International Diffusion of Renewable Energy Innovations: Lessons from the Lead Markets for Wind Power in China, Germany and USA
This article was written in 2014 and discusses the international diffusion of renewable energy innovations with a focus on the lessons learned from the lead markets for wind power in China, Germany, and the USA. Climate change is pushing a transition towards a new energetic system. In 2014 energy use was responsible for about 83% of global anthropogenic greenhouse-gas emissions. As result it is apparent that current patterns of energy production and consumption have to be transformed to avoid the dangerous climate change. From 2011 to 2014 China, the EU15, Japan, and the USA all implemented policies aimed at achieving leadership in green technologies. The concept is that that through these environmental and technology policies these countries can gather first-mover advantages that will increase their competitiveness. In this case, a country takes the lead in the international diffusion of a particular innovation, benefiting from increasing returns of technological development, economies of scale, and exports to expanding international markets. The comparative analysis of lead market potential for wind power indicates a high level of internationalization of the industry with China, Germany, and the USA holding lead positions in specific parts of the supply chain. These competitive advantages were built primarily upon policy support. This fact reinforces the power and necessity of policy-based initiatives and incentives for the further development and diffusion of renewable energy.
In class we discussed the concept of diffusion through a network, and an example of this is the international diffusion that has started to occur with renewable energy. However, in this case the individuals in the network are nations and companies. With a large majority of the most powerful nations in the world having agreed to work together towards a low-carbon future, the face of energy will shift away from fossil fuels and towards renewable energy sources. Since these nations are huge players in the energy industry and will have a large influence on the industries future, other nations are incentivized to follow suit if they wish to keep up and reap the rewards. Concurrently if China, Germany, and the USA are able to make themselves the lead exporters of the various technologies, materials, and systems needed to establish these renewable energy sources, they can generate great payoff from the international diffusion themselves and the other nations initiated.