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The inter-organizational network and its effect on the regional energy transition
Quinten Hogeweg - 351161qh MSc Global Business & Stakeholder Management Rotterdam School of Management Coach: Prof. Dr. Ir. Jan Rotmans Co-reader: Prof. Dr. Gail Whiteman Scientific supervisor: Dr. Derk Loorbach Date: December 5th, 2013
Everything flows, nothing remains still - Heraclitus
Executive Summary
Our society faces fundamental sustainability challenges in several domains. Of these, our energy supply is confronted with a rapid depletion of natural resources, air pollution and greenhouse gas emissions, nuclear risks, uncertainties related to short- and long term security of supply and energy poverty (IEA, 2011). On a global, European and national level, protocols and goals have been developed to decrease emissions and increase the share of renewable energy. The Netherlands is considered one of the lacking countries of the European Union regarding the development of sustainable energy sources. As such, the Energy Valley region may provide a welcome development in the Dutch renewable energy progress. Since 2003 an interorganizational network organization under the same name has been founded to facilitate business and local governments in establishing an energy region. Although the main goal is economic development, renewable energy also is considered a key goal of the organization. This study looks at the effect of the inter-organizational network organization Energy Valley on the regional socio-technical energy regime and its transition and hereby contributes to the business literature on the networked approach to sustainable development. Additionally, this study contributes to the emerging paradigm in the business and natural environment literature of strong sustainability. Proponents of this paradigm argue for a systemic and complexity perspective, where the goal should be system transformation or a transition in the (local) socio-technical system. In order to analyze the effects of the inter-organizational network organization Energy Valley on the transition of the regional socio-technical energy regime, this study brings together the fields of business and the natural environment with the field of transition studies. The field of transition studies is occupied with the study and support of long-term fundamental shifts in the social and technological domain and has developed several frameworks and concepts to analyze and accelerate transitions. In order to analyze the effect of the inter-organizational network organization Energy Valley on the regional socio-technical energy transition, this study has looked at the functions of the network, the processes of transition it facilitates, in what transition phase the region is in and what opposing forces of the transition are present in the network. It has been found that the eight different functions of the network organization facilitate several processes of transition in the region, thereby helping to create a fundamental transition in the socio-technical energy regime. It has been found in this study that the Energy Valley interorganizational network contributes to processes of transition regarding the change of fossil regulations, the lobby in national and regional policy circles for renewable energy, the connection of niches and regime actors as well as to some degree to the coordination of niche actors, the parenting of niche actors, the scaling up of niche projects and to the facilitation of social relations creating niche momentum.
However, a key result of this study is that the composition, structure, funding, vision, strategy and evaluation of the inter-organizational network organization have a key role in the effectiveness of the network organization in achieving a regional energy transition. In this study, the unbalanced representation of regime actors, the embeddedness of the provinces and the national government with their own stakes, the existing institutional environment of dominant gas stakes, the short term funding and resulting strategy without a long term vision, the role of the network in greenwashing and the lack of evaluation of the results, have resulted in an inter-organizational network organization that facilitates incremental change as opposed to radical change in the socio-technical energy regime. Therefore, it is concluded that the interorganizational network Energy Valley does not significantly contribute to the fundamental transition of the regional socio-technical energy regime. Regarding the theoretical implications of this study, the application of transition studies to the field of business and the natural environment has contributed to a better understanding of the use of interorganizational networks in the growing paradigm of strong sustainability: Although the interorganizational network has valuable characteristics that lead to sustainable development, its contribution to the resolution of meta-problems such as climate change through the fundamental transition of sociotechnical regimes strongly depends on the specific characteristics of the inter-organizational network organization and the system it operates in. The application of the inter-organizational network as a tool for transformation in the strong sustainability paradigm should therefore be applied with a better understanding of the essential networks characteristics and the respective contextually of the network organization. It is suggested that the current interest for the inter-organizational network in the quest towards sustainable development and especially towards the resolution of meta-problems in the business and natural environment literature is not entirely consistent with its practical contribution to date and should therefore be applied more critically. Concluding, this study has looked at how the business and inter-organizational network Energy Valley helps create a fundamental transition of the regional socio-technical energy regime. It has been found that, despite several contributions to the regional development of renewable energy, the dominant effect of the inter-organizational network organization constitutes incremental change. It is therefore concluded that the Energy Valley inter-organizational network organization does not significantly contribute to a fundamental transition of the regional socio-technical energy regime.
Table of Contents
Executive Summary ........................................................................................................................................... 4 Table of Contents .......................................................................................................................................... 6 1. Introduction and Research Question ............................................................................................................ 8 1.1. Introduction 8 1.2. Research Question.................................................................................................................................. 9 1.3. Structure ............................................................................................................................................... 10 2. Literature Review ........................................................................................................................................ 10 2.1. Beginnings and Development of Corporate Environmentalism ........................................................... 10 2.3. Corporate Social Responsibility ............................................................................................................ 11 2.4. Complex Issues and Strong Sustainability ............................................................................................ 13 2.5. The Role of Networks ........................................................................................................................... 14 2.6. Literature Gap....................................................................................................................................... 16 2.7. Sustainability Transitions...................................................................................................................... 17 2.8. Summary and Research Lens ................................................................................................................ 20 3. Methodology and Research Approach ........................................................................................................ 20 3.1. Type of Research .................................................................................................................................. 20 3.2. Single-case approach ............................................................................................................................ 21 3.3. Data collection & Analysis .................................................................................................................... 21 3.4. Validity .................................................................................................................................................. 22 3.5. Research Approach and Framework .................................................................................................... 22 4. Energy Valley .............................................................................................................................................. 23 4.1. Organization and Structure .................................................................................................................. 24 4.2. Funding ................................................................................................................................................. 24 4.2.2. Funding Energy Valley IV ............................................................................................................... 24 4.3. Context and History .............................................................................................................................. 25 4.3.1. Introduction ................................................................................................................................... 25 4.3.2. Energy Valley I 2003 - 2005 ........................................................................................................ 26 4.3.3. Energy Valley II 2005 2008....................................................................................................... 26 4.3.4. Energy Valley III 2008-2011 ........................................................................................................ 26 4.3.5. Energy Valley IV Current strategy and goals .............................................................................. 26 5. Results ......................................................................................................................................................... 28 5.1. Functions of the Network ..................................................................................................................... 28 6
5.1.1. Calibrating party ............................................................................................................................ 28 5.1.2. Scaling up....................................................................................................................................... 29 5.1.3. Place-to-be .................................................................................................................................... 30 5.1.4. Coordination of stakeholders ........................................................................................................ 31 5.1.5. Access to funding........................................................................................................................... 32 5.1.6. Parenting ....................................................................................................................................... 33 5.1.7. Lobby ............................................................................................................................................. 34 5.1.8. Social Relations .............................................................................................................................. 36 5.2. Processes of transition ......................................................................................................................... 36 5.2.1. Landscape pressure ....................................................................................................................... 36 5.2.2. Windows of opportunity in the regime ......................................................................................... 38 5.2.3. Niche momentum .......................................................................................................................... 41 5.3. Transition phase ................................................................................................................................... 43 5.4. Opposing Forces ................................................................................................................................... 46 5.4.1. The Role of Gas .............................................................................................................................. 47 5.4.2. Lack of vision ................................................................................................................................. 49 5.4.3. Broad coalition .............................................................................................................................. 50 5.4.4. Greenwashing ................................................................................................................................ 52 5.5. Conclusion Results ................................................................................................................................ 52 6. Discussion .................................................................................................................................................... 54 6.1. Theoretical implications ....................................................................................................................... 54 6.3. Practical implications............................................................................................................................ 60 6.4. Limitations ............................................................................................................................................ 61 7. Conclusion ................................................................................................................................................... 62 7.1. Main conclusion ................................................................................................................................... 62 7.2. Future Research.................................................................................................................................... 65 7.3. Acknowledgements .............................................................................................................................. 66 8. References ................................................................................................................................................... 67 Annex A - Interview protocol........................................................................................................................... 75
Although the main goal is economic development, renewable energy also is considered one of the main goals of the Energy Valley inter-organizational network organization. This networked approach to sustainable development has also received attention in the business literature. It has been argued that due to the complexity of the current sustainability issues, a firm or single actor approach simply is too narrowminded. Instead, co-operation in inter-organizational networks compromised of businesses and (local) governments may provide the proper tool in moving forward to a more sustainable future. At the same time, a new paradigm is slowly emerging in the business and sustainable development research. Instead of looking at new ways of operating in an old system, it is proposed to achieve a more radical form of transformation, or strong sustainability. Proponents argue for a systemic and complexity perspective, where the goal should be system transformation or a transition in the (local) socio-technical system. Although the network approach has been mentioned and researched as a tool for sustainable business development, until date no research in the field of business studies has looked at how this network approach may contribute to a fundamental change in the socio-technical system. This could partly be due to the complexity of conceptualizing what exactly a fundamental change is comprised off and how this could be measured. From the field of social sciences comes the transition approach. Occupied with the study and support of long-term fundamental shifts in the social and technological domain, this field has developed several frameworks, concepts and approaches to analyze and accelerate transitions. Most notable of these is the multi-level perspective (MLP). The MLP looks at a system through three different levels: niches (the locus for radical innovations), socio-technical regimes (the locus of established practices and associated rules that stabilize existing systems) and an exogenous sociotechnical landscape. Using this framework, researchers have identified different ways or processes through which a transition could emerge in a system. As such, this approach offers a valuable addition to the business and the natural environment literature.
In order to structurally answer the research question, four sub questions have been formulated: What functions of the inter-organizational network can be identified? To which processes for transition does the inter-organizational network contribute? In what phase of transition is the region currently situated? What opposing forces of the transition can be identified?
1.3. Structure
This thesis starts with a literature review on the topic of business and the natural environment, focusing on the role of inter-organizational networks. After this, the field of transition studies is introduced. In the next chapter, the methodology and research structure is discussed. Hereafter, a description of the Energy Valley organization is provided, after which the results will be presented in the next chapter. The result chapter will be followed by a discussion chapter, after which the conclusions and suggestions for further research are provided in the final chapter.
2. Literature Review
In this chapter, the beginnings and development of corporate environmentalism are described, providing the context for a literature review on sustainable development and regional inter-organizational networks. After this, the literature gap is identified. Hereafter, a review of the proposed literature to fill the literature gap is given. Lastly, a summary of the chapter is provided, concluding with the research approach and the angle of view from this research.
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During this second wave of corporate environmentalism, scholars within management schools started to more predominantly enter the field of business and the natural environment research. One of the first formal structures for research in this area was an international interest group of scholars, the Greening of Industry Network (GIN), which was formed in 1989. GIN participants argued that most regulation has not been based on a solid understanding of how industrial firms operated and that future advances in environmental policy required an appreciation for the intradynamic and interdynamic procesess of organizational learning. This means to be aware of how various groups both inside and outside the firm conjointly shape its behavior and strategy (Fischer &Schott, 1993). Most common however became the central question to business and the natural environment research: Does it pay to be green? and How to merge existing concerns for economic competitiveness with environmental demands to gain market advantage? (e.g. Hart, 1995; Porter and Van der Linde, 1995; Roome, 1998). This became the central issue for business and the natural environment research during the early and late 90s and still is today, early in the 21st century.
tensions: the interdependencies between firms and society present an opportunity to create shared value that benefits society and is valuable to business (Porter, M.E. and Kramer, M.R., 2006). Still, CSR-related activities described in the business literature mostly reflect operations within given institutional, structural and cultural boundaries of the dominant competitive market model. Thus business tends to focus more on reducing unsustainable firm-level behavior (Ehrenfeld, 2005) than on increasing the sustainability of the broader societal system they operate in via change strategies across actors and levels (Loorbach and Wijsman, 2012). The latter is addressed in the literature on Green Business, which is often described as business that strives to have no negative impact on the global or local environment, community, society, or economy. In other words: a business that strives to fully meet the triple bottom line (Cooney, 2008, Elkington, 1998, Friend, G., Kordesch, N., Privitt, B, 2009, Loorbach and Wijsman, 2012). Such a mission goes far beyond the traditional business practices; only a few companies have been successful at embedding sustainability into the core of their business (Loorbach and Wijsman, 2012). Van Kleef and Roome (Van Kleef and Roome, 2007) showed how the shift in business focus from competitiveness to sustainability impacts the capabilities and competence for innovation, while also identifying a systematic failure to address the need for inventiveness as a cornerstone of innovation. Over the last decade, studies into how businesses optimize their sustainability performance and what kind of strategies are effective in line with this tend to focus more on the level of business and industry networks and their relationship with broader societal contexts (Baas, 2008, Boons and Wagner, 2009, Genaidy et al., 2010, Porter, M.E. and Kramer, M.R., 2006) (Loorbach and Wijsman, 2012). From a similar perspective is the observation of Bansal and Hoffman (2011, p7) that during the first decade of the 21st century, some researchers shifted their focus towards a merger between environmental and social issues on a broader (global) scale, representing a growing awareness of our vulnerabilities and collective impact on the global environment and the need for change not just on a firm-level but on a broader societal level too. Most notably here is the issue of climate change; no single environmental issue dominates the field more than climate change. The growing scientific consensus that humans have been altering the global climate through the release of greenhouse gas emissions since the Industrial Revolution has focused attention on the need to move the economy away from its foundations on fossil-fuel use and material consumption (Bansal and Hoffman, 2011, p7).
Figure 1 - The Three Waves of Corporate Environmentalism 1960 - 2010 (Bansal and Hoffman, 2011)
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In this approach, diverse actors must work together in networks to understand the nature of the issues found in complex problem sets, identify better configurations, search for options or pathways to get from the present to an agreed and desired future and review and evaluate the consequences from those options on economic, environmental, social, and political conditions of the actors involved (Roome in Bansal and Hoffman, 2011, p626).
