Dynamic governance of clean-energy markets: How technical innovation could accelerate climate policies

Abstract

This article explores the governmental means to accelerate technical progress in climate protection. It is based on selected "best practice" cases in which the diffusion of low-carbon technologies has been accelerated by ambitious policies. The empirical cases involve not just renewable energies, but also energy efficiency (the latter being considered more difficult in terms of governance). The examples are taken from advanced OECD countries as well as from emerging economies. This article will explore, which factors have caused this dynamic development. The conclusion reached will show that the interaction of positive feedback mechanisms - which has already been described as "virtuous cycle" - provides only a plausible theoretical explanation, if the policy cycle is added to the market cycle and the innovation cycle. Climate policy should not only define ambitious targets but also address all three feedback mechanisms. © 2011 Elsevier Ltd. All rights reserved.