Comparative Innovation Policy Analysis
-Electric Vehicle Development in Japan and Germany -
Waseda University, Graduate School of Asia-Pacific Studies PhD Program in International Studies Chief Advisor: Prof. Kobayashi Hideo
4011S005-4 Martin Schroeder Table of Contents Introduction 1
Chapter 1: Theoretical framework...... 4
1.1 On innovation...... 4
1.2 Innovation system typology...... 5
1.2.1 Do National Innovation Systems matter to automakers?...... 13
1.3 Innovation, innovation systems and the Policy Cycle model...... 17
1.4 The Policy Cycle model...... 21
1.4.1 Agenda-setting ...... 21
1.4.2 Policy formulation...... 22
1.4.3 Decision-making ...... 24
1.4.4 Policy implementation...... 26
1.4.5 Policy evaluation...... 27
1.4.6 Policy regimes...... 29
Chapter 2: The Japanese National Innovation System...... 31
2.1 Political framework conditions ...... 31
2.2 Long-range planning ...... 40
2.3 Governmental R&D funding strategy...... 42
2.4 Administrative guidance...... 46
2.5 Administratve reform ...... 49
2.6 Environmental policy ...... 57
Chapter 3: The German National Innovation System ...... 66
3.1 Political framework conditions ...... 66
3.1.1 Federalism...... 66 3.1.2 Party system...... 69
3.1.3 Research landscape...... 74 3.2 Role of regional policy ...... 77
3.3 Technology assessment ...... 80
3.4 Governmental R&D funding strategy...... 81
3.5 Environmental policy ...... 86
Excursus: vehicle weight...... 92
3.5.1 Fuel policy ...... 96
3.5.2 Vehcile tax relief ...... 97
3.5.3 Energy policy ...... 98
Chapter 4: Electric vehicle development...... 102
4.1 Regulative framework conditions on electric vehicle development in Japan ...... 102
4.2 Foresight on battery-powered and hybrid vehicle technology in Japan...... 103
4.3 Governmental support for battery-powered and hybrid vehicle technology in Japan.....103
4.3.1 Initial support (1971-1989)...... 103
4.3.2 Renewed emphasis (1990-1996) ...... 106
4.3.3 Policy transfer and learning: influence of US environmental regulation...... 109
3.3.3.1 The ‘Muskie Law’ ...... 109
3.3.3.2 The impact of the Californian Zero-Emission Vehicle Mandate...... 111
4.3.4 Enter the hybrid (1997 onwards)...... 116
4.4 Governmental support for battery-powered and hybrid vehicle technology in Germany124
4.4.1 Initial support (1971-1989)...... 124
4.4.2 Technology testing (1990-1996) ...... 125
4.4.3 Attempted catch-up (2004 onwards) ...... 128
4.5 Fuel cell electric vehicles...... 151 4.5.1 Short history of fuel cell electric vehicles...... 151
4.5.2 Regarding fuel cells...... 151
4.5.3 Foresight on fuel cell technology in Japan...... 152
4.5.4 Promotion of fuel cell technology in Japan...... 154
4.5.5 Fuel cell electric vehicle promotion in Japan...... 155
4.5.6 Promotion of fuel cell technology in Germany ...... 165
4.5.7 Fuel cell electric vehicle promotion in Germany ...... 168
4.6 Automakers’ electric vehicle development strategies ...... 171
4.6.1 Toyota...... 172
4.6.2 Honda...... 175
4.6.3 Nissan ...... 177
4.6.4 Daihatsu...... 181
4.6.5 Mitsubishi ...... 182
4.6.6 Mazda ...... 184
4.6.7 Suzuki...... 186
4.6.8 Subaru...... 187
4.6.9 Daimler ...... 187
4.6.10 BMW ...... 191
4.6.11 Opel ...... 194
4.6.12 Volkswagen...... 196
4.6.13 Development strategy patterns analysis...... 199
Chapter 5: Electric vehicle innovation policy regimes...... 206
5.1 Japanese electric vehicle innovation policy regime ...... 208
5.2 German electric vehicle innovation policy regime...... 219
Conclusion...... 224 Bibliography ...... 229
Appendix ...... 270 List of tables and figures
Tables:
Tab. 1 Top-selling models...... 2
Tab. 2 Sancioned amakudari cases...... 38
Tab. 3 German and Japanese public R&D institutions ...... 75
Tab. 4 German electricity mix in 1996, 2010, 2011 ...... 99
Tab. 5 2003 Government subsidies for BPEV and HEV purchase by model ...... 119
Tab. 6 Component utilisation and modifications among EV subtypes ...... 175
Tab. 7 German and Japanese OEMs EV development approaches ...... 199
Tab. 8 OEMs’ HEV type development strategy...... 200
Tab. 9 FC stack development strategies...... 202
Tab. 10 Properties of Audi A4 duo and Toyota Prius...... 206
Figures:
Fig. 1 GERD as percentage of GPD ...... 43
Fig. 2 Composition of AIST researchers by field...... 55
Fig. 3 German R&D expenditure by government level ...... 84
Fig. 4 Average passenger vehicle fleet weight ...... 92
Fig. 5 Units subsidised under Clean Energy Vehicle Program ...... 116
Fig. 6 Distribution of NIP transportation and hydrogen infrastructure budget...... 169
Fig. 7 Automotive battery alliances and supply relations (as of 2013)...... 204
Fig. 8 CST (1959-2000)...... 270
Fig. 9 CSTP (2001-present) 270 List of abbreviations
ACE Advanced Clean Energy (Vehicle Program) ACEA European Automobile Manufacturers Association (Association des Constructeurs Européens d'Automobiles) AFCC Automotive Fuel Cell Corporation AIST National Institute for Advanced Industrial Science and Technology ANRE Agency for Natural Resources and Energy BMBF Federal Ministry of Education and Research (Bundesministerium für Bildung und Forschung) BMFT Federal Ministry of Research and Technology (Bundesministerium für Forschung und Technologie) BMF Federal Minstry of Finance (Bundesministerium der Finanzen) BMU Federal Ministry of Environment, Nature Conservation and Nuclear Safety (Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit) BMVBS Federal Ministry of Transport, Building and Urban Development (Bundesministerium für Verkehr, Bau und Stadtentwicklung) BMWA Federal Ministry of Economics and Labour (Bundesministerium für Wirtschaft und Arbeit) BMWi Federal Ministry of Economics and Technology (Bundesministerium für Wirtschaft und Technologie) BPEV Battery-powered electric vehicle CAFE Corporate Average Fuel Economy CARB California Air Resource Board CDU Christian Democratic Union (Christlich Demokratische Union Deutschlands) CEP Clean Energy Partnership CSU Christian Social Union (Christlich-Soziale Union in Bayern) CST Council for Science and Technology CSTP Council for Science and Technology Policy DLR German Aerospace Center (Deutsches Zentrum für Luft- und Raumfahrt) DPJ Democratic Party of Japan EA Environmental Agency (now: ME) EC European Commission ECJ European Court of Justice ECU electronic control unit ELV end-of-life vehicle (directive) EV Electric vehicle DoE Department of Energy FAZ Frankfurter Allgemeine Zeitung FCCJ Fuel Cell Commercialization Conference of Japan FCEV Fuel cell electric vehicle FDP Free Democratic Party (Freie Demokratische Partei) GGEMO Federal Government Joint Unit for Electric Mobility (Gemeinsame Geschäftsstelle Elektromobilität der Bundesregierung) GHG Greenhouse gas(es) HAZ Hannoversche Allgemeine Zeitung HEV Hybrid electric vehicle IAA Independent administrative agency ICEV Internal combustion engine vehicle JAMA Japan Automobile Manufacturers Association JARI Japan Automobile Research Institute JHFC Japan Hydrogen and Fuel Cell Demonstration Project KBA Federal Motor Transport Authority (Kraftfahrt-Bundesamt) KfW Reconstruction Credit Institute (Kreditanstalt für Wiederaufbau) LDP Liberal Democratic Party LEV Low emission vehicle LEVO Organisation for the Promotion of Low Emission Vehicles LGRI Local government research institute LiIon Lithium-ion MAFF Ministry of Agriculture, Forestry and Fisheries MCFC Molten carbonate fuel cell ME Ministry of Environment METI Ministry of Economy, Trade and Industry MEXT Ministry of Education, Culture, Sports, Science and Technology MHLW Ministry of Health, Labor and Welfare MITI Ministry of International Trade and Industry (now: METI) MLIT Ministry of Land, Infrastructure, Transport and Tourism MOC Ministry of Construction (now: integrated into MLIT) MOE Ministry of Education (now: MEXT) MOF Ministry of Finance MOT Ministry of Transport (now: integrated into MLIT) NEDO New Energy and Industrial Technology Development Organization NEV Neighborhood electric vehicle NEP National Development Plan Electro-mobility (Nationaler Entwicklungsplan Elektromobilität) NiMH Nickel-metal hydrate NIP National Innovation Program Hydrogen and Fuel Cell Technology (Nationales Innovationsprogramm Wasserstoff- und Brennstoffzellentechnoogie) NISTEP National Institute of Science and Technology Policy NOW National Organisation Hydrogen and Fuel Cell Technology (Nationale Organisation Wasserstoff- und Brennstoffzellentechnologie) NPE National Platform Electro-mobility (Nationale Plattform Elektromobilität) OEM Original Equipment Manufacturer PAFC Phosphoric acid fuel cell PEFC Polymer electrolyte fuel cell PHEV Plug-in hybrid electric vehicle PRC People’s Republic of China R&D Research and development RD&D Research, development and demonstration REEV Range-extended electric vehicle SKW Hydrogen Strategy Council (Strategiekreis Wasserstoff des Bundesministeriums für Wirtschaft und Arbeit) SME Small and medium-sized enterprise SOFC Solid oxide fuel cell SPD Social Democratic Party of Germany (Sozialdemokratische Partei Deutschlands) STA Science and Technology Agency (now: integrated into MEXT) SZ Sueddeutsche Zeitung TCO total cost of ownership UBA Federal Environment Agency (Umweltbundesamt) V2G vehicle to grid VDA German Association of the Automotive Industry (Verband der Automobilindustrie) VES Transport Energy Strategy (Verkehrswirtschaftliche Energiestrategie) ZEV Zero-emission vehicle Preface
During the research for this dissertation I could always rely on the support of my parents, therefore I dedicate my work to Dieter and Monika Schröder. Further, all my family and friends encouraged me to conduct research in Japan even after the tragic events of the Great Tōhoku Earthquake and subsequent nuclear accidents happened right before I was going to return to Tōkyō in 2011. As the shock in Germany was truly large, I appreciate the moral support even more. I would like thank Prof. Kobayashi Hideo who helped me to establish contacts with Japanese automobile and automotive parts producers, which was helpful to understand their perspective. These contacts provided a lot of technical and managerial insights that hopefully improved and balanced my political-economic perspective on the subject. Moreover, I was free to develop my own view and framework for studying this topic. Therefore I hope that it produced a meaningful and interesting contribution to the understanding of the mutual influence of policy and technology. I also would like to thank Dr. Jin Yingshan and my fellow student Tristan Leo Dallo Agustin from the Research Institute Automotive Parts Industries, Waseda University for sharing their knowledge about the industry. As there are too many people to address individually, I would also like to thank everyone at the Graduate School of Asia-Pacific Studies, Waseda University for their time to discuss and exchange perspectives.
