The politics and policy of energy system transformation - explaining the German diffusion of renewable energy technology

To arrest climate change, a transition to a low-carbon economy must take place quite rapidly, within a century at most. Thus, the rate of diffusion of new technologies such as those for the generation of electricity from renewable energy sources becomes a central issue. This article explores the reasons for the particularly rapid spread of two such technologies in Germany, wind turbines and solar cells. We trace this diffusion to the nature of the policy instruments employed and to the political process which led to the adoption of these instruments. The analysis demonstrates how the regulatory framework is formed in a 'battle over institutions' where the German parliament, informed and supported by an advocacy coalition of growing strength, backed support policies for renewables sourced electricity against often reluctant governments and the opposition from nuclear and coal interests. It also demonstrates that this major political and environmental achievement carries a modest price if we consider total costs to society, i.e. including both subsidies to coal and the negative external economies of coal. (c) 2004 Elsevier Ltd. All rights reserved.