More recently, Cohen (2006) has looked at the impact of sustainable entrepreneurial ecosystems or networks on the development of successful sustainable ventures, concluding that such systems might facilitate successful sustainable ventures and create a place to be effect among similar firms. Malmborg (2007) looked at the role of local authorities in the knowledge transfer in regional networks for sustainable development and found that a local authority approach leads to incremental change in the short run. However, this research also finds that long-lived multi-actor networks with sufficient dialogue, experimentation and strategic niche management may lead to more radical change in the regional system. McCormick and Kaberger (2005) looked at the role of partnerships in regional networks of actors in the success of the expansion of bio-energy, finding that while partnerships in regional networks might help coordinate the development of a bioenergy system, the introduction of a carbon tax and the attraction of local knowledge and investments played an important role too. Lastly, Fadeeva (2005) performed a literature study on the efficiency of multi-stakeholder networks in solving complex sustainability issues, concluding that collaboration frequently falls short of expectations: The process can be misused for blocking and promoting vested interests, actors with resources and skills may use the legitimating power of collaborative initiatives to promote their own agendas and inherent complexities of collaboration can be underestimated, lowering expectations and results. Most recent work in the field of inter-organizational networks and sustainable development has looked at how resource efficiencies stemming from co-operative businesses might deliver environmental advantages (Barackenko and Olgethorpe, 2012). The research concludes that where co-operative businesses achieve efficiencies through economies of scale, knowledge and skills transfer, sharing of risks and other means, this can also lead to coincidental reductions in greenhouse gas emissions that may not be achieved if investor-owned activity prevails. Potts (2013) looked at how regional networks of sustainable businesses can profit from local natural advantages, finding potential for local authorities to explore the linking of sustainable development, innovation and economic development in their regions through the development of natural advantage action plans. Potts (2013) advises local authorities to develop plans that should transform local businesses, grow the sustainable industry base, support environmental innovation and focus on local issues and regional strengths, and finally, aim to support the development of environmental products and services. Sol, Beers and Wals (2013) studied how social learning in regional networks works and which factors are critical for it. According to their research, trust, commitment and reframing are interrelated aspects and emergent properties of interaction in the process of social learning. The framework they develop in the article therefore reflects social learning as a dynamic process, produced and reproduced through (inter)actions of individual actors. Lastly, Khan (2013) looked at what role network governance could play in urban low carbon transitions, finding that the effects of network governance are mixed: It can contribute to niche developments and innovation at an urban level, however, the elitist character of networks risks maintaining unsustainable patterns and the mainstreaming of problems and possible solutions. See Figure 2 for an overview of four of the most relevant publications.
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Title Stimulating learning and innovation in networks for regional sustainable development: the role of local authorities (Malmborg, 2007) Exploring a pioneering bioenergy system: The case of Enkping in Sweden (McCormick and Kaberger, 2005).
Topic and Research Goal Roles of local authorities (LA) in the knowledge transfer in regional networks for sustainable development. Examining resulting influence on learning and innovation. Contribute to knowledge on the expansion of bioenergy. Examine a successful case in Sweden and identify factors that can explain the difference between success and failure of bioenergy systems.
Findings LA approach leads to incremental change in the short run. However, long lived multi-actor networks with dialogue, experimentation and strategic niche management may lead to radical change. Three success factors: 1) Introduction of carbon tax made bioenergy competitive. 2) Local knowledge encouraged local investments. 3) Partnerships in regional networks of actors, including private companies, research institutions and local government, helped to coordinate the development of the bioenergy system. Effects of network governance are mixed: It can contribute to niche developments and innovation at an urban level. But the elitist character of networks risks maintaining unsustainable patterns and the mainstreaming of problems and possible solutions. Collaborations frequently fall short of expectations: The process can be misused for blocking and promoting vested interests. Actors with resources and skills may use the legitimating power of collaborative initiatives to promote their own agendas. Inherent complexities of collaboration can be underestimated, lowering expectations and results.
What role for network governance in urban low carbon transitions? (Khan, 2013)
Critically analyze the role of network governance in urban low carbon transitions from the perspective of network governance and transition governance. Investigate the most frequent promises of multi-stakeholder networks in solving complex sustainability issues.
Literature study
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Briefly put, the sociotechnical landscape is the wider context, which influences niche and regime dynamics (Rip and Kemp, 1998) highlighting not only the technical and material backdrop that sustains society, but also demographical trends, political ideologies, societal values, and macro-economic patterns. The sociotechnical regime forms the deep structure that accounts for the stability of an existing socio-technical system (Geels, 2004). It refers to the semi-coherent set of rules that orient and coordinate the activities of the social groups that reproduce the various elements of socio-technical systems. Examples of regime rules are cognitive routines and shared beliefs, capabilities and competences, lifestyles and user practices, favorable institutional arrangements and regulations, and legally binding contracts. Niches are protected spaces such as R&D laboratories, subsidized demonstration projects, or small market niches where users have special demands and are willing to support emerging innovations. Niche actors (such as entrepreneurs, start-ups, spinoffs) work on radical innovations that deviate from existing regimes. Niche-actors hope that their promising novelties are eventually used in the regime or even replace it. This is not easy, however, because the existing regime is stabilized by many lock-in mechanisms and because niche-innovations may have a mismatch with existing regime dimensions (e.g. lack of appropriate infrastructure, regulations or consumer practices). Niches are crucial for transitions, because they provide the seeds for systemic change (Geels, 2011). Most transition scholars have focused on emerging radical innovations at the niche-level, assuming that novelties developed in niches might eventually make their way into the regime (see e.g., Raven, 2012; Hekkert, Suurs, Negro, Smits, Kuhlmann, 2007)(Bosman, 2012). Transitions can occur when developments at these three levels align (Geels, 2002; Grin et al., 2010). The speed of the transition, or in what phase it is in, is conceptualized in the multi-phase framework. The multi-phase framework looks at the direction, speed and size of transitions. The transition is described through time as an S-shaped curve that goes through four non-linear phases (Rotmans, Kemp & Asselt, 2001; Rotmans & Loorbach, 2010): 1) Pre-development: small changes are going in the background of the system but are not (yet) visible. 2) Take-off: structural changes gain momentum; it is the ignition of a transition. 3) Acceleration: structural changes gain speed and become visible. 4) Stabilization: a new state of dynamic equilibrium is reached.
Figure 3 - Multi-phase and multi-level models of transition (Rip, 1998; Rotmans, 2000)
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The multi-pattern framework is used to understand how the three levels, landscape, regime and niche, interact dynamically in the unfolding of a socio-technical transition (Geels, 2011). Figure 4 provides an ideal-typical representation of how the three levels interact dynamically in the unfolding of socio-technical transitions. Although each transition is unique, the general dynamic pattern is characterized by transitions resulting from the interaction between processes at different levels (idem): 1) Changes at the landscape level create pressure on the regime: Large exogenous changes in the landscape are being felt in the regime. A good example for the energy-regime would be the worldwide shift towards less CO2 emissions or the rising costs of fossil fuels. 2) Destabilization of the regime creates windows of opportunity for niche innovations: Changes in the regime, such as consumer wishes, policy or in the dominant culture create favorable openings in the regime selection environments (Smith et al, 2010) where the regime might be more susceptible to the offerings of a niche-innovation. 3) Niche-innovations build up internal momentum: Through networks of supporting actors, learning processes and the linking of different elements, niche-innovations manage to gain a foothold (for example scale-up their product or service), stabilize in a dominant design and increase their internal momentum. The unfolding interactions can then be further sub-divided into several phases, using the multi-phase framework as described in the previous paragraph.
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Furthermore, this research is explorative in nature. According to Eisenhardt (1989) and Yin (2009), a case study here is the preferred approach, mainly because of its allowance for theory testing. Yin (idem) has provided three important conditions to apply a case-study approach. First, a research question asking how or why applies to the case study approach. Second, when the researcher is unable to control the behaviour of the researched unit(s) a case study is useful. Lastly, a case-study approach is useful when contemporary events or organizations or the topic of research.
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Open coding: large paragraphs were reviewed by to establish major themes in the data and to structure the first results. Themes were based on the interview protocol and on subjects that were raised during the interviews. Axel coding: After the major themes and concepts were identified, smaller themes and more importantly relations and insights are identified. Here substance analysis of the collected data was used in order to reduce its volume and identify core consistencies and meaning. Consequently, data considered irrelevant to answering the main research question was discarded (Patton, 2002). Selective coding: Here, the smaller themes and concepts are connected to the major themes of the research and interviews. Comparative coding: Finally, the results as provided by the analysis of the interviews are compared to the relevant secondary data in order to increase the validity and to help understand the context. Also see the next paragraph on validity. However, according to Yin (2009), the need to triangulate will be less important when the interviews for primary data are recorded directly, which is the case for this research.
3.4. Validity
In order to achieve a proper level of validity for this research, with properly collected and interpreted data so that the conclusions accurately reflect and represent the real world (Yin, 2011), the suggestion to apply triangulation (Yin, 2009) is followed. In this thesis methodological triangulation is applied, which means that two different ways of obtaining data are being used. Primary data is obtained through thirteen indepth interviews; secondary data is obtained from several documents, including academic articles, policy reports, internal organizational reports and other sources such as newspapers
In the fourth section, the concepts of path dependency and lock-in are used to analyze the possible opposing forces of the transition. This allows for a better understanding of the dynamics within the regional socio-technical energy regime and explains what attributes of the inter-organizational network might slow down the transition. In the final section, a synthesis of the four sections is provided. Combining the observed functions of the Energy Valley network in the regional socio-technical energy regime; the processes of transition Energy Valley contributes to; the transition phase the region is situated in and what opposing forces the transition faces, it is synthesized how Energy Valley contributes to the socio-technical shift of the energy regime. Please find a visualization of the research approach in Figure 5.
4. Energy Valley
Energy Valley is a foundation and inter-organizational network organization based in the NorthernNetherlands. It was founded in 2003 by a consortium of public and private partners as a network organization in order to facilitate regional growth of the energy sector. Its main goal is the economic development of the Northern-Netherlands, with the ambition to create new jobs and work on clean, reliable and innovative energy. Additionally, Energy Valley is the name given to the region that is comprised of the provinces Groningen, Friesland, Drenthe and the northern part of Noord-Holland. However, the topic of research is the Energy Valley organization. The information for this chapter is derived from internal documents of the Energy Valley organization (Energy Valley 2008; 2011).
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4.2. Funding
4.2.1. Energy Valley I, II & III The majority of Energy Valleys funding is obtained from public funds, complemented with contributions from private (founding) partners. Energy Valleys funding is project-based, meaning that each 3.5 years (connecting with the public service cycle) a new project plan is required for the whole Energy Valley organization. During the first three stages of Energy Valley, the Cooperation North-Netherlands (SNN) was the main source of income, as well as contributions from the European Union, the ministry of Economic affairs, regional governments, knowledge institutes and partners from the private sector. For Energy Valley I, the first phase, no specific information is available except that the large majority of the funding, 2.130.000, is obtained through the SNN agreement. The same goes for Energy Valley II, the majority of the funding, 3.675.00, is obtained through the SNN agreement. For Energy Valley III, the budget has been increased to 8.050.000, based on a Koers Noord subsidy from SNN and further contributions from both public and private stakeholders. Here, funding is based for 50% on the SNN agreement, 35% from provinces and municipalities and the remaining 15% on private funding. 4.2.2. Funding Energy Valley IV More information on the funding of Energy Valley IV is available. This also gives an insight into the previous funding structure and how the funding structure is shifting towards a larger percentage of private funding. For Energy Valley IV, 65% of funding is obtained from public funds and 35% from private and knowledge institutes funds.
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A total funding of 11.500.000 is obtained for a period of four years, of which 7.500.000 comes from public funding, distributed among the provinces of Drenthe, Friesland, Groningen and Noord-Holland, the national government and the municpalaties of Groningen, Leeuwarden, Assen, Emmen and Den Helder. Of the private funding, an even distribution among Gasunie, GasTerra, NAM, Groningen Seaports, Enexis, Alliander, KEMA and the NOM is seen. Together they contribute 3.2000.000. Combined with a contribution of 800.000 from Rijksuniversiteit Groningen, Hanzehogeschool Groningen, Kenniscampus Leeuwarden and Noorderpoort College, the total funding of Energy Valley IV equals 11.500.000. For a quick overview of Energy Valleys funding, please review Figure 7.
Funding
% Private funding
Small, exact number unknown Small, exact number unknown 15% 35%
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Given the liberalization of the Dutch energy market, the importance of the energy market as a job creator and the opportunities arising from the transition towards a sustainable energy supply, a favored scenario was created stating that the region should focus on the further development of the conventional energy sector, the stimulation of sustainable energy and the development of energy-related knowledge and innovation, eventually resulting in a stronger regional economy based on sustainable energy. 4.3.2. Energy Valley I 2003 - 2005 Based on this initial study, the provinces of Drenthe, Friesland, Groningen and the NOM together with Gasunie have continued the development of the foundation Energy Valley with the main goal of facilitating development on all three focus areas. These first two years were mainly spent on expanding the coalition and developing strategic opportunities, where Energy Valley acted as the intermediary between private and public organizations. In total 2.5 fte were employed during this period, under the supervision of a board of directors existing of members from the NOM and the connected provinces. Also a support group with members from the NOM and the municipality of Groningen was initiated. Branding and lobby resulted in the positioning of the Northern-Netherlands as energy region, complemented with several studies and stakeholder sessions. This eventually resulted in a broad coalition and a connection between Energy Valley and the national transition policy via the Support Transition Coalition (OTC). 4.3.3. Energy Valley II 2005 2008 Due to the complementary energy sector and mutual stakes in the Waddenfonds the northern part of the province of North-Holland was added to the Energy Valley organization. Also, the coordination office was expended to 7 full time employees, as well as the addition of actors from the ministry of Economic Affairs to the support group. An Energy Valley platform was created, where businesses and other organizations are formally connected. In terms of activities, next to the branding activities, the stimulation of project developments became the main focus. Energy Valley also managed to increase its institutionalization in the region through joining several regional development programs and agreements. 4.3.4. Energy Valley III 2008-2011 During 2008-2011 the focus points of Energy Valley remained the branding of the region and the stimulation of energy projects. As for branding, the extension of the cluster and the positioning of the Energy Valley as a gas region, including a gas hub and large-scale electricity production were the main points. The stimulation of projects was divided into two separate clusters, Bio-energy & Warmth and Decentralized Energy and CCS. Under these clusters, projects focused on biomass, green gas, energy transition parks, smart grids, offshore wind and carbon capture storage were stimulated. Internationally, cooperation was started with the German north-west region via the Hansa Energy Corridor. Also, four large partners joined Energy Valley: Enexis, Alliander, KEMA and Eneco. The organization itself was expanded to 17.5 fte, with the majority of the employees working on energy projects. 4.3.5. Energy Valley IV Current strategy and goals For the period of 2012 2015, the main goal of Energy Valley remains the economic development of the energy sector through innovation and the expansion of energy-related activities. Energy has been selected as one of the nine top sectors in the Netherlands by the national government, with Energy Valley as one of the main drivers. The regional cluster has developed itself towards a strong player in large-scale decentralized and centralized energy production, (inter)national infrastructure and knowledge. 26
On a European level, the region strives for a growing position in a stabilized electricity supply, especially in the gas sector. Building on the regional strength of the energy sector and looking to increase its stake in improving the competitive position of the Dutch energy sector in Europe, Energy Valleys strategy for the coming three years is built on further specialization along four main themes. These are the (Green) gas hub, power production and balancing, decentralized energy systems and lastly, bio-based energy. Connecting all four themes are research, development and education. In addition, Energy Valley will focus more on coordinated lobbying and international cooperation. For the (green) gas hub, an improvement of the competitive power and export of the gas sector is sought through improving the level of organization and increasing the interaction with alternative energy sources. For power production and balancing, core points are the growth of large-scale decentralized energy production and the greening of central production. For bio-based energy, scale advantages, technology renewing, innovation and interaction with the chemical sector are being sought. For decentralized energy, more pilots and the clustering of business and knowledge should lead to increased growth. Research and knowledge is, in line with demand, extended through the bundling of education and research in the newly founded Energy Academy. And lastly, (inter)national cooperation is focused on the four identified core themes of Energy Valley IV, expanding project-based national and international cooperation projects looking to strengthen both the nationalbased top sector Energy as well as the European-based innovation policy.
