Journal of Cleaner Production 195 (2018) 651e663

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Journal of Cleaner Production

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Potential transitions in the and industry in Sweden: Towards a hydrogen-based future?

* Emrah Karakaya a, , Cali Nuur a, Linda Assbring b a Industrial Economics and Management, KTH Royal Institute of Technology, Sweden b KK-stiftelsen, Sweden article info abstract

Article history: The iron and steel industry accounts for one third of global industrial CO2 emissions, putting pressure on Received 19 August 2017 the industry to shift towards more sustainable modes of production. However, for an industry charac- Received in revised form terised by path dependency and technological lock-ins, sustainability transitions are not straightforward. 8 May 2018 In this study, we aim to explore the potential pathways for sustainability transitions in the iron and steel Accepted 16 May 2018 industry. To do so, we have conducted a case study in Sweden where there are policy and industry Available online 20 May 2018 commitments towards fossil-free steel production. Our theoretical points of departure are the techno- logical innovation system (TIS) approach and the multi-level perspective (MLP), and our paper presents Keywords: Innovation systems the dynamics behind an emerging case of transition towards a hydrogen-based future. The paper has two HYBRIT major contributions to the literature on sustainability transitions. First, it attempts to borrow some concepts from the MLP and integrate them with the TIS approach. Second, it empirically presents an in- Hydrogen depth case study of the iron and steel industry e an understudied context in the field of sustainability Sustainability transitions transitions. By doing so, it sheds some light on the dynamics between an emerging TIS and potential Typology transition pathways of a regime. © 2018 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

1. Introduction received little attention, with only a few studies in the field (e.g., Rynikiewicz, 2008; Wesseling et al., 2017). For the past few decades, the research on sustainability transi- The iron and steel industry is under transformative pressure to tions has examined how socio-technical systems transform into shift towards more sustainable modes of production. On the one more sustainable modes of production and consumption (Markard hand, steel is widely used in every country and in almost all in- et al., 2012). Several research frameworks such as the multi-level dustries, with a growing trend around the globe. On the other hand, perspective (MLP) (e.g., Geels, 2006), strategic niche management the industry needs to improve energy efficiency, recycle more and (e.g., Nill and Kemp, 2009), transition management (e.g., Rotmans switch to low-carbon production processes (IEA, 2015a; and Loorbach, 2009) and technological innovation system (TIS) Rynikiewicz, 2008; Sridhar and Li, 2016; WSA, 2016). However, (e.g., Bergek et al., 2008) have been developed and have enriched sustainability transitions towards low-carbon production processes our understanding of how these transitions can be guided, require lengthy and complex development involving radical in- managed and governed. Although the field of sustainability tran- novations that need extensive testing (Arens, 2016; Wesseling et al., sitions has grown rapidly (Chappin and Ligtvoet, 2014; Geels, 2013; 2017). Markard et al., 2012), the empirical focus of the literature has been The iron and steel industry is often perceived to be slow and limited and mostly dominated by studies on some specific indus- resistant towards large-scale transitions. It has an energy and trial sectors, i.e., energy, transportation, water, sanitation and food capital intensive production structure with high entry barriers; (Markard et al., 2012). The iron and steel industry e which accounts thus, technological innovations are risky and expensive for one third of global industrial CO2 emissions (IEA, 2015a) e has (Rynikiewicz, 2008; Wesseling et al., 2017). This makes any possible transition a complex and lengthy process, as the history of the in- dustry shows. For instance, the open-hearth furnace had domi- * Corresponding author. KTH Royal Institute of Technology, Lindstedtsvagen€ 30 nated steel production for almost 50 years until the revolutionary 114 28 Stockholm, Sweden. basic oxygen furnace was commercially available in the 1950s. The E-mail address: [email protected] (E. Karakaya). https://doi.org/10.1016/j.jclepro.2018.05.142 0959-6526/© 2018 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). 652 E. Karakaya et al. / Journal of Cleaner Production 195 (2018) 651e663 basic oxygen furnace, developed by Austrians, caused not only a explained by existing concepts and theories (Arino et al., 2016). large-scale transition towards a more productive and profitable The rest of this paper is structured as follows. Section 2 gives an mode of production, but also a leadership shift from the United overview of the core concepts as well as of the state-of-the-art States of America to Japan (Lee and Ki, 2015). Today, the industry literature. Section 3 puts the iron and steel industry into its his- may be on the verge of another technological transition. This time, torical context and identifies major transitions that have shaped the the goal is not only about productivity and profitability, but is also industry in Sweden. We provide this brief historical background about environmental sustainability, mostly emanating from the since the industry is characterised by path dependency (Arthur, climate change mitigation policies to reduce CO2 emissions (IEA, 1989), and examining its history may thus help us to understand 2015a; PC, 2016; WSA, 2016). Hence, the potential for sustainabil- what is happening now and what may happen in the future. Section ity transitions in the iron and steel industry is worth exploring. 4 presents the methodological details, with a focus on the data- Responding to this, we pose the following research question: collection and analysis processes. Section 5 presents the case What are the potential pathways for sustainability transitions in the study and its findings. Finally, section 6 derives conclusions and iron and steel industry? Empirically, the paper is based on a case presents implications for theory, industry and policy. study in Sweden. Recently in Sweden, three key actors (a mining company, a steel producer and a power company), together with 2. Sustainability transitions the Swedish government, teamed up and committed to making Sweden the first country to reach fossil-free steel production (PC, Our analysis of the iron and steel industry in Sweden has its 2016). Through an initiative called “Hydrogen Breakthrough Iron- conceptual point of departure in the widely-used approaches of making Technology” (HYBRIT, 2016), which is still in the experi- sustainability transition studies such as TIS (Carlsson and mental stage, the ambition is that the iron and steel industry will Stankiewicz, 1991) and the MLP (Geels, 2002). Grounded in the have zero emissions by the year 2045 (PR, 2017). Due to the seminal works of Dahmen (1989), Dosi (1982), and Nelson and explorative nature of our research question, we chose a case-study Winter (1982), the TIS and MLP approaches jointly provide a bet- approach (Yin, 2003). We combine primary qualitative data such as ter understanding of how radical innovation processes impact in- semi-structured interviews with secondary data such as reports, dustries and socio-technical transformations (Markard and Truffer, papers and press materials. These data are used to analyse how the 2008). Although the TIS and MLP approaches have different per- industry leans towards a hydrogen-based future and how the po- spectives on transitions, they share a number of comparable un- tential pathways may develop. Our contribution is twofold. First, dercurrents. In the sustainability transitions literature, there have our paper borrows some concepts from the MLP (e.g., Geels et al., been several attempts to better integrate these two approaches 2016) and align them with the TIS perspective (e.g., Hekkert et al., (e.g., Markard and Truffer, 2008; Meelen and Farla, 2013; Walrave 2007). Through this alignment, partially built on previous and Raven, 2016). Fig. 1 presents the interactions between some research (Markard and Truffer, 2008; Walrave and Raven, 2016), we core concepts from the TIS and MLP approaches (such as niches, attempt to bring an alternative understanding on the dynamics regimes, the landscape and contextual structures). A focal TIS is between an emerging technological innovation system and po- considered to interact with one or more socio-technical regimes tential transition pathways. Second, we put forth an in-depth case (Markard and Truffer, 2008) and other contexts such as other TISs, study of the iron and steel industry e an understudied context in relevant sectors, geographical contextual structures and the polit- the field of sustainability transitions e and discuss characteristics ical context (Bergek et al., 2015). that are not very common in other industries. Such an empirical A socio-technical regime is a semi-coherent set of rules contribution is as valuable as theoretical and methodological con- embedded in a complex of technological artefacts, infrastructures, tributions (Berthon et al., 2002) and it has the potential to lead to regulations and social groups (Geels, 2002). The notion of a socio- the discovery of interesting phenomena that may not be fully technical regime extends the concept of a technological regime

