is essential that incumbents, as well as new firms, engage rapidly with LCTs. Introduction: incumbents and the low carbon transition There has been much recent emphasis on encouraging the development and penetration of new low carbon technologies and related innovations. International experience has shown that incumbent high carbon technologies and firms can be important influences, negative or positive, on the success of low carbon technologies and policies. Analyses have emphasised the path dependent, locked in states of incumbent high carbon technologies and/or industries and their capacity to delay a low carbon transition (e.g. Unruh, 2000; Unruh and Carillo Hermosilla, 2006) The challenges for new entrants and fledgling technologies also include the potential for high carbon incumbent firms and technologies to improve or otherwise protect their competitiveness or dominance, creating a moving target. Nevertheless, there can also be positive opportunities for system actors (and the policies that influence them) to overcome lock in, accumulate new competences and help create new low carbon paths and technologies. For example, other analyses in the innovation literature, have pointed towards possibilities of path creation and creative accumulation by incumbent firms (e.g. Garud and Karnoe, 2001; Pavitt, 1986; Bergek et al. 2013) This paper discusses these issues and explores the roles both negative and positive that incumbents might play in the innovation processes of a low carbon transition.