Innovation For Sustainability: African and European Perspectives

Chapter 7 - Why Radical Innovations Fail

127 CHAPTER 7 SUMMARY Radical innovations are frequently called for in order that the transformation of society to a system perceived as sustainable can succeed. The reason givenforthisisthegreaterenvironmentalefficiencyoftheseinnovations.We review the hypothesis that radical innovations are superior to incremental innovations by taking the case of fossil fuel power plants in Germany. An ex-post analysis of the German R&D portfolio in the past three decades in the field of power plants environmentally shows that technologies which were radical innovations had great difficulties in becoming accepted by possible investors. The future potential of radical innovations in the field of power plant technology is to be regarded as relatively low, especially due to comparatively high cost-pressure, the reluctance of utilities to take risks and the temporal dynamics of technological progress facilitating incremental innovations on the basis of conventional reference technology. INTRODUCTION In the discussion on innovations for sustainable development, radical innovations are frequently called for in order that the transformation of society to a system perceived as sustainable can succeed (Vellinga, 2004). The reason given for this is the expectation that these innovations will increase environmental efficiency by a factor of 10, compared to a factor of 2 for incremental innovations (Geels et al., 2004). The literature, however, provides hardly any empirical evidence in favour of this hypothesis. Supporters of this view admit that such changes need at least one generation in order to become accepted, since they have to pass through several stages. Radical innovations should ideally develop Why Radical Innovations Fail TheCaseofTechnologicalChangeinGermanCoal-firedPowerPlants Klaus Rennings, Peter Markewitz and Stefan Vögele 128 CHAPTER 7 first in small market niches, then diffuse and finally replace existing technologies . In the literature this idea of innovation is described as Transition Management (Geels, 2004). Against the backdrop of an increasing use of coal-fired power plants and the environmental burden to be expected, the potential and the relevance of radical innovations in this field is of interest to researchers. The International Energy Agency IEA assumes that global electricity and capacity need will increase significantly in the next decade and that fossil fuel power plants will be the central basis of future electricity generation worldwide (IEA, 2008b). The development of power plant technology in Germany is used as an example in this study to show in an ex-post analysis, to what extent radical innovations have been successful and what were the obstacles with which they were confronted. The relevance of these aspects for future R&D policy is shown by applying the concept to the ongoing discussion of CO2 capture. Firstly, the concepts of radical and incremental innovation are described on the basis of theories on innovation in evolutionary economics. Section 3 analyses the development of the R&D portfolio in the last decades. The paper uses the examples of Pressurised Pulverised Coal Combustion and supercritical coal-fired power plants in order to compare the development of Figure 1 Predicted increase in capacity worldwide Source IEA (2008b) Capacity (Gigawatt) 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 Year 2006 2015 2020 2025 2030 Coal Gas Other fuels 129 WHY RADICAL INNOVATIONS FAIL radical and incremental innovations. This part is followed by an evaluation of risks and probabilities of success with regard to technological trajectories of CO2 capture which are at present globally favoured. Section 5 draws some conclusions. INCREMENTAL AND RADICAL INNOVATIONS FROM THE PERSPECTIVE OF EVOLUTIONARY ECONOMICS In accordance with the OECD Guidelines for Collecting and Interpreting Technological Innovation Data (OECD, 2005), we distinguish between technical and organisational innovations. Technical innovations are divided into product and process innovations: ■ Process innovations occur when a given amount of output (goods, services) can be produced with less input. ■ Product innovations require improvements to existing goods (or services) or the development of new goods. Product innovations in machinery in one firm are often process innovations in another firm. ■ Organisational innovations include new forms of management, e.g. total quality management. The following definition of environmental innovation is used in this report (Kemp and Arundel, 1998; Rennings and Zwick, 2002): Environmental innovations consist of new or modified processes, techniques, practices, systems and products to avoid or reduce environmental harms. Environmental innovations may be developed with or without the explicit aim of reducing environmental harm. They may also be motivated by the usual business goals such as profitability or enhancing product quality. Many environmental innovations combine an...