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5. Results
The results are based on thirteen interviews with different actors from the region and complimented with data coming from secondary sources. In the first section, the different identified functions of the Energy Valley network are discussed. In total, eight different functions, some overlapping, were identified. Based on the established functions of the network, the second section of this chapter will look at what processes of transition, as facilitated by Energy Valley, can be identified. Next, in the third section, based on the previous results and complemented with quotes from interviewees and secondary data, it is identified in which transitional phase the region currently is. In the fourth section, an analysis using the concepts of path-dependency and lock-in is performed to identify possible opposing forces to the regional transition. In the last section, a synthesis of the previous sections provides a conclusion on how the Energy Valley network organization contributes to the fundamental transition of the regional socio-technical energy regime of the Energy Valley region.
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Even though Energy Valley operates close to the political field, their independent position and proximity to the market allows them to sometimes intervene without a sense of conflict of interest: When a party like GasTerra presents a list of bottlenecks for green gas, quickly a sense of conflict of interest could arise. However, Energy Valley has limited self-interest in green gas, preventing such a situation (GasTerra respondent). About this, the respondent from the University of Groningen (RUG) says: In that respect, they hold an interesting position: Executing projects while being generic towards the general energy policy of the provinces but at the same time very close to the market. An impossible position for civil servants, but not for them. So, once in a while, ideas and requests from the market are brought to the table by Energy Valley. Summarizing, the independent position of Energy Valley, in between the market and the public administration, allows them to calibrate the two different spheres of market and public administration. This is done through translating the different languages of both spheres into a common jargon, facilitating a consistent policy through acting as storyteller and advisor towards new public servants and through providing a lobbying-platform that is perceived to be less inclined towards conflicts of interest. 5.1.2. Scaling up Energy Valley helps scaling up projects and technologies on two different levels. Firstly, by helping businesses work together, an economy of scale is created in the actual business operation. An example of this is the planned Biogas pipe-line Noord-Oost Friesland, which connects several stand-alone fermentation plants and makes it possible to centrally upgrade the biogas into green gas: All those vulnerable smaller installations, at farms and so on, they are simple not economically feasible. Still, green gas is important so by clustering them you make it unique and protected and more interesting for the deciding parties (Energy Valley respondent). This is confirmed by another respondent from Energy Valley: Because of the larger scale of operation, we will be able to create an economy of scale. This is the most important thing to the ministry, being able to produce at a lower cost than a stand-alone installation. Secondly, by clustering different parties working on energy projects, Energy Valley enables them to achieve a larger striker power towards the public administration, be it to influence existing regulations or for funding: We try to cluster as much as possible, the more the private initiatives coming from the market are visible, the stronger our position towards the administration becomes (Energy Valley respondent). Talking about the green gas casus, an Energy Valley respondent provides two examples of this: The green gas concept was ready to go, however, regulations were still obstructing. Using the Green gas task force, we were able to collect the right people at the table: public administrators from the provinces, Ferd Crone, the mayor of Leeuwarden with a large network in The Hague and large gas players such as GasUnie and GasTerra. With this collective, we started lobbying for a change in feed-in regulations. In the case of funding, Energy Valley played a similar role. When several different companies were interested in further developing the green gas concept and faced similar development issues, Energy Valley organized for them to collectivity opt for the Koers Noord subsidy: What we did to put the different parties together at one table and suggesting the bundling of all the development questions together into one funding request. This way, we were able to fund all the projects and make sure no double work was being done. This resulted in a project estimated at 7 million euros, of which 2.2 million were granted for subsidy (idem).
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Summarizing, Energy Valley facilitates the scaling up of energy projects in two different ways: Firstly by organizing a physical economy of scale, resulting in a lower production price. Secondly, by bundling the lobby and funding efforts of market initiatives, a larger striking power is created towards the public administration. 5.1.3. Place-to-be Making the Energy Valley region the place-to-be for all energy related business in the Netherlands and other regions in the vicinity is one of the main goals of the Energy Valley organization. Since 2003, the region has slowly become a common name in the industrial reality of the Netherlands. For example, the region was mentioned as an important industrial area together with Brainport Eindhoven and Schiphol in the governing agreements of the cabinets Rutte I and II and was part of the Green Deals, made during the previous Balkende IV governance. Several interviewees stressed the branding function of the region as an essential element of Energy Valley: You could draw a comparison with The Hague, branded as the justice capital of the world. Thats what we are trying to do with energy: If you want to do anything in the field of energy in North-West Europe, come to Energy Valley (Energy Valley respondent). Next to the regions citing in various governing agreements, the respondent from the Ministry of Economic Affairs also confirms the region has succeeded in establishing a well-known brand: Energy Valley naturally has a great sound to itconsequently propagating their selling point has resulted in a prominent nameGroningen, Friesland and Drenthe have benefited from this positive branding. One of the Energy Valley respondents states the same: If you look at what role Energy Valley has played for the regiondistinguishing it from the rest of the Netherlands in terms of accelerating in one field, it has done a great job. Next to a national branding function, Energy Valley also has a regional branding function, providing inspiration and common ground for those active in the region: One of their main functions is marketing; from where I stand they are an important marketing tool for the philosophy that is present in the region (Attero respondent). This philosophy is described more precisely by the respondent from the Ministry of Economic Affairs : It is very interesting to see how Energy Valley has given the North, previously known as a somewhat lagging and reactive region, a new spin; changing the mindset from reactive to active. One of Energy Valleys tools to inspire the region is the ample amount of examples provided by the organization. The organization hosts around fifteen to twenty local events built around different energy topics per year, has its own newsletter, its employees frequent public hearings on energy issues and Energy Valleys website hosts a map of the region indicating all current energy projects. Additionally, a booklet called Energy Valley Works! was issued in 2010 (Energy Valley, 2010), providing a host of examples ranging from sustainable smart grid systems to high-capacity transport cables and coal-fired plants. Indeed, Energy Valley is an organization that has the overview and provides a spotlight for new initiatives, inspiring others by doing so (Waddenvereniging respondent). And the examples do resonate in the region: Examples, we are almost functioning through examples, we warm ourselves to examples so to speak (GasTerra respondent). Finally, as is suggested by the respondent from the City of Leeuwarden: Even just by mentioning the name Energy Valley consistently, a sense of community spirit is created: We are all working with energy. Summarizing, Energy Valley has a place-to-be or branding function on two levels: Firstly to provide a branding that distinguishes the region from the rest of the Netherlands, and secondly, to provide inspiration within the region through their various communication outlets.
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5.1.4. Coordination of stakeholders One of the main functions of the Energy Valley organization in the region is the coordination of different sets of stakeholders before and during projects. The nature of the energy business is as such that often different stakeholders are needed and involved in order to successfully complete a project. This requires a party that is able to connect different players and coordinate the unfolding process. Briefly put, Energy Valley works with private parties, public administration and knowledge institutions on a project-base to start laying bricks as soon as possible (Energy Valley respondent). Even though Energy Valley is a small organization, with currently 19fte, they sure know about organizing, how to interlink different parties (GasTerra respondent). Through the interlinking of parties and processes, new enterprises and consortia can arise in the region: Imagine you are working with three different parties, and quickly they are connected with each other, creating a new sustainable enterprise. Initiating, propagating, conceptualizing, finding the right subsidies and the right players to connect to the initiative, that is what Energy Valley does (Attero respondent). An interesting example of this role is the realization of the first physical green gas tank station by Green Planet in Pesse, that brings together the green gas production of Attero and the direct-sales channel of Green Planets tank station: Energy Valley seems to be able to make connections that other dont. For example, they were the ones that made sure a FES subsidy was allocated to the Green Planet project, effectively making us the first green gas producer to physically provide the gas from the side of the road (idem). A similar suggestion is given by the respondent from the Natuur & Milieu Federatie Groningen: Energy Valley has lots of knowledge and insight into how the chain operates, what product might do well, what else you could make of it, what the next steps are and how this is all inter-connected. Operating as a stockbroker, the Energy Valley organization utilizes its large network to make connections that otherwise, most probably, were never realized. In the case of Attero, when the organization was looking to develop a transition park, in which several operations are clustered to achieve a more efficient energy use, Energy Valley was responsible for the first introductions: Energy Valley has had an important role in the initiation. We had a plan, but still needed clients and the first client came from the Energy Valley network: Noblesse, a large user of steam. This has been their virtue (Attero respondent). Please refer to Box I for a short description of the transition park. Next to bringing different stakeholders together during the initial phases, the working groups, task forces and events of Energy Valley also function as a coordinating forum in the region: The gatherings organized by Energy Valley are very important. This is where agreements are made as to what you can and what you cant do and how you could help each other (City of Leeuwarden respondent). Summarizing, Energy Valley has a coordinating function in the region: The organization brings together different actors, keeps coordination of projects and provides several coordinating forums.
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5.1.5. Access to funding Next to having the right stakeholders at the table, access to funding is a critical dimension of successfully starting a new energy project. Although Energy Valley does not do any investing, they do play an important role in access to funding: In the last ten years of operation, we have not invested a penny. This is not what we do, as an organization we only cost money. We do however facilitate third parties to come to an investment. This is what we do and what we get paid to do (Energy Valley respondent). One of the most apparent ways of facilitating access to funding is helping companies to be assigned a subsidy, either coming from the provinces, The Hague or Brussels: Along the subsidy lines they seem quite well informed, when there are subsidies available, they are very capable of getting them and broker them to companies. The other way around, when companies have funding opportunities, I can imagine they will find the right subsidy too (RUG respondent). The various subsidies available require in-depth knowledge about following the right steps and opening the right doors, something that most companies or entrepreneurs simply do not always have enough time for. Although commercial subsidy consultants do exist, Energy Valley is described as skilled in this field too: Their skills are to know the right phone numbers, having the network but also to have time to, in a rather pit-bull-like way, chase subsidies. For me, this is something I have to do on the sidefor them it is a primary task (Attero respondent). Especially smaller organizations can benefit from Energy Valleys expertise and network in the field of subsidies: For the smaller players, they function as a trustee. For example, you are looking for a subsidy from GasUnie. Having Gerrit van der Veen introduce you (director EV), makes this easier from the onset (IMSA respondent). In this sense, the Energy Valley organization has a guiding approach towards funding, introducing new players and bringing stakeholders together, who once they have generated new ideas can opt to receive help during their funding rounds:
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Take the Dutch Torrefaction Association (DTA), it is a small club but they do know a lot about this specific concept. So, when you put them together in a room, you get an explosion of ideas and possibilities. However, once they need financing for these ideas, they are lost. That is where we can be of significance (Energy Valley respondent). Summarizing, creating access to funding is an important function of the Energy Valley organization. The organization is described as having in-depth knowledge in the field of subsidies, having the time and skills necessary to obtain them and having access to a broad network of investors.
5.1.6. Parenting Building on the guiding approach for smaller players in the previous paragraph on funding, the parenting of new projects or companies is another function of the Energy Valley organization. This means that the Energy Valley employees go to great lengths to help their clients, be it a small or larger company, with a variety of issues that might arise before or during a project: How I see it, they are a facilitating organization. So for example, when we have a project that we would like to demonstrate in the Energy Valley region, we can ask them to clear the path for us so to speakthis is what makes it interesting for organizations to be part of the Energy Valley network (GasTerra respondent). This is described by one of the Energy Valley respondents too: We enter the domain that is bothering most entrepreneurs, for which they have no time or interest, or in the words of another Energy Valley respondent: "We are the physician, the general practitioner of the energy projects Often, the smaller companies need the most guiding or parenting: Smaller companies can benefit from our services more. We can support them, take them by the hand, protect, accelerate; in that respect we can have a significant impact. Larger players like GasUnie; we really do not need to tell them how the game is played (Energy Valley respondent). Working with smaller companies makes the nature of Energy Valleys business more personal according to one of the Energy Valley respondents: How you can be of any assistance, its all about trust, building a relationshipand knowing what keeps the entrepreneur awake at night. However, the large scale operations of Energy Valley do not always go hand in hand with the building of a trustful relationship with a smaller company: When we started working with Energy Valley, they were asking for quite some information: What were we doing, how far we were and what our planning was. However, this information would be shared with the larger stakeholders too. As a small organization, you have to think twice before taking such steps I would say (ATO respondent). A final parenting function is helping companies find new initiatives in the market that otherwise would have possibly remained less visible to them as well as keeping track on the companys progress: One of the functions they have is pointing us in the direction of new or interesting initiativesThey filter all the information, supply us with synthesized informationand keep track on whether or not you are utilizing it. I would say that is important too (Attero respondent). Summarizing, the parenting role of Energy Valley accounts for several functions in one, all related to making the professional lives of different stakeholders in the region easier: Be it through clearing the paths for new projects, scanning for new initiatives in the market and presenting them to companies, building meaningful relationships with entrepreneurs or keeping track of a companys progress.
