From energy islands to energy highlands? Political barriers to sustainability transitions in the Baltic states.

To overcome the challenges of climate change and environmental degradation, the European Green Deal mandates accelerated sustainability transitions, including in the energy sector. However, the dynamics of change to achieve this goal varies across EU member-states. The sustainability transitions literature has explored such pathways from various angles, including the multi-level perspective on socio-technical change (Geels 2002, 2011; Smith et al. 2010), systems perspectives (Bergek et al. 2008; Hekkert et al. 2007), and relevant policy designs (Loorbach 2007; Schot and Geels 2008). However, the political determinants that could explain these discrepancies remain under-addressed (Avelino and Wittmayer 2015; Farla et al. 2012, Kuzemko et al. 2016, Meadowcroft 2011). Understanding the intricacies of political factors is indispensable for improving policymaking for accelerated transitions. Therefore, this paper asks: How do political barriers to sustainability transitions emerge and endure? To answer this question, the paper builds on the multi-level perspective, complementing it with concepts on institutions (rules, norms, incentives) and institutional change from the political economy scholarship. This approach helps to distill how state actors engage with institutions at the regime level, at times reinforcing political barriers to niche processes. The study relies on a comparative analysis of the renewable electricity transition in the Baltic states -- Estonia, Latvia, and Lithuania. The Baltic states provide for a most similar but different research design, as they share overarching landscape factors, such as the EU policy framework and highly similar political and economic development trajectories since the 1990s. Advancing renewable energy would help meet the EU targets, could increase investment and innovation in these economies, and could achieve energy security – a key goal in the region for decades. To this end, wind and solar energy are equally feasible energy generation options across the region. Yet, the pathways to renewable energy and the respective innovation and deployment outcomes differ fundamentally. The paper draws on insights from 30 semi-structured interviews with senior energy policy stakeholders and market participants in the Baltic states. The paper renders two key findings. First, the difference in niche outcomes between the Baltic states is driven by the extent to which policymakers create targeted incentives in the existing energy regime for renewable energy deployment and innovation. While in Lithuania incentives are aligned for developing the renewable electricity sector, in Estonia, they remain split, also reinforcing the socio-economically embedded incumbent oil shale industry. In Latvia, incentives remain inconsequential in light of rapidly changing coalitions and political priorities, even in the absence of a strong incumbent industry. Second, the discrepancies between countries are also attributable to how closely the underlying rules (relevant regulation, procedural and administrative processes) and norms (attitudes and perceptions) are aligned with such incentives. In sum, creating targeted incentives is necessary but insufficient to reorient institutions towards accelerating sustainable energy transitions. Political barriers that emerge from path-dependent energy sector developments endure if the rules and norms in the energy sector and the wider economy are misaligned to the transition objectives.