Addressing climate change effectively requires making low-carbon technologies competitive against existing fossil-fuel based energy technologies. Bargaining over policies to promote clean energy is often as a domestic issue, pitting interest groups against each another as they vie to shape national polices. The 2015 Paris Agreement on Climate Change recognizes that multilateral cooperation is only possible when national governments have negotiated agreements with domestic interests.

This special issue in Business and Politics contends that we need to understand the effects of global interdependence on clean energy transitions. Interdependence profoundly influences climate and clean energy policymaking, creating new opportunities and constraints for governments and firms in the transition to clean energy. In particular, the rise of global supply chains, and the cross-border effects of green industrial policy, create a new politics of complex interdependence.

Improving our understanding of global interdependence in clean energy transitions matters for both economic and environmental reasons. Economically, new forms of interdependence affect the ability of firms to capture value in globalized industries. On the one hand, the depth of interdependence raises questions for first movers about the durability of any competitive advantage they may secure. New interdependence through global supply chains offers opportunities to firms in developing and middle-income countries to enter new global industries in clean energy technologies. The rise of developing country competitors obviously raises issues for governments in advanced industrialized countries whether global supply chains affect their ability to implement policies that create durable competitive advantage for domestic industries.

New interdependencies also have potential environmental implications, including for the pace of the diffusion of clean energy technologies. On the one hand, feedback dynamics that facilitate the more rapid deployment of a particular technology can lock in potentially sub-optimal technologies globally. For example, the global diffusion of polycrystalline solar cells may limit opportunities for more advanced technologies to enter the market. On the other hand, the ability of firms to vertically specialize key parts of productive processes potentially enables greater specialization, increases productivity, and allows clean energy industries to take advantage of economies of scale. As we have seen in solar photovoltaics and batteries, this has enabled new, low-carbon technologies to more rapidly compete against legacy fossil fuels, hastening the transition to clean power systems.

Read the full special issue ‘Clean energy transitions in a global economy’ here

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