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5.1.7. Lobby The Energy Valley organization has been described as being an active lobbyist numerous times by the interviewees. Since its start, the organization has been able to propagate itself and the Energy Valley region into the policy domain. For example, they are being mentioned in various policy programs: It started as a small club, financed by the provinces...and after a while they showed up in public documents, like Pieken in de Delta. Here, energy was a described as a viable option for the North, giving Energy Valley as a prime example. As such, they have some influence They are clearly working in that level too, not just with practical smaller projects (RUG respondent). The organization function as a vehicle for the Northern provinces to create the critical mass they need towards The Hague: The North needs, to a certain degree, to cooperate to create a larger critical mass from companies, local governments and knowledge institutes. This way, you get more done in the Hague: Energy Valley is an organization that is able to create that critical mass (City of Leeuwarden respondent). Building critical mass is described as one of the success factors of Energy Valley: We have a large group of stakeholders from the market and government who pull their weight. We started in 2003 and are now mentioned in the Government Agreement together with Brainport Eindhoven and the harbor of Rotterdam/Amsterdam. This is a position that has been achieved in just nine years (Energy Valley respondent). On a national level, next to the Pieken in de Delta and the Government Agreements of Rutte I and II, the Northern Green Deal from 2011 is another example of how Energy Valley operates: The Green Deals from Maxime Verhagen are an example of Energy Valleys lobbying. Different stakeholders in the North create a proposal, e.g. a green gas hub, and in turn Energy Valley greatly helps in the lobby-process, getting our Green Deals (City of Leeuwarden respondent). However, as one interviewee notes, even though the striking power of the Energy Valley lobby is significant, the scale of the lobbying process is mainly directed toward larger projects and organizations: What we have encountered is that Energy Valley clearly has a strong lobby towards the Ministry of Economic Affairs, which is a good thing. However, for smaller players like us, the projects will always be put in a larger context and become (too) widely known (ATO respondent). Interesting is that due to the way Energy Valley organizes their lobby, the organization itself does not always become visible during the process: I get the impression Energy Valley is not that visible in the lobbyprocess. This is more a task for the public officials, they are the ones you hear talking about sustainability. Energy Valley appears to take a different approach, but Im finding it hard to put my finger on it (Ministry of Economic affairs respondent). When asked about this, one of the Energy Valley respondents explains why this is the case: Well, we organized the lobby. Energy Valley is not a lobby organization as such, so for outsiders it makes sense that they only see public officials, deputies or one of the chiefs of the Queen. We initiate the lobby and make sure they have the right arguments to present. A brief description of the Green Deal Northern Netherlands 2011 is presented in Box 2.
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Green Deal Northern Netherlands 2011 The Green Deal Northern Netherlands of 2011 has been designed to strengthen the position of the Energy Valley region as the energy port of the Netherlands and North-West Europe. The Green Deal consists of fifty smaller individual projects that collectively are seeking to contribute to this goal. The Green Deal is constructed around three core themes: 1) Sustainable energy: Mostly focusses on green gas hubs, the ambition was set to generate 500 to 750 m3 biogas/green gas per year by 2020 (200 million nm3 by 2015). This part of the Northern Green deal can be considered the core theme of the deal. Energy Valley has been very actively involved in this part according to interviewees. 2) Energy: mostly focusses on the founding of an Energy Academy, where MBO, HBO and WO level students can work together with knowledge institutes and business from the Netherlands and North-West Germany and 3) Innovation, with several renewable energy projects, ranging from the production of synthetic gas, bio methanol, smart grids and the acceleration of electric mobility. A range of stakeholders was involved in the formulation of the Northern Green Deal, from local municipalities, the SER Northern Netherlands, four different national ministries and lastly, the Energy Valley organization representing approximately 150 business and knowledge institutes (Provincie Groningen, 2011). Box 2 - Green Deal Northern Netherlands 2011
5.1.7.2. Syncing of lobbying story One of the key roles Energy Valley has in the lobby process is making sure all stakeholders are on the same page, i.e. making sure the same story is accepted and told by everyone involved. According to the GasTerra respondent: For the Hague this presents a favorable situation knowing that Energy Valley makes sure everyone is looking in the same direction, that they create a good story and that money coming from the Hague is invested in innovative energy projectsOne front, with signals that are being listened to, thats the attractive thing about Energy Valley. On a provincial level, the Waddenvereniging respondent observes the same mechanism: A couple of years ago I was present at a green gas meeting. This helps to bring people together who are looking to engage in the green gas market, but also gives Energy Valley an overview of which bottlenecks are still there. Like this, you have a much stronger voice than one farmer who goes to the province. This is a role they have. Inside the Energy Valley organization, they appear to be wellaware of the importance of a synchronized lobbying story: When the director of GasTerra is visiting the minister, and the next week the deputy of Drenthe is telling him the same storythat makes a huge impact. You still dont have any guarantees that changes will be made, but this way you can apply more pressure together (Energy Valley respondent). Summarizing, lobbying is an important function of the Energy Valley organization: Different functions in the lobbying process were identified: Creating a critical mass, having the appropriate and highly connected players involved, mapping which regulatory bottlenecks are visible in the region and making sure the lobbying story is synchronized among the different the stakeholders involved.
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5.1.8. Social Relations Being part of the main networks and having the right social relations can be considered a key variable in successfully doing business. In the Energy Valley region, Energy Valley has a role in facilitating several events where the different stakeholders in the region can meet each other: Building a network is a strategic part of doing business. When you join Energy Valley as a starting entrepreneur, within no-time you are can meet everyone in the field during a networking event (IMSA respondent). This is also mentioned by the Ministry of Economic Affairs respondent: Energy Valley has an active role in bringing together people that jointly can achieve certain developments.bringing together a coalition. Two interesting examples how Energy Valley facilitates the relationship building in the region are given by the Attero respondent and by one of the Energy Valley respondents: What they do well in terms of networking, for example, at a formal meeting, presentations and so on, very interesting, everybody applauds. Then, we go to the bar and thats where it happens, those last ten minutes at the bar. So, what does Energy Valley? They come up with a networking event during a soccer match, Energy Valley Topclub. Sounds good, and it appears to be so simple: you create an environment, you give it a nameand slowly, people are starting to get that feeling, I need to be a part of that. And all this is in a pleasant and informal environment with meatballs and a match. And then again, thats where it happens; having a quick five minute meeting, arrange this or that. And they come up with the guest-list May I introduce you to? and so on, thats how it works! A second example of how Energy Valley facilitates social relations in the region is the The Green Gas Task Force. Next to its formal functions, the task force also is used a tool to create a sense of belonging within the green gas community. What started as a small gathering has turned into a key event in the green gas network according to one Energy Valley respondent: Sometimes all we do is have a BBQ and some drinks together. The Green Gas project is a good example of this. We have become an institution of sorts, first we only had local players attending, but currently people are coming to our Green Gas BBQ from all over the country! Summarizing, the Energy Valley organization facilitates the social relations within the Energy Valley region. Through various networking events, formal and informal, they are able to socially connect different actors within the energy sector and facilitate a more coherent community in the region.
One of the key pressures is the increasing worry from several stakeholder groups about climate change. One of the largest stakeholders, the national government, has set ambitious goals with regards to sustainability: Fourteen percent sustainable energy in 2020 and hundred percent sustainable energy in 2050. It also developed the Green Deal program to stimulate green innovations and recently (Summer 2013) a national Energy Agreement has been presented. In addition, the European government has set similar climate and energy goals. Although considered soft goals, they do play an important role in the further development of sustainable energy sources and as such might put pressure on the Energy Valley region to accelerate its transition. Additionally, the growing awareness in the Dutch society with regards to climate also puts pressure on the existing regime. Another source of pressure is the growing awareness that fossil fuels are finite. In the words of one of the Energy Valley respondents: We know fossil fuels will be depleted in the future. You can spend a lot of time considering what will be the best alternative, but whats needed is a mix of solutions. The reality of depleted fossil fuels also is visible in the Energy Valley region, the omnipresent gas in the region has become harder to extract and reserves are depleting. According to the Ministry of Economic Affairs, the Dutch gas production will be able to produce at current volumes until 2030, after which they will continue to decrease, resulting in the Netherlands becoming a gas importer by 2025 (Economische Zaken, 2011). As suggested by several interviewees, large gas players in the region, such as the NAM and GasUnie are increasingly willing to work with alternative energy sources such as green gas in order to safeguard their right to exist in the future. This is also in line with the national policy to spread opportunities in the gas sector, for example through gas hubs importing gas from, mainly, Russia, the increased capitalization of gas specific knowledge and by increasing the use of green gas (idem).
A third source of pressure is the worldwide rise of energy prices. This is caused by the increasing demand for energy, the decreasing supply of fossil fuels, CO2 reduction schemes, the increasing share of renewable energy in the mix and the forthcoming necessary infrastructural investments (Economische Zaken, 2011). In the Energy Valley region, this leads to increased resources derived from extracted fossil fuels. Most notably of these is gas, of which the total added value to the regional economy equaled 13.3 billion in 2008 (EnergieMonitor, 2012). 37
Figure 10 - Energy prices 2005 - 2012 (Financial Times, 2011) & Expected Primary Energy Demand (World Energy Demand from IEA, 2010)
A last source of landscape pressure is the current Energiewende in neighboring Germany. The phasing out of fossil fuels, including nuclear already has led to an increased demand for sustainable energy in Germany. However, volatile demand and lacking infrastructure occasionally lead to a situation where Germany is forced to export its excess energy from wind power to the Netherlands. The energy is offered at a reduced price or even for free, putting pressure on the operating profits of existing coal and gas plants in the Netherlands, including those in the Energy Valley region (ABN Amro, 2013). Summarizing, several sources of landscape pressure were described in this paragraph. These include the growing awareness of climate change, a depletion of fossil fuels, rising energy prices and the German Energiewende. 5.2.2. Windows of opportunity in the regime In order for niche innovations to find its way toward the market, windows of opportunity in the existing regime are necessary. Changes in the regime, such as consumer wishes, policy, regulations or infrastructure create favorable openings in the regime selection environments. Based on the data, three different windows of opportunity facilitated by the Energy Valley organization were identified. 5.2.2.1. Regulation For new technologies, existing regulations or other unfavorable institutional arrangements often act as a barrier to the current regime. As can be seen in the Functions of the Network section, three functions of Energy Valley are primarily related to influencing regulations: Calibrating party, lobbying and the access to funding function. This is confirmed by the respondent from the Ministry of Economic Affairs, who believes the main function of Energy Valley is taking away the bottlenecks in current regulations. The Green gas casus again provides an interesting example: By bringing together different stakeholders in the Green gas task force, Energy Valley was able to organize a lobby towards The Hague to change certain regulations regarding the re-feeding of green gas into the network: Specifically to influence the institutional barriers, we established a task force with several public officials, members of the university and directors of the gas companies. 38
Here, under the management of Ruud Paap (Green gas EV, QH), we discussed what institutional barriers there were and what pathways, individually and together, we could employ to change them (Energy Valley respondent). For a broader description of the development of green gas in the Netherlands, please refer to Box 3. Another example of influencing existing regulations is the re-feeding of electricity that is needed in order to operate smart grids: Take smart grids, this field still has plenty of fossil regulations. They need to be changed, so you need to understand how the regulation works, pick your niche. When you succeed, for example with the regulations regarding re-feeding electricity, that is a very important achievement (Energy Valley respondent).
Green Gas Developments When biogas is upgraded (CO2 is removed, methane are levels increased to the 88% level of natural gas), green gas is created. This gas has the exact same specification as the natural gas extracted from, for example, the Slochteren gas field in Groningen. Green gas has seen a relatively quick development in the Netherlands. This box provides a brief overview of that development. In 2006, a green gas taskforce from the AgentschapNL (national innovation platform) was created, with the goal of developing the potential of green gas on a national level. At that point, regulation for the injection of green gas was non-existing, and subsidy arrangements for renewable energy (MEP at that time) did not include green gas. GasUnie, comprised with the task of maintaining the gas-infrastructure, did not yet trust the quality of the greengas. This was changed when a subsidiary from Gasunie, Vertogas, was founded in 2009 with the goal of providing quality-certificates for green gas. This certification was entered into national law in 2011. In 2009, Energy Valley founded the 3 Green Gas Task Force, looking to stimulate the green gas production to 100 mn per year and growing 3 3 towards 200 mn in 2015 and 500mn in 2020. Following the lobbying of a range of politicians, some of them informed by the Green Gas Task Force (The mayor of Leeuwarden, the Deputy of the province Drenthe) and large companies like the gas companies GasUnie and GasTerra, Green gas was included in the SDE+ subsidy arrangements from 2010 onwards. Additionally, green gas was made part of the national green deals from 2011, with a special green gas green deal included in the Nortern Netherlands Green Deal. Here, the goals as set previously by the Green Gas Task Force were copied into national policy. Currently, the Energy Valley region is looking to develop at least five green gas hubs in the region, of which one (at the Transition Park in Wijster) is set to be constructed in 2014. In total, the current production of green gas in the Energy Valley region equals 2.4 petajouls, approximately a quarter of the total national production. Despite positive developments, the Noordelijke Rekenkamer (2013) has estimated that in order to reach the policy goals, production of green gas needs to more than double in the Energy Valley region until 2015.