Fig. 1. Interactions between the conceptual elements in a technological innovation system and the multi-level perspective.1. E. Karakaya et al. / Journal of Cleaner Production 195 (2018) 651e663 653

(Nelson and Winter 1982) by adding the wider social and economic Table 1 aspects to the picture, e.g., the activities of scientists, policymakers, Structural dimensions of a technological innovation system (adopted from Wieczorek and Hekkert, 2012). users and special-interest communities. Although a socio-technical regime is relatively stable, a complex and unique chain of interre- Category Sub-categories lated events can trigger and lead to transformations (Smith et al., Components Actors - Civil society 2005). Geels and Schot (2007) point out that a socio-technical - Companies: start-ups, small and medium-sized regime can change in the long term, triggered by destabilising enterprises, large firms, multi-national pressures from the landscape (an exogenous environment such as companies - Knowledge institutes: universities, technology macro-economics, deep cultural patterns or macro-political de- institutes, research centres, schools velopments) or by upcoming technological niches (micro-level - Government formations where radical novelties emerge). - NGOs fi A focal TIS does not emerge in isolation, as it interacts with the - Other parties: legal organisations, nancial organisations/banks, intermediaries, knowledge wider context. To capture this in our conceptual model, we include brokers, consultants interlinked contexts e the environment that goes beyond the focal Institutions - Hard: rules, laws, regulations, instructions TIS, niches and regimes but may sometimes intersect with the - Soft: customs, common habits, routines, landscape. These interlinked contexts may encompass several as- established practices, traditions, ways of pects including history, technology, sector, geography and policy. conduct, norms, expectations fl Infrastructure - Physical: artefacts, instruments, machines, roads, These dimensions elaborate the in uence of factors which are not buildings, networks, bridges, harbours necessarily embedded inside the boundaries of the focal TIS, niches - Knowledge: knowledge, expertise, know-how, and regimes. In a recent study, Bergek et al. (2015) highlight the strategic information fi importance of some of these interlinked contexts. First, they argue - Financial: subsidies, nancial programs, grants fl etc. that a focal TIS is in uenced by other technological developments Interactions (relationships - At the level of networks beyond the technology in focus. Second, there is a mutual inter- and links) - At the level of individual contacts action between a focal TIS and several sectors. Third, regional development strategies and the spatial dimension affect the focal fl TIS. Fourth, a wide political context is important and in uential for 2.2. Systemic functions the development of a focal TIS. Sustainability transitions are long-term, multi-dimensional and Systemic functions are the key activities that influence the fundamental transformation processes through which established development of a TIS. If the systemic functions are well developed socio-technical systems shift to more sustainable modes of pro- for focal innovations, it is assumed that the focal innovations will duction and consumption (Markard et al., 2012). In line with the have the potential to be widely diffused. The “functional perspec- literature (e.g., Hekkert et al., 2007), we argue that the process tive” can be used as a framework for analysing a specific technol- depends on structural elements such as actors, institutions, in- ogy's innovation dynamics (e.g., Hellsmark et al., 2016; Stephan teractions and infrastructures (section 2.1) and the systemic func- et al., 2017). Systemic functions are related to the structure of the e tions (section 2.2) which may together constitutes an emerging innovation system, i.e., actors, interactions, institutions and infra- TIS. Thus, depending on the timing and nature of the multi-level structure. For instance, by altering the structural elements, policy interactions (Geels and Schot, 2007), different kinds of transition makers can create circumstances in which functions can strengthen pathways (section 2.3) can emerge and facilitate sustainability or weaken (Wieczorek and Hekkert, 2012). transitions. Systemic functions are composed of entrepreneurial activities, knowledge development, knowledge diffusion, guidance of the 2.1. Structural elements search, market formation, resource mobilisation and creation of legitimacy (Hekkert and Negro, 2009; Wieczorek et al., 2013). For a The structural elements of a focal TIS consist of a set of actors, TIS to avoid failure, its functions must be sustained by the under- fi institutions, interactions and a speci c infrastructure. Wieczorek lying structural elements such as its actors, institutions, in- (2014) as well as Wieczorek and Hekkert (2012) delineate these teractions and a specific infrastructure (Negro et al., 2008). Table 2 structural elements into several sub-categories, offering a system- presents a summary of these functions as well as their explana- atic typology (see Table 1). Actors encompass civil society, com- tions, as compiled by Wieczorek et al. (2013). panies, knowledge institutes, non-governmental organisations as well as other parties such as legal, financial and consulting agencies. Institutions include both hard and soft aspects. Hard in- 2.3. Transition pathways stitutions are formal rules, regulations, laws and instructions which are often consciously created, while soft institutions refer to This sub-section elaborates on the transition pathways in terms informal and implicit rules of the game which often evolve spon- of timing and multi-level dynamics. Borrowing some ideas from the taneously (Negro et al., 2012). Infrastructure consists of the physical, recent works by Geels et al. (2016) and Walrave and Raven (2016),it knowledge and financial dimensions. The physical infrastructure presents a typology of transition pathways and its relation to an refers to artefacts, instruments, machines, roads, buildings, tele- emerging TIS. We make a simplification compared to Geels (2004). communication networks, bridges, harbours etc. The knowledge The focus is on the specific technologies rather than on broader infrastructure encompasses knowledge, expertise and know-how systems e which is also the demarcation made by Geels et al. as well as strategic information. The financial infrastructure can (2016). In our study, this simplification enables us to mobilise be in the form of subsidies, financial programs or grants. In- concepts from the MLP and merge them into a TIS framework e teractions are the relationships or links between the actors, both at which is a technology-specific approach. the individual and network levels. In the early stages of system Transition pathways are different from a “business-as-usual” development, interactions may be bilateral and limited to indi- situation. Depending on the timing and nature of multi-level in- vidual contacts. In the later stages, one can trace multilateral and teractions, different kinds of transitions might occur (Geels and formal interactions at the network level as well (Wieczorek, 2014). Schot, 2007). By timing, we mean the relation between when 654 E. Karakaya et al. / Journal of Cleaner Production 195 (2018) 651e663 landscape pressures occur and when the emerging TIS becomes Table 2 functional. The emerging technology does not have to be at niche Systemic functions of a technological innovation system (Wieczorek et al., 2013). level as regime actors may sometimes drive the emerging specific Category Explanation technologies (Berggren et al., 2015). This is the main reason un- Experimentation by Entrepreneurs are essential for a well-functioning derlying the assumption that regime actors can sometimes be a entrepreneurs innovation system. Their role is to turn the potential of part of the emerging TIS (as is also depicted in Fig. 1). By nature of new knowledge, networks and markets into concrete interactions, we mean whether the emerging TIS has a symbiotic or actions to generate e and take advantage of e new disruptive relationship with the regime. This is different when business opportunities. Knowledge Mechanisms of learning are at the heart of any compared to the study of Walrave and Raven (2016) which development innovation process, where knowledge is a fundamental conceptualized the nature of interactions on the basis of regime resource. Therefore, knowledge development is a resistance. crucial part of innovation systems. The argument here is that a transformation pathway often occurs Knowledge exchange To learn relevant knowledge, it needs to be exchanged between actors in the system. when (1) landscape pressures develop and the emerging TIS is not Guidance of the search This system function refers to those processes that lead functional and; (2) the emerging TIS has a symbiotic relationship to a clear development goal for the new technology with the regime. For this pathway, regime actors respond to land- based on technological expectations, articulated user scape pressures either by increasing their innovative efforts to- demand and societal discourse. This process enables wards the dominant socio-technical design or by reorientation selection, which guides the distribution of resources. Market formation This process refers to the creation of markets for the towards radically new technologies, new beliefs and new business new technology. In the early phases of development, models (Geels et al., 2016). Geels et al. (2016) argue that the former these can be small niche markets, but later, a larger response of the incumbent actors occurs when new institutions are market is needed to facilitate cost reduction and layered on top of existing arrangements without affecting their core incentives for entrepreneurs to move in. fi fi Resource mobilisation The nancial, human and physical resources are logic, while the latter response occurs in times of a more signi cant necessary basic inputs for all activities in the innovation change in institutions. A de-alignment and re-alignment pathway is system. Without these resources, other processes are likely to occur when (1) landscape pressures develop and the hampered. emerging TIS is not functional and; (2) the emerging TIS has a Creation of legitimacy Innovation is, by definition, uncertain. A certain level of disruptive relationship with the regime. For this pathway, a decline legitimacy is required for actors to commit to the new technology with investment, adoption decisions etc. in old technologies usually opens space for several competing in- novations and new entrants, while the incumbents are in danger of collapse (Geels et al., 2016). A technological substitution pathway often occurs when (1) landscape pressures develop and the emerging TIS is functional and (2) the emerging TIS has a disruptive relationship with the regime. As Geels et al. (2016) argue, this pathway might occur under either limited or broader institutional change, often creating opportunity for new entrants to overthrow the incumbents. A reconfiguration pathway can occur when (1) landscape pressures develop and the emerging TIS is mature enough (2) the emerging TIS has a symbiotic relationship with the regime. This pathway often leads to new combinations of new and existing technologies as well as new alliances between incumbents and new entrants (Geels et al., 2016). The above translates into the typology presented in Fig. 2 and in Table 3. The rationale behind our attempt to borrow some concepts from the MLP and integrate them with the TIS approach lies in our in- terest to study the dynamics between an emerging TIS and po- tential transition pathways of a regime. This integration has two main characteristics. First, the functionality of an emerging TIS is Fig. 2. A typology of transition pathways and its relation to an emerging TIS. used as an alternative proxy of whether niche innovations are fully developed or not. Thus, this addresses the objectivity issues raised proxies on whether niche innovations are fully developed or not. by Geels and Schot (2007, p. 405). They propose, based on strategic Second, in our theoretical approach, the nature of interactions is niche management approach (Hoogma et al., 2002; Kemp et al., defined, based on whether the emerging TIS has disruptive or 1998) and diffusion of innovations theory (Rogers, 2003), that symbiotic relationships with the regime. This is different when “(a) learning processes have stabilised in a dominant design, (b) compared to Walrave and Raven (2016) who instead take the powerful actors have joined the support network, (c) price/perfor- regime resistance as a reference. As discussed in the literature, mance improvements have improved and there are strong expecta- regime resistance (and power struggles) may appear not only in tions of further improvement (e.g. learning curves) and (d) the transformation and substitution pathways (Geels and Schot, 2007) innovation is used in market niches, which cumulatively amount to but also in reconfiguration pathway (Geels et al., 2016). Therefore, more than 5% market share” could be used as proxies of whether in our approach, regime resistance is not used as a replacement to niche innovations are fully developed or not. Instead, in our inte- disruptive/symbiotic relationships e the relationships that consti- grated approach, we cover the first three indicators (a, b and c) by tute a central criterion in the transition pathway typology (Geels the functions of entrepreneurial activities, knowledge develop- and Schot, 2007; Geels et al., 2016). ment, knowledge diffusion, guidance of the search, resource mobilisation and creation of legitimacy while we replace the latter indicator (d) by the function of market formation. Since the oper- 3. Historical background: The Swedish iron and steel industry ationalisation of TIS functions is established in the literature (Wieczorek, 2014), such an attempt introduces relatively objective The iron and steel industry is one of the oldest industries of the E. Karakaya et al. / Journal of Cleaner Production 195 (2018) 651e663 655

