254 Jenny Lieu et al.
Influence of political will on technology selection and policy promotion
Politicians are more hesitant to support low- carbon pathways if they imply a risk
of disrupting the socio- economic balance within their countries. The (lack of )
support for technologies can be primarily driven by political will, creating a
strong enabler for favoured technologies but also high risks if political backing is
withdrawn. We see examples throughout the country studies where policies and
political support create barriers for policy implementation. This directly relates
to carbon lock- in effects, i.e. barriers to new technologies, as established
technologies have become tightly entangled with the existing institutional
set- up (e.g. Unruh, 2000).
As these disruptions are often noticeable in the short term and directly affect
voters, policies supporting low- carbon pathways can be subject to change due to
elections. An example of risks caused by political change can be observed in the
oil sands sector in Canada. A new political party (the NDP) came into power
for the first time in 2015, uprooting the incumbent party who were large
supporters of oil sands development. The NDP implemented a carbon tax for oil
sands production which has impacted profits and has been unpopular within the
industry. If a different political party gains power through the next election in
2019 they may reverse the carbon tax. In Indonesia, where fossil- fuel exports are
an important source of government revenue and economic development,
changes in political leadership can lead to significant uncertainties for the
biogas renewable energy programmes as there is no certainty that the new government will continue to support programmes.
Without financial support some low- carbon technologies, particularly those
needing intensive capital investment, would not be feasible. New nuclear power
stations in the UK, for instance, face a high risk in securing funding. The high
costs of construction and nuclear waste handling requires secure long- term
revenue streams to ensure financial viability. For that, there has been significant
political support for the development of the new Hinkley Point C nuclear power
plant. The government has negotiated with investors to secure long- term fixed
electricity price contracts that are well above current wholesale prices. This
example shows how, through a long- term guarantee scheme, the impacts of
changes in the political context can be kept relatively small.
In Kenya, on the other hand, the lack of strong, long- term guaranteed
political support has led to implementation risks for geothermal plants. One of
the barriers for these plants is securing funding. Since geothermal plants are
viewed as higher risk investments, investors need the reassurance of financial
and political stability for their investments. A means of reducing the financing
risk for the project developers is to guarantee the revenue stream through a
power purchase agreement with Kenya Power, which is jointly owned by the
government and private investors. But there have been delays in finalising this
financing as the government has been slow to issue letters of support for the
projects. Due to this delay, investors face a higher risk that funding for the projects will not be secured.
Influence of political will on technology selection and policy promotion
Politicians are more hesitant to support low- carbon pathways if they imply a risk
of disrupting the socio- economic balance within their countries. The (lack of )
support for technologies can be primarily driven by political will, creating a
strong enabler for favoured technologies but also high risks if political backing is
withdrawn. We see examples throughout the country studies where policies and
political support create barriers for policy implementation. This directly relates
to carbon lock- in effects, i.e. barriers to new technologies, as established
technologies have become tightly entangled with the existing institutional
set- up (e.g. Unruh, 2000).
As these disruptions are often noticeable in the short term and directly affect
voters, policies supporting low- carbon pathways can be subject to change due to
elections. An example of risks caused by political change can be observed in the
oil sands sector in Canada. A new political party (the NDP) came into power
for the first time in 2015, uprooting the incumbent party who were large
supporters of oil sands development. The NDP implemented a carbon tax for oil
sands production which has impacted profits and has been unpopular within the
industry. If a different political party gains power through the next election in
2019 they may reverse the carbon tax. In Indonesia, where fossil- fuel exports are
an important source of government revenue and economic development,
changes in political leadership can lead to significant uncertainties for the
biogas renewable energy programmes as there is no certainty that the new government will continue to support programmes.
Without financial support some low- carbon technologies, particularly those
needing intensive capital investment, would not be feasible. New nuclear power
stations in the UK, for instance, face a high risk in securing funding. The high
costs of construction and nuclear waste handling requires secure long- term
revenue streams to ensure financial viability. For that, there has been significant
political support for the development of the new Hinkley Point C nuclear power
plant. The government has negotiated with investors to secure long- term fixed
electricity price contracts that are well above current wholesale prices. This
example shows how, through a long- term guarantee scheme, the impacts of
changes in the political context can be kept relatively small.
In Kenya, on the other hand, the lack of strong, long- term guaranteed
political support has led to implementation risks for geothermal plants. One of
the barriers for these plants is securing funding. Since geothermal plants are
viewed as higher risk investments, investors need the reassurance of financial
and political stability for their investments. A means of reducing the financing
risk for the project developers is to guarantee the revenue stream through a
power purchase agreement with Kenya Power, which is jointly owned by the
government and private investors. But there have been delays in finalising this
financing as the government has been slow to issue letters of support for the
projects. Due to this delay, investors face a higher risk that funding for the projects will not be secured.