Martin Schröder Tōkyō, 12.09.2013 Introduction
The aim of this thesis is to analyse public policy on electric vehicles (EVs) in Japan and the Federal Republic of Germany in order to elucidate the processes and functions of the respective national innovation system as well as to investigate interaction between the state and industry concerning those new technologies. Innovation is the driving force behind global competition and its impacts will shape future industries and societies, as well as the environment. The capability to foster innovative products, processes and services is of vital interest for states, especially for already highly developed ones like Japan and Germany. This is because those national economies cannot compete successfully in areas like cheap labour costs with emerging countries. Therefore, national innovation systems become more important as they play a crucial role in the future economic and social development. Although the term suggests that it is first and foremost a domestic affair, this analysis intends to highlight international influences on innovation processes to exemplify how policies and business decisions are becoming increasingly interdependent. Indeed, the notion of national innovation system could be misleading, if taken literally, which is stressed by this pointed remark: “Like the Holy Roman Empire, which was not holy, Roman, or an empire, innovation systems may be international, rather than national, in scope and structure; they may influence diffusion as much as innovation; and they often are ad hoc, rather than strategically conceived, in origin.” (Mowery/Oxley 1995: 80, 2n) It cannot be ignored that innovation systems themselves are evolving and therefore, it must be investigated if or to what extent the trend towards globalisation is gradually undermining national innovation systems and replacing them with a global innovation system. The case studies were chosen for the following reasons: first, the automobile industry is perhaps the most international, if not truly global. A relatively small number of Original Equipment Manufacturers (OEMs) (coupled with increased concentration among Tier1 suppliers) competes and the last decade witnessed a dramatic shift towards emerging markets. If there is an industry that should shift from mainly carrying out R&D at home markets, it should be the automobile one. Second, while Japanese and German OEMs are heavily rivaling each other in fields such as car safety, motor efficiency or driver’ support systems, EVs are clearly dominated by Japanese firms. In 2009, the Toyota Prius became Japan’s top-selling car and has defended this position ever since (Tab. 1). Compared to the situation in Germany, Japan is far advanced indeed. Sales data show that no EV even made it to the top five positions in the German market. Hence, it will be explored which factors contribute to these different development trajectories of Japanese and
1 German automobile manufacturers and markets.
2009 2010 2011 2012
Model Units Model Units Model Units Model Units
Japan
1. Toyota Prius 208.876 Toyota Prius 315.669 Toyota Prius 252.059 Toyota Prius 317.695
2. Honda Fit 151.324 Honda Fit 185.439 Honda Fit 207.882 Toyota Aqua 266.567
3. Toyota Vitz 117.655 Toyota Vitz 122.248 Toyota Vitz 128.725 Honda Fit 209.276
4. Toyota Passo 98.883 Toyota Corolla 111.265 Nissan Serena 84.359 Honda Freed 106.316
5. Honda Insight 93.283 Honda Freed 95.123 Toyota Corolla 70.820 Toyota Vitz 105.611
Germany
1. VW Golf 366.231 VW Golf 250.078 VW Golf 258.059 VW Golf 240.702
2. VW Polo 109.005 VW Polo 96.945 VW Polo 103.507 VW Passat 89.353
3. Opel Corsa 106.908 Opel Astra 72.685 VW Passat 96.720 VW Polo 76.507
4. Opel Astra 104.950 Mercedes C 71.871 Opel Astra 86.579 Mercedes C 69.052
5. Skoda Fabia 103.645 BMW 3 67.643 Mercedes C 79.820 Opel Astra 66.981 Tab. 1 Top-selling models (Source: compiled by the author from JADA & KBA)
Japanese automobile manufacturers were the first to develop and commercialise EVs, more precisely hybrid electric vehicles (HEVs) like the Prius or Honda Insight. A relatively new development is so-called plug-in hybrid electric vehicles (PHEVs): Toyota released the Prius PHV in 2012 after a limited leasing program began in 2010. An alternative that has been around for about 40 years, but only recently has been commercialised, is battery-powered electric vehicles (BPEVs) like the Nissan Leaf or Mitsubishi i-MiEV. Also, Japanese and German car industries are considered to be leading in the field of fuel cell electric vehicles (FCEVs). All alternatives are regarded as possible options for replacing the standard internal combustion engine vehicles (ICEVs) as they are more fuel efficient and their harmful exhaust emissions are considerably lower.1 The question is why Japanese OEMs developed clear superiority in this particular field, while other automobile fields are highly contested between Japanese and German car-makers. The aim of this study is to investigate Japanese and German innovation systems and policies to analyse if they are responsible for the different outcomes. Most important will be to investigate
1 There exists the debate about how much more efficient grid-charged vehicles like BPEVs and PHEVs really are as the production of electricity also includes carbon dioxide (CO2) emissions which is arguably true. The same observations are made for hydrogen production questioning the efficiency of FCEVs. However, then it is also necessary to add the emissions of petrol and diesel refining to the ecological balance sheet of ICEVs, which is usually forgotten.
2 the role of the Japanese government policies on this issue and to ask if those policies contributed to the aforementioned positive results. Just like the Japanese automobile industry, the German one is among the main competitors in the global market. It is undisputed that the German car manufacturers are currently lacking behind their Japanese competitors and it should be investigated if this is attributable to differing policies or purely a matter of company strategy. To what extent can different institutial structures and power constellations explain the outcome? The theoretical framework will be a policy analysis as EV development in both countries is surrounded by various issues, rivalling interests and different actors. It is critical to point out that by the time EVs first came on the political agenda, the topic was highly contested by economic interests of the industry, national energy security, environmental conservation as well as public health. All stages of the policy cycle will be investigated, but areas of special interest will be the tactics of different actors in the decision-making stage, the choice of instruments for implementation and learning processes in the evaluation of policy. The element of learning is most critical to judge the innovation process, because the fact that technological innovation is hard to predict does not allow state agencies to put forward a single option. Technology development forces agencies to revisit subjects, evaluate the achieved advancement and determine possible readjustment measures to their programs. Therefore, first, an introduction of the theoretical approach will be necessary to clarify the analytical framework. An overview of various innovation system approaches will be provided and the choice for the national innovation systems perspevtive will be clarified. Second, the Japanese and German systems and their characteristic processes will be explored to place the case studies in the context of the respective innovation framework. The main issues covered by this study are interaction patterns between actors inside the national innovation systems and external influences on the systems. Further, as emissions regulation is a possible driver of technology development in the automotive industry, the environmental policies of Japan and Germany will be investigated. Third, the case of EV development will be explored to illustrate the interaction between policy and technology development, which is mainly carried out by industry. For analytical reasons, BPEVs and (P)HEVs will be separated from FCEVs, because the latter are embedded in a wider technological context than the former. Therefore, this study will allow some insights into the nature of public-private interaction in Japan and Germany. Finally, building on the findings of the case studies, the question can be answered of there are innovation policy regimes, what their main characteristics are and if regimes have transformed over the period covered by this study.
3 1 Theoretical framework
This study will apply the analytical framework of the policy cycle as put forward by Howlett and Ramesh (Howlett/Ramesh 2003) and combine it with the literature on innovation systems. To clarify the theoretical framework, a brief introduction to innovation theory will be followed by an exploration of the various innovation systems approaches and an explanation of the policy cycle model. Finally, it should be described why it is useful to analyse innovation policies in Germany and Japan with the help of these approaches.
1.1 On innovation2
Innovation is a field that has received increased attention over the past 20 years. Pioneering academic works have been laid in the 1970s, but the term innovation itself became popular later. Some initial findings are still valid today, e.g. that scientific research generates the following benefits: trained manpower, stimuli for culture and applied research as well as the application of discovered principles into new and improved products (Gibbons/Johnson 1974: 221). Another crucial aspect of innovation and science is the inexistence of a terminal state. Both, problems and solutions, are themselves often dynamic and even stand in interactive relation. While new knowledge answers old questions, it simultaneously creates new questions and issues, which is why science has been called “The Endless Frontier”. However, it is crucial to stress that scientific or technical discoveries are distinct from the term innovation. Innovation differs as it is defined as products, processes and services that diffuse into society. A number of discoveries are never used in the creation of new products, processes or services, because they are too expensive to apply or too difficult to handle, not every invention is an innovation. This introduces another important innovation aspect: it is typically conducted by companies and directed at consumers. Only if consumers are ready to buy a product because they see it as being superior to older ones, an innovation will diffuse into society. Also, like Schumpeter pointed out, innovation can also be created by recombining already existing products into new ones. The general problem of innovation is the question how to study it. Often, innovation is purely analysed through patent data or case studies. While limitations of case studies are obvious, methodical problems as well as provided insights stemming from patent data analysis have been discussed (Archibugi/Pianta 1996). An insightful elucidation into problems of quantifying innovation has highlighted the following problems (Archibugi 1988: 254; 258f.): first,
2 There exists a plethora of definitions of the term innovation. Each perspective highlights different aspects and looks at innovation from a different perspective. Garcia and Calantone (2002) conducted a metastudy exploring the variations and put forward suggestions for a unified terminology. Therefore, this paper will follow established terminology instead of developing own definitions.