Table 3 A typology of transition pathways and its dynamics (built upon the work of Geels et al., 2016).

Timing Pathway Institutions Dynamics

Landscape pressures occur Transformation Limited change - Regime actors try to keep the existing regime through innovative efforts when an emerging TIS is not - Incremental improvement in existing technologies functional yet Broader change - Regime actors try to substantially re-orientate - Reorientation towards existing technologies/business models - Incorporation of symbiotic niche innovations De-alignment and re- Broader change - Regime actors search for alternative regimes alignment - Institutions are disrupted by shocks - Decline of old technologies - Space for several competing innovations - Incumbents may collapse Landscape pressures occur Substitution Limited change - Regime actors try to keep the existing regime through innovative efforts when an emerging TIS is - New entrants may overthrow the incumbents substantially functional Broader change - New entrants may replace the incumbents - New institutions drive the niche innovations Reconfiguration From limited to broader - Regime actors search for alternative regimes change - New combinations of new and existing technologies - New alliances between incumbents and new entrants

modern world. Consequently, any emerging technology in the in- British iron production. In 1831, an owner, Gustav dustry is interlinked with centuries of socio-technical change that Ekman, visited Britain and observed different processes in Cumbria has technological, sectoral, geographical and political dimensions. (then Lancashire). On his return to Sweden, he adapted the Traditionally, the iron and steel industry is characterised by path Lancashire furnace to Swedish conditions. The adaption of the dependency (Arthur, 1989) where there are often technological Lancashire process gradually caused production units to grow in lock-ins (Barnes et al., 2004). Understanding transitions in this kind size in Sweden. However, to make a profit, the Lancashire of industry necessities a discussion of the historical context. The required a larger production volume than with open hearth finery. Swedish iron and steel industry has undergone a few major shifts With the final abolishment of the forging limitations by the Riks- and the patterns of these pragmatic shifts are long term, as each dag, the new method rapidly replaced open hearth finery in Sweden. period lasted a very long time before the next shift occurred. Thus, The change took place most rapidly in the home region of Gustav in this section, we give a brief background on the transitions that Ekman, Varmland,€ in the southwest of the country (Ryden, 1998). the Swedish iron and steel industry has gone through to date. Overall, this transition also affected the size and number of iron- works. Even though there was an increase in production and in the 3.1. Transition to bar iron number of new furnaces in Sweden, the smaller ironworks shut down while the larger ironworks flourished. In Sweden, the industry's history goes back to the 12th century when steelmaking was immature and was the most 3.3. Transition to steelmaking common form of malleable iron. As was the case globally, this era of wrought iron began with the production of so-called Osmond iron The so-called Steel Age started to take off during the 1850s, took (which was made by melting in a hearth), continued with a larger market share (than wrought iron) in the 1900s and has kept bar iron (a more workable form of forging iron) and overall, this its importance since then. This transition from wrought iron to steel lasted for over five centuries. In the 14th century, annual produc- took decades, driven by factors related to the technological break- tion of Osmond iron reached 2000 tones, half of which was exported throughs and industrial dynamics. Several technological break- (Jernkontoret, 2017a). During the 16th century, the iron industry throughs have enabled the industry to produce cheaper and good- witnessed a transition from Osmond iron to bar iron e driven by quality steel. First, the Bessemer method (after 1856) made the both the supply and demand sides. This process was eased with the economic production of steel possible. Second, the Siemens-Martin technical knowledge of foreign forgers who were recruited to work open-hearth process (after 1865) enabled producers to melt and in Sweden. From the 1640s to the 1740s, Sweden's exports of bar refine large amounts of scrap iron and steel. Third, the electric arc iron more than tripled and reached 40000 tonnes per year furnace (after the 1900s) and basic oxygen furnaces (after the (Jernkontoret, 2017a). The strong growth in bar iron exports during 1950s) increased efficiency and labour productivity. These tech- the 18th century had increased the competition for and nological transitions did not take place in a vacuum. They were pig iron in Sweden. At the same time, competition from Russian bar accelerated by the advances in other sectors and in other technol- iron had increased. During 1746-47, two major steps were taken. ogies (Dahmen, 1989; Mokyr, 1998). For instance, from 1900 to 1974 First, an institution, Jernkontoret (the Swedish Steel Producers' in Sweden, electricity enabled the emergence of a development Association), was established. Second, a limitation on pro- block for mining and metal-producing industries (including iron duction was introduced in the Riksdag (the Swedish Parliament), and steel), machinery and railways (Enflo and Kander, 2008). regulating the market for the next 90 years. Since then, Jernkon- In 2016, crude steel production in Sweden was around 4.6 toret and the Riksdag have acted as key actors, influencing the million tonnes (0.02% of world production), two thirds of which dynamics of the industry. came from iron ore-based steel production (see Table 4). Iron ore- based production takes place in two plants, Luleå and Oxelosund,€ 3.2. Transition to the Lancashire process owned by SSAB AB, which specialise in processing raw material into high-strength steel. Scrap-based production accounted for only one Until the middle of the 19th century, the bar iron in Sweden was third of the national share, taking place in ten different plants and produced through an open hearth finery in a finery forge. However, owned by a number of other companies (which is further discussed this method was no longer competitive compared to cheaper in section 5.1). In 2016, steel was exported from Sweden to 140 656 E. Karakaya et al. / Journal of Cleaner Production 195 (2018) 651e663

