Market Feedback on The Politics of Decarbonization: A Remaking of Vested Interests?

When and under what conditions can policy-induced market developments, including low-carbon technology and investment change, lead to a remaking of vested interests that have previously reinforced and protected the status quo? Literatures on the politics of low-carbon transitions have largely described business incumbents as political obstacles to decarbonization due to their deep entrenchment in existing socio-technical regimes (Newell and Paterson 1998, Geels 2014, Hess 2014, Roberts, Geels et al. 2018, Lockwood, Mitchell et al. 2020, Stokes 2020). Yet, a growing body of research reveals increasingly heterogenous incumbent responses to advancing, low-carbon transition processes (Steen and Weaver 2017, Turnheim and Sovacool 2019). For instance, many established firms are now “entering niches” (van Mossel, van Rijnsoevera et al. 2018) and may successfully integrate disruptive, low-carbon technologies with existing capabilities and business models (Bergek, Berggren et al. 2013, Berggren, Magnusson et al. 2015). Emerging political science research also shows that market-related change can remake incumbent interests toward decarbonization, and shift preferences into alignment with climate policy reform (Vormedal et. al 2020; Vormedal and Meckling, forthcoming). In this paper, we will examine how, when and to what extent policy induced, market-related change may cause shifts in incumbent agency, by focusing on the 15 largest power producers in Europe. We operationalize market-related change mechanisms as divestment from fossil-fuel, and investment in low-carbon and renewable energy technologies and generation capacity. Using a large data-set on power generation assets, we conduct a quantitative analysis of change in the utilities' generation portfolio/fuel mix between 2010-2020, and of new investment and forthcoming capacity expansions. We also conduct systematic qualitative analysis of change in their policy preferences between 2010-2020, drawing on a combination of consultation comments and in-depth interviews. Ultimately, we seek to establish the causal effect of change in generation portfolios/fuel mix on the utilities economic, self-interests, and analyze the extent to which such change may shift in preferences, strategies and forms of political mobilization towards support for more ambitious EU climate and renewable energy policies. Our findings will contribute to developing novel knowledge on the conditions under which policy-induced market feedback on vested interests can alter previous political dynamics in advancing low-carbon transitions.