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Politics of energy transformation is the study of the political processes that are involved in this transformation of energy sources and the interactions between the actors, networks and institutions concerned. Energy production is very important in our lives, making the mode of energy production a quintessentionally public issue as nothing in this world could be produced without energy.

Overview
The dominant source of energy in the world is fossil fuels, contributing about 80% (91,000 TWh) of total primary energy supply and 64% (9400 TWh) of electricity generation in 1999. This reliance on fossil fuel has raised several environmental and climate challenges associated with concerns of peak oil, energy crises as well as rising energy prices. More recently, the Key World Energy Statistics Report produced by the International Energy Agency stated a figure of 12,267 million tonnes of oil equivalent (Mtoe) of total primary energy supply in the year 2008 having increased from 12,097 Mtoe in the previous year. Of these fuel shares, energy supply by power source was oil 33.2%, coal and peat 27.0%, gas 21.1% with only nuclear contributing 5.8%, hydro-generation representing 2.2% and other renewables 0.7%. The combination of oil, gas and coal easily represents over 81% of the world total primary energy supply.

Table 1 - Total Primary Energy Supply by fuel type, 2008 

Renewable energy is energy that is generated through a renewable source such as solar radiation, wind, tides and geothermal heat. As concerns arise of the finishing resources of fossil fuels and the detrimental effects they have on the environment, more and more interest has been directed towards the field of renewable energy and its technology. Wind power, solar energy, geothermal heat, hydropower and biofuels amongst many other sources have been researched and successfully captured by advanced technology and it is this technology that needs to be further incorporated into our existing energy system.

Alternative Source
A transformation of the energy sector must be built on a whole range of renewables as one type of technology is not enough to transform the whole system. They will have different cost levels, for which policy makers will have to deal with by using market-forming instruments including giving different prices, and price dynamics, for electricity generated by different renewables. Parties concerned with energy and environmental matters favour high prices for oil and natural gas that will allow renewable energy to be economically competitive and encourage conservation. Renewable energy systems have come to be increasingly regarded as viable alternatives to the conventional energy systems, and as the process of planning and implementation continues, they have become more involved in the political process.

Analytical Context
Before starting with the analysis of the political processes surrounding renewable technology, there are certain features that have to be considered which characterise the larger context in which analysis will take place.

Size of Energy System
First of all, the energy system is huge, and any efforts to transform the energy system will seem like a daunting task. It is said that even with continued high growth rates of wind and solar power technology implementation over the next decade, this source of energy may only begin to replace the current stock of conventional energy technologies after 2020. However, this transformation although placed in the future is very reliant on policy initiatives that can be commenced now and over the upcoming planned period. Policy making thus has to be conducted with a very long-term perspective.

Markets
Markets are a second feature of the context, essentially they are important for technology systems to continue on and as they are not easily formed, this creates another challenge for our renewable energy system transformation. This is mainly because new technologies often are associated with a high cost disadvantage as compared to currently existing technologies that are often subsidised under present subsidies or programmes. New technologies are also harder to be adopted because they are perceived to not offer any direct benefits for the individual buyer or investor in the short term.

Changes to Existing System
The final feature, itself a difficult challenge to deal with, is that proponents of the established existing energy system often will attempt to block the diffusion of renewable energy technology as they see new introductions as a threat to the competitive arena of global energy production and supply. They do this by influencing the institutional framework so that it continues to be to their advantage, which involves intense lobbying on policy matters and discussions over the design of the policy regime. This is one of the main reasons why, policy making and environmental technology has become such a political business.

Technological Systems
Energy systems are also broadly categorised as a technological system amongst other literature. A technological system is defined by Carlsson and Stankiewicz as a ‘network(s) of agents that are interacting with each other in a specific technology area under a particular institutional framework for the purpose of generating, diffusion, and utilizing that particular technology’. They identify a technological system to have three main elements that influence the transformation and associated processes: Actors, Networks and Institutions.

