The innovation and industry dynamics of technology phase-out in sustainability transitions: Insights from diversifying petroleum technology suppliers in Norway

The urgency of a sustainability transition in the energy sector has led numerous authors to argue that it can and should be accelerated through active phase-out, disruption and destabilization of the undesirable established technologies. This paper starts out accepting the phase-out premise, but argues that a more nuanced view of 'established' technologies and incumbents is needed. Technologies often involve many different sectors, and there may be a great but underappreciated potential to realize transitions through recombinations and diversification by upstream firms providing the components and material inputs for the undesirable technology. Recombination and diversification can also dampen the possible negative effects of transitions such as loss of jobs and bankruptcy of firms that are not at the core of these technologies. By combining literature on transitions and phase-out, technological innovation systems, and diversification, we develop a framework of analysis that is used to study diversification processes in supplier firms in the Norwegian offshore petroleum technology value chain. We find that these firms face a number of diversification challenges that are mostly non-technological. These findings are used to discuss how policies can better support diversification and how theories of sustainability transitions can take this perspective into account.