Table 4 National production shares of the two main types of steel production in Sweden in 2016 (based on Jernkontoret, 2017b).

Production type Primary material Furnace No. of plants National production share

Iron ore-based Iron ore , Basic Oxygen 2 2/3 Scrap-based Steel scrap Electric arc 10 1/3

countries around the globe and accounted for about 3.4% of Swe- were conducted with representatives from industry, government, den's total exports (Jernkontoret, 2017b). The industry still plays a associations and knowledge institutes. These interviews took place key role in the industrial competitiveness in Sweden (see e.g., at different times in different locations (see Table 6). Some of the Ketels, 2009; Nuur et al., 2017). interviews (IN1, IN2, IN3, IN5, IN9 & IN10) were conducted in Luleå during an industrial conference “Bergforskdagarna 2016” e which served as a forum of collaboration and knowledge-sharing for the 4. Methodology actors involved in the Swedish mining and metal industry. This two-day conference gathered over 60 industry leaders, academics In order to answer our research question, “What are the potential and policy leaders who exchanged views on the challenges that the pathways for sustainability transitions in the iron and steel industry?”, industry was facing as well as potential opportunities. The rest of we conducted an explorative case study (Yin, 2003). The case-study the interviews (IN6, IN8, IN4, IN7, IN11-13, and IN14) were con- approach is in line with the nature of our research question, which ducted in Stockholm, Eskilstuna and the mining district of Norr- is explorative and focuses on a highly complex and under- botten with face-to-face meetings with the representatives of researched phenomenon. We agree with Siggelkow (2007) that industry and government. The content of the interviews varied. case studies should not only address theory but should also provide Some of the interviews (IN1, IN2, IN3, IN5, IN9 & IN10) focused real-world examples and findings in a new way, and that is what (generally) on the mining and metal industry and the questions we aim at. Our case study focuses on the status (2016e2017) and were related to social networks, key actors and relationships future (2018-onwards) of the transitions in the Swedish iron and among the actors. Some others (IN6, IN8, IN4, IN7, IN11-13, and steel industry. Building upon previous research (Markard and IN14) focused (specifically) on the iron and steel industry and the Truffer, 2008; Walrave and Raven, 2016), we borrow some con- questions were related to the technology, institutions and systemic cepts from the MLP (e.g., Geels et al., 2016) and align them with the functions. Overall, the duration of the interviews varied between technological innovation system perspective (e.g., Hekkert et al., 10min and 2h20min, often took place in the natural setting of the 2007). The aligned model is used as a philosophical lens through interviewees. Such interviews, i.e., in the field at the sites, are a which to examine and analyse our data. major characteristic of qualitative research (Creswell, 2009). In two As data sources, we combine primary qualitative data such as instances after the interviews, we also undertook guided visits, one semi-structured interviews with the secondary data such as re- to an iron mine in Kiruna and the other to a steel production plant ports, papers and press materials (see Table 5). Reports and papers in Luleå. The aim of these visits were to get first-hand insights into include documents from companies, governmental agencies, as- the industry and the current production technologies (which are sociations including business development organisations and related to the current sociotechnical regime). knowledge institutes (such as universities). These reports and pa- Specification and operationalisation of the theoretical concepts pers cover from specific to general topics such as (specifically) the was a multifaceted process. As Geels (2011) also suggest, this pro- iron and steel industry in Sweden and (generally) the mining and cess should draw the boundaries of empirical work, define the metal industry around the globe. Press materials encompass press empirical topic of analysis and operationalize the analytical con- conferences (as a report or as a recording), press releases, news as cepts by relatively measurable terms. In our study, the process has well as broadcasted interviews and talks. Semi-structured interviews

Table 5 Data sources.

Category Sub-category Reference/information

Reports and Industrial company (LKAB, 2016; SSAB, 2016; Vattenfall, 2016a) papers Governmental (Naturvårdsverket, 2017; Regeringskansliet, 2013; SEOC, 2002; SEPA, 2016; STIC, 2016) Associations including NGOs (Fryer et al., 2016; IEA, 2015a, 2015b; Jernkontoret, 2017a, 2017b; 2017c) Knowledge institutes (Andersson et al., 2017; Arens, 2016; Brolin et al., 2017; CCC, 2012; Johansson, 2014; Lee and Ki, 2015; Morfeldt et al., 2015a, 2015b; Quader et al., 2016; Ryden, 1998; Rynikiewicz, 2008; Sridhar and Li, 2016; Wesseling et al., 2017) Press material Conference release (PC, 2016; PR, 2017) News (Reuters, 2017; Thorpe, 2016; Vattenfall, 2016b) Public debate A debate from the Almedalen Week (45 min, July 2017, recorded and transcribed) Semi-structured Industrial company A consultant, Enetjarn€ Natur (IN1) interviews A consultant, Material Economics AB (IN2) A principal R&D expert, LKAB (IN3) Executive Vice President and Chief Technology Officer, SSAB (IN4) Joint interview with R&D Manager, Environmental Manager and a technical expert, SSAB Europe (IN11-13) € Governmental A local politician from Orobro (IN5) Head of Sustainable Industry Unit, Swedish Energy Agency (IN6) A member of Swedish parliament - Riksdag (IN7) President of the city council, Kiruna (IN14) Associations, NGOs and The Energy and Environment Director of Jernkontoret (the Swedish Steel Producers' Association) (IN8) knowledge institutes Two researchers, Luleå tekniska universitet (IN9 and IN10) Visits Industrial conference & SSAB Luleå, December 2017e steel production site company LKAB Kiruna, December 2017eiron ore mining pit E. Karakaya et al. / Journal of Cleaner Production 195 (2018) 651e663 657

Table 6 Details of the interviews.

