The National System of Innovation as a Co-evolutionary Regime for Socio-Technical Transition

1. The National System of Innovation as a Co-evolutionary Regime for Socio-Technical Transition Sangook Park SPRU, University of Sussex

2. Contents Part I. Brief introduction of my Ph.D. project The National System of Innovation as a Socio-Technical Regime: Co-evolution of Technology and STI Policy in the Early Stages of the Hydrogen Energy Transition. Part II. Ongoing WP on the result from Korean case study R&D Network as a Precursor to an Emerging Sectoral System of Innovation: Evolution of the Hydrogen Energy Sector, Incubated by Government Funding Programmes.

3. Part I. Context of this research • The NIS concept had contributed to explain the national dependence of economic development on its first phase in 1980s. (Freeman, Lundvall, Nelson) : Understanding what has happened. • Until recently and going on, researchers has been using the NIS concept to show international differences in capability, growth, performance, etc. (Verspagen, Fagerberg, Godinho …) : Seeing what is going on. • Various systemic approaches have been located at the centre of STI researches. • In this research, the NIS is to be seen as a regime for co-evolution of everything (actors/components, tangible/intangible things), especially the co-evolution of an emerging technology and STI policy for it, emphasizing social aspects, combined with socio-technical system theory.

4. Societal aspects of emerging technologies, especially (large) energy technology “I wish to emphasize only that there are numerous compelling reasons for preferring one energy form over another. Energy models that do not take these reasons into account will be very inadequate guide to future energy policy making.” (Rosenberg) “Consumers cannot possibly be aware of the various long-term side effects of a multitude of individual choices about many products….Yet the social costs may well be so great that they negate the private benefits to most consumers.” (Freeman) • Innovations and deployment of sustainable energy technologies have been driven by supply-side actors and government policies, rather than consumers’ demand. • Social acceptance and technical compatibility became key factors in a large technological system transition.

5. Theories • System builder • Pattern of evolution: inventiondevelopmentinnovation • transfergrowth, competition and consolidation • Energy systems, transport and social infrastrucre • Hughes(1983), Hughes(1989), Coutard(1999) (large) Technological System Theory Actor Network Theory • Actor, actant and their network • Mediator • Translation, Purification, Inscription • Latour(1987, 2005), Callon(1989) Innovation System Theory Socio-technical system theory • Components, actors and their networks • Institution, culture and government policy • Interactive learning • National, regional, sectoral level • Freeman(1987, 1997), Lundvall(1992), Nelson(1993), • Edquist(1997) • Relatively new and growing • Interdisciplinary • Not a big, unifying theory but a mixture of theories

6. Landscape: • Global environment • outer-regime factors • Interaction with the regime Components and network in the socio-technical regime Where co-evolution take place. • Niche: • New and emerging technologies • Competition • Technology trajectory Geels(2004)

7. Framework Co-evolution of emerging technology and policy, mediated by governance STAGE III STAGE I STAGE II Development/ commercialization possibility consolidation Emerging Technology social change innovation engineering feasibility scientific evidence emergence maturing complex Governance: mediator all the people researchers + civil society / users + Government / industry Policy + demonstration / industry formation / market rules / social acceptability Promotion of R&D / risks + Regulation / social effects / competitiveness • Co-evolutionary paths depend on national systems of innovation • It is not necessary to start from stage I • The direction is not time-dependent: stage-up can occur discontinuously • Some countries may take the reverse-direction

8. Framework Components and actors in NSI which influence the co-evolutionary pathway in emerging energy technology NIS basic facts R&D capacity Market condition Institutions Governance & political system Socio-economic aspects Networks of actors, especially firms (MNEs, LFs, SMEs) Strategic aim of a nation Major target technologies / technological pathway STI policy Industrial policy STS policy Interactions / Co-evolution • STI policies for emerging technology: • Communication language and learning process between various actors • Steering the direction of co-evolution • Influenced by actors and also influencing actors (Interacting) • They are forms of institutions and they are transforming institutions • Initial code for industry formation and market rules (standards, regulations etc.)

