Chapter 1broad transformation of the energy system. Stabilizingthat transformation will require compensating thosewho will lose from the transformation to a low-carbon,high-efficiency energy system. That compensation, inturn, must come from the economic opportunity andvalue created by the transformation itself. In short, thesame challenges that confront economic restructuringin other guises—whether during industrialization, or inresponse to changing international competition, or technologicalchange—will challenge the transformation oftoday’s energy system."Thus the real policy challenge at the heart of greengrowth lies in securing effective, stable alliances for industrialredevelopment"9: Governments, markets and greengrowth: concluding remarksThere are compelling and varied arguments for movingto low-carbon, high-efficiency energy systems thatinclude climate change and energy security. The notionof “green growth” expresses the hope, or ambition, thatsuch a transformation can be compatible with, or couldeven drive, sustained economic growth. We argue herethat the concept of an energy systems transformationmust underpin discussions of and policy for climate andgreen growth. By system, we refer here to an array of separateelements complementary to one another and tightlyinter-linked. In economic terms, the widespread adoptionof some technologies requires investment in related, complementary,technologies and policy innovations to facilitateor permit their diffusion. It is this complementaryseries of technological, economic, and regulatory changesthat we refer to as an energy systems transformation.There are three significant implications of our argument.• First, with limited resources, policymakers should seekpoints in the energy system where limited interventionscan change the trajectory of development, by alteringthe choices of actors throughout the system. Wedefined such a lever to be “a change or set of changes topart of the system that, if carried out, will induce or enablecomplementary changes in the rest of the system.”• Second, enduring economic and political success ata green energy-led systems transformation can onlycome from the possibilities it would create for thebroader economy. Emissions reduction is principallymotivated by the need to avoid the damaging consequencesof the existing energy system. But achievingemissions reduction presently provides few immediatebenefits. “Green” electrons differ from brown electronslargely by being more expensive and requiringthe expensive replacement of a significant infrastructure.Green jobs will often simply replace brown jobs.The acute costs and diffuse benefits of emissions reductionpose serious challenges to sustained progress.Consequently, policy discussion must also focus on theadvantages of a low-emissions energy system. Thoseadvantages, if they exist, will come from enabling thebroader economy to discover and express the presentlyunknown—and often unknowable—opportunitiesthat such a new system may create.• Third, achieving this transformation will require acomplex set of offsetting deals that often compensatethose discomfited or disadvantaged while allowingmarket incentives to induce the enormous privateinvestments that will be required. Governments willneed to play a role: setting technology standards andmarket rules, balancing losers from the transition, investingin technology development and often in thedeployment of critical infrastructure.In sum, moving green growth from religion to reality,and thereby exploiting the redeployment of the energysystem as the basis of sustainable prosperity, will requirea technological and economic transformation akin tothose of the emergence of steam, or rail, or—more recently– information technology. That transformationwill not come through a focus on one technology or another.Rather, it will require attention to the restructuringof the energy system as a whole, and the role that policymust play in structuring and facilitating that systemstransformation.Works CitedAral, Sinan, Erik Brynjolfsson, and Marshall Van Alstyne. 2007.“Information, Technology and Information Worker Productivity:Task Level Evidence”. NBER Working Paper no. 13172. Cambridge:National Bureau of Economic Research.Bradsher, Keith. 2010. “To conquer wind power, China writes therules.” The New York Times, 15 December, A1.Cowen, Tyler. 2011. The Great Stagnation: How America ate all thelow-hanging fruit of modern history, got sick, and will (eventually)get better. New York: Dutton.Davidow, William. 1986. Marketing High Technology: an insider’sview. 