4 innovation is often characterised by the use of tacit knowledge. A possible proxy indicator like the educational level of workers, is very difficult to operationalise, thus economists rarely engage this aspect. Second, different states apply differing principles to grant patents, so that cross-country comparison may become difficult or misleading. Third, different data banks use differing definitions of innovation, creating a similar problem. Fourth, simply counting patents makes a differentiation into important and less important patents impossible. This shows that there are many methodical problems associated with quantitative analysis, which may be the reason why innovation is rather studied by economic and technological historians or political scientists than by economists. However, Archibugi has pointed out that a careful and informed investigation of quantitative data such as patents, observed innovations, R&D personnel and expenditure still can produce useful insights (ibid: 272-275). One of the most common differentiations in innovation studies concerns the nature of innovation. Namely, inspired by Schumpeter’s distinction, innovations are divided into radical and incremental ones. Again different scholars place this dichotomy in different contexts, e.g. from the perspective of companies, consumers or technology (Freeman 1994: 474-478). To adopt this dichotomous categorisation to the studied case, a degree of differentiation appears necessary. First, regarding technology, it can be stated that HEVs and PHEVs are incremental innovations, because they gradually move away from ICEVs towards fully electric types. Thus, as fully electric types use different energy sources and require a different infrastructure, they can be described as radical innovations. Second, if one considers the scope of social change, it must be labeled as incremental. As EV development largely happens inside the established automobile industry, it is reasonable to assume that the shift will be rather gradual than radical. Moreover, simply considering passenger cars as a product leads to the same conclusion: cars are expensive durable products that consumers roughly renew every 10 years.3 Hence, even under the unrealistic condition that OEMs would only offer EVs from now on, transforming the total vehicle population would take at least 10 years. Therefore, it can be stated that while the EVs can be both, radical or incremental innovations, the process of technology diffusion will definitely be incremental.
1.2 Innovation system typology
The scientific literature on innovation systems has so far not resulted in a consistent theory, but produced various approaches to study innovation. It must be highlighted that innovation system approaches are models, no formal theories (Archibugi et al. 1999: 531). Regarding innovation
3 Average vehicle age in Germany is currently 8.7 years (KBA 2013) and 7.95 years in Japan (JAMA 2013: 12).
5 systems, they are studied under varying perspectives, i.e. national, regional, sectoral or technological. However, it is necessary to highlight that these approaches are not rivalling each other, but are rather complementary. In fact, there are many shared assumptions. It is necessary to stress that the term “system” does not mean something that was intentionally designed: it rather describes a framework of existing relations and interactions between institutions and agents. Indeed, all approaches regard innovation as an outcome influenced by market and non-market interactions of agents. Those interactions are shaped by institutions, both formal and informal. Also, firms posses the highest innovative potential in all approaches. Another important aspect about the literature is that it originates from case studies of innovation processes, which do not conform to neoclassical economics. Therefore, the perspective on economics and economic development is evolutionary and in contrast to “such obvious idealisations as ‘perfect competition’, ‘equilibrium’, ‘the real world is just a special case’ and so on.” (Cooke 2001: 953) Moreover, innovation systems literature highlights the significant impact of innovation on economic development. The common view is that contradictionally to neoclassical theory, firms do not have perfect knowledge, but their knowledge bases are different. Thus, firms have differing perspectives on technologies and markets, which is resulting in diverse R&D, chance and risk perception as well as strategy (Carlsson/Stankiewicz 1991: 100). Hence, this very diversity of knowledge and related behaviour in a market environment causes the creation of variety. Variety is regarded as the driving force of economic qualitative change. While quantitative growth is important for any economy, innovation-driven increase of variety is regarded as crucial for long-term economic development and growth (ibid: 95-98). Further, all approaches share what has been labelled as the “stylized facts” about innovation (Dosi 1988: 222f.): 1. Uncertainty: innovation processes are indeterminable. It is impossible to predict if the attempted research is going to result in a marketable product or service; 2. Increasing reliance of new technologic opportunities on advances in science; 3. Increasing complexity of research, which causes systematically organised forms of investigation carried out in firm or university laboratories instead of lone inventors’ tinkering; 4. Increasing role of experimentation, especially via learning by doing and learning by using; 5. Innovation is a cumulative process. This means that existing knowledge can be utilised to create new one. However, some authors stress that internalised knowledge can also hinder emergence of new knowledge (Lundvall/Johnson 1994: 39f.). Regarding those facts, it is important to realise that the literature investigates how systems may reduce uncertainty and how systems are evolving, partly in response to issues like increasing
6 complexity. Further, all approaches deal with learning. Learning occurs at different levels. Although individuals such as political decision-makers, university researchers, company R&D staff, etc. gain new knowledge through market and non-market interactions, collective actors like states, industry associations and firms optain and utilise new knowledge similarly. Regarding the common approach of patent data analysis for measuring innovation, it has been noted that firm, sector and country level are all dimensions that provide insights into innovative activity (Archibugi/Pianta 1996: 457-462). Hence, analysing the phenomenon of innovation from different perspectives also results in a more nuanced result than an isolated approach. Despite shared assumptions, the differences should be explained briefly. Starting with national innovation systems (NIS), the level of analysis is centred on the nation state. The concept originated from Freeman (1987), who studied Japan’s post-war economic development and referred to it as “national system of innovation”. Following Freeman’s study, similar research has been conducted at different analytical levels, creating the diverse innovation systems literature. Few scholars like Lundvall (1992: 2-3), argue that systems might work across national boundaries, because national can be understood as a national-cultural and as an etatist-political dimension. However, most scholars and international organisations like the OECD that adopted this concept focus on national frameworks and policies, especially on how they induce, support or hinder innovation. Within this framework, it is necessary to explain the relevance of national boundaries for multi-national companies (MNCs). Although several studies (see below) have demonstrated that R&D, which is a major factor for innovation, is mainly carried out in the country of origin of a MNC, other country-specific factors must be highlighted to identify the reasons for these findings. One important factor is proximity: innovations do often not spur from isolated efforts of a firm, but are positively affected by similar or related research by universities, public research centers, industry associations or other firms (Breschi 2000: 214). An explanation for this phenomenon seems to rest in the cumulative character of innovation: the more people – wheter in companies or institutions – are working on similar problems in close distance from another, the more likely they are to exchange their views and share experiences. For the sake of clarity it should be added that this assumption stands in contrast to the logic of the science system of former Socialist countries like the Soviet Union. In these systems, the simple logic of the more, the better was applied. Projects that were prioritised by political decision-makers received many financial and personal inputs and often were also geographically concentrated. It is necessary to realise that the cases explored by NIS scholars differ in three crucial aspects from this logic. First, although firms and institutions may work in similar fields and directions, they have different expertise and approaches. Like in a recipe, the combination of several ingredients
7 (pieces of information) may result in a much better dish (product) than simply using a higher amount of a single one. Staying in this picture, secondly, there existed no incentive to create new dishes, which were different from the one originally ordered by the customer (the state). Thirdly, there was almost no feedback from other sources than this single customer. For many NIS scholars, cooperation and information-sharing are important factors that induce innovation, because such feedback gives the producer valuable insights to what the mass of consumers expect, so that the next generation of products, processes or services can be improved. Facilitating crucial feedback mechanisms is one of the main reasons why markets develop patterns or structures that enable exchange and cooperation: Paradoxically, in the real world, product innovations are not rare. Why? The simple answer is that most markets are not pure markets characterised by anonymous relationships between buyers and sellers. Most markets involve an element of mutual exchange of qualitative information, and sometimes direct cooperation between users and producers in the process of innovation. The relative importance of product innovations indicates that most markets are organised markets, which allow for interactive learning. This implies that modern economies are 'mixed' in a fundamental sense. Not only does the private sector coexist with a large public sector; the relative success of the market economies in terms of technical progress reflects, not the purity of the markets, but rather their impurities. (Lundvall/Johnson 1994: 35) With regard to firms, it must be pointed out that NIS approach assigns superior capacity to innovate to firms. The reason for this is that companies’ core functions and competencies are regarded as being (efficient) resource allocation, exploitation of underutilised resources and learning or creation of new competencies (Lundvall 1999: 70f.). Although firms are the main innovators and posses a much higher capacity to innovate than the state, NIS approach still holds that it is insufficient to examine differences in firms to explain innovations. The approach is closely linked to the non-linear, interactive process character of innovation (chain-linked model). This process involves several non-market relationships. These relationships have been defined as organized markets, which involve elements of power, trust and loyalty (ibid: 62). Examples for such organised markets are the industry-academia relations, the education system or inter-firm collaboration. All these relations are heavily influenced by the state, e.g. laws regulate how companies and universities or other firms can interact and policies and general state capacity influence education systems’ quality. This highlights that national borders do matter to companies as many vital business conditions depend on states, more precisely their capacities and services. The importance of state policy for economic activity is also discussed in relation to learning processes by firms. While economic (or innovation) policy cannot (and should not) govern the market, it can foster developments along existing or new technological trajectories. Government