Actors
Actors also known as stakeholders, firms or participants all play a role in the energy system whether they are consumers of the energy, suppliers or venture capitalists as well as many other organisations. Hughes highlights a particularly important actor, who is the ‘prime mover’ or ‘system builder’, an actor (or set of actors) who are so financially and/or politically powerful that they can strongly influence the development and diffusion process. Essentially, they are the puppeteers placed backstage, who run the show that either should be feared for the power they wield or should be targeted to change their influences that have significant impacts on the subsequent actors.

Networks
Networks constitute important channels for the transfer of both tacit and explicit knowledge between different participants. Some are built around markets and therefore contribute towards the identification of problems and the development of new technical solutions that are presented by potential buyers and sellers, as they proclaim reasons. Networks do not necessarily have to be market related, they can be formed through institutions and organisations with an objective to allow for transparent sharing of information and as a space for debates and discussions. Perceptions about particular technology are collected through networking is useful for advisement in any further technological developments. As networks allow the sharing and transfer of knowledge, influence can also be directed in certain pathways that can guide the decisions of firms and other organisations.

Institutions
Institutions lay down the groundwork, forming the norms and rules that regulate interactions between actors within the network, essentially forming various segments in society. The roles of institutions may vary; some may stipulate strict regulations, not allowing much flexibility for the activities of actors while others employ different instruments that influence the incentive structure or the structure of demand. The paths that institutions take have an impact on the potential of technology that can be fully grasped as well as its future in terms of the growth of new industrial clusters.

Diffusion of Technology
Total primary energy supply in 2008 had increased by a percentage of 2% (from 12,029 to 12,267 Mtoe). Although the decrease in energy supply by oil from 34.0% to 33.2% in 2008 and increase in energy supplied by combustible renewable and waste from 9.8% to 10.0% could be good news, this is hardly an achievement that could be applauded for. This is because the change did not lead to an increase in other renewables, and instead was an increase for gas (from 20.9% to 21.1%) and coal/peat supply (from 26.5% to 27.0%). This is not the only document showing unfavourable statistics on world energy supply and consumption; BP’s Statistical Review of World Energy that stated 87.9% of energy consumption in 2009 was of oil, natural gas and coal. This represents a significant disclosure of humans’ over reliance on fossil fuels and urgency for change in the energy supply and consumption system.

Table 2 - Total Primary Energy Supply by fuel in 2007 and 2008

The statistics show that while many governments claim to support the diffusion of renewable technology, the actual rate of diffusion of new technologies in to the energy system is another matter and this rate varies considerably between countries.

Transformation Process
The real issue behind renewable energy is no longer about the technical potential that could be provided, but of how this potential can be realised to its full capacity and substantially contribute to a revolution of the energy sector. A large scale transformation process of this kind is envisioned by many proponents who say it is possible and required to battle against the energy crisis and to work towards a carbon free energy system. But far-reaching changes and ruthless goals are needed for this to happen as well as years of policy initiatives and political support in various forms. Jacobsson and Bergek highlights four key conditions that are essential for the early parts of these processes, namely, institutional changes, market formation and the formation of technology-specific advocacy coalitions.

Institutional Change
Institutional change is at the heart of the process. A redirection of science and technology policy would be required in order to direct knowledge formation intended to generate a range of competing designs; a series of processes that would have to occur before the emergence of markets. Institutional alignment also involves the amount of political support available as well as when and where to place this support. One policy challenge at this point lies with the incumbent technology proponents who will lobby against energy transformation in the policy regime, as ‘firms compete not only in the marketplace, but also in this political institutional context’.

Institutional change is often required to generate markets for the new technology. This comes in the form of using economic instruments that are designed to influence incentives in the direction that is considered necessary for markets to form. Talking in the language of economics is sometimes the only way to get through to the workings of the industrialised world; organisations that are profit-hungry and money-driven. This alignment process may have to begin well in advance of the emergence of markets, but it also needs to be sustained throughout the evolution of the system in order for the viability of the technology to continue and the new renewable technology continues to be developed and improved.