9. Framework and methodology • Analysing NISs of three selected countries • Comparative analysis of hydrogen R&D and energy policies • Iceland: A test-bed for the first Hydrogen Society in the world. • United Kingdom: A European developed country, putting more weight on sustainability. • South Korea: Lately developed country with a rapid catching-up experience. • Semi-structured interviews (government, quasi-government agencies, firms, policy researchers, scientific researchers, NGO etc.) • Iceland: 7 interviews • United Kingdom: 13 interviews so far (planned more) • South Korea: 18 • Social Network Analysis • United Kingdom: Evidence for policy networks • South Korea: will be presented in this presentation

10. Results: NSI and co-evolutionary pathways Iceland: a living-scale experiment of socio-technical transition Economy & energy environ. Small economic size with high GDP per capita Population: 270,000 Plenty of renewable energy (hydropower and geothermal) Society & culture Small, primary society Environment-friendly Challenging Energy transition experiences (coal  gas  renewable) High social acceptability STI and Industry Low technological capability Fishery  Aluminum processing  Finance Energy firms Almost no manufacturing industry except aluminum

11. Evolution of hydrogen energy policy in Iceland • (~1997) • No specific policy or R&D programme on hydrogen energy • Small group in scientific community discussed about the possibility • (1998) • The government statement on the Hydrogen Economy (world 1st) • It was resulted from the converging of following three parts; the characteristics of natural environment of Iceland, the debates of Icelandic scientist, and the inspiration from the changes of global status about Hydrogen energy. • Drivers: aluminum industry, Kyoto protocol, energy security • (1999~2005) • The Icelandic New Energy Ltd. established, which has performed most of activities • Demo projects like fuel cell bus, Hydrogen fuelling station • - Social aspect studies and developing PR. • - International partnership; IPHE • Supporting domestic R&D • (2006~) • - National Hydrogen Roadmap: Strategic selection of target technologies, the plan for deployments • - Second phase demo projects

12. United Kingdom : Sustainability matters Economy & energy environ. Large economic size with high GDP per capita North Sea oil Long history of industrialization and economic changes Society & culture Large, complex society High environmental concern Sensitive to climate change High social acceptability for renewable energy Mature civil participation STI and Industry High technological capability But weak manufacturing industry Large energy firms Service industry Active and good-quality policy researches

13. Evolution of hydrogen energy policy in the UK • (~2001) Research-councils based, less-organised R&D programmes • (2002) DTI started organised activities, such as formation of network of interest groups • The Carbon Trust established. • (2003) Fuel Cells UK: A fuel cell vision for the UK 2003 • - It emphasised the possibility of fuel cell technologies. • - It requested leadership and vision on fuel cells, contained messages to stakeholders, and requested for government actions. • (2004) Tyndall Centre: Hydrogen Energy Scenarios to 2050 • - To map out the stages required for a national energy infrastructure based on hydrogen produced from renewable sources. • (2004) A strategic framework for hydrogen energy in the UK (official policy paper) • - Hydrogen energy is a desirable addition, to CO2 reduction and improved upstream energy security as key goals for UK innovation and wealth creation. • The UK’s technical strength and industrial weakness • (2005) Fuel Cells UK: Roadmap for fuel cell sector development • - Assessment of the UK situation: strength and weaknesses in fuel cells • - Steps, actions and timescales to overcome challenges • (2005 onward)) UK sustainable hydrogen energy consortium: UK Hydrogen Futures to 2050 • - Roadmap development and designing scenarios • - Hydrogen transition (adopted socio-technical system approach) • - Various social aspects, such as acceptability and risk

14. South Korea: Catching-up / hydrogen as a new industrial opportunity Economy & energy environ. Large economic size with mid-high GDP per capita Depends on imported fossil fuels Underdeveloped renewable energy Big firms (BGs) are important Society & culture Large, complex society Little environmental concern Challenging culture Rapid changes High social acceptability for new technologies Immature civil participation STI and Industry High technological capability, especially applications & production Electronics and automobile industry GRIs Less policy researches Catching-up in not only technologies but also policies

15. Evolution of hydrogen energy policy in South Korea (~2002) Several national-level R&D programmes on hydrogen energy as part of new & renewable energy research. (Hyundai Motor Company started in-house R&D on FCV in 1998) (2003) Fuel cell technology was selected as the one of ten ‘Next Generation Technologies for Economic Growth’ The first policy research report on Hydrogen technologies was reported to the Presidential Advisory Council of Science and Technology; This report was mainly technological, paid no attention on scenarios or socio-economic aspects. (2004) National RD&D Organization for Hydrogen & Fuel Cell, was launched. South Korea joined IPHE (2005) The Hydrogen Economy Master Plan published by MOCIE This can be regarded as mostly R&D policy, partly energy usage forecasting. - The aim of this master plan is shown clearly that it is focused on the industrialisationof fuel cell vehicle. (industrialisation > energy security > sustainability)

16. Results: Policy-steered technological development Comparison of UK and South Korea • Socio-technical regime (NSI) influences R&D activities • Government policies strongly steer the direction of technological trajectory. 1. Hydrogen technology emerging, and Korea’s catching-up in hydrogen technologies SCI publications in the UK and South Korea. Subjects related to Hydrogen generation, storage, and fuel cells.