8 policies may support the means to learn, the incentives to learn, capability to learn, give access to relevant information and help firms to “learn to forget” (Lundvall/Johnson 1994: 37-40). Also, the particular skills and know-how that are at the core of competitive advantage of a firm mostly stay in the home country of a MNC (Carlsson 2006: 56f.). The reason for this appears to be the importance of vocational training and basic research: both involve a high degree of tacit knowledge (see below), which also explains why the home base profits the most from innovation. Further, if compared to other industries, the automobile sector appears to be more reluctant than others to rely on patents generated outside their home countries and internal combustions engines, which are still the automobile core technology, are found to be an industrial sector with a high level of regional concentration (Cantwell/Santangelo 2000: 141; 144f.). All results suggest that national boundaries and home markets still have overarching importance for MNCs. Indeed, national politics are far from irrelevant: the investigated cases represent new technologies, but their development is dominated by a small, highly concentrated number of large MNCs of an established business. It could be concluded that MNCs do not recognise national borders and therefore, national innovation systems are irrelevant under those conditions. It has been demonstrated that MNCs carry out most of their research and development (R&D), the heart of innovative activity, in their home nation (Hu 1992: 119). This line of reasoning is particularly fitting for Japan. This can be backed up by the finding that among industrialised countries, Japanese firms have the lowest rate of international co-authorship combined with the lowest count of scientific papers produced by overseas subsidiaries (Hicks et al. 1994: 377-381), the least internationalised R&D structure (Meyer-Krahmer/Reger 1999: 761-765), and the slowest increasing share of patents developed outside the home-country (Cantwell/Santangelo 2000: 140), so that national framework conditions actually play an important role even for MNCs. All these findings explicitly do not argue that globalisation is irrelevant. However, it is highlighted that this trend does not necessarily undermine companies’ reliance on their respective nation. Investigating alliances in the biotech industry, Bartholomew (1997) claimed that the increase of international alliances could be explained by the desire of firms to overcome the limitations of national boundaries by tapping into the knowledge of foreign firms and hence indirectly foreign NISs. Sectoral innovation systems place most importance on firms. The elements of a sectoral system are products, agents, knowledge and learning processes, basic technologies, inputs, demand and the related links, interaction mechanisms within and outside of companies, processes of competition and selection as well as institutions (Malerba 2002: 250f.). Firms are the key actors as both suppliers and users of technology. This puts firms in the centre of information exchange
9 processes: firms generate and absorb information about products and exactly this information is used to improve products accordingly. Due to competition, companies will try to use feedback information to create better products for customers. Hence, firms are regarded as the actors most likely to innovate. According to this view, knowledge is concentrated at the firm level and the properties of the agents are primarily shaped through their company background. With regard to the case studies, it is necessary to characterise the properties of the automobile sector. In a comparative patent analysis of several sectors in four countries (Germany, Italy, UK and France), sector specific innovation activity has been classified under two items, labeled Schumpeter Mark I and Schumpeter Mark II. The former is typically showing low concentration of innovative activity among firms, low stability in the ranking of innovators, high-birth rate of new firms and low firm size while the later is characterised by high concentration, high stability, low birth-rate and large firm size (Malerba/Orsenigo 1995: 56-58). The majority of investigated sectors fall into those two categories, the few sectors that have different patterns are not subsumed under a specific model. According to this taxonomy, the sector road vehicles and engines, which can be used as a proxy for automobile industry, is a Schumpeter Mark II sector. Against the background of the EV case, the question arises if such sector-specific coding is adequate, because EVs are typically using technology from other industrial sectors, e.g. batteries and power electronics. Indeed, analysis of patent data demonstrates that the dominant ICEV technologies still make up the bulk of patents, while an increase of patents for different EV variants is also visible at the same time (Oltra/Saint Jean 2009: 207-209). As OEMs are increasingly active in combining technologies from different sectors, a reexamination with the outlined approach might become less insightful as industry-specific coding might miss the activity in these other sectors. However, the taxonomy can still be used as a reference point for past industrial patterns. Although the sectoral perspective places most importance on firms, it acknowledges that national innovation systems can influence sectoral ones, e.g. different patenting systems will cause differentiation in patenting behaviour of companies from the same sector across countries (Malerba 2002: 260f.) Regional innovation systems highlight the importance of networks and clusters. This perspective focuses on inter-firm and firm to sub-national government relations. Although regional systems are embedded in national ones, this literature is relevant as it helps to understand why different regions in the same country may have different levels of economic prosperity. Several subtypes can be differentiated. Cooke (1998: 19-24) has created a typology along the governance dimension and business innovation dimension: the former is ranging on a continuum from grassroots over network to dirigiste system, while the latter spans from localist
10 over interactive to globalised system. Thus, the key indicators are the origin and the reach or global embeddedness of the particular system. The dirigiste type demonstrates that regional systems might be artificially created by central governments, highlighting the possible significance of national frameworks. This aspect is confirmed by the study of Abe (1998) on Japan’s Tōhoku region, which demonstrates that policies that induced the formation of the Tōhoku innovation system stemmed from the national level and that the prefectures in the Tōhoku area did posses limited capacity, experience, and financial resources to develop such a system independently. Aside from this insight, regional innovation systems’ proponents emphasise that the socio-cultural milieu is playing a key role in the emergence and continuity of such a system (Cooke 1998: 9f.). As networks are at the heart of the concept, it is stressed that a network is an intermediate form of organisation, neither hierarchy nor market (Carllson/Stankiewicz 1991:103). Network relationships are defined as being heterarchical, meaning based on trust, reputation, custom, reciprocity, reliability, openness to learning and a rather inclusive than exclusive (Cooke 1998: 9). Hence, regions which posses a milieu that values these characteristics could develop an innovation system “naturally”. Moreover, this socio-cultural aspect can explain why systems may disappear: if trends like globalisation undermine original milieus, e.g. by affecting the traditional values or via entrance of new actors with differing values into a region, such a system could cease to exist. The aforementioned cumulative character of innovation and the role of tacit knowledge are crucial for regional innovation systems’ logic. Tacit knowledge is defined as knowledge that cannot be easily transferred, e.g. in a manual, but skills or knowledge that are acquired through practical experience, i.e. training or routine. Such information has been coined as being “sticky” (von Hippel 1994: 430-432). “Sticky information” means that the cost of transferring particular information in a useable form to the knowledge seeker is high. The aspect of later utilisation is particularly important, because it contains the insight that transfer is influenced by personal properties of provider and receiver. A master-apprentice relation illustrates the point: successful transfer of skills depends just as much on the teaching qualities of the master as on the learning capacity of the apprentice. Thus, it becomes clear that tacit knowledge is heavily related to learning by doing and using. Consequently, tacit knowledge reproduction is more dependent on spatial proximity than knowledge that can be transcribed. Hence, the emergence of regional systems of innovation may be explained by early specialisation in certain products, backed by a socio-culturally promoted exchange of tacit knowledge between individuals, firms, and public institutions in a region. Although it is possible for regions or nations to catch up economically, there are many examples of regions continuing specialisation in specific technologies or products.
11 Technological innovation systems focus on technological development in the form of knowledge or competences. Thus, scholars of this strand of the literature have argued that it should be analysed how knowledge and competences are distributed (Carlsson/Stankiewicz 1991: 111). In their view, NIS focuses on the creation, diffusion and use of technological artifacts, i.e. goods and services, instead of knowledge. Also, they emphasise the network aspect of knowledge generation and exchange. From this point of view, technological innovation systems can take any geographical shape, from regional to global. Another aspect that differentiates technological from national systems is that TIS focus to a specific technology, while NIS encompasses all technologies. Later, some adjustments have been made to this original approach. It has been argued that it is necessary to clearly indicate the studied product, field and the timeframe to operationalise the approach. To do this, it has been acknowledged that while TIS is global, it might be necessary to focus on a specific set of national or regional institutions in order to analyse actors’ behaviour (Bergek et al. 2008: 412f.). Moreover, it was argued that TIS analysis should identify the actors, networks, and institutions which structure this very system. In essence, this means that TIS stress the global nature of technological development and competence networks as their main driver but nevertheless see the necessity to operationalise the concept in a particular geographic context. While there are certainly examples of cross-border networks, especially in the EU, this means that actual research must define a geographic boundary but try to incorporate (global) impulses that influence this defined setting. As this overview clearly shows, different innovation system approaches do overlap and all recognise the influence of national policies, organisational and institutional structures on firms’ innovative capacity and direction. It might be appropriate to state that all approaches realise existing interdependencies between actors and organisational levels, which explains why the approaches are complementary, not exclusive. Although it is acknowledged that other approaches are delivering valuable insights into innovation processes, most studies did not try to demonstrate how these systems are interacting. One exception is Kaiser and Prange’s study (2004) on EU level and regional systems contribution on the development of Germany’s biotechnology sector. This paper follows a similar approach, but there is a fundamental difference: biotechnology is a new sector with typically radical innovations, whereas EVs are a potentially radical innovation emerging in an established industry, which is mainly engaged in incremental innovation. As the author agrees with Kaiser and Prange that national innovation systems are increasingly delegating functions to other levels or are supplemented by them, a national innovation system could be defined as “the set of organizations, institutions, and linkages for the generation, diffusion, and application of scientific and technological knowledge operating in a specific country” (Galli/Teubal 1997:
12 345). Shared assumption is that national frameworks are still the main influence on innovation, but that international and regional systems increasingly perform specific functions on behalf of national ones. Thus, simultaneous internationalisation and regionalisation reconfigure national innovation systems. Hence, it should be studied how these theoretically distinct systems overlap and interact or if and how different levels perform specific functions. This is not to deny the general inconsistency between the term NIS and the tendency of globalised operations in the automotive industry. However, the next section should investigate to what extent the notion of NIS still does make sense for automotive OEMs from Japan and Germany.