Focus Date Interview Duration (min) Location

Mining and metal producing May-16 IN1, IN2, IN3, IN5, IN9 & IN10 (separate) 32, 12, 27, 11, 41 & 18 Bergforskdagarna, Luleå industry Iron & steel industry, May-17 IN6 85 Swedish Energy Agency, Eskilstuna sustainability and HYBRIT IN8 140 Swedish Steel Producers' Association, Stockholm Nov-17 IN4 80 SSAB Headquarters, Stockholm IN7 39 Swedish Parliament, Stockholm Iron & steel industry; and Dec-17 IN11-13 (joint) 130 SSAB Production Site, Luleå sustainability IN14 95 City Hall, Kiruna four core elements. First, to operationalize the regime concept, we been operating since the end of the 19th century. The ore from focus only on the steel production process and we do not include LKAB mines is turned into pellets which are transported to the the other parts of the value chain (resource extraction, steel-based ports of Narvik and Luleå as well as to the SSAB steel production manufacturing and end consumers). We study the current regime plants in Luleå and Oxelosund€ 3. Including the plants of SSAB, steel at the level of steel production process at which we observe the production takes place at thirteen plants in Sweden (see Fig. 3). Ten character of an organisational field. At this level, there is a large and of these are scrap-based steel production plants, two of them are relatively stable community of interacting groups (sharing certain iron ore-based (also called integrated iron and steel production), rules that coordinate action) which is in line with the concept of and only one of them (in Hogan€ as)€ is an ore-based direct reduction regime (Geels and Schot, 2007). Second, for the operationalisation plant (Jernkontoret, 2017c) (see Table 7). Traditionally, the of the TIS, we analyse the emerging “hydrogen-based direct geographical concentration of the iron and steel industry has been reduction technology”. At the level of this emerging technology, we critical, especially for communication and transportation purposes observe the character of a small and unstable organisational field (Jernkontoret, 2017a). which is in line with the conceptual definition of technological In addition to production plants, the Swedish iron and steel niche. Third, in order to operationalize the functions of the TIS, we industry has interactions with other actors: civil society (e.g., the look for the possible answers for the diagnostic questions sug- Sami people, the indigenous Finno-Ugric people in northern Swe- gested by Wieczorek (2014) which are also directly asked during den), equipment producers (e.g., ABB, Sandvik and Atlas Copco), some of our interviews (e.g., IN6 and IN8). For the operationalisa- universities (e.g., Luleå University of Technology, LTU) and regional tion of landscape, we attempt to identify and analyse “the gradient and national policymakers. As several interviewees pointed out, the of forces that make some actions easier than other” (Geels et al., 2016, industry is currently composed of large companies, which have p. 403), which apply on the regime and niche. Last but not least, for been historically conditioned. the operationalisation of the interlinked contexts, we focus on the “The iron and steel industry is very different in comparison to other conditions that are embedded mostly in Sweden and we do not industries such as the “solar photovoltaic sector” e which is include a thorough analysis of international dynamics. perhaps a new market with a lot of new actors. The iron and steel industry is composed of large companies. There are not many ac- 5. Findings and discussions tors and players there.”

We organise our findings and discussions into four sub-sections. In sub-section 5.1, we present the current regime actors and the In addition, the interviewees mentioned the historical context status of steel production technologies in the industry. In sub- and the co-evaluations of institutions and industries, i.e., the section 5.2, we explain how the industry potentially leans to- development blocks (Dahmen, 1989) such as the clusters of inter- wards a hydrogen-based direct reduction process. This also justifies dependent companies from other industries that provided inputs, why our analysis on TIS mostly focuses on hydrogen-based direct have resulted in the creation of a competitive industry. However, as reduction technology. In sub-section 5.3, we present our findings was widely recognised, there have been a lack of small- and on the structural elements and systemic functions that capture the medium-sized enterprises (SMEs): emerging TIS around the hydrogen-based reduction technology. “We [Sweden] have very advanced mining companies like LKAB When doing so, we also discuss the role of current regime actors and Boliden. Over the years, companies like ABB and Atlas Copco and the landscape pressure, since they intersect with the TIS (both have developed, supplying the mining companies. Together, we in terms of the conceptual framework and in actual practice). In have developed machines and equipment that they are now selling sub-section 5.4, we discuss the potential transition pathways that and using at the international level. I think this combination is very the industry may face and the implications for the literature. strong.” “We [the Swedish mining and metal-producing sector] have quite a 5.1. The status quo good and diverse network of manufacturers, suppliers of equip- ment, mining companies themselves, universities, research in- In Sweden, iron ore is mostly mined in the mining district of stitutes etc. What is perhaps missing is what you might call SMEs e Norrbotten, where LKAB2, a state-owned mining company, has smaller companies. The ones in the network now are really global

1 We have adapted Fig. 4 in Markard and Truffer (2008) by making two major changes. First, we have replaced the “complementary innovation system” with “interlinked contexts” and have refined the graphical representation. Second, we have extended the boundary of the “focal technological innovation system” so that 3 Oxelosund€ is an integrated plant (i.e., from iron ore to finished steel product) it intersects with regimes and the landscape. while steel slabs produced in Luleå are transported to SSAB's rolling mill in 2 LKAB is the EU's largest iron ore producer with 78% of the market share (LKAB, Borlange€ for processing. 2016). 4 Own elaboration. 658 E. Karakaya et al. / Journal of Cleaner Production 195 (2018) 651e663

Fig. 3. Steel production plants in Sweden (based on Jernkontoret, 2017c).