Box 3- Green Gas Developments
5.2.2.2. Policy and Lobby Since 2003, Energy Valley has been active in creating a favorable position for the region within the national and local policies. As described in the Functions of the network section, the organization plays a role as a calibrating party between business and governments and within governmental cycles and as such has some influence on new policies. Additionally, through creating a place to be, it has been able to put the Energy Valley name firmly on the map for policy makers. With regards to actively influencing national policy, the lobbying function of Energy Valley is significant too: 39
On this level, I would say they could play an interesting role, it is a strategic issue, the energy politics of the North and they are quite busy with that, especially with green has and the gas hubs (RUG respondent). Since 2003, the region has been included in several policy documents, including Pieken in de Delta, the Northern Energy Agreement, the Green Deals, including the Green Deal Northern Netherlands and the consecutive government agreements of Balkenende IV, Rutte I and Rutte II. However, it seems that the policy activity is almost exclusively located in the domain of green gas: In the field of Green gas, they are very active. However, this is an activity that suits Energy Valley I would say (GasTerra respondent). This is confirmed by other interviewees too, as most lobby examples concern green gas: Take for example green gas, when we see, practically or in the Hague, that something goes wrong, for example last year at the ministry of Finance, we make sure to actively lobby. In this case, I was involved because of my network and as a worthy proponent of green gas. During this process, Energy Valley was backing me (City of Leeuwarden respondent). One of the Energy Valley respondents also provides a green gas example of Energy Valleys lobby: We are being consulted by civil servants concerning new energy policies and programs, yes. Renewable energy for example, but this was limited to the green gas sector (concerning the Green Deal, QH). The Energy Valley organization also has some power in the regional policy developments concerning sustainable energy. Although most interviewees state that this remains the domain of the civil servants, with organizations such as Energy Valley operating around them, indirectly they do have some influence. This is mostly through their events, their network and several task forces, which enables the Energy Valley organization to influence the knowledge, opinions and general discourse in the regional energy field. On this, the respondent from the RUG mentions: We also have some large municipalities that are looking to become energy neutral. It might just be that Energy Valley and the Energy Valley Topclub have more effect in this sense than the municipalities themselves A noticeable example is the City of Groningen, which is aiming to become the most sustainable city in the Netherlands as well as completely energyneutral by 2025 (Noorderlink, 2007). The Attero respondent thinks that this might be connected with, but might even be a direct consequence of the Energy Valley lobby. Another form of lobbying, together with creating access to funding, is suggested in the data too: Energy Valley has the expertise to effectively engage with the various civil servants and maneuver around possible institutional barriers with regards to subsidies or environmental permits for new projects: The way I see it, regulations in terms of permits, subsidies, making sure you are at the right window so to speak, they know their way around that, especially at the various ministries. Its often quite hard to know where to go, but they seem to know without failure (Attero respondent). 5.2.2.3. Connection with regime-players Within the Energy Valley region, several large regime players are active. Of these, most notable are gas companies like the NAM and GasUnie. Interesting to note with regards to creating a window of opportunity within the regime, is that Energy Valley has achieved to bring new sustainable energy options under the attention of these regime players. Working with niche and regime players, the Energy Valley organization is able, most notably in the field of green gas, to bring together old and new technologies.
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One of the Energy Valley respondents describes this process: In the beginning, the fossil players were looking on from the sides, considering whether the technology had potential or would stay in its niche. After that, green gas started gaining momentum; more projects were started and so on. Those projects were connecting to the fossil infrastructure, so they could not ignore it anymoreThis was difficult, but after a while they were able to make it land in the organization, even creating a rub-off effect on their organization regarding sustainabilityand then you start to notice they are willing to take it even furtherAnd now we see even the NAM is starting to see the potential and they are seriously looking at the role of their own infrastructure for the evacuation of green gasThat dynamic, in the beginning, fossil and green were separate, then some co-existence arose and now a symbiosis appears to be happening, with green standing and growing on the shoulders of fossil. As another Energy Valley respondent describes, the technology of green gas is getting more entrenched within the regime companies: Once people inside the organization have an opposed goal as to what the organization as a whole is trying to achieve, you have passed a tipping point. For example, within GasUnie there are employees who have targets concerning green gas, so the more green gas they produce, the better they have done their job, they might even receive a larger bonus. Once youve reached that point as an organization, you cant stop it anymore. Summarizing, Energy Valley facilitates three windows of opportunity within the regional socio-technical regime: They help change fossil regulations, lobby in national and regional policy circles and help niches to connect to the regime. 5.2.3. Niche momentum In order for niche-innovations to increase their proximity to the regime, they need to build op momentum. Through networks of supporting actors, learning processes and the linking of different elements, nicheinnovations can manage to gain a foothold and increase their internal momentum. Four of the functions of the Energy Valley organization play a role in creating niche-momentum: The coordination of stakeholders, the scaling up of projects, parenting and facilitating social relations. Regarding the coordination of stakeholders as well as parenting, two primary examples mentioned in the data are the New Energy Business Collective and the Smart Grid Task Force: The New Energy Business Collective (NEBC) is an example; here we regularly bring different partners together from solar, ICT, smart grids and so on. We have some possibilities to test ideas and products in a professional business or research environment. We need to cultivate this further though, but these are real breeding grounds (Energy Valley respondent). For a brief description of the NEBC, please refer to Box 4. The respondent from the City of Leeuwarden provides the example of the Smart Grids Task Force: Due to a weak construction sector, there was a need for a better connection with the existing real estate in order to develop testing grounds where you can work with smart grids. This resulted in the Smart Grids Task Force, presided by the mayor of Leeuwarden. Here, different actors within the smart grid come together to coordinate and work on new initiatives. Concerning the up scaling of technology in order to gain momentum, green gas and the creation of centralized gas-plants that change biogas into green gas provides a good example, as described in the scaling up function in 5.1.2. on page 29.
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Another function that could contribute to creating niche-momentum is the facilitation of social relations. Through various events, Energy Valley has been able to create several (smaller) networks with entrepreneurs, researchers etc. of specific niche technologies. As mentioned often in the data, new introductions and access to specific networks is a key function of doing business, and as such, contributes to creating a niche-momentum. However, some interviewees communicated concerns regarding the effectiveness of Energy Valleys approach in the niche domain: If you, as a smaller player, decide to join Energy Valley, this means your projects will be put in a larger context too, meaning they will also be more widely known. This is something you normally only can risk when you already have established a certain position, one that you cant share too easily, thats the strategic game you need to play. This is something we have encountered with Energy Valley, they are asked for all kinds of information, what kind of projects, what ideas, what is your timeframe. Sure, they tried to share similar information with us too, but two parties of un-even strength exchanging information, thats just not possible (ATO respondent). The Natuur & Milieu Federatie Groningen respondent commented that he did not see a strong presence of Energy Valley in the niche domain: Small scale initiatives that still need development; I do not feel like they play a very serious role there. Maybe they accelerate some innovations by providing a stage for them, but I cant really give you any examples. Summarizing section two of the results chapter, some processes of transitions facilitated by the Energy Valley organization were identified. Some landscape pressures were visible in the Energy Valley region: the rising concern about climate change, the depletion of fossil fuels, rising energy prices and the Energiewende in neighboring Germany. In addition, three windows of opportunity were identified in the regulatory and lobby sphere as well as in connecting niche innovations with regime players. Lastly, some niche momentum was facilitated by Energy Valley, most significantly through the coordination of niche actors, parenting, the up scaling of projects and by facilitating social relations.
New Energy Business Collective The New Energy Business Collective (NEBC) is a network for small and medium sized companies, looking to bring together stakeholders that are working on Smart Grid and Smart Energy related initiatives and support them in generating business. Currently, demand and availability of smart technologies is lacking calibration in the region and the NEBC is looking to stimulate and coordinate efforts in order to help small and medium sized companies grow, resulting in a strong market position for the Energy Valley smart technology cluster. Several activities and other possibilities are organized: Matchmaking, knowledge sharing, support on funding, consulting on projects, the availability of lab and office space, joined communication and branding and lastly, a showroom. The NEBC was founded by five Northern partners: KEMA, TNO, the municipality of Groningen, the Northern Development Organization (NOM) and the Energy Valley organization (NEBC, 2013). Box 4 New Energy Business Collective
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The investments have been mainly directed towards energy saving and the production of biomass and wind power. Until now, these investments have not resulted in the necessary acceleration. Additionally, the Rekenkamer concludes that the relative contribution of the Energy Valley region in sustainable energy production equals around 20% percent of the national total. This means that in 2011, the region has not substantially contributed more to sustainable energy development than the rest of the Netherlands. Currently, it is estimated that the share of renewable energy of the region in 2020 will be between 9 and 12%. Summarizing, numerous new initiatives have been developed in the Energy Valley region. However, the realization of sustainable energy production lacks far behind on the ambitions and is similar to those in the rest of the Netherlands. Please refer to Figure 11 and 12 for an overview of the investment levels and a comparison of the region with national sustainable energy production.
Figure 12 - Comparison of the national and regional sustainable energy production (Noordelijke Rekenkamer, 2013)
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Based on the interviews, a similar picture of visible developments but unmet ambitions arises. During the coding of the data, the majority of the quotes point toward a pre-development stage, set to turn into a take-off. This is mostly based on the amount of experiments and innovation in the region, the scaling up of certain niches, especially the green gas niche and the increasingly turbulent sentiments among the inhabitants and NGOs in the region. Even though the Energy Valley region has been, in a brief period of time, able to propagate itself as a key energy region, doubts are expressed if the ambitions and investments are leading to real innovations, especially from smaller companies. Interviewees addressed that mostly large projects are undertaken, leaving out the middle and small companies. As the Natuur & Milieu Federatie Groningen respondent says: A lot is happening, lots of investments, but is it really that innovative? Groningen (with the development of new coal and gas plants, QH), builds a strong position in the Dutch energy field because of the large production volumes, but thats mostly old-fashioned production. Almost no innovation when you are talking about sustainable energy. Although it is important to note that according to the Rekenkamer (2013), Friesland and Drenthe focus more on smaller initiatives, they do also confirm that Energy Valley focusses too much on industrial-scale energy projects with mostly large regime knowledge institutes and energy companies involved, leaving the niche companies behind. Initiatives like the Smart Grid Task Force and the New Energy Business collective do facilitate niche innovations, but remain too little to achieve a significant growth of renewable energy production. Still, some large developments have also been going on in the renewable energy production, most notable in the green gas sector. The scaling up of projects has led to an increase in investments and regime players are joining in green gas production and other alternative biofuels: I dont see GasUnie for example not cooperating, they have to cooperate. All the developments going on with green gas, the biomass plant of Eneco, the plans of BioMCN, if they want to survive, they will have to join (IMSA respondent). Furthermore, investments in green gas and biofuels are growing, they are not small investments anymoreI believe the Suikerunie will now invest 18 millionbioMCN has a planned project of 700 million for bio-ethanol, these are not the small projects with a couple of tons () investments, these range from a couple of million to hundreds of millions (Energy Valley respondent). Despite the recent rise in investments, the Rekenkamer (2013) does note that the ambitions as formulated in the Green Deal North-Netherlands for 2015 are as yet still far away: In order to reach these goals, the production of green gas for example will have to more than double within the next two years. In addition, as can be seen in Figure 11, the investments in sustainable energy production are decreasing from 2015 and onwards, with investments in conventional energy decreasing at a lower rate. Lastly, a growing turbulence and increasingly sharper contrasts among inhabitants and local NGOs can be seen, as is typical for a (pre) take-off phase. The recent (planned) construction of new coal plants in the Eemshaven faced continuous opposition from several NGOs. At the same time, it is interesting to note that according to the Natuur & Milieu Federatie Groningen respondent: when you raise doubt about the coal plants in the Eemshaven, the whole of Groningen seems to be against youmost people in the Netherlands, specifically national politicians, dont seem to realize that the largest support for coal plants lies with the inhabitants themselves and that actually, there is more resistance against the construction of wind power farms. 45
As previously mentioned, the controversy surrounding the extraction of shale gas is another example: local inhabitants together with local and national NGOs are currently attempting to frustrate the first try-out drills and strongly oppose the possible following extraction, while simultaneously opposition exists against the construction of wind farms in the Eemshaven. Summarizing this section, it is concluded that the Energy Valley region currently is situated between the pre-development and take-off phase. The landscape pressures and several windows of opportunity have increased the sense of urgency and have influenced national and regional policy leading to ambitious goals. Also, investments in sustainable energy production have increased from 2003 to 2015. Viable alternatives are scaling up, of which most notable green gas, and some other niches are gaining momentum. At the same time, tensions within the regime and within civil society create turbulence within the system, continuously building pressure. However, conventional energy production and investment remain dominant and niche players, compared to national levels, do not have a substantial higher contribution to sustainable energy output. In short, so far ambitions have surpassed realization. The Energy Valley region is still building up pressure and some developments are visible, but have as of yet not interlocked and caused significant (so to speak) chaos in the system. This leads to the final conclusion that the region is currently situated between the pre-development and take-off phase. To conclude with the words of the GastTerra respondent: An energy transition only works when we believe in cooperation, if we dont we can continue running but there will be a deep hole waiting for us at the end. Concerning energy, we have mainly regime players, but new players do arrive and larger players get smaller and vice versa, that is the phase we are in right now, estimating where to go.
5.4.1. The Role of Gas The Northern Netherlands has been traditionally been a supplier of energy to the rest of the Netherlands, originally with biomass (turf), later with oil and currently with natural gas. The discovery and extraction of natural gas has been of great significance for the development of the Northern economy (Noorman et al., 2006). Within a few years after the first gas discoveries in the 1960s, a new high pressure gas transport system was constructed and the existing networks were upgraded and integrated in a new gas system that not only covered the Dutch territory but also became an essential part of an emerging international gas network (idem). Crucial for this expansion was a political agreement between the Dutch state and two oil companies (Shell, Exxon) and the national monopoly transferred to a new actor, Gasunie (Verbong and Geels, 2007) The GasUnie and NAM (Nederlands Aardolie Maatschappij) are based in the region and due to the willingness of the Dutch government to stimulate large industry; several large industries such as chemical and metal production are based in region too, relying on affordable energy sources. Most notably are the Delfzijl and the Eemshaven harbor. Additionally, a strong knowledge cluster with a focus on gas has been developed in the region. Summarizing, natural gas holds a dominant position in the region and as such provides a characteristic of the market and institutional environment (such as infrastructure) that creates a path-dependency towards large scale energy production (gas in particular) and contributes to the lock-in of existing technologies. According to several interviewees, the strong position of the gas sector and the corresponding large regional players has its influence on the focus and preferences of the Energy Valley organization: Traditionally, the large organizations have more power, but in everyday practice it is always attempted to reach out to the middle and smaller companies (City of Leeuwarden respondent). The IMSA respondent takes a more critical stance: Even though the ambition was there (towards sustainability, QH), Energy Valley seems to stand very close to the large coal and gas companies. The Waddenvereniging respondent argues in a similar line: Even though they do work in the field of sustainable energy, I see a clear intervention with the gas sector. This might be a transition fuel, and not as bad as coal, but still I sometimes have my doubts. The Natuur & Milieu Federatie Groningen respondent takes it one step further: I just mentioned the position of GasUnie and GasTerrathe energy policy of the region that Energy Valley is involved in, you always see the gas stakes strongly represented in those. 47
One of the respondents from Energy Valley confirms some if these sentiments: I always feel like we have received, from a strategic level, the mandate to propagate gas as very importantGas as a transition fuel, this message is internalized in the Energy Valley organization. The Waddenverening respondents confirms Energy Valleys role in the framing of gas as a transition fuel: I would say that statements such as gas is a transition fuel are partly based on what Energy Valley propagates. I have also learned this during my studies at the Rijksuniversiteit Groningen (RUG), but still. The framing of natural gas as a transition fuel and the coupled increase use of green gas in the Energy Valley region is particularly interesting for this research, as it might compete with and slow down the development of other renewable energy sources and might therefore be a source of lock-in. Natural gas is widely considered to be a crucial bridging fuel in the transition to the low-carbon energy systems necessary to mitigate climate change (Stephenson, Doukas and Shaw, 2012) and the International Energy Association (IEA) has heralded a golden age of gas (2011). This claim rests on the argument that natural gas is relatively inexpensive, burns cleaner and more efficiently than coal or oil, and is a leading option for backing up intermittent renewable sources with easily dispatchable, scalable generators(idem). These arguments support a growing popular and academic discourse characterizing natural gas as a transition fuel for a low carbon energy system. However, as Stephenson, Doukas and Shaw (2012) have found, the transition fuel argument for gas development has been so far unsubstantiated by the best available evidence: Emissions factors for shale gas and LNG remain poorly characterized and contested in the academic literature, and context-specific factors have significant impacts on the lifecycle emissions of shale gas but have not been evaluated (idem).