1.2.1 Do National Innovation Systems matter to automakers? Aforementioned studies support the view that R&D, the main soure of innovation, is primarily carried out in firms’ countries of origin, which suggests that NIS are indeed the main influence on innovating firms. However, as some results are already 20 years old and all studies documented a trend towards more internatinalisation of R&D, it must be investigated if these findings are still relevant. For this purpose the author conducted interviews with managers and engineers from seven Japanese and German automobile OEMs, Tier1, and Tier2 suppliers. The interviews lasted between 60 and 90 minutes. Also, the author was able to visit factories and R&D facilities of Japanese suppliers in Japan and Europe to get an own impression. Further, the author regularly attended presentations at the Research Institute Automotive Parts Industry at Waseda University. These meetings are mostly attended by managerial staff of automotive parts suppliers and OEMs. While the majority of firms are Japanese, international automotive companies active in Japan are participating as well. As internationalisation is a reoccurring theme and participants state their view on related problems these meetings are an additional source of information. Findings can be summarised as follows: despite an increasing number of overseas R&D facilities, it can be claimed that the majority of fundamental R&D is still concentrated in the respective home countries. Mainly, international R&D locations are active in adjusting technologies developed in the home market to local conditions and regulations. One plant operations manager stated that to become global, firms must become local. Examples are different Japanese and European OEMs’ material specifications and differing regulation on material content, e.g. asbestos in brakes. Hence, suppliers adjust their technology and product to local market conditions and regulations. As adjustments are commonly only minor, overseas R&D facilities may have few employees. In the case of a Japanese Tier2 supplier, the European R&D facility had eight employees, of which seven were local. In comparison to other facilities of the company, it was rather small and largely directed at testing and documenting. Main purpose is adjusting the technology developed in Japan to the European market. Therefore, it
13 can be generalised that overseas R&D is often of secondary nature. Nevertheless, the actual number of overseas R&D facilities is increasing and will continue to grow. Especially Japanese suppliers frequently mentioned that they are in processes of opening facilities or searching for suitable locations. Even an interviewee from Denso, Japan’s largest supplier and one of the most internationalised firms stated that Japanese firms are less internationalised than their foreign competitors and that there is the need to go abroad. Similar to Denso, the Bosch interviewee also stated that the firm is considering further internationalisation of R&D. Thus, it appears that those firms that are already substantially internationalised also are the one’s most concerned about deepening the process. Considerations for the internationalisation of both R&D and production are cost and competitiveness. A main driver for supplier firms is OEM demand: car-manufacturers want suppliers to be available on short notice, especially for problem-solving. Interviewees from a Japanese firm stated: “If we are not going abroad, we cannot survive the next ten years.” It was explained that customers want suppliers to interact with them in problem-solving and R&D processes. This specific Tier2 supplier already had two production sites in each Europe, Asia and the Americas, but at the time of the interview, conducted no overseas R&D. However, it was stressed that due to OEM pressure, the company was investigating suitable locations. Relatively lengthy arrangements like flying-in experts from Japan are no longer accepted and OEMs demand quick availability of qualified supplier staff. Although time and financial considerations exist, there is another reason for this requirement: the trend towards specialisation makes OEMs partly dependend on suppliers’ expertise. Technological complexity and resulting partial dependence lead to situations where OEMs want suppliers close by to enable R&D cooperation as well as problem- solving. This means that suppliers have to have overseas R&D staff capable of performing these tasks. Statements made by suppliers suggest that the trend towards more overseas R&D facilities is going to last. Ability to set up and operate overseas R&D facilities that can satisfy OEM demands will be of increasing importance in competition for OEM contracts. This also implies that firms which do not or cannot respond to this demand will face problems that could lead to further supplier concentration. Be there as it may, extension does not rule out qualitative diversification among R&D facilities of the same company. Despite this general finding, there are signs that the largest companies also seek to shift generic R&D to overseas locations. Companies like Toyota and Denso stated that their R&D facilities in Thailand should perform global functions, i.e. develop new technologies that can be applied all over the world. Again, it needs to be emphasised that this may only apply to the very top companies. At a meeting of the aforementioned institute, a representative of a Tier2 supplier stated that he had tried to find qualified personnel in Thailand and did not succeed. He implied that only larger firms could internationalise because they had the necessary reputation and
14 financial muscle to be attractive for local engineers. This again relates to the aforementioned pressure to internationalise: the process is mainly driven by already internationalised MNCs and relatively smaller companies must find ways to follow this lead in order to survive. Another aspect that only Japanese firms mentioned is that overseas R&D supports local production. Indeed, some firms either set up R&D facility and production at the same site or ensure that they are in close proximity and have reliable communication infrastructure. This phenomenon can be explained: in Japanese firms, innovation, i.e. product development, is closely related to production. During the first interview, the interviewees were surprised that only the number of R&D personnel was inquired. They pointed out that the number of engineering (or technical) support staff should be considered since they had an important function of communicating problems occurring in production to R&D and to on the spot problem-solving. Thus, many incremental innovations are due to the close links between production and R&D that are embodied in engineering support staff in Japanese firms. Thus, after the first interview, the number of technical support staff was included. Further, all interviewed companies pointed out that hiring qualified personel is an issue in setting up overseas R&D centers outside the triad. Thus, although firms operate R&D facilities in emerging countries, all interviewees stressed that local engineers had a considerable skill gap. The most drastic assessment comes from a plant manager of a German OEM in China: “The people they call engineers here are not even at the level of our trained blue collar workers [Facharbeiter].” Facing this problem, companies use a mixture of different coping strategies. Companies like Volkswagen started transplanting domestic training systems and standards, e.g. under the cooperation between the German Chamber of Commerce, Shanghai and the Chien Shiung Institute of Technology, Taicang. At the institute, Chinese workers are trained after German standards and graduates receive valid German certificates. Although the number of graduates is still low4, it appears that German firms opt for training their staff under established German standards. Other companies stressed that they are hiring locally trained engineers and then gradually try to increase their skills. This is done in two ways: by giving local engineers less complex tasks then their Japanese or German counterparts, which are yet challenging and thought to be skill enhancing. Another approach is to supply more or less outdated technology to local engineers “to play around with it”, hoping to stimulate learning processes that lead to gradual enhancement of skills. An issue exclusively raised by Japanese suppliers was the link between skill gap and firm loyalty in China. It needs to be stressed that all interviewed firms already have overseas operations in Southeast-Asia, Europe and the USA, so that the concern about Chinese
4 93 graduates in 2010; see: http://www.hannover.ihk.de/presse/archiv-pm/pressemeldungen-2010/ahkshanghai.html [27.03.2013]
15 employees’ loyalty is particularly striking. Japanese firms invest considerable time on training and qualifying personel, and especially smaller suppliers are afraid that employees will leave the company after acquiring skills or that local staff will demand drastic wage increases for remaining in the company. Despite associated issues, internationalisation has an important function for firms, mainly in relation to cost. An example directly related to the study is software development costs: it has been estimated that software development cost make up more than 80% of total development cost in a modern vehicle, i.e. various EV types, upper sedan segment and luxury cars (Fujimura et al. 2012: 123). This is due to up to 100 electronic control units (ECUs) in such cars that are monitoring and coordinating the various interacting components like battery, electric machine and ICE. Overseas facilities are used to lower development cost. One Japanese Tier1 supplier which produces ECUs for Nissan explained that the hardware device is developed in Japan, but that code development is mainly conducted in China. The motive was clearly identified: “For the cost of hiring a single Japanese programmer, I can hire six or seven Chinese.” Moreover, by outsourcing this kind of important, but rather secondary development functions, companies also avoid existing IPR issues. The company stated that the software engineers must not understand or physically see the hardware, only develop the code that is operating it. Thus, firms can protect their know-how, but benefit from lower salaries in developing countries. Again, there is the aspect of increasing complexity and role-sharing: most automobile and auto-parts producers have accumulated know-how in the fields of mechanics and electronics. Thus, software programming is not among the key competences. Firms have to decide if they want to control every aspect of new products, which would mean that they have to hire programmers, or if they feel it is sufficient to control actual technology, i.e. the hardware. Both approaches can be practiced and have specific benefits and downsides. While full control over every aspect of the product increases the technological capabilities and should enhance cooperation with customers, acquiring and integrating additional skills is lengthy and costly. If tasks are sourced out, the company does not control every aspect of their product, which may mean that it cannot benefit from the evolution of certain technologies. Although the core of innovative activity is mainly at firms’ home countries in general, there exist deviant cases. The supplier Magna is a good example: founded by an Austrian emigrant in Canada, the company is not located in one of the leading automobile nations. 5 Magna informants pointed out that their R&D activities are concentrated at the Great Lakes region in the USA and the region of Stuttgart, Germany. This is due to the fact that the US “Big Three” (Chrysler, Ford, and GM) and Daimler are Magna’s most important customers, which demand
5 After initial success in Canada and the USA, Magna founder Frank Stronach started operating numerous facilities close to his place of birth in Austria and Southern Germany.
16 close interaction and services by the supplier companies. Thus, it can be concluded that the concentration at home countries is much more difficult for companies from smaller (i.e. in terms of population) countries, especially if they are suppliers. These findings are in line with those of Patel and Pavitt (1991: 10f.), who conducted empirical analysis on a data set of 686 large firms. They also observed that companies from smaller nations had a higher degree of international R&D than larger nations such as France, Germany, Italy, Japan, and the USA. Hence, it can be concluded that despite the undeniable internationalisation of R&D activities, the majority of fundamental R&D from automotive companies from larger states such as Japan and Germany is still carried out in the country of origin. Therefore, it can be stated that despite the seemingly contradictory notion of NIS and the trend towards globalisation, international knowledge exchange and regulative influences from large markets, Japanese and German automotive companies still conduct the core R&D activity at home, which suggests that investigating particular national framework conditions may enable insights into the question why which products are being developed by OEMs. In other words, investigating NIS and relevant policy subsystems may allow the discovery of (national) structural factors that explain why Japanese OEMs started commercialising EVs significantly earlier than their German competitors.
1.3 Innovation, innovation systems and the policy cycle model
It should be pointed out that there exists a plethora of other methods to study public policy, however, the model of the policy cycle has the following merits: first, this model explicitly states that it is studying policy subsystems instead of covering the full spectrum of public policies. The proposed model states that actors and institutions have a mutually defining relationship (Howlett/Ramesh 2003: 53). This means that individuals are influenced by their environment but at the same time they are capable of affecting the institutions through interaction. Putting it different, both entities “are mutually constitutive, yet ontologically distinct” (Evans/Davies 1999: 371), i.e. policy analysis represents a combination of actor-orientated and structural approaches. The large framework, which is called the policy universe, is constituted by the international system, the state and its society. However, neither of these constituants are unified actors, they merely represent categories of actors. All actor categories can be present in the policy subsystem, which is at the centre of analysis. A subsystem includes all relevant actors that engage in influencing and determining policies according to their interests in specific issue areas. Second, as subsystems include a broad variety of actors, analysis is not exclusively limited to government activity. Further, it follows that policy subsystems are influenced from decisions made in other subsystems. Therefore,
17 subsystems are only partially autonomous and the impact of policies generated in other subsystems has to be regarded as a major dynamic element which drives intra-subsystem activity and debate (Sabatier 1988: 137). This is very similar to described processes of fragmentation and accommodation of policies (McCool 1989: 266; 271f.): policies and subsystems get more specialised, which enhances the chances that subsystems are captured by vested interest groups. At the same time, there is a greater need for coordination upon subsystems, because their authority and expertise is becoming narrower. Hence, there appears to be a trend towards greater differentiation and interdependence between subsystems. Third, it is acknowledged that there is no sequential order in the policy cycle, although the model might suggest the opposite. The insight that sometimes stages are left out or that evaluation can influence a new round of the cycle is adaptable to innovation policy. A similar flexibility can be noted in the interactive innovation model. This model replaced former linear and sequential linear innovation strategies. Older policy approaches to the topic of innovation, back then frequently labelled science and technology (S&T) policy, followed the logic of linear or sequential linear models: innovation was thought to evolve in a fixed and sequential order, which could be described as a chain of events. The prime example for the linear model is the Manhattan Project, a large-scale military R&D program6 resulting in the development of the atomic bomb. The success of this project quite literally embodied the power of science, more precisely “big science”. Because the development of the first nuclear weapon appeared to have resulted from a “chain reaction”, starting with basic physics, followed by large-scale development in big science laboratories and ending in the application in the form of the atomic bomb (Freeman 1995: 9). Following this logic, a state basically had to provide the R&D budget and innovation would more or less automatically evolve. Consequently, R&D budgets were the most prominent tool of technology policy. However, later scientific work demonstrated that innovation was also linked to the application into products by firms, the diffusion of those products as well as the exchange of knowledge between companies and academic scholars and the capacity of the education system (ibid: 10-12). This means nothing less than a shift from mainly focussing on quantitative factors towards incorporating qualitative ones. The linear and sequential linear models were replaced by the interactive innovation model, because it became apparent that innovation is subject to many different economic and social influences, so that it rarely evolves in a linear fashion. Uncertainties of the innovation process therefore necessarily influence any policy trying to foster innovative products or processes. Addressing technological innovation policy-making, it
6 Formerly, the role of military R&D has been regarded as positive for technological innovation. However, this view has become increasingly doubted and qualified. For a thorough and balanced discussion of the relationship between military R&D and innovation, see: Mowery 2010.