“They [LKAB] are acting on the national, European and interna- Table 7 tional levels. They are involved in activities together with Austra- Production types of the plants in Sweden (based on Jernkontoret, 2017c). lian and Canadian research institutes […] It is important for them Location Company Production type [LKAB] to really look and see what is going on with their compet- Luleå SSAB EMEA AB Iron ore-based itors in the business. They [the competitors] are not in Sweden or in Hofors Ovako Sweden AB Scrap-based the EU. They are, for example, in Australia, South America or Sandviken AB Sandvik Materials Technology Scrap-based Canada and so on. They [LKAB] have to follow the development of € Soderfors Erasteel Kloster AB Scrap-based technology in those parts of the world […] They [LKAB] have a Smedjebacken Ovako Bar AB Scrap-based Avesta Outokumpu Stainless AB Scrap-based position within the company that has the role of lobbying the Hagfors Uddeholms AB Scrap-based Swedish government. They also had one person based in Brussels, Hallstahammar AB Sandvik Heating Technology Scrap-based working at the European level […] They [LKAB] are more or less the € Torshalla Carpenter Powder Products AB Scrap-based “iron ore business” in Europe. They are the largest iron ore com- € Scana Steel Bjorneborg€ AB Scrap-based Bjorneborg pany in Europe. In that respect, they represent the whole iron ore € SSAB EMEA AB Iron ore-based Oxelosund ” Halmstad Hogan€ as€ AB Scrap-based business in Europe. Hogan€ as€ Hogan€ as€ AB Iron-ore based Iron ore-based steel production e which is the major production type in Sweden e requires a different process compared to scrap- companies like ABB and Atlas Copco, really international based steel production. In the world, the most common process companies.” for iron ore-based steel production is blast furnaces and basic ox- ygen furnaces, but there are also the less common routes of direct reduction and electric arc furnaces (Johansson, 2014). This is also The interactions and relationships in the industry are well the case in Sweden (Jernkontoret, 2017b). Overall, iron ore-based established, the roots of which go back to decades of collaboration steel production results in high CO2 emissions (Morfeldt et al., and cooperation. For instance, Jernkontoret has been serving as a 2015a). The blast furnace route is fed with iron ore (in the form platform to safeguard the industry's interests and strengthen its of pellets or sinter), limestone and (which act as reducing networks since 1747. Today, Jernkontoret, with representatives agents). Often, pulverised , natural gas, or oil is injected into the from the industry, focuses on cooperation in research, education, blast furnace in order to reduce the need for coke and improve the standardisation, energy, environment, sustainability, services and energy efficiency (Johansson, 2014). The direct reduction route is communication-related topics. As one of the interviewees also also fed with iron ore, but, differently from the blast furnace, the emphasised, while there was stiff competition in the international reducing agent is either coal or gas. In scrap-based steel production, market, there was a lack of competition at the national level. The steel is produced by steel scraps that are melted in electric arc different competition conditions at the national and international furnaces. Although scrap-based production is theoretically close to levels influenced the ties in the network: zero CO2 emissions, scrap availability is limited in terms of it “For a long time there has been large-scale cooperation between meeting future demand (Morfeldt et al., 2015a). Thus, using scrap fi the companies to develop new process technologies. The thing that will not be a suf cient solution to nullify the CO2 emissions of the makes it possible is that there is not really any competition between industry. the companies in Sweden because they work on different products and markets. For the cooperation to lead to new process technol- 5.2. Towards hydrogen-based direct reduction ogies, we have networks and groups to discuss new technologies ” and develop new projects. There are several incremental and radical technologies with the E. Karakaya et al. / Journal of Cleaner Production 195 (2018) 651e663 659

Fig. 4. The dominant method (in 2017) and the long-term goal (for 2045) for the Swedish iron and steel industry.4.

potential to reduce CO2 emissions in iron and steel making, as has formed. Most of the actors we interviewed shared their long-term been widely discussed in the literature (Arens, 2016; e.g., Morfeldt vision of a single technology, i.e., hydrogen-based direct reduction, et al., 2015a; Quader et al., 2016; Sridhar and Li, 2016; Wesseling which they hoped would revolutionise the industry. As illustrated et al., 2017). Most of these technologies have been under investi- by excerpts from our interviews, although hydrogen-based direct gation for decades, receiving policy support through CO2 pro- reduction is a technology with the highest potential in terms of grammes in the USA (e.g. the AISI e technology roadmap reducing the emissions, it has some uncertainties and cost-related programme), South Korea (e.g., the POSCO CO2 breakthrough pro- challenges: gramme), Japan (COURSE 50) and the EU (ULCOS e ultra low CO 2 “Besides [hydrogen-based reduction], there are not really any other steelmaking) e in which Sweden also took an active role (Quader possibilities, except carbon capture and storage […] By 2045e50, et al., 2016). For instance, in the ULCOS programme, several tech- [we expect] the production will still need iron ore as raw material. nologies, e.g., a top gas recycling blast furnace with carbon capture So, you need a technology to implement on a large scale. What we and storage (CCS), HISARNA technology with CCS and think now is [that] the best possibility is hydrogen-based reduction advanced direct reduction with CCS have been tested, but none technology because the other possibility [CCS] is an end-of-pipe have reached commercial maturity (Bellevrat and Menanteau, solution and it's not really handling the problem. [With CCS], you 2009; IEA, 2015a; Quader et al., 2016). still have the carbon dioxide.” Recently, building upon the years of experimentation with different methods and technologies, Sweden has signalled that the “The investment [needed for a transition to hydrogen-based country aims to be the first to reach zero CO2 emissions in the iron reduction] is extremely high. Someone has to pay […] Also, we and steel industry. For instance, on the 4th of April 2016 in a press need a lot of electricity and we have the issue of infrastructure in conference, the main Swedish steel producer, SSAB, the state- terms of how to store and supply hydrogen.” owned energy company Vattenfall and the Swedish iron ore extractor LKAB announced the start of their long-term vision of The Swedish environmental goals (Naturvårdsverket, 2017; collaboration (e.g., through joint research) to fully develop a SEPA, 2016) and fossil-free Sweden initiative, which started ahead hydrogen-based direct reduction process to replace coal or natural of the COP21 Climate Change Conference in 2015, have created gas (PC, 2016). As one of the interviewees also highlighted: landscape pressures on the regime, pushing for sustainability “The main emissions, 90 per cent of the emissions in the Swedish transitions. These political contexts seem to be in line with the steel industry, are from the blast furnaces of SSAB at the two sites visions of the key actors, e.g., Vattenfall, SSAB and LKAB, thus […] What SSAB has now decided is that they will focus on providing a nurturing environment for the technological develop- hydrogen-based reduction within the HYBRIT project. Together ment of the hydrogen-based direct reduction process. For instance, with LKAB and Vattenfall, they have started this project.” SSAB, by taking the lead in this technology development and its implementation, aims to enhance its competitiveness in the long term. Overall, the Swedish parliament, SSAB, LKAB and Vattenfall have the joint goal of driving the sustainability transitions from current blast furnace based steelmaking methods towards fossil-free 5.3. An emerging technological innovation system steelmaking. The technological differences between the dominant method (which accounts for the two third of steel production in Sweden has two major conditions (as parts of interlinked con- Sweden) and fossil-free production (with hydrogen-based direct texts) that create the potential for adopting and scaling up reduction) are presented in Fig. 4. With fossil-free production using hydrogen-based direct reduction technology. Firstly, with the cur- hydrogen instead of coal as a reducing agent, the emissions are rent production methods, SSAB needs to import coal to reduce the reduced to water instead of CO2. iron in its blast furnaces. However, Sweden has an available and On the 27th of February 2017, the initiative received new sup- fossil-free electricity production mix, which may instead provide port from the Swedish Energy Agency, with funding of SEK 54 the grounds for using electricity in steel production, e.g., through 5 million (approximately 5 million V) over the next four years, in hydrogen-based reduction technology. Also, as some interviewees addition to the previous SEK 7.7 million (approximately 700 mentioned, Sweden is expected to have a continued electricity thousand V) which was granted for conducting a pre-feasibility production surplus in the future, which may potentially be used for study (PR, 2017). Later, in June 2017, a joint venture company be- reducing iron via hydrogen-based direct reduction technology. tween SSAB, LKAB and Vattenfall (HYBRIT Development AB) was Secondly, there is no major resistance against the technology in Sweden. This facilitates a faster and smoother decision-making process. The vision of Sweden in general is to phase out coal con- 5 Total project budget is approximately 10 million V. sumption and this fits well with the expectations from the 660 E. Karakaya et al. / Journal of Cleaner Production 195 (2018) 651e663 hydrogen-based direct reduction technology. pre-feasibility studies have been successful, the technology needs The incumbent regime actor, SSAB, collaborating with LKAB, to be tested at a pilot plant from 2018 to 2024, followed by Vattenfall and the government, aims at leading the emerging demonstration plants from 2025 to 2035 in Sweden (PC, 2016) technology of hydrogen-based reduction. This is an interesting before it becomes commercially available. Additionally, the transi- phenomenon, since SSAB is acting as the promoter and driver of a tion is expected to be expensive: technological innovation that will replace the current production “It is important to note that the companies drive the technology processes in SSAB's blast furnaces e which are considered one of [hydrogen-based reduction]. They are really ambitious. They are the most efficient furnaces in the world. As Martin Pei, executive putting a lot of resources into it. The societal discussion and the vice president and chief technology officer of SSAB, mentioned political support helps as well. They [the companies] cannot do it during a public debate in June 2017, achieving high efficiency with [transition] without financial help [from the government]. This hydrogen-based reduction that can compete with the current [transition to hydrogen-based reduction] is extremely expensive.” production method is a huge challenge. “The biggest challenge that SSAB faces in this case [hydrogen-based The hydrogen-based reduction technology case demonstrates a direct reduction] is the current blast furnace process. The blast combination of strengths and weaknesses in systemic functions. furnace process has been working for a very long time. It is very Overall, the knowledge exchange and guidance of the search are stable and very energy efficient. It stands out and it works around significantly high in the industry. This is also reflected in the case of the clock for the whole year's production. Finding a method that hydrogen-based direct reduction technology. As some interviewees can replace it, that can make iron and steel equally efficiently, and pointed out, there is strong coordination, knowledge exchange and as stably as we have today, is the biggest challenge.” commitment, which they think is possible to achieve in a small country such as Sweden. The activities involved in knowledge In the Swedish iron and steel industry, entrepreneurial activity development, resource mobilisation and legitimacy function and experimentation with new technologies are led by large moderately well. However, market formation is still in its very early incumbent companies (e.g., LKAB and SSAB) with the support of stage (see Table 8 for an overview). Interestingly, the diversity of research institutes. This is different when compared to other in- the different functionality levels is also similar to that observed in dustries where the entrepreneurial activities are mostly driven by Sweden in another of its industries, i.e., bio-refinery (see Hellsmark small- and medium-sized companies. The nature of the iron and et al., 2016). steel industry makes it difficult for new entrants. This is because the industry requires huge investments and mining can only be un- dertaken in limited places. From a TIS perspective, this is an illus- 5.4. Potential transition pathways trative example of a well-known type of “experimentation by entrepreneurs” in which incumbent companies diversify their In the Swedish iron and steel industry, there have been recent business strategies to take advantage of new developments landscape pressures on regime actors (such as SSAB) to move to- (Hekkert et al., 2007, p. 421). This is also captured in one of the wards more sustainable modes of production. These pressures are interviews: mostly related to the fact that SSAB is one of the largest CO2 emitters in Sweden: “In the steel industry, we are talking about large companies. It is “ not really the same [with other industries]. It may be the supplier SSAB is a small company globally. But, they want to be at the who has an idea to bring forward. As for entrepreneurial activity [in forefront and their products are very specialised. They have high- the form of a start-up or an individual], I do not really see it in this strength steel which also contributes towards decreasing emis- kind of industry.” sions when used as a product. However, they are the largest source of emissions in Sweden and, of course, this creates pressure.” “ Overall, knowledge development (e.g., on specific technologies) The possibility of SSAB reducing its emissions today is quiet low. is led by several actors (such as companies, associations and in- You cannot do much about it. SSAB's blast furnaces are among the fi stitutions), through established networks (e.g., Jernkontoret) most ef cient worldwide, but still we have emissions. Sometimes, it fi within which new ideas, visions and practices are exchanged. In the is dif cult [for others] to understand because all they see is these ” case of hydrogen-based reduction technology, the support from huge emissions. SSAB, LKAB, Vatenfall and the policymakers is relatively strong. This is in line with Sweden's commitment to completely phase out Although there are several incremental and radical technologies greenhouse gas emissions by 2045. However, hydrogen-based in- with the potential to reduce the emissions in iron and steel making duction technology is still in its experimental stage. Although the (see e.g., Morfeldt et al., 2015a; Quader et al., 2016; Sridhar and Li,

