Decarbonizing a Complex System

Meeting the challenge of climate-change mitigation involves a rapid and comprehensive transformation of the global economy away from high-emitting production systems toward low-carbon ones. This chapter illustrates how complex-systems approaches are uniquely well suited to understanding the drivers, barriers, and risks arising from such a technological transformation. We first consider the dynamics at play in growing new technological systems. We contrast two empirically well-documented cases (solar photovoltaics and electric vehicles) to show the central importance of technological interdependencies in shaping the dynamics of innovation and in crafting effective policy strategies. In particular, we argue that promoting low-carbon technologies that are less modular may require a more targeted and coordinated approach than is standard in innovation policy. We then turn to the dynamics at play in phasing out old technological systems. A central question is whether the progress of low-carbon technologies can on its own displace fossil-fuel-based technologies without policies that actively phase out or discourage these technologies. We highlight the different feedback processes that are key to answering this question (including the interaction between changes in technology costs, the rebound effect and the green paradox, and the role of heterogeneous expectations), some areas where better modeling is needed, and open policy questions. Finally, we argue that accounting for the heterogeneous nature of capital assets, skills, and regional capabilities, as well as understanding systemic interdependencies, is essential to anticipating disruption and stranding and crafting policies to mitigate transition risks.