18 is also crucial to realise that a large number of innovative approaches will fail and that technical advances, if they do occur, not necessarily translate into innovative products or services. Putting it different, most innovation experiments fail. Interestingly, this high rate of failure and the related perceived wasted resources of unsuccessful trials could be regarded as the starting point of social planning or innovation policy (Metcalfe/Georghiou 1997: 5). However, the belief that planning can improve the process by making it more efficient and targeted is questioned, because the generated technological variation also needs to be selected by firms and consumers, which also creates a feed-back to the variation respectively innovation process (ibid: 5f.). This perspective has several consequences (ibid: 9-12; 17-23): innovation policy-making must be adaptive, meaning that a high capability of policy learning and will to policy experimentation, including the use of many instruments, are deemed more likely to succeed than following an orthodox, standard operation procedure approach. Also, companies are at the centre of innovation as they posses the knowledge which products will be valued by the market. Therefore, technological innovation policies need to encourage firms to use this potential or assist companies in enhancing their capabilities. Hence, it has been emphasised that the NIS framework ideally should focus on the conditions that enable or drive innovation, rather than pursuing the achievement of individual innovations (Metcalfe 1995: 31). In the context of decision-making towards innovation policy, new product design or in actual basic and applied research, political decision-makers, company board members and R&D personal all face the same problem: they lack sufficient information on the actual result of their decisions. Although their respective fields of activity are completely different, it is likely that they will apply similar strategies for finding a solution. Here, another useful aspect of combining the two models should be highlighted. In both models systems and their respective parts are mutually constitutive, i.e. have a dynamic relationship that can evolve in different directions. For the context of this study this means that NIS should by no means be interpreted as a mechanism with a one-sided effect from state policy on firms’ innovation approaches. Automotive OEMs are included in a NIS and policy subsystems dealing with subjects that influence their industry. Hence, the societal actors – especially the affected OEMs – will try to influence deliberation and decision-making on policies according to their preferences. The critical point of combining these two models is that NIS literature itself does not predefine any particular relationship between actors. Therefore, case studies on particular national innovation systems should investigate if there are patterns of actor interactions that are characteristic. Understanding the relations between policy subsystem actors may answer the question if there are dominant actors that shape the policies of the subsystem in the context of a NIS. While findings may not characterise the whole NIS, they can elucidate developments in a
19 certain field of technologic innovation such as the automotive industry. Another aspect investigated by innovation systems and policy analysis literature is the capacity to learn. Some innovation system scholars like Lundvall, which are favouring broader definitions of institutions, have included institutional innovation such as educational reform. Learning is regarded as central because it may explain the internal dynamic of the system as a whole and it can be seen as the bond that connects the different parts (Archibugi et al. 1999: 530). Other scholars like Cohen and Levinthal (1990) investigate what they termed “absorptive capacity”: it describes the capability of companies to integrate knowledge outside their respective expertise into new products or methods of production. Hence, “absorptive capacity” may explain how and why firms are able to adapt to changing environment conditions such as market, technology or regulation, while others are unable to deal with these challenges. Despite differing notions, it is clear that learning is central to innovation scholars. It could be stated that Lundvall regards learning as the basic condition, while Cohen and Levinthal rather stress the process of learning (or absorbing) knowledge. Policy scholars are also interested in learning, more precisely the learning capacity of public institutions and policy-makers (see: 1.4.5). In fact, learning capacity is elemental for policy adjustment and change. Thus, arriving at conclusions about institutional learning capacity through policy analysis helps to understand one important factor of innovation systems. The flexibility of the interactive innovation model and the plea for adaptive policy-making both suggest a view that is compatible with the policy cycle model. Both emphasise that the processes of innovation are open-ended and uncertain. The cycle model also acknowledges this observation, as it is impossible to determine if a topic raised through agenda-setting will eventually be dealt with in a state-implemented policy or if it fails to go through the stages of the cycle. Thus, as an invention may never be used or commercialised, policy proposals may never enter decision-making or become implemented. Also, both perspectives stress that innovation could occur in a non-linear fashion, e.g. through a combination of already existing items, a new way of using technology and also feedback from different development stages or the market that influences development of a particular product. A very similar idea is immanent to the policy cycle model, because of the possibility that stages are left out and that evaluation can initiate a new cycle, which is basically another method of feedback utilisation. In general, innovation can be described as a cumulative process, which is path- and context-dependent (Lundvall/Barrás 2005: 615). Therefore, the concept of (international) best-practice must be doubted, because institutions or procedures that work successfully in one path- and context-specific innovation system might not perform similarly in another system, which operates under its own unique conditions. This general observation is also found in the policy cycle as the subsystem resembles the path- and context-dependency in many ways: investigating
20 the open or closed structure of a subsystem, the level of state capacity or a preference for certain policy tools are just a few examples which obviously acknowledge the distinct features inherent to each system.
1.4 The Policy Cycle model
Before beginning, it must be stated that the following model represents an ideal type, but later analysis may present a differing sequence of government action.
1.4.1 Agenda-setting The first stage is agenda setting, which involves the circumstances and processes that lead governments to the conclusion that there exists a problem which has to be addressed through policy. Although it appears to be a problem-solving approach, this process can also be reversed: politicians, bureaucrats or interest groups often already advocate a policy, but do not find support. Thus, policy proposals have to be related to problems. This linking of a proposal and a perceived problem has been called coupling (Kingdon 2003: 172-179). It is possible to relate a policy to various problems: if an attempt to couple fails, this does not mean that the policy will never appear on the agenda. The proposal may be linked to another problem, highlighting the importance of persistent advocacy by actors interested in a particular policy. Therefore, successful coupling is crucial for agenda-setting. However, it needs to be stressed that setting a topic on the agenda does not equal control over subsequent policy-making or outcomes. Despite coupling, a completely different policy might result from raising concern about a perceived or real problem. Further, timing is crucial as problem perception may pass rapidly or be replaced by an even more pressing concern. This is the reason why Kingdon describes the timely limited possibility to link problems to policies as “window of opportunity” (ibid: 165-170). Another way to understand policies is to place them in political environments. It has been argued that there is a dual causality between politics and policies, meaning that the way policies are formulated and implemented depends on the level of public involvement (May 1991: 189-197): To define environments, applying a continuum which extends from “policies with publics” to “policies without publics” is advocated. Several important insights can be drawn from this approach: first, in case of “policies with publics” due to high level of public interest, formulation and implementation will be largely influenced through the process of agenda-setting: “It is unlikely that an issue would reach sufficient prominence to place it on the policy agenda without some sense of problem definition and at least an implicit set of policy responses.” (ibid: 193) This perspective is very similar to Kingdon´s approach. However, if there are rivaling
21 understandings of the problem addressed, policy-making can be conflict-ridden (see below). Second, in case of “policies without publics”, policy-making will be dominated by expert opinions and conflict will usually be absent. However, there is the danger that those policies or whole subsystems will be captured by vested interest groups. Thus, both extremes of the continuum present differing challenges for policy-makers. Third, towards the issue of learning, it is argued that under conditions of “policies without publics”, learning will be limited, because there is little debate, in general about technical details rather than fundamental convictions, and consequently less pressure to explore different solutions (ibid: 202f.). Last but not least, in regard to the topic of this paper, May states that in the USA innovation policy falls into the category of “policies without public” while industrial policy is subsumed under “policies with public” (ibid: 190f.). Whether or not this observation can be applied analogously to Japan and Germany must be doubted, especially as Japan has traditionally sought to integrate industrial and innovation policies (see: 2.2; 2.3; 2.5)7 and Germany is recently moving toward the same direction (see: 3.1). Key elements that determine if and how a problem will appear on the political agenda are the nature of the respective subsystem, because this affects if a problem is initiated by the state or societal actors, and the level of public support for a resolution (Howlett/Ramesh 2003: 140f.). From the combination of these dimensions, four styles of agenda-setting are possible: If there is a problem affecting the whole society, outside initiation is likely to occur as societal actors will demand a solution and become actively involved in promoting policies. However, if a societal group has close ties to the administration it may also be able to initiate policy from the outside, nevertheless this behaviour is termed inside initiation. However, if the problem is narrower, government can also practice a form of internal initiation. When a government wants to address an issue, but support is scarce, the administration must resort to mobilisation of the public. If the administrative initiative finds broad support, the likely result is consolidation of the topic. Further, agenda-setting is the only stage of the cycle were non-members of the policy subsystem can play an influential role, because identifying an issue and calling for its solution does not require specialised knowledge, so that the entire policy universe may participate in this process.
1.4.2 Policy formulation The second stage is called policy formulation, i.e. different policy options are developed. Although formulation may be directly linked to agenda-setting, in the way that an identified problem is already put on the agenda coupled with a specific solution, usually policies are formulated in specialised subsystems. Most issues require expertise, which is embodied in
7 However, if one measures “policy without public” with the indicator of being a subject in elections, research from Nakano (1997: 120) shows that Japan would fall into this category, because science and technology were never an important election topic.