Formation of Markets
Following on from institutional changes is the formation of markets, the main component of the formative stage of the energy transformation process. Policies play a big role in the design of these markets; lessening impact of a large cost, possible protection from the opposing incumbent technology proponents whilst the market grows bigger. Market formation normally involves exploring niche markets, starting by forming alongside existing markets and then slowly finding areas where the new technology is superior in some dimension (such as better profit return), continuing on until the market has a self-sustaining capability. A ‘protected space’ is created for the new technology serving as a ‘nursing market’ where learning processes can take place and the price or performance of the technology can improve.

The formation of nursing markets has an importance of generating a ‘space’ for the different elements in the technological system to fall into place, whether this is the combination of policies or the connections that form to allow interdependency among different actors. Additionally, nursing markets can influence preferences among potential customers that will induce firms to enter into various parts of the value chain as they play different roles in the development of user-supplier relations and other networks.

Technology-specific Advocacy Coalitions
For the renewable technology to gain ground and firm foundation in the system, technology specific coalitions need to be formed. These coalitions essentially are networks to engage in wider political debates whereby influence and support from institutions can be gained in order to secure favourable institutional alignment. Rival firms will often cooperate together to collectively manipulate the institutional environment and it is the main purpose of technology specific coalitions to lobby against such rival firms. The main point to bring across to the policy agenda is basically that a particular technology e.g. solar cells or gas turbines, is a solution to wider policy concerns and a coalition of actors are required to push for this belief.

Challenges
A formative stage needs to be followed by one in which the initial market space is enlarged so that further advantages can be realised and reaped and allowing for additional firms to enter throughout the value chain. By this time, a series of policy challenges would have presented itself and amongst them is the challenge to implement pricing policies in the second phase that can ensure the continuous support of investors and unrelenting to allow for long life times of the equipment and a long learning period.

Features and conditions required to progress renewable technology diffusion have been discussed, but these inducement mechanisms often come across policy challenges such as the one mentioned above. The five major blocking mechanisms are :
 * High Uncertainty: Tendency to impend functions of market formation or inducing firms to enter into the market
 * Lack of Legitimacy: Guide the search and interest away from the field of renewable energy technology, but also blocks the supply of much needed resources and market development. The legitimacy of the final regulatory decision depends upon the regulator’s ability to reconstruct a plausible scientific rationale for the proposed action which is often a difficult task.
 * Weak Connectivity: Actors in the technology systems unable to increase legitimacy and induce the institutional changes that is necessary to stimulate market formation because of weak learning and political networks
 * Government Policy: Although government policy is an inducement mechanism, they may also block several functions such as not allowing a level competitive playing field where prices of other energy sources are highly dependent on political decisions
 * Ambiguous and/or opposing behaviour of some established firms would prey on these mechanisms, adding to customer uncertainty and vulnerability and delaying important steps in the knowledge development and market formation processes.

Implications
There is a lack of political action in terms of renewable energy diffusion to replace our current framework. Politicians as well as the general public shouldn’t be waiting for an energy crisis before realising that something needs to be done. The public plays a large role in whether political action will be taken or not. Many things that are decided within government are dependent on whether the public will accept it, with politicians worried for the next upcoming elections and hoping to secure votes. Which political power is in place is also important, whether the greens have improved their support and claim a stronger position in government, those policies will change as well.

The view of innovation is normally perceived in a traditional ‘linear’ motion but this is hardly the case as functions of a technological system have to be served simultaneously. The implication of this is that science, technology and market stimulation policies have to be operate in parallel to each other, not one after another, as they survival and success is co-dependently linked. This may not necessarily only apply to the formative period but also beyond, where policies are needed to expand the space for new technologies in its self-sustaining market.