Essays on the nexus between technological change, policies, and value chain governance for a transition towards a low-carbon economy

Abstract

Technological change is essential to reconciling economic growth with environmental conservation. A transition toward an environmentally sustainable economic system requires new production techniques that improve land use efficiency, increase yields, reduce chemical input applications, prioritize low-carbon energy sources, and integrate new (non-fossil) raw materials. However, even when technical change promises to safeguard environmental sustainability, it is not a sufficient condition to reach inclusive growth since it is non-neutral from a social perspective. Balancing multiple goals to ensure a just transition requires consistency between governing institutions and technological advances, which is a two-way relationship: some governance schemes may be more conducive to fostering technical change, whereas new governance patterns and institutions emerge in response to innovations. This Ph.D. dissertation explores the nexus between technical change, policies, and value chain governance from different points of view in three separate chapters, each focusing on a different technology set: bio-based technologies, technological innovations in agri-food systems, and renewable energy. <br /> In the first chapter, I explore from a conceptual perspective the nexus between organizational characteristics of bio-based value chains and technological innovations in the transition to a bioeconomy. Moving away from the fossil-based production paradigm into a bio-based economy that creates economic value added with minimum environmental impacts requires substantial investments in technological innovations. These innovations will likely affect how value chains are structured and which actors benefit from this transformation. Accelerated bioeconomy innovation is associated with shorter and more vertically coordinated value chains, a leading role by dominant firms, and higher levels of cooperation among firms with core research capabilities. These organizational features entail welfare effects for value chain actors, leading to potential trade-offs between greenhouse gases (GHG) emissions mitigation and social inclusion. <br /> In the second chapter, I discuss the entrepreneurial landscape of innovations that promise to revolutionize agri-food systems, covering the entire value chain from farming inputs to last-mile delivery. Using Crunchbase as the primary data source and applying machine learning for natural language processing, the purpose of this chapter is twofold: first, identify which technologies have been receiving the most support from investors, and second, analyze the corporate strategies of the largest agri-food multinational companies regarding their investments in new technologies. The results for the first goal show an imbalanced scene in which downstream technologies capture most investors’ interest. As for the second goal, three trends of investments by dominant agri-food firms are identified: upgrading strategies to improve their core activities, defensive strategies to control technologies that compete with their business, and corporate portfolio strategies to seize profit opportunities. <br /> Given that the adoption of many clean technologies is still low in many regions of the world, in the third chapter, I delve into the role of policy design in fostering technology adoption to reach low-carbon production systems. For this purpose, I focus specifically on studying how institutional quality and macroeconomic instability mediate the effects of auctions in promoting investments in renewable energy technologies. The analysis is built upon a differences-in-differences analysis considering staggered treatment adoption. Findings show that auctions positively affect RE capacity, but average treatment effects are higher for countries with better business environments. Thus, caution is needed in adopting this instrument, especially in countries exposed to macroeconomic or institutional instability. At the same time, dynamic treatment effects suggest that the policy needs time to show results. <br /> Based on the findings in this study, policymakers should account for the fact that the surrounding governing institutions condition the effects of technical change over different sustainability dimensions. While synergies between economic and social dimensions are more evident, balancing these two dimensions and environmental goals is not always straightforward and requires fine-tuning in policy design. From the perspective of business managers and entrepreneurs, it is essential to acknowledge that new value chains will emerge, and the traditional ones will reconfigure, opening new business opportunities in which sustainability aspects are at the core of the strategy.