22 subsystem members. A division inside a subsystem can be made into policy networks and communities (Howlett/Ramesh 2003: 150f.). Whereas networks are characterised by the promotion of participants’ material interests, the category of policy community shares political ideas. However, networks and communities can co-exist and even if their motivation is of a different nature, they may advocate the same policies. Related to the notion of a policy community is the idea of an advocacy coalition: “These are people from a variety of positions (elected agency officials, interest group leaders, researchers) who share a particular belief system - i.e. a set of basic values, causal assumptions, and problem perceptions - and who show a non-trivial degree of coordinated activity over time.” (Sabatier 1988: 139) This framework is highlighting the importance of beliefs and ideas in politics. Advocacy coalitions pursue their goals exactly because they share a common understanding of their environment. Also, these coalitions are more inclusive than the older concept of “iron triangles” (see: 2.1) as they not only incorporate state officials and interest groups, but also journalists or researchers (ibid: 131). Further, this concept realises that a common problem perception is crucial. Indeed, a problematic condition such as environmental pollution may persist for some time, but only if it is perceived as problematic, it will be addressed through policies. However, the negative aspect of belief-based perception certainly is that information which is incompatible with one´s belief-system is resisted and not acknowledged (ibid: 133). Therefore, policy learning (see: 1.4.5) of an advocacy coalition or an entire subsystem may be limited due to prevailing dominant ideas. Another aspect is the relation of state and societal actors inside networks or to a lesser extent in communities. The position of the state inside those networks is important, because it indicates if politicians and bureaucrats can influence social and economic actors or if they are subject to pressure by those members. Yet another significant dimension of a policy subsystem is the ability to integrate new actors and ideas. With regard to the styles of policy formulation, entrance of new ideas and actors influences the mode of formulation (Howlett/Ramesh 2003: 156-159): if new ideas and actors are blocked from entering the formulation process, the result is instrument tinkering, meaning only minor adjustment of already existing policy tools. If actors are excluded, but ideas welcomed, or the opposite, medium adjustments in programs or instruments can occur, the former called program reform, the latter policy experimentation. If both, actors and ideas, are included, the outcome is likely to be a complete change in goals and instruments, labelled as policy renewal. From the perspective of the author, this distinction between entrance of ideas and actors is somewhat problematic: although analytically elegant, separating an actor from inherently hold ideas is almost impossible in reality. No actor has exactly the same set of ideas or interests as
23 another. Further, if views held by an actor would already be advocated by members of the policy subsystem, the actor would have little reason to enter into deliberation. Moreover, this separation may not be generating a better understanding of the policy formulation process, because consequences of receptiveness to only actors or only ideas are almost identical (ibid: 158). However, the distinction made is useful to explain the extreme types, policy renewal and instrument tinkering, as well as the related ramifications for policy formulation.
1.4.3 Decision-making The following third step, decision-making, refers to the selection among previously formulated policy options. It needs to be stressed that the process of decision-making is inherently political, not a limited technical choice between options. Options are the result of the formulation process and as described, those can be subject to the influence of actors furthering their own, often economic, interests. Therefore, decisions are not necessarily rational in the sense of rational for the public good. Further, it must be pointed out that decision-making is also not rational in the sense of attaining the optimal goal. Lindblom (1959) has stressed that practitioners expect that policies alone are insufficient to achieve the desired outcome and that they are rather trying to achieve the practical optimum than the theoretical one. It is critical to note that political decisions are made under time pressure. Hence, decision-making is not subject to careful, exact or scientific procedures (Lindblom 1959: 80). Further, it is pointed out that problems which are easy to measure are increasingly made subject to scientific analysis before decisions are made, but that complex issues cannot be based on scientific methods. Even more important, it is hardly possible for decision-makers to predetermine public reactions to decisions or to rank conflicting values against one another, so that most policies are drafted without accessing public opinion. Against this background, decision-makers explore limited options to operationalise value and goal issues in reference to their past experience, which means that there is no distinction between means and ends or clear separation of goals and the analysis which measures are best suited to achieve them. For Lindblom, empirical analysis and evaluation are intertwined (ibid: 81f.). This limited approach of decision-making has received much critique, but appears more realistic than other models. Regarding complex issues, it has been argued that it would be better to develop improved decision-making strategies than aspiring synopsis, because strategies enable analysts and decision-makers to choose and operationalise manageable tasks. In the words of Lindblom: “All analysis is incomplete, and all incomplete analysis must fail to grasp what turns out to be critical to good policy. But – and this is a "but" that must be given a prominent seat in the halls of controversy over incrementalism – that means that for complex problems all attempts at
24 synopsis are incomplete. The choice between synopsis and disjointed incrementalism – or between synopsis and any form of strategic analysis – is simply between ill-considered, often accidental incompleteness on one hand, and deliberate, designed incompleteness on the other.” (Lindblom 1979: 519) From this perspective, the practice of decision-makers to only consider a limited set of factors and options is actually sensible and indeed necessary to be able to draft policies within limited timeframes and with inevitably incomplete information. Decision-making is the domain of actors that possess authority (Howlett/Ramesh 2003: 163f.). In democratic states like Japan and Germany those actors are politicians or bureaucrats that hold legal authority to initiate action on behalf of the public. Of course, other actors from society or foreign countries might actually influence decision-making through lobbying or pressure, but formal power to make legally binding decisions rests with governmental and bureaucratic office-holders. However, non-action is also a possible alternative of decision-making. This leaves three possible types of decision-making: positive, negative and non-decision. Positive decisions are those which become implemented and alter policies. Negative decisions are characterised as an arrested policy cycle, since they are options that appeared in previous stages, but are discarded in order to maintain the status quo. This separates negative from non-decisions, which represent options that are consciously blocked from entering the cycle altogether, because they represent an undesired change of the status quo. Because decision-making is taking place under complex conditions, models seek to combine rational and incremental approaches. Howlett and Ramesh suggest that the complexity of the policy subsystem and the severity of constraints the decision-makers face are the most critical indicators to understand the nature of decisions made (ibid: 182f.): If the subsystem is highly complex and the constraints severe, resulting decisions will be limited to incremental adjustment. In the oppsite situation, a simpler subsystem and low constraints, decision-making will be comparatively easy, so that a more rational search for policies occurs. If the subsystem is complex, but facing low constraints, the likely result is optimising adjustment. Optimising adjustment is related to so-called mixed-scanning models, which stress that rationality is limited to areas perceived most crucial for addressing a problem. It is also differentiated between fundamental and incremental decisions: fundamental decisions only explore main alternatives without much concern about details or possible effects. Incremental decisions occur within the context of fundamental ones. Further, it is argued that both types are each others’ corrective, so that there is constant interplay (Etzioni 1967: 390). Context-rational fundamental decisions address long-term perspectives, which are often ignored due to incremental conservatism. In turn, incremental decisions correct rational ones by focusing on detailed policy effects and seek to optimise used tools.
25 Critisising the incremental approach for lacking any guiding principle to determine the direction of decisions, Etzioni makes a very important observation: [an] “accumulation of small steps could lead to a significant change” (ibid: 387). This means that many incremental decisions could have the same changing impact than one fundamental decision. Although mixed-scanning is labelled a decision-making approach it is clear that close links to policy formulation are present in the process of scanning on different levels. Further, the model has later been extended to incorporate implementation and review strategies (Etzioni 1986: 9), so that almost the complete policy cycle is covered by this model. The approach realises the role of structural factors such as actors’ position and relative power that affect decision-makers (ibid: 11), which is similar to the idea of the policy subsystem. Because of the incremental aspect of continuing scanning and re-evaluation, it is noted that the mixed-scanning model can become a “quasi-satisficing approach” (ibid: 9). If the subsystem is simple, but constraints are high, satisfycing search will occur, meaning search is likely to end as soon as a solution is likely to address the problem in a viable way. However, satisfycing search will resort to this solution even if it is quiet distant from being optimal. It could be said that satisfycing search will result in an effective problem resolution, but not in an efficient one.
1.4.4 Policy implementation In turn, the fourth implementation stage describes methods or strategies by which decisions are put into practice. Implementation is the domain of bureaucracy, but some qualifications are put forward (Howlett/Ramesh 2003: 187): bureaucracy is never a monolithic block, but rather consists of many agencies, sometimes even bureaux, with different agendas and interests of their own. Further, members of a policy subsystem will try to influence implementation, because this function determines the actual outcome of all other stages. In this stage the choice of the instrument of implementation takes place, because decision-makers seldomly provide a clear goal or direction, nor prescribe a specific instrument (ibid: 189f.). Instruments can be divided in substantive and procedural types, the former delivering or affecting the delivery of goods and services in society, while the latter alter aspects of policy deliberations (ibid: 91). Thus, substantive instruments deal with the question of how to deliver policies whereas procedural instruments are concerned with the question of how these policies are born out of interaction patterns by the political process. Also, tools may be categorised by the type of resource governments use to implement their policies. Organisation, authority, treasure, and nodality are the main governmental power resources and instruments can be assigned to one of these categories (ibid: 91-116). Especially if decision-makers and implementing bureaucrats are confronted with complex issues, it is likely that a policy combines use of several tools from different categories to address the
26 problem from various angles. Despite this observation, a model of implementation styles can be applied. Using the nature of the policy target and the severity of constraints on the state as indicators, the following categories exist (ibid: 203f.): if a policy target is highly specific and constraints on the governmental decision-makers are low, directed provision policy is an often observed approach. Owing to the specific nature of the issue, the state can use its organisational capacity to address it, while low resistance reduces the need to persuade or include societal actors. If the target is narrow, but the government is confronted with various limitations, e.g. legal, monetary or societal opposition, policies are likely to rely on regulation, which is combined with provision of financial incentives for the organisation of targeted actors in the policy subsystem. Such an approach, using the carrot and the stick, exemplifies that different, i.e. negative and positive incentives, may be employed simultaneously in order to achieve the specified goal. This way of implementing policy is called representative legalism. If a broad issue has to be addressed while decision-makers face multiple constraints, they will tend to use information-based substantive tools and the procedural tool of reorganisation. This approach, which on the one hand seeks to promote policies by speech-based acts like exhortation or persuasion and, on the other hand, utilises governmental authority to change interaction structures, is called institutionalised voluntarism. If a broad target is pursued without significant constraints, implementation is likely to employ treasure-based policy tools and communicate goals towards stakeholders. Further, this channelled consultation could be used to establish a dialogue to ensure continuous flow and exchange of information between state and relevant societal actors. This method of implementation is labelled directed subsidisation and with regard to the case studies, it should be highlighted that this type is commonly found in industrial policies.