Table 8 The assessment of the functions of technological innovation systems for the emerging case .

Category Observation Explanation

Experimentation by entrepreneurs Moderate Experimentation is led by large incumbent companies and research institutes Knowledge development Moderate There are several actors (such as companies, associations and institutions) leading knowledge development Knowledge exchange High Established networks create sufficient exchange of knowledge Guidance of the search High The actors and institutes clearly set the goals (e.g., zero carbon by 2045) and policymakers support new technologies (e.g., hydrogen-based reduction technology) Market formation Low The market forhydrogen-based reduction technology has not yet started to develop Resource mobilisation Moderate The governmental agencies support the new technologies through funds Creation of legitimacy Moderate There is not much resistance against new technologies. However, the activities, which create legitimacy for new technologies, target the long term E. Karakaya et al. / Journal of Cleaner Production 195 (2018) 651e663 661

2016; Wesseling et al., 2017), the Swedish actors and institutions incumbent actors (e.g., SSAB and LKAB) are reorienting themselves strongly believe that hydrogen-based reduction technology is the towards a new radical technology, hydrogen-based reduction, best option to invest in. The reasoning behind this belief is three- which, if successful, will lead to a technical substitution of blast fold. First, hydrogen-based reduction technology has the potential furnaces in the long term. This implies the emerging TIS has sym- to revolutionise ore based production e which are the main sources biotic relationships with the regime. Third, new alliances (e.g., with of emissions. Second, scrap-based solutions do not have the po- Vattenfall) have been formed to potentially reconfigure system tential to supply the steel required on their own (because there is a components and their relations (e.g., connecting electricity supply limited amount of scrap available). Additionally, it is difficult to to hydrogen production). Fourth, the landscape developments (e.g., produce high-quality steel only from recycled scrap. Third, natural macro-political developments) can be influenced by the two state- gas-based solutions have some shortcomings, e.g., their limited run companies, LKAB and Vattenfall, the former of which is part of capacity to reduce emissions in steelmaking and the political the current regime. Also, both of these companies are expected to complexity of accessing natural gas. These three reasons were also be part of the new regime (if HYBRIT succeeds). These findings shed mentioned in the interviews: some lights on what kind of transitions is likely to happen. The potential transitions towards hydrogen-based reduction technol- “We need to be able to use iron ore to produce steel [in the future]. ogy may not be seen as a typical technological substitution pathway Because steel products have a long life, consequently we have a lot because the TIS is not yet developed and, also, there are no new of steel in society. Therefore, scrap is not plentiful enough to be able entrants that can replace the incumbents. It is not a reconfiguration to supply the steel we [will] need.” pathway either, because the TIS is not developed enough to create “The rest of our [iron and steel industry's] emissions are connected technological add-ons or combinations. In addition, it is difficult to to the use of fuels [e.g., for heating purposes and melting]. For categorise it as a de-alignment and re-alignment pathway since it is example, we have a stepwise transition from oil to liquid natural not the case that “incumbents [will] collapse because of landscape gas. If we want to get rid of such emissions [from the use of fuels], pressures, creating opportunities for new entrants” (Geels et al., 2016, we have to have biogas. Yet this depends on the possibility of get- p. 900, p. 900). The case findings show some similarities with a ting biogas. That is a political issue and it is complicated […] transformation pathway6 because (1) the emerging TIS is not Everybody wants biogas and there is competition.” functional yet when landscape pressure occurs and (2) the emerging TIS has symbiotic relationships with the regime. It also “In Sweden, except for one pipeline on the West Coast, there has supports the idea that incumbents can re-orientate towards radical never been any natural gas because there has been political technologies (Berggren et al., 2015; Geels et al., 2016). However, the resistance to natural gas. This resistance is based on the assump- case does not provide any evidence for struggles between policy- tion that you should not build something that puts you into fossil makers and industry (Geels et al., 2016) or regime resistance (Geels, infrastructure.” 2014) which is likely to happen in a transformation pathway.