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Chapter 1Hughes, Thomas. 1983. Networks of Power: electrification in Westernsociety, 1880-1930. Baltimore: The Johns Hopkins University Press.Hughes, Thomas. 1979. “The Electrification of America: the systembuilders”, Technology and Policy pp124-161.Integration of Variable Generation Task Force. 2009. AccommodatingHigh Levels of Variable Generation. Washington, DC: NorthAmerican Electricity Reliability Corporation.Jones, Van. 2008. The Green Collar Economy: how one solution canfix our two biggest problems. San Francisco: HarperOne, 2008.Kammen, Daniel M., and Detlev Engel. 2009. “Green Jobs and theClean Energy Economy.” Thought Leadership Papers Series No. 4.Copenhagen: Copenhagen Climate Council. At http://www.copenhagenclimatecouncil.com/dumpfile.php?file=ZmlsZWJveC8xODk=&filename=VExTMDQgX0dyZWVuSm9icy5wZGY=.Katz, Michael, and Carl Shapiro. 1985. “Network externalities, competition,and compatibility”. The American Economic Review 75(3)424–440.Katz, Michael, and Carl Shapiro. 1986. “Technology adoption in thepresence of network externalities”. The Journal of Political Economy94(4), 822-841.Katz, Michael, and Carl Shapiro. 1994. “ Systems competition andnetwork effects.” The Journal of Economic Perspectives, 8(2) 93–115.Katz, Randy, David Culler, Seth Sanders, Sara Alspaugh, YanpeiChen, Stephen Dawson-Haggerty, Prabal Dutta, Mike He, XiaofanJiang, Laura Keys, Andrew Krioukov, Ken Lutz, Jorge Ortiz,Prashanth Mohan, Evan Reutzel, Jay Taneja, Jeff Hsu, and Sushant .2011 “An Information-Centric Energy Infrastructure: the BerkeleyView.” Journal of Sustainable Computing 1(1) 1-17.Krueger, Alan. 1993. “How Computers Have Changed the WageStructure: Evidence from the microdata, 1984-1989” The QuarterlyJournal of Economics 108(1) 33-60.Rai, Varun, David Victor, and Mark Thurber. 2009. “Carbon captureand storage at scale: Lessons from the growth of analogous energytechnologies” Energy Policy 38(8) 4089-4098.Van Ark, Bart, Robert Inklaar, and Robert McGuckin. 2002.“Changing Gear: Productivity, ICT, and Services: Europe and theUnited States” Research Memorandum GD-60. Grönigen: Universityof Grönigen Growth and Development Center.Sudarshan, Anant and James Sweeney. 2008. “Deconstructing the‘Rosenfeld Curve’”. Precourt Energy Efficiency Center Working Paper,2-17. Palo Alto: Stanford University Precourt Energy EfficiencyCenter.The Danish Government. 2011. “Danish Energy Strategy 2050.”Denmark: Danish Climate and Energy Ministry.The European Commission. 2007. “An Energy Policy for Europe”,Communication to the European Parliament and European Council.Document SEC(2007) 12. Brussels, Belgium: The EuropeanUnion.The European Commission. 2010. “Energy Infrastructure Prioritiesfor 2020 and beyond – a blueprint for an integrated European energynetwork”. Communication from the Commission to theEuropean Parliament, the Council, the European Economic andSocial Committee and the Committee of the Regions. DocumentCOM(2010) 677. Brussels, Belgium: The European Union.Woody. 2010. “China snaps up California Solar Market”, TheNew York Times Green Blog. 14 January, at http://green.blogs.nytimes.com/2010/01/14/china-snaps-up-california-solarmarket/#more-38129.Zysman, John and Abe Newman, eds. 2006. How Revolutionary wasthe Digital Revolution. Stanford: Stanford University Press.Zysman, John and Nina Kelsey, eds. 2011. “The Green GrowthEconomies Project, Part Two: Country Cases and Analysis.” Preparedfor the Mandag Morgen Green Growth Leaders Forum.Leatherman, John. 2005. “Internet-based Commerce: Implicationsfor Rural Communities” Review of Economic Development Literatureand Practice 2000:5.Noll, Roger. 2011. “Encouraging green energy R&D: a comment”Energy Economics 33(4) 683-686.Nordhaus, William. 2010. “Designing a Friendly Space for TechnologicalChange to Slow Global Warming.” Energy Economics 33(4)665-673.Obama, Barack. 2011. “State of the Union Address”, 27 January.Washington, DC: The White House. At http://www.whitehouse.gov/the-press-office/2011/01/25/remarks-president-state-unionaddress.Perez, Carlotta. 1985. “Microelectronics, Long Waves, and WorldStructural Change: New Perspectives for Developing Countries.”World Development 13(3) 441-463.Schepelmann, Philip, Martin Stock, Thorsen Kosta, Ralf Schüle,and Oscar Ruetter (2009) “A Green New Deal for Europe” GreenNew Deal Papers Series vol. 1. Brussels: Green European Foundation.Scott, Mark. 2010. “GE, Vestas fall behind in China’s ‘Tough’ windmarket.” The New York Times, 14 May.Green Growth: From religion to reality 17
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