Figure 14 - Visualization of the rapid increase in national natural gas usage from 1960's and onwards (Vringer and Block, 2000)
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In this respect, framing gas as a transition fuel can be considered a legitimization strategy from regime companies to extend their life-span. In the Energy Valley region, (natural) gas is also regarded as an important transition fuel in the energy transition, providing options for new, biomass based gasses, and ultimately, heading towards an economy based on renewables. The gas industry plays a leading role in this transition (Noorman et al., 2006). It is considered that the gas network is suitable for green gas also and that empty gas fields are fitted for carbon capture storage (CCS) (idem) The latter has already faced strong opposition from local NGOs and inhabitants. In brief, the gas producers in the Energy Valley region follow a common frame that gas is an important partner in the development towards a sustainable energy supply, thereby possible competing with other renewable sources. Summarizing, the role of gas provides a factor of lock-in and of path dependency towards gas in the Energy Valley region. The organizational commitments and vested interests of existing organizations in the system, including the public and private utilities, industrial and governmental knowledge institutes and educational institutions (Walker, 2000), may lead to the suppression or slowing down of innovations (Unruh, 2000). In the case of Energy Valley case, the system interdependence of industry, policy, power generation and education is a powerful obstacle for the emergence and incorporation of radical innovations (Geels, 2004). Additionally, the hardness of the socio-technical regime in the Energy Valley region, in particular the material structures or technical systems, makes it hard to shift to a new technological path, as this would destroy sunk investments. This leads to firms sticking to established technologies as long as possible (idem). In the Energy Valley region, this is most visible in the framing of gas as a transition fuel and the propagation of green gas developments, even though production volumes are still very limited compared to the production and import of natural gas. Based on primary and secondary data, it is concluded that the Energy Valley organization, by actively propagating the use of gas as a transition fuel, contributes to a path dependency towards gas in the Energy Valley region. In addition, the vested interests of the gas community within the network promote a lock-in of existing gas technology. 5.4.2. Lack of vision The development of guiding visions has been identified as a central element of governance strategies which aim at directing sociotechnical regime transitions towards desired outcomes and are confirmed to have an important role in the strategies of actors attempting to influence the socio-technical change (Spth and Rohracher, 2010). They play an important role as they travel across spheres and (governance) levels and can be used intentionally to co-shape socio-technical change in a multi-level, multi-actor process (idem). Broader and rather abstract visions of sustainable energy futures can translate into more concrete agendas reflecting the specific requirements and opportunities of a particular regional context (idem). Among others applications in academia, guiding visions play an important role in transition management, the accelerating equivalent of transition dynamics: Long-term visions can function as a framework for formulating short-term objectives and evaluating existing policy (Rotmans and Van Assalt, 2001). With regards to influencing path dependencies and preventing lock-in, visions can contribute to creating a favorable institutional and regulatory environment, as well as influence regional discourse and culture towards favoring renewable energy sources.
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The data of this research suggest that the Energy Valley organization is not occupied with creating a broad vision for the region. As the RUG respondent says: They dont seem to think this is really important and we will do everything it takes to achieve this. They are more pragmatic than that, and they also might not have enough tools for that. So in that sense, it might be a good thing that the organization is not occupied with creating a vision. This is confirmed by one of the Energy Valley respondents, who mentions that we are a very pragmatic organization, looking to realize real projects as opposed to creating visions. There are enough other institutes to do so, and sure, we keep track of those As such, the organization takes a more reactive stance in the regional energy debate, for example by long-lasting support for CCS or coal fired plants: We see more opposition against new wind farms than coal plants. We would like to see that differently, but it also for a large part forms the position of the Energy Valley organization. Their biggest success appears to be the realization of two large plants in Groningen that will constitute a large part of the Dutch energy production. Questioning these developments appears to be nearly impossible (Natuur & Milieu Federatie Groningen respondent). One of the main reasons for Energy Valleys pragmatic stance seems to be the short financing period of the organization. Every four years, Energy Valley presents its results to its public and private partners, looking to re-assure its existence. Important parameters for this are the amount of investments made and the amount of jobs created. CO2 reduction, for example, is not a focal parameter in this process (Noordelijke Rekenkamer, 2013). One of the Energy Valley respondents provides a suiting summary of the situation: We might invest for eight years in algae, that might be a wonderful technology and we might achieve great success, but hey, we are financed in periods of 3-4 years, so we need to prove ourselves. That is the balance we are looking for. Concluding, creating a guiding vision is considered an important tool in achieving a transition. Due to the nature of the organization and the financing cycles, Energy Valley does not has a visionary function in the regional energy system and as such, contributes to, or at least does not significantly decreases, the effects of unfavorable institutional and regulatory path dependency factors and possible lock-in effects of existing technologies.
5.4.3. Broad coalition A third factor of path dependency and lock-in in the regional energy system Energy Valley is the embeddedness of the organization (Geels, 2004) in broad interdependent national and regional networks. From the start, in 2003, the key (founding) partners of the Energy Valley organization have been existing regime players such as provinces and large utility companies like the NAM and GasUnie. The provinces have been closely involved via the deputy consultation (see Figure 6 on page 24) and additionally, the ministry of Economic Affairs, which has ties with large industrial players via, for example the VEMW (Vereniging Grootgebruikers Energie), has been involved in yearly meetings with Energy Valley (Noordelijke Rekenkamer, 2013). Furthermore, several respondents and the Noordelijke Rekenkamer (2013) have commented that mostly large players are involved in the Energy Valley network. As such it is concluded that a broad coalition of (mostly regime) partners is brought together in the Energy Valley network. According to several interviewees, this has its effect on the organizations view points and actions regarding the regional energy transition: There is a risk, because they have not been created for sustainable development but for the economic position of large energy companies, next to facilitating the ambitious provincial goals regarding sustainable energy, that they re-enforce the status-quo of the market 50
for example the Topsectoren Green Deal policy, here they focused on partnering existing research with existing companies. This is how they play the game, or actually, this is how the game is organized. If it is desirable to play it like that, well, that is a whole other story (RUG respondent). The broad coalition has according to some interviewees led to sub-optimal solutions: For example, they have missed an opportunity with the mitigation of the coal plants. We have tried, but they were too close to the provinces and the Eemshaven harbor (IMSA respondent). The RUG respondent has a similar suggestion: There are a couple of interesting cases to see what role Energy Valley has in the region, and what I notice, is that Energy Valley is very close to current policies and the market. As such, Energy Valley does not stand for radical innovation or new points of view, something that is considered positive by some interviewees: The viewpoints they propagate usually have a wide support, because they are not radical points of view. In that sense, we support that (Waddenvereniging respondent). A result seems to be that a broad selection of possible energy sources is considered and researched: Here, almost everything is considered, on a very broad level too, the field of renewable energy is very broad here. And everything surrounding thatlots of that is organized by Energy Valley (GasTerra respondent). Radical innovation and a broad coalition do not go well together (Rotmans, 2013). Radical means that existing stakes are under pressure and that power shifts are visible. A broad coalition in that sense means incremental change and implicates that the existing regime is kept in place (idem). Therefore, the embeddedness of the organization in broad interdependent national and regional networks is considered as the third factor that leads to sub-optimal path dependencies and the lock-in of existing technologies.
Figure 15 - 'Energy Valley made possible by' - A broad coalition of mostly regime players (Energy Valley, 2011)
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5.4.4. Greenwashing A fourth and last factor influencing path dependency and lock-in in the Energy Valley region is the practice of greenwashing. Briefly put, greenwashing is the misleading of consumers about firm environmental performance or the environmental benefits of a product or service. It is defined as the intersection of two firm behaviors: poor environmental performance and positive communication about environmental performance. Greenwashing can have profound negative effects on consumer confidence in green products (Furlow, 2006), eroding the consumer market for green products and services. Likewise, greenwashing can negatively affect investor confidence in environmentally friendly firms, eroding the socially responsible investing capital market. Greenwashing also entails some risks for greenwashing firms when consumers, non-government organizations (NGOs) or government entities question firms claims (Delmas and Burano, 2011). The Energy Valley organization has the potential to become a platform for greenwashing, and in some cases also has been described of doing so: Joining the Energy Valley platform is in a companys self-interest. However, there is also this other aspect, giving something back to society. The platform helps in creating a favorable spotlight towards the Northern governments; companies such as GasUnie, GasTerra and the NAM simply have no option but to join in that sensethe platform can even be interesting for companies that want to promote something grey (as opposed to green/sustainable, QH)(Energy Valley respondent). A more vicious suggestion comes from the Natuur & Milieu Federatie Groningen respondent: Energy Valley has a position as such, that they realize that the region needs some fun sustainable projects next to those two new coal plants. Otherwise, they have no socially responsible story to tell, that my image. Putting on a green coat, so to speak, that's my impression Concluding, some evidence exists that Energy Valley provides a platform for greenwashing. Considering the possible negative effects of greenwashing on the demand for green products, the availability of socially responsible investment capital and the effect on accused firms, greenwashing is considered to contribute to suboptimal path dependencies for new technologies and the lock-in of existing technology in the region. Summarizing the opposing forces section, the concepts of path dependency and lock-in have been used to analyze why the regional ambitions regarding a fundamental change in renewable energy production have largely remained unmet. This section has looked at the particular characteristics of the initial market, the institutional and regulatory factors, the expectations of consumers and lock-in effects. Four different factors contributing to suboptimal path dependencies for new technology and the lock-in of existing technologies were identified: The dominant position of gas and the connected industrial system, the width of the Energy Valley network, a lack of vision and greenwashing.
creates access to funding (be it subsidies or investments), has a parenting role for (mostly) smaller companies, has a strong lobbying function predominantly in regulations and policy and lastly, facilities social relations within the energy domain through various outlets. The second section of this chapter has analyzed to what processes for transition, on the landscape, regime and niche level, the Energy Valley organization contributes. Although not directly influenced by the organization, several sources of landscape pressure were identified. These include the growing awareness of climate change, a depletion of fossil fuels, rising energy prices and the German Energiewende. On the regime level, Energy Valley facilitates three windows of opportunity within the regional sociotechnical regime: The organization helps change fossil regulations, lobbies in national and regional policy circles for renewable energy and helps niches to connect to the regime. On the niche level, some niche momentum was facilitated by Energy Valley, most significantly through the coordination of niche players, parenting, scaling up of projects and by facilitating social relations. The third section of the chapter has looked at in what phase of transition is the regional socio-technical energy regime is currently situated. Here, it is concluded that numerous renewable energy initiatives have been developed in the Energy Valley region. Furthermore, landscape pressures and windows of opportunity have increased the sense of urgency leading to ambitious goals. Also, investments in sustainable energy production have increased from 2003 to 2015, viable alternatives are scaling up, and some other niches are gaining momentum. Additionally, turbulence within the regime is building. However, due to the fact that conventional energy production and investments remain dominant and niche players, compared to national levels, do not have a substantial higher contribution to sustainable energy output, it is concluded that the Energy Valley region is currently situated between the pre-development and take-off phase of transition. The fourth section of this chapter has looked at possible explanations for the lacking transition of the regional socio-technical energy regime using the concepts of lock-in and path dependency. Four separate functions that facilitate lock-in and suboptimal path dependencies were identified: The role of gas, the width of the Energy Valley network, a lack of vision and greenwashing. These sources of lock-in and path dependency are powerful incentives for incremental innovations in the socio-technical regime. The identified functions of the network, the facilitated processes of transition and the current transitional phase of the region lead to the conclusion that the Energy Valley organization does play a role in the regional energy transition; however, due to the nature of its operation, incremental change rather than radical change is promoted and achieved. Therefore, the effect of the Energy Valley organization on the regional socio-technical transition is considered to be limited.