The transition towards a hydrogen-based future is neither an 6. Conclusions easy nor clear path. There is no guarantee that the HYBRIT project will succeed. As mentioned by some of the interviewees, there is a In this study, we addressed the research question of: What are need for continuous dedication to create the necessary financial the potential pathways for sustainability transitions in the iron and and physical infrastructure (i.e., the structural elements of the steel industry? To do so, we conducted a case study (Yin, 2003)in emerging TIS) and the political support from the government Sweden, combining primary qualitative data such as semi- (which partly constitutes the landscape). Interestingly, the current structured interviews with secondary data such as reports, papers phase (2016e2017) seems to be a well-coordinated start as three and press materials. As a theoretical approach, our paper has bor- incumbent companies (LKAB, SSAB and Vattenfall) and the gov- rowed some concepts from the MLP such as niche, regime, land- ernment are collaborating harmoniously. However, there is a long scape and transition pathways (Geels and Schot, 2007; Geels et al., way to go. This came to the surface not only in the interviews but 2016) and aligned them with the technological innovation also during the public debate, as can be seen in the excerpts from perspective (e.g., Hekkert et al., 2007; Wieczorek and Hekkert, the statements of the panel members in June 2017. 2012). “We need support, continued support from the government […] Our findings on the iron and steel industry in Sweden indicate Without this support, this type of ‘betting’ can fail because it is a that the incumbent regime actors (such as companies, govern- very high risk.” mental agencies and knowledge institutions) strongly collaborate to drive the transition towards hydrogen-based direct reduction “Anyway, it's something typically Swedish in that we are quite good technology. The technology is perceived as the ultimate goal in the at this kind of collaboration and coordination as we are a small industry since there is no other technology available to eliminate country.” the CO2 emissions to the same degree in Sweden. In line with the “This kind of cooperation between companies is quite unique to governmental goal of fossil-free production by 2045, this transition Sweden.” is expected (by some) to happen over the next three decades, which would be perceived as lengthy elsewhere. However, for an industry that is over 600 years old, a few decades are not a long time, rather Overall, the potential transition towards hydrogen-based we think it is Lagom e a traditional Swedish word that expresses reduction in the industry is critical to discuss in terms of the something being “neither too much nor too little” (Lexikon, 2017). transition pathways typology (Geels and Schot, 2007; Geels et al., The case of the iron and steel industry in Sweden is highly 2016) and its links to TIS (Walrave and Raven, 2016). Our case shows that, firstly, the TIS for hydrogen-based reduction has not yet been developed. Although some of the systemic functions (such as 6 We are aware that transitions may shift between pathways, i.e., they may start knowledge exchange and the guidance for research) perform well, with one path and then shift to others (Geels and Schot, 2007; Geels et al., 2016). the market is not yet formed at all. Second, our case reveals that Therefore, the case we study, which is in its very early phase, may shift between pathways as well. 662 E. Karakaya et al. / Journal of Cleaner Production 195 (2018) 651e663 interesting for the ongoing research in sustainability transitions structures and interaction dynamics. Environ. Innov. Soc. Transit. 16, 51e64. studies, especially for the literature on TIS (Bergek et al., 2015; https://doi.org/10.1016/j.eist.2015.07.003. Bergek, A., Jacobsson, S., Carlsson, B., Lindmark, S., Rickne, A., 2008. Analyzing the Hekkert et al., 2007; Walrave and Raven, 2016) and transition functional dynamics of technological innovation systems: a scheme of analysis. pathways (Geels and Schot, 2007; Geels et al., 2016). In this paper, Res. Pol. 37, 407e429. https://doi.org/10.1016/j.respol.2007.12.003. we have provided a framework with which to study the dynamics Berggren, C., Magnusson, T., Sushandoyo, D., 2015. Transition pathways revisited: established firms as multi-level actors in the heavy vehicle industry. Res. Pol. between an emerging technological innovation system and po- 44, 1017e1028. https://doi.org/10.1016/j.respol.2014.11.009. tential transition pathways. First, we have used the functionality of Berthon, P., Pitt, L., Ewing, M., Carr, C., 2002. Potential research space in MIS: a an emerging TIS as a proxy of whether the focal technology is framework for envisioning and evaluating research replication, extension, and e fi generation. Inf. Syst. Res. 13, 416 427. developed or not. By doing so, we have de ned the timing of in- Brolin, M., Fahnestock, J., Rootzem, J., 2017. Industry's Electrification and Role in the teractions in terms of whether an emerging TIS is functional when Future Electricity System - a Strategic Innovation Agenda. Sweden). the landscape pressures develop or not. Second, instead of taking Carlsson, B., Stankiewicz, R., 1991. On the nature, function and composition of technological systems. Evol. Econ. 93e118. the regime resistance as a reference (Walrave and Raven, 2016), we CCC, 2012. Mitigating Iron and Steel Emissions, the GNCS FACTSHEETS. Colmbia defined the nature of interactions in terms of whether the emerging Climate Center, The United States. TIS has disruptive or symbiotic relationships with the regime. These Chappin, E.J.L., Ligtvoet, A., 2014. Transition and transformation: a bibliometric fi two redefinitions have enabled us to provide a framework with analysis of two scienti c networks researching socio-technical change. Renew. Sustain. Energy Rev. 30, 715e723. https://doi.org/10.1016/j.rser.2013.11.013. which, to some extent, to integrate the TIS perspective with tran- Creswell, J.W., 2009. Research Design - Qualitative, Quantitative and Mixed sition pathways typology. Methods Approaches. SAGE. “ ” This study, nevertheless, has some limitations that could be Dahmen, E., 1989. Development blocks in industrial economics. In: Carlsson, B. (Ed.), Industrial Dynamics Technological, Organizational, and Structural overcome by future research. First, it is based on a single case study, Changes in Industries and Firms. Kluwer Academic Publishers, BOSTON/DOR- i.e., a case study from Sweden. Since sustainability transitions are DRECHT/LONDON, pp. 109e121. https://doi.org/10.1080/ global phenomena, further research could examine other cases 03585522.1988.10408102. Dosi, G., 1982. Technological paradigms and technological trajectories. A suggested from a variety of countries. Second, the focus of this paper is mostly interpretation of the determinants and directions of technical change. Res. Pol. limited to the process of crude steel production. However, it would 11, 147e162. https://doi.org/10.1016/0048-7333(82)90016-6. also be appropriate to study the other parts of the downstream and Enflo, K., Kander, A., 2008. 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From sectoral systems of innovation to socio-technical systems: This study was made possible by the support of the Knowledge insights about dynamics and change from sociology and institutional theory. Foundation and through a generous grant from the Marianne and Res. Pol. 33, 897e920. https://doi.org/10.1016/j.respol.2004.01.015. fi Marcus Wallenberg Foundation (Grant No. MMW 2013.0194). Geels, F.W., 2002. Technological transitions as evolutionary recon guration pro- cesses: a multi-level perspective and a case-study. Res. Pol. 31, 1257e1274. Please note that the previous version of this paper was presented at https://doi.org/10.1016/S0048-7333(02)00062-8. the 8th International Sustainability Transitions Conference in June Geels, F.W., Kern, F., Fuchs, G., Hinderer, N., Kungl, G., Mylan, J., Neukirch, M., 2017 in Gothenburg, Sweden. We would like to thank Ebru Susur Wassermann, S., 2016. 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