17. 2. Technology selection: SCI publications decomposed Hydrogen generation Hydrogen storage Fuel cells Number of US patent applications

18. Conclusion • Co-evolution in NSI: A dynamic transition • Everything in the system co-evolves, interacting with each other. • STI policies are steering the co-evolutionary pathway. STI policies are not only the product from but also the language of interactions among actors and institutions. • National System of Innovation as a co-evolutionary regime • This research shows that national dependence exists not only in performance and capability, but also in evolution of policies. • The dependence and differences were resulted from systemic factors. • Social aspects: historical and cultural perspectives • Existing strong industry • Governance: social capital, civil participation, and policy networks • Institutional and organisational aspects

19. Part II. Ongoing WP on the result from Korean case study R&D Network as a Precursor to an Emerging Sectoral System of Innovation: Evolution of the Hydrogen Energy Sector in Korea, Incubated by Government Funding Programmes. Sangook Park SPRU, University of Sussex Hyun-do Choi TEMAP, Seoul National University

20. The emergence of a new SSI (Malerba, 2002, 2007) • Emerging knowledge base- From scientific and technological development (not necessarily new) - From emerging social demand, or from socio-technical landscape changes 2. Formation of networks - (sometimes) Aided by government policy - Global industrial trend / activities of MNEs 3. Involvement of existing actors and new actors - Number of startups in the sector can be an indicator of SSI emergence. - The role of government / quasi-government agency is important, especially when it is immature. 4. Institutions, evolving • - With existing institutions, in the early stages of the emerging SSI. • - Institutions are co-evolving, within the evolution of the SSI.

21. Obstacles against the emergence of a new SSI • Uncertainty and risk • Technological uncertainty • Unknown social acceptance of the new technological system • Possible system failure - Absence of relevant industry policy • Difficulties in transition management • Resource and investment • (sometimes) Infrastructure is needed • Difficulties in knowledge flow

22. Government funding programmes as catalysts • Building capabilities for the future • Seeding and managing of knowledge networks (between universities, GRIs, and firms) • Reducing uncertainties of under-realised technologies • Direct/indirect subsidizing firms, especially SMEs, to encourage their involvement into the emerging sector. • Part of STI policy and/or industrial policy activities • Also, formation of policy network which is specialised to the technology

23. R&D networks as precursor to the emerging SSI • Malerba (2002, 2007) wrote about the main building blocks of a sectoral • system of innovation and production as being identifiedby the following ones: • • knowledge base and learning processes • • basic technologies, inputs and demand, with keylinks and dynamic complementarities • • type and structure of interactions among firms andnon-firms organizations; • • institutions • • processes of competition, cooperation, and coevolution. • AND/OR three building blocks as: • 1. Knowledge and technological domain 2. Actors and networks • 3. Institutions • R&D networks can be regarded as a precursor to the sectoral system •R&D networks have many of above identifications. •R&D links can evolve to value chains, R&D collaborations can evolve to business collaborations/alliances. So can R&D competitions. • They will co-evolve, interacting with other components in system.

24. Methodology • Social network analysis on government R&D funding programmes in Korea 1989~2005 • Network maps were drawn by using UCINET software • Non-R&D bodies such as the government and quasi-government agencies were intentionally omitted. • Any participation in the same programme was marked as one link between nodes, with no weight given.

25. Universities GRIs Firms Results 1989~1991 1992

26. Universities GRIs Firms 1993 1994

27. Universities GRIs Firms 1995 1996

28. Universities GRIs Firms 1997 1998

29. Universities GRIs Firms 1999 2000

30. Universities GRIs Firms 2001 2002

31. Universities GRIs Firms 2003 2004

32. Universities GRIs Firms 2005

33. Dynamics of formation of the new industrial sector

34. Firms • Large firms were pre-existing actors • Conventional energy firms, former national: Korea Gas, KEPCO etc. • Conventional energy firms: LG-Caltex (MNE), SK corp, etc. • Non-energy firms • Hyundai Motor Company • LG Chemical • POSCO (steel) • LG electronics • SMEs were mostly technology-specific startups • Growing importance of the roles in the network, but less links than LFs. • Not only R&D, but business partnership with large firms • Focusing on components and materials, rather than system • Fuel Cell Power, Heung Chang Carbon, etc.

35. Analysis and discussion • Pattern and characteristics found in evolution of R&D network • Increasing number of involving firms (snowball, critical mass?) • R&D bodies  large firms  SMEs • Role of government-funded research institutes (GRIs: KIER, KIST, KATECH, KIMM) • R&D: intermediate technologies • Network hub: the centre of knowledge flow • Quasi-government agency; sub-contracting, performing demo project • Policy input • Evolution of knowledge networks are • Collective, rather than fragmentizing • Cumulative: the importance of key actors are growing • Existing-sector compatible, rather than disruptive

36. Thank you.