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6. Discussion
6.1. Theoretical implications
This research has looked at the effect of the inter-organizational network Energy Valley on the regional socio-technical energy transition. In order to so do, it has looked at the inter-organizational network functions of the organization in the region, the processes of transition the inter-organizational network organization contributes to, in what transitional phase the regional transition currently is and what opposing forces of the transition can be identified. This section will firstly discuss the results in the light of the existing literature, after which the general theoretical implications will be discussed. Burstrom (2000) and Rowe (1998) describe that regional inter-organizational networks are particularly used to support private companies and small and medium sized enterprises. The results of this research indicate that indeed private companies are supported and that some functions of the network particularly support smaller enterprises, such as parenting, creating access to funding and facilitating social relations in the region. However, the majority of the functions as well as the processes of transition that are facilitated predominantly benefit existing large companies in the region. Good examples of this are the lobbying function, where the majority of the efforts is directed towards green gas, more and more becoming an extension of existing gas companies, and the windows of opportunity that are created by the network: The achieved changes in regulation, the success in policy changes through lobbying and the connection of niche actors with the regime all are connected to the development of green gas. The findings from Burstrom (2000) and Rowe (1998) are therefore only partially supported by the results of this research. In line with the findings of Clark & Roome (1999) and Gulati & Gargiulo (1999) it is concluded that the interorganizational network is capable of accommodating complex situations: Through the calibration of market and public administration, the coordination of stakeholders, the facilitation of access to funding, helping technologies or organizations with up scaling and through the parenting of companies and entrepreneurs, Energy Valley is able to promote, facilitate and manage complex energy projects with a variety of stakeholders successfully. Furthermore, the organization is capable of connecting communities of practice within and between organizations (Clarke and Roome, 1999). This is most significant in the calibrating function, where the organization is shown to bring together the spheres of the market and public administration and in the connection of niche and regime actors in the niche-regime window of opportunity. Some of the results do indicate that, in line with Clarke and Roome (1995), the inter-organizational network is capable of facilitating innovation through the linkage of actors and knowledge exchange. Most notably here is the green gas case, where different actors in the gas field are connected through the Green Gas Task Force, resulting in economies of scale and the sharing of knowledge. In addition, the organization has several communication outlets to share knowledge. For example, network events organized by Energy Valley regularly contain presentations and other moments of knowledge sharing, and as such can be seen as learning instruments (Boons & Berends, 2001; Dyer & Nobeoka, 2000). However, one of the main results of this study is that despite some facilitation of innovation, this effect is confined to some particular technologies, especially green gas. Other sustainable technologies, such as smart grids and torrefaction, do receive some stimulation through actor linkage and the sharing of knowledge via task forces, but do not seem to have gained much momentum as such. 54
Therefore, the findings by Clarke and Roome (1995) have to be contextualized for this research: The interorganizational network does indeed support innovation, but does so only for selected niches. The Energy Valley network has several functions that foster trust and social relations (Roome, 2001). Understanding what companies need and building a meaningful relationship with them is considered a core part of the parenting function. Additionally, through the calibrating function, the organization is considered a balancing and trustful partner by the different stakeholders involved. Also, by introducing new partners to each other through the coordination function, the facilitation of social relations and the connection of niche to regime actors, the organization contributes to building trust and social relations in the region. However, the results also indicate that due to an uneven representation of large and small actors not all smaller actors feel comfortable sharing their knowledge: a sign of lacking trust. As such, the suggestion by Roome (2001) is only partially supported by this research. The results of this research show that the Energy Valley network organization helps businesses in finding new opportunities: Energy Valley is described in the data as filtering new information, delivering it to companies and making the appropriate connections to help them capitalize on the provided knowledge. This finding is in line with Larson (2000) who illustrates the importance of networks (and supply chain development) for discovering and creating environmentally relevant opportunities. The results of this research indicate that Energy Valley plays a role in creating and maintaining partnerships in the regional network leading to and therefore supports the finding by Larson (2000). Some examples have been provided in the data indicating that the creation and maintenance of partnerships leads to the development of new sources of sustainable energy. This is suggested by McCormick and Kaberger (2005) too, who found that partnerships in regional networks might help coordinate the development of a bioenergy system. Even though Energy Valley does create partnerships that lead to new sustainable ventures, this research has found that due to the nature of the inter-organizational network, so far no real bioenergy system has started to exist in the region. As such, the finding by McCormick and Kaberger (2005) is not supported. This also results from the fact that next to partnerships, McCormick and Kaberger (2005) also looked at the introduction of a carbon tax and the attraction of local knowledge and investments, of which the former has not been included in this study. A result of this study however is that the Energy Valley organization is capable of stimulating local knowledge and of attracting new sources of investment. Again though, it is concluded that especially regarding investments, the network organization does not specifically attract more investment in sustainable than in conventional energy. Not just the right network is important for partnerships and businesses; the location of the business affects its success too. Clusters of similar industries and companies gain market advantages due to the dynamics of the cluster, like the proximity of competitors and partners or the entrepreneurial spirit in the cluster. It is concluded in this study that the Energy Valley inter-organizational network has managed to create a place to be effect for the Energy Valley region: Through the continuous propagation of the name, the function and the prominence of the region in the field of energy, the inter-organizational network organization has succeeded of creating a name for the region as well as providing a motivational spirit in the region itself. 55
This might, as Cohen (2006) suggests, lead to a network that facilitates successful sustainable ventures. However, this study finds no direct indication that especially sustainable ventures are attracted by the region. Although Energy Valley is concluded to be a strong brand with a place-to-be effect, the interorganizational network does not especially contribute to an attractive network of sustainable ventures. As such, the finding of Cohen (2006) is not supported by this study. This study shows that the Energy Valley network organization does facilitate social learning in the region. It has been described previously that the organization facilitates, to some level, trust in the region, and is capable of reframing knowledge. A good example of the latter is the reframing of sustainable projects towards public officials in jobs created by the project, as described in in the calibrating function (see 5.1.1). By doing so, the organization is capable of teaching public officials the benefits of sustainable energy projects in their own language. The results also indicate that a result of the network is increased commitment towards sustainable development in the region: Cities are looking to become more sustainable, large organizations are committing to the development of green gas and several policy goals regarding sustainable development have been formulated in regional policy agreements. This study has not looked at the interaction between trust, commitment and reframing in social learning as Sol, Beers and Wals (2013) have done and as such cannot provide a conclusive argument on their finding. This study however does indicate that the inter-organizational network facilitates these three functions and as such stimulates social learning in the innovation network. Therefore, the results by Sol, Beers and Wals (2013) are only partially supported by this study. Another result of this study is that, in line with the findings of Barackenko and Olgethorpe (2012), cooperative businesses might deliver environmental advantages through economies of scale, knowledge and skills transfer, the sharing of risks and other means. Examples of cooperative businesses in this study include the scaling up of green gas initiatives through the linkage of different actors before and during operationalization as well as the Transition Park Wijster. Nevertheless, the concept of co-operative business used by Barackenko and Olgethorpe (2012) implies the exclusion of investor-owned activity. As this factor is not included in this study, the results of this study cannot entirely be compared to Barackenko and Olgethorpes (2012) results. Even though this study has not looked at the specific concept of natural advantage plans as proposed by Potts (2013), one of the results is that, in line with Potts (2013), it is valuable for a region to benefit from its regional strengths regarding sustainable development. The success of green gas in the Energy Valley region can be partially attributed to the (natural) characteristics of the region: The presence of a gas-infrastructure and the presence of large amounts of biomass due to farming have created a favorable setting for the development and growth of green gas in the region. Potts (2013) additional advice to local authorities to develop plans that should transform local businesses, grow the sustainable industry base, support environmental innovation and focus on local issues and regional strengths, and finally, aim to support the development of environmental products and services, is put into perspective by this study. Even though having a vision for the region has been described in the results as an important attribute to achieving a sustainable transition as well as concrete plan to stimulate sustainable development, the results of this study indicate that visions and plans for sustainable development often lead to an oversimplification of the reality on the ground and therefore do not always contribute significantly to the projected sustainable development. 56
A key result of this study is that the use of an inter-organizational network to achieve a sustainability transition in the regional socio-technical energy regime does not seem to lead to an actual radical transformation of the energy regime. Instead, incremental change is achieved. This has been described in the literature section by three different authors. The finding by Khan (2013) that the effects of network governance are mixed are supported by this study. It has been found that while indeed the interorganizational network contributes to some niche developments, such as the momentum of green gas and the development of smart grids, the elitist character of the network risks maintaining unsustainable patterns and the mainstreaming of problems and possible solutions: The nature of the Energy Valley network leads to a dominance of gas and other large industry related interests, resulting in the continued favoring of gas-related solutions to sustainable development, the lock-in of existing gas technology (e.g. the framing gas as transition fuel) and a general frame where gas and other large scale solutions are seen as the main part of the environmental solution, as opposed to radical transformation of the energy regime. Considering that all provinces of the region as well as several municipalities are represented through the Energy Valley organization in the region, it can be (albeit carefully) be considered a local authority approach. The finding from Malmborg (2007) that the use of a local authorities approach for the transfer of sustainable knowledge in regional networks leads to incremental change in the short run is supported by this study. Additionally, looking at the effects of the Energy Valley organization since its foundation in 2003, ten years ago, it is concluded that also on the medium-long term of ten years, the effect of the Energy Valley organization is incremental. Important to note though is that Malmborg (2007) does not define short run or long-lived which makes it more difficult to draw a comparison between the studies. The suggestion from Malmborg (2007) that dialogue, experimentation and strategic niche management might lead to more radical change is especially interesting for the Energy Valley case example, since the data of this study point out that such activity, with the omission of dialogue, are not predominantly exercised through the Energy Valley network organization. This again supports this studys finding that the Energy Valley network organization leads to incremental sustainable developments. This study also supports the finding by Fadeeva (2005) that the efficiency of multi-stakeholder networks in solving complex sustainability issues frequently falls short of expectations. The results indicate that, in line with Fadeeva (2005), the process unfolding in the inter-organizational network is misused for blocking and promoting vested interests, as is most visible in the dominance of (natural) gas and the related industry. Also, the constant propagating of gas as a transition fuel as well as the focus on the development of green gas can be seen as the result of actors with resources and skills using their legitimating power of collaborative initiatives to promote their own agendas. Finally, this study also finds support for Fadeevas (2005) conclusion that using a network organization for the promotion of sustainable development leads to the underestimation of the inherent complexities of collaboration, lowering expectations and results: The region has formulated ambitious sustainability goals and has not met them, resulting in critical reviews from civil society, intermediaries and knowledge institutes. For an overview of the implications of this study for the recent literature, please see Figure 16 on page 59.
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Several authors in the field of business and the natural environment have argued for the implementation of strong sustainability and the acknowledgement that currently sustainability challenges require a systems thinking perspective, taking into consideration the whole system in which an organization operates in (e.g. Gladwin in Bansal and Hoffman, 2011; Roome in Bansal and Hoffman, 2011; Khurana, 2007). This should lead to a multi-actor process where a resolution of meta-problems, such as climate change or the change in the socio-ecological system, is achieved. One of the key beliefs from this strong sustainability view is the need to move beyond the firm/actor perspective. This has resulted in considerable attention for the, especially regional, inter-organizational network as a tool to work on complex issues and achieve resolutions for meta-problems. As described more extensively in the literature section of this study, the inter-organizational network is seen to have numerous characteristics that make it applicable to such complex issues. This research has shown that indeed the inter-organizational network has several functions that make it especially useful for complex situations: Its functions facilitate coordination, calibrating, up scaling, learning, access to funding, lobbying, social relations and the parenting of organizations. Furthermore, this study concludes that the inter-organizational network does have a function in facilitating processes of transition, of which most notable on the regime level are the changing of fossil regulations, the influencing of regional and national policy and the connecting of regime and niche actors. On the niche level, this study has found that the inter-organizational network also helps create some niche momentum through the coordination of niche players, parenting, the scaling up of projects and through facilitating social relations. However, this study has also shown that in order to successfully facilitate a regional energy transition, the composition, structure, funding, vision, strategy and evaluation of the inter-organizational network organization has a key role in the effectiveness of the network in achieving a regional energy transition. The unbalanced representation of regime actors, the embeddedness of the provinces and the national government with their own stakes, the existing institutional environment of dominant gas stakes, the short term funding and resulting strategy without a long term vision and the lack of evaluation of the results have, in this case, resulted in an inter-organizational network organization that facilitates incremental change as opposed to radical change. As such, the application of transition studies to the field of business and the natural environment has contributed to a better understanding of the use of inter-organizational networks in the growing paradigm of strong sustainability: It is concluded that although the inter-organizational network has valuable characteristics that lead to sustainable development, its contribution to the resolution of meta-problems such as climate change through the fundamental transition of socio-technical regimes strongly depends on the specific characteristics of the inter-organizational network organization and the system it operates in. The application of the inter-organizational network as a tool for transformation in the strong sustainability paradigm should therefore be applied with a better understanding of the essential networks characteristics and the respective contextually of the network organization. Finally, it is suggested that the current interest for the inter-organizational network in the quest towards sustainable development and especially towards the resolution of meta-problems in the business and natural environment literature is not entirely consistent with its practical contribution to date and should therefore be applied more critically.
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Title Sustainable innovation through an entrepreneurship lens (Larson, 2000) Exploring a pioneering bioenergy system: The case of Enkoping in Sweden (McCormick and Kaberger, 2005)
Social learning in regional innovation networks: trust, commitment and reframing as emergent properties of interaction (Sol, Beers and Wals, 2013) The potential environmental benefits of co-operative businesses within the climate change agenda (Baranchenko and Oglethorpe, 2012)
Findings Network development is important for discovering and creating environmentally relevant opportunities. 1. Introduction of carbon tax made bioenergy competitive 2.Local knowledge encouraged local investments 3. Partnerships in regional network of actors, helped to co-ordinate development of bioenergy system. Sustainable entrepreneurial ecosystem (SEE) and branding has positive impact on the attraction and development of successful sustainable ventures Trust, commitment and reframing are interrelated aspects and emergent properties of interaction in the process of social learning in innovation networks. Where co-operative businesses achieve efficiencies through economies of scale, knowledge and skills transfer and sharing of risks this can also lead to coincidental reductions in greenhouse gas emissions that may not be achieved if investorowned activity prevails. Local authorities should explore the linking of sustainable development, innovation and economic development in their regions through the development of natural advantage action plans. Effects of network governance are mixed: It can contribute to niche developments and innovation. Elitist character of network risks maintaining unsustainable patterns and mainstreaming of problems and possible solutions. LA approach leads to incremental change in the short run. However, long lived multi-actor networks with dialogue, experimentation and strategic niche management may lead to radical change. Collaboration frequently fall short of expectations: The process can be misused for blocking and promoting vested interests. Actors with resources and skills may use the legitimating power of collaborative initiatives to promote their own agendas. Inherent complexities of collaboration can be underestimated, lowering expectations and results
Support by this study Yes, network organization helps companies find and benefit from knowledge and new connections. No, investments in sustainable projects are not significantly higher; network organization leads to partnerships but not to a bioenergy system. Carbon tax not included in this study. No, strong regional branding exists but no evidence found for the specific attraction of sustainable ventures. Some, network organization has some contribution to trust and a contribution to commitment and reframing. Interactions between aspects are not a part of this study. Yes, some evidence found of greenhouse gas reductions through scaling up and knowledge and skill transfer. However, study not entirely comparable due to use of different concepts. Some, region is found to benefit from natural advantages in development of green gas. However, study also shows the pitfalls of looking to stimulate sustainable development through plans. Yes, some niche developments, but dominance of gas leads to lock-in of existing gas, favoring of green gasrelated solutions and framing of gas as main solution as opposed to radical transformation of energy regime Yes, study sees short term and mid-long term incremental change. Not all factors leading to radical change from Malmborg (2007) are used significantly by the EV network organization. Yes, dominance of gas and large industry promotes vested interests. Propagating of gas as transition fuel and the strong push of green gas is seen as promoting of own agenda. Also, sustainability goals are unmet, resulting in critique from civil society, intermediaries and knowledge institutes.
