5.3.1.3 The Context for Technological Change
The wider context plays an important role in shaping technological change and
hence in determining the feasibility of GHG mitigation. There are several important
elements or dimensions of the context for technological change:
- market conditions, including ease of entry for new firms and technologies;
availability of capital; the degree of internalization of social and environmental
concerns through taxes, subsidies, insurance, and other mechanisms; and the
degree of competitiveness, including any oligopolistic practices or informal
arrangements between government and the private sector;
- the legal system, including the system of intellectual property rights;
the allocation (e.g., among firms or between the public and private sector)
of liability for past and future environmental damage; freedom of speech and
information; and ease of litigation;
- the physical infrastructure, including the design of cities and other settlements,
transport systems, and utilities; and their flexibility in permitting the
adoption of alternative technologies, lifestyles, and production systems;
- social and political structures, including the role of the public in decision-making;
the location of power in institutional and social relationships; the presence
of formal or informal alliances, for example involving government, industry,
and the media; and the allocations of roles within households and communities;
- culture, including cultural diversity; the role of technology and material
consumption in establishing individual identity, status, and social bonds;
tendencies towards competition and co-operation, conformity, and distinction;
and
- psychology, including awareness, understanding, and attitudes relating to
climate change, its causes and potential impacts, and to changes in technology
and lifestyles.
Of these dimensions, most attention has been paid in the literature, including
the SAR, to the role of markets and legal systems. Existing market and legal
incentives can pose barriers to some kinds of technological change, as discussed
in later sections of this chapter. Changes in the market and legislative context
can also provide opportunities for innovation. For example, the need to address
local pollution through government regulations may stimulate innovation that
can contribute to GHG mitigation. Porter and Van der Linde (1995a) argued that
environmental regulation of industries could also promote their competitiveness
through accelerated innovation, although this has been disputed by Palmer et al. (1995), who argues that most evidence is that regulation, as historically
practised, has not fostered competitiveness, and has encouraged innovation only
narrowly aimed at regulatory compliance (Berman and Bui, 1998; Xepapadeas and
de Zeeuw, 1999).
The effects of physical infrastructure have been less studied, being harder
to measure than those of prices and regulations. Infrastructure often acts as
a constraint on changes in technology and behaviour: existing road systems and
settlement patterns in many countries tend to encourage car dependency; the
existing supply networks for domestic and transport fuels make it difficult
for individual households or firms to adopt alternatives. In this chapter, the
role of infrastructure is considered in relation to buildings, transport, and
energy supply (see Sections 5.4.1 to 5.4.3).
The social capital passed on from generation to generation offers an opportunity
for diffusion of GHG mitigation technologies in traditional and modern societies
alike. Societies in which trust and civic co-operation are strong have significant
positive impact on productivity, especially human capital productivity, and
provide stronger incentives to innovate and to accumulate physical capital.
More investment in consultation and participation of the local population in
decision making about GHG mitigation technologies contribute both to information
sharing, to building trust, and civic co-operation. The former may contribute
to changes in beliefs, norms, and values if participants are convinced that
they are better off after effecting the change (Gibson et al., 1998).
Reliance on market mechanisms alone, without an appropriate institutional framework
that performs a co-ordinating function among sectors, is inadequate and may
be destructive of social capital. Policy attention to learning by doing, and
network externalities, together with policy stability and enforcement favour
the diffusion of GHG mitigation technologies.
Addressing the last three dimensions listed above thus involves understanding
human psychology, relationships, communities, institutions, and the process
through which social norms and decisions are established. These aspects of climate
mitigation are addressed in Sections 5.3.6 and 5.3.8
of this Chapter.
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