Policy Mixes for Industrial Transformation: Lessons from Finland and Sweden

Abstract: An accelerated transition of the existing industry sectors towards low-carbon and renewable energy technologies is crucial to achieving global climate targets and national net zero emission commitments. This thesis departs from the notion that many governments increasingly emphasise the possibilities of combining such a transformation with domestic “green growth”. Recent research suggests that policymakers can influence innovation and transition processes through the implementation of transformative innovation policies, including a mix of instruments oriented towards climate and industrialisation goals. At the same time, scholars have stressed that the design and implementation of policy mixes play a key role in their effectiveness. Despite these advances, there is a lack of studies addressing the outcomes of such policy mixes in the context of transformative change in the industry. This licentiate thesis aims to enrich the current understanding of the impact of policy mixes on industrial transformation processes. To this end, this thesis builds on three historical case studies of industrial transformation in the Nordic countries. It combines qualitative interviews with secondary data and social network analysis to reconstruct how the implemented policy mixes have influenced the industrial transformation over an extended period (2003-2022). Theoretically, this thesis departs from the innovation systems approach and draws on insights from studies of transformative innovation policies, mission-oriented innovation systems and value chains. The thesis contributes to a more advanced understanding of the underlying processes by which policy mixes influence industrial processes towards the targeted transformative change. First, the thesis contributes with a typology of value chains, which describes and explains how differences in the type, design and implementation of policy mixes could lead to alternative value chain developments. Second, the thesis develops a process model that describes and explains how policy feedbacks affect the evolution of policy mixes and the subsequent emergence of renewable energy technologies and industrial structures. Third, the thesis contributes to the understanding of the impact of collaborative R&D programs directed toward promoting low-carbon innovation and experimentation in the established industry by investigating the role of the main Swedish industrial emitters in one policy-driven R&D network.