The natural advantage of regions: linking sustainability, innovation, and regional development in Australia (Potts, 2013)
What role for network governance in urban low carbon transitions? (Khan, 2013)
Stimulating learning and innovation in networks for regional sustainable development: the role of local authorities (Malmborg, 2007). Promise of sustainability collaborationpotential fulfilled? (Fadeeva, 2004)
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6.4. Limitations
This research is based on thirteen interviews and complemented with secondary data. Regarding the respondents, it has been attempted to organize a sample that accurately reflects the different actors in the region and represents a variety of viewpoints and opinions. Most important here is the even representation of regime and niche actors. Despite having been able to include other critical respondents from civil society and knowledge institutes in the sample as well as one niche organization, it has proven difficult to find willing respondents from small and medium sized companies for this research. This might have to do with the larger cost of time for (in particular) small and medium sized companies or lack of interest and perceived importance from their side. However, regarding one case, it appeared as if the possible respondent did not consider co-operating with this research very tactical. This might have to do with the importance of the Energy Valley organization in the region. This in itself is an interesting insight into the dynamics of the Energy Valley region. Concluding, a limitation of this research is the possible missrepresentation of small and medium sized companies due to a skewed sample of respondents. Even though the single-case approach is particular useful for collecting thick data and in-depth knowledge on one specific case, and that the suggestion from Dyer and Wilkins (1991) to contextualize the case allowing it to become a deep case study has been followed, a limitation of the single-case study is the limited generalizability of its results. An additional effect on this could be the limited amount of respondents used for this research. Through extensive application of existing literature, the application of thick data and contextualization of the case, it has been attempted to increase the generalizability and reduce this limitation. This research has looked at the effects of one organization on a regional socio-technical regime. Although it has looked specifically at the workings of the organization itself regarding the research questions and use of primary and secondary data, it does remain difficult to pin-point the exact effect of the organization in the context of the complete existing regional dynamics. Therefore, a possible limitation of this research is that its results cannot be entirely valued or justified without considering the specific regional dynamics at hand. In order to conceptualize the effect of the Energy Valley organization on the regional socio-technical regime, this research did not include any quantitative indicators of the functioning of the regional ecosystem. Although this is not uncommon in the business management literature (Whiteman, Walker and Perego, 2012), research that focuses on corporate behavior in isolation from ecologically material impacts (Whiteman and Cooper, 2011) might decouple social and organization efforts for sustainability (Banerjee, 2003) from the on-the-ground, in-the-air, and through-the-water material impacts of collective corporate and consumer activity(Whiteman, Walker and Perego, 2013). Since the researcher believes that next to making a contribution to the academic literature, the practical application of research is paramount to sustainable development, this decoupling can be considered a limitation of this research. The researcher has been involved in the field of sustainability for over five years and as such has a normative perspective on the importance of sustainable development. Although it has been attempted to conduct this research in a balanced and non-normative way, it still is possible that some of the researchers opinions and selective knowledge have influenced the results of this research. The researcher however believes that constantly keeping an open and critical state of mind as well as the use of measurable secondary data has limited this effect. 61
7. Conclusion
7.1. Main conclusion
Our society faces fundamental sustainability challenges in several domains. Of these, our energy supply is confronted with a rapid depletion of natural resources, air pollution and greenhouse gas emissions, nuclear risks, uncertainties related to short- and long term security of supply and energy poverty (IEA, 2011). Awareness that business as usual is not an option anymore is growing among governments, businesses, NGOs and the general public. On a global level, the Kyoto protocol has been developed to curb global CO2 emissions. On a European level, targets and roadmaps have been developed to increase the share of renewable energy and reduce greenhouse gases. On a national level, most European countries lack progress, with the exception of Germany and Denmark. The Netherlands also lacks progress in the development of renewable energy sources: Renewable energy only accounts for 4.7% of the total production (Rijksoverheid, 2012) and not many believe that the national goal of 14% in 2020 will be reached. On a regional level, the Energy Valley region may provide a welcome development in the Dutch renewable energy progress. Since 2003 an inter-organizational network organization under the same name has been founded to facilitate business and local governments in establishing an energy region. Although the main goal is economic development, renewable energy also is considered a key goal of the organization. This networked approach to sustainable development has also received attention in the business literature. It has been argued that due to the complexity of the current sustainability issues, a firm or single actor approach does not suffice. Instead, co-operation in inter-organizational networks compromised of businesses and (local) governments may provide the proper tool in moving forward to a more sustainable future. At the same time, a new paradigm is emerging in the business and sustainable development research. Instead of looking at new ways of operating in an old system, it is proposed to achieve a more radical form of transformation, or strong sustainability. Proponents of this paradigm argue for a systemic and complexity perspective, where the goal should be system transformation or a transition in the (local) socio-technical system. Although the network approach has been mentioned and researched as a tool for sustainable business development, until date few studies in the field of business and the natural environment have looked at how this network approach contributes to a fundamental change in the sociotechnical system. Addressing this literature gap, this thesis has looked at the effect of the Energy Valley inter-organizational network on the regional transition of the socio-technical energy regime. In order to do so, the following research question has been formulated: How do regional business and inter-organizational networks help create a fundamental transition in the socio-technical energy regime?
In order to structurally answer the research main question, four sub questions have been formulated: What functions of the inter-organizational network can be identified? To which processes for transition does the inter-organizational network contribute? In what phase of transition is the region currently situated? What opposing forces of the transition can be identified?
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In order to answer the research questions, this research brings together the fields of business and the natural environment with the field of transition studies. The field of transition studies is occupied with the study and support of long-term fundamental shifts in the social and technological domain and has developed several frameworks and concepts to analyze and accelerate transitions. Using the concepts from transition studies to look at the Energy Valley case and its influence on the transition of the regional sociotechnical energy regime, this study provides an insight into how inter-organizational networks may help bring about a transition in a regional socio-technical energy system. The results of this study will be presented using the sub-questions and main research question as structure. - What functions of the inter-organizational network can be identified? In total, eight network functions of the Energy Valley inter-organizational network have been identified in this study. 1)The organization functions as a calibrating party between the market and public administration through translating the different languages of both spheres into a common jargon, facilitating a consistent policy through acting as storyteller and advisor towards new public servants and through providing a lobbying-platform that is perceived to be less inclined towards conflicts of interest. 2) The organizations facilitates the scaling up of energy projects through organizing a physical economy of scale, resulting in a lower production price and by bundling the lobby and funding efforts of market initiatives, leading to a larger striking power towards the public administration. 3) The organization creates a place to be through providing a branding that distinguishes the region from the rest of the Netherlands and by providing inspiration within the region through their various communication outlets. 4) The organization has a coordinating function in the region, bringing together different actors, keeping the coordination of projects and providing several coordinating forums. 5) The organization creates access to funding; it has in-depth knowledge in the field of subsidies, has the time and skills necessary to obtain them and has access to a broad network of investors. 6) The organization has a parenting function, making the professional lives of different stakeholders in the region easier, be it through clearing the paths for new projects, scanning for new initiatives in the market and presenting them to companies, building meaningful relationships with entrepreneurs or keeping track of a companys progress. 7) The organization has an important lobbying function in the region; it creates critical mass, is able to get the appropriate and highly connected players involved, maps the regulatory bottlenecks makes sure the lobbying story is synchronized among the different the stakeholders involved. 8) The organization facilitates social relations within the Energy Valley region through various networking events, connecting different actors within the energy sector and facilitating a more coherent community in the region. - To which processes for transition does the inter-organizational network contribute? Although not directly influenced by the organization, several sources of landscape pressure were identified. These include the growing awareness of climate change, a depletion of fossil fuels, rising energy prices and the German Energiewende. On the regime level, Energy Valley facilitates three windows of opportunity within the regional socio-technical regime: The organization helps change fossil regulations, lobbies in national and regional policy circles for renewable energy and helps niches to connect to the regime. On the niche level, some niche momentum was facilitated by Energy Valley, most significantly through the coordination of niche players, parenting of niche actors, the scaling up of niche energy projects and by facilitating social relations.
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- In what phase of transition is the region currently situated? Numerous renewable energy initiatives have been developed in the Energy Valley region. Furthermore, landscape pressures and windows of opportunity have increased the sense of urgency leading to ambitious goals. Also, investments in sustainable energy production have increased from 2003 to 2015, viable alternatives are scaling up, and some other niches are gaining momentum. Additionally, turbulence within the regime is building. However, due to the fact that conventional energy production and investments remain dominant and given that niche players, compared to national levels, do not have a substantial higher contribution to sustainable energy output, it is concluded that the Energy Valley region is currently situated between the pre-development and take-off phase of transition. - What opposing forces of the transition can be identified? This question was answered using the concepts of lock-in and path dependency. Four separate functions that facilitate lock-in and suboptimal path dependencies were identified: 1)The role of gas, that leads to a dominant path-dependency towards (green) gas technology in the region as well as the lock-in of existing gas technology as a transition fuel. 2) A lack of vision, contributing to and/or not significantly decreasing the effects of unfavorable institutional and regulatory path dependencies as well as possible lock-in effects of existing technologies. 3) A broad coalition and the resulting embeddedness of the organization in broad interdependent national and regional networks, resulting in incremental rather than radical change and 4) Greenwashing, that has a negative effect on the demand for green products, the availability of socially responsible investment capital and on the accused firms, contributing to suboptimal path dependencies for new technologies and the lock-in of existing technology in the region. - How do regional business and inter-organizational networks help create a fundamental transition in the socio-technical energy regime? In order to answer the main research question, this study has looked at the functions of the network, the processes of transition it facilitates, in what transition phase the region is in and what opposing forces of the transition are present in the network. It has been found that the eight different function of the network lead to several processes of transition in the region, thereby helping to create a fundamental transition in the socio-technical energy regime. It has been found in this study that the Energy Valley interorganizational network contributes to processes of transition regarding the change of fossil regulations, the lobby in national and regional policy circles for renewable energy, the connection of niches and regime actors as well as to some degree to the coordination of niche actors, the parenting of niche actors, the scaling up of niche projects and to the facilitation of social relations creating niche momentum. However, a key result of this study is that the composition, structure, funding, vision, strategy and evaluation of the inter-organizational network organization has a key role in the effectiveness of the network in achieving a regional energy transition. In this study, the unbalanced representation of regime actors, the embeddedness of the provinces and the national government with their own stakes, the existing institutional environment of dominant gas stakes, the short term funding and resulting strategy without a long term vision, the role of the network in greenwashing and the lack of evaluation of the results have resulted in an inter-organizational network organization that facilitates incremental change in the socio-technical energy regime as opposed to radical change. Therefore, it is concluded that the interorganizational network Energy Valley does not significantly contribute to the fundamental transition of the regional socio-technical energy regime. 64
Regarding the theoretical implications of this study, the application of transition studies to the field of business and the natural environment has contributed to a better understanding of the use of interorganizational networks in the growing paradigm of strong sustainability: Although the interorganizational network has valuable characteristics that lead to sustainable development, its contribution to the resolution of meta-problems such as climate change through the fundamental transition of sociotechnical regimes strongly depends on the specific characteristics of the inter-organizational network organization and the system it operates in. The application of the inter-organizational network organization as a tool for transformation in the strong sustainability paradigm should therefore be applied with a better understanding of the essential networks characteristics and the respective contextually of the network organization. It is suggested that the current interest for the inter-organizational network in the quest towards sustainable development and especially towards the resolution of meta-problems in the business and natural environment literature is not entirely consistent with its practical contribution to date and should therefore be applied more critically. This study has looked at how the business and inter-organizational network Energy Valley contributes to the fundamental transition of the regional socio-technical energy regime. It has been found that, despite several contributions to the regional development of renewable energy, the dominant effect of the interorganizational network organization constitutes incremental change. It is therefore concluded that the Energy Valley inter-organizational network organization does not significantly contribute to a fundamental transition of the regional socio-technical energy regime.
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7.3. Acknowledgements
This master thesis constitutes the last part of my formal education and as such is a significant milestone for me. I have always learned that although it is vital to continuously make plans and try to be one step ahead of time, one can only truly see the logic of developments in hindsight. This is certainly been true for my education so far. Commencing my university education, I could have never guessed that this journey would take me to three different universities in two different countries, allow me to meet a great variety of interesting fellow students, professors, schools of thought, cities or just people in general, nor could I have imagined the privileged position where I am today. I would therefore like to express my appreciation to all those who made my study years invigorating, extremely educational and best of all, fun! Regarding this thesis, I would especially like to thank my coach Dr. Ir. Jan Rotmans for his time and support, my co-reader Prof. Dr. Gail Whiteman for her invaluable advice and Dr. Derk Loorbach for tirelessly supporting me. Furthermore, I would like to thank the people at DRIFT for their warm welcome and my respondents without whom this thesis would not have been possible. Lastly, I would like to express immense gratitude and pride towards my parents, my sister, my friends and my everloving girlfriend Rosanna for always being there for me in every way possible. The future is bright and I cannot wait for it to begin!
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8. References
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Energy Valley and sustainability o What is the role of the Energy Valley network in increasing the sustainable energy production in the Northern-Netherlands? o What stakes are predominantly driving this? What is the actual effect of the Energy Valley organization on the stimulation of sustainable energy in the region? What is the division between conventional and sustainable energy within Energy Valleys projects? o Do you see any change now or in the future of this division? How does Energy Valley stimulate sustainable energy projects? o Do you recognize a structural approach?
o o o
Discourse o o o How is the concept of sustainability considered/described within Energy Valley? o Economical vs. Ecological How does the Energy Valley organization influence the discourse surrounding sustainability in the region? What is the sense of urgency regarding sustainable development?
Transition studies: o o o o o o o Region o o What organizations have an important role in the region and within the Energy Valley organization? o What is their reason of joining the Energy Valley organization What developments regarding sustainable energy do you see happening within the next 10 years in the region? To what extent do you see large regime players within the Energy Valley region try to remain existing structures? To what extent do middle-large players have the ability to create new structures? To what extent do niche players within the region have the ability to prosper? How does the Energy Valley organization promote the stakes of sustainable energy enterprises within the region? Does the Energy Valley organization projects vulnerable sustainable initiatives, if so, how? Does the organization have a long-term vision and/or transition agenda? Does the organization organize monitoring and evaluation practices?
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