1.4.5 Policy evaluation The fifth stage of policy evaluation refers to the processes of judging the effects of particular policies and conclusions from evaluation can set off a new cycle by identifying remaining problems or ineffective measures of implementation. There are three basic types of evaluation (Howlett/Ramesh 2003: 210-216): judicial, administrative and political. Judicial review first and foremost judges the legality of governmental and bureaucratic action. In this process, the judiciary assesses if policies conform to constitutional principles and administrative bodies act in the boundaries of their legally prescribed jurisdiction. Moreover, in states like Germany, courts may play an influential role as they are not limited to strictly legal, procedural parameters. Administrative evaluation is more concerned with economic or budgetary cost-benefit assessment. The aim is to establish how efficient or effective the implementation process was
27 conducted, analysing the costs and performance of a policy or program. However, administrative units have organisational self-interest in continuing programs, which equals jurisdiction and command over financial resources. Thus, if the administrative body performing the program and its evaluation are identical, evaluation is likely to be biased. Therefore, dividing project administration and its evaluation between separate agencies may be sensible. Moreover, administrative review may be subject to influence of political actors, who wish to portray their policies in a positive fashion and therefore lobby for evaluation with favourable indicators. Thus, administrative review processes can be manipulated to arrive at a desired, predetermined conclusion about the evaluated policy. In this case, the distinction between administrative and political evaluation becomes blurred due to political interference. Political evaluation is most likely to be biased as the interests of the evaluator guide the assessment. Judging policy is a very political process, because there are usually no clear or fixed criteria of evaluation, so that the establishment of indicators will significantly shape the following analysis and its results. Possible outcomes of policy evaluation are continuation, alteration and termination. Upon these, termination is most rare. Possible explanations are a tendency towards stability and persistence of organisations. Termination of longer existing policies has been compared to human relationships: “Have we not heard of those who stick to a relationship just because they have grown used to the institutional inertia, are better off financially, or will not face the cost or legal complexities of ending it? […] Till death do us part… how nice to cleave to the oath. But at what price? […] While the oath above is not officially sworn in public policy and public management, organizational survival patterns, as well as legal and cost-benefit concerns, are analogical to their equivalents in human affairs.” (Geva-May 2001: 265) According to this perspective, termination is avoided because of the political, financial, legal as well as emotional costs. While judgements seldom declare neither flawless success nor complete failure, continuation and termination only occur as exceptions, but most evaluations will arrive at the conclusion that improvement of a policy is possible or necessary. Therefore, alteration of the program or parts of it is likely to appear. However, change tends to be incremental due to path dependency of the policy subsystem and its policies. Related to evaluation is the question of policy learning. Learning can be interpreted as conscious attempt to improve existing policies, but also as a mere reaction to changing conditions affecting the policy under review. Therefore, learning can be initiated endogenously or exogenously. With regard to the former, it needs to be stressed that learning or lesson drawing must be an intentional exercise directed towards changing policy to distinguish it from the effect or reliance of policy-makers past experience (Evans/Davies 1999: 365-367). This
28 point is crucial, because otherwise almost all decisions could be labelled as lesson drawing as experience will often be included subconsciously. However, this again is difficult to determine, because analysts cannot differentiate between conscious and subconscious lesson drawing. Another aspect is who is learning and what is learned. Learning may be limited to a subsystem or occur on a larger scale, namely the policy universe while the object of the process may be restricted to specific instruments, but also extend to a redefinition of the problem addressed by a policy. One special type of organisation which has been credited as influential is so-called epistemic communities (Haas 1992: 2-4): these networks of knowledge-based experts are said to play an important role as advisors on increasingly complex policy issues. It should be stressed that the idea of an epistemic community is highly idealistic. This ambition is reflected by the differentiation between them and administrative bodies: epistemic communities are said to operate on the basis of normative objectives, whereas bureaucracies further their own interests, embodied in their missions and budgets (ibid: 19). The relation between evaluation and learning can be investigated by assessing the level of administrative capacity of a state and investigating if a subsystem is dominated by state or societal actors. Those indicators generate the following evaluation styles (Howlett/Ramesh 2003: 222-224): If state capacity is high and state actors dominate, the likely result is endogenous lesson-drawing, also called instrumental learning. If capacity is high, but societal actors are more influential than state-centred ones, the process is called social learning as learning emanates from non-governmental actors. If administrative capacity is weak and the state dominates the subsystem, learning effects will be very limited and it is likely to arise from technical evaluations. If state capacity is low and societal actors more influential, the result will be non-learning, because evaluation does not even follow some limited rationality as in the former case, but is mainly subject to political interests. All in all, it stands out that state administrative capacity is critical for any substantial learning process. State capacity is necessary to absorb any evaluation, regardless of its origin, and transform the results into improved policies.
1.4.6 Policy regimes Finally, students of public policies seek to identify long-term patterns of policy-making in subsystems. This idea is embodied in the so-called policy regime, which combines persistent patterns of policy processes and contents (ibid: 233f.). While the processes, represented through the already put forward policy styles, deal with the question how policies are made, prevailing contents, called policy paradigms, define ideas and issues addressed through these policies. Moreover, although regimes are examples of lasting processes dealing with persistent or reoccurring contents, regimes are also subject to change. Change can be of incremental or
29 fundamental nature, but the former is more common than the latter, which is the reason why they are also labelled as normal and atypical respectively (ibid: 234-242). However, it must be underlined that both modes may be interlinked, e.g. that long periods of incremental change are followed by a brief phase of fundamental shift, which then is a newly established, dominant set of ideas and processes, but in turn also will become subject to many incremental changes. Further, policy processes like learning represent openness to a certain degree of change via regime-internal functions, so that regimes should not be misinterpreted as frozen structures. On the contrary, they have inbuilt features that enable modulation. However, as already pointed out, learning tends to be embedded in existing belief-systems and structured through institutions that seek continuity. Exactly for these reasons, the level of change tends to be rather evolutionary and path-dependent than revolutionary.
30 2 The Japanese National Innovation System8 2.1 Political framework conditions
Innovative development often takes place inside firms, but the political environment is able to provide conditions that support or discourage research. Besides monetary incentives, a high quality education system and stable, reliable conditions for R&D are being attributed to positively affect innovation. An outstanding feature of the Japanese political system is the dominance of the Liberal Democrat Party (jimin tō; LDP) in what is commonly called the “55 system”. Thus, for most of the time covered by this study the LDP held power, the only exceptions being 1993/1994 and the administrations headed by the Democratic Party of Japan (minshu tō; DPJ) from 2009 to 2012.9 With such an ongoing influence the LDP decisively shaped the framework under which Japanese innovation policy operated. Long-term electoral success of the LDP provided a stable and reliable set of conditions. Industry, bureaucrats and LDP-politicians were able to establish close relations, sometimes referred to as “iron triangle” (tetsu no sankaku). Triadic explanations of the Japanese political economy are useful as they identify influential actors: early studies have either emphasised dominance by business or the bureaucracy. As one of the first scholars Yananga (1968: 103-108; 141-151) has described this triadic model of Japan’s policy-making, concluding that organised business has the power to make and unmake governments and further that the bureaucracy is mainly developing, formulating and implementing legislation instead of politicians. Regarding the second observation, Curtis (1999: 116-121) has described in great detail that the Japanese Diet hardly had any policy-making function before the LDP first lost power in 1993 and that the seven party coalition under Prime Minister Hosokawa failed to establish an effective mechanism of policy- and decision-making. From a historic perspective, it has been argued that bureaucracy gradually lost power vis-à-vis LDP politicians, especially in the 1980s (Muramatsu 1997). However, Kato (1994; 2002) has argued that it is more meaningful to search for mutual utility to explain cooperation between LDP politicans and bureaucrats than assuming one-sided dominance. In his view, politicians need the expertise of bureaucrats to effectively regulate. On the other hand, bureaucrats will have to adjust technocratically ideal regulation to the politically
8 As this study covers only the timeframe from the 1970s, which are the starting point for state interest in EVs, the description of the innovation systems is only covering the same timeframe. Detailed accounts that include the historical developments can be found in the volume edited by Nelson: On the roots and continuities from the Meiji Restoration up until the 1990s, see Odagiri and Goto (1993). For a thorough discussion of the German case, refer to Keck (1993). 9 As the LDP needed to form a coalition with the New Liberal Club (shin jiyu kurabu), a party that split away from the LDP and later remerged with it from 1983-1986 and ever since it returned to power in 1994 and 2012 one cannot speak of single-party rule (Stockwin 2011).
31 feasible. For Kato, relations between the LDP and bureaucracy are less characterised by deterministic power but rather by reciprocal influence or interdependence. Similarly, in his analysis of declining industries, Uriu (1996) has shown that bureaucrats need the cooperation of LDP and business to implement their policies. While covering different topics, these studies all observed that the triadic model is too static and incorrectly suggests that business, bureaucrats and LDP are unified actors. Thus, more detailed policy-making research has put forward the notion of “baby triangle” (kogata no sankakkei) (Nakano 1997: 91). Schwartz (1998) analysis of the role of consulting bodies (shingikai) has shown that dominance over the policy process indeed depends on the concreate case, i.e. if deliberated policies are contested by interest groups, rather technical or distributive. In each case, the differing nature of policies created a different environment of deliberation. Thus, each of the triadic actors 10 behaved different in the policy-making process. This means that it is increasingly meaningless to enter into the discussion on if or to which extent these informal networks or their respective actors dominated Japanese politics11 because the answer depends on the concrete policy field or subject. However, one aspect is nevertheless important for the analysis: the position of the LDP minimised the role of other parties in those “(baby) iron triangles”, which should be regarded as policy subsystems, or at least as their respective cores.12 Therefore, using a policy analysis approach for analysis is more useful than attempting an a priori determination of which actor is going to dominate the process. Another aspect is the size of these bodies. It has been noted that in the 1950s and 1960s, these bodies incorporated large numbers of members (up to 420), which made deliberation lengthy and complicated. Therefore, the cabinet introduced a limit of 20 councillors per body, but it has been documented that almost half of all bodies exceeded this limit (ibid: 61). Thus, the limitation to 20 members is a mere guideline, not a strict rule. Therefore, while the guideline suggests that these bodies are rather exclusive, the high number of incidients which violated the guideline shows that these bodies can include a larger variety of actors. Hence, judging if
10 Schwartz (1998: 116-163) has further demonstrated that the general exclusion of labour does not apply for Ministery of Labour (MOL) shingikai, which regularly includes union representatives. Thus, while labour is included in deliberations that affect its constituents directly, it is excluded from discussions on broader issues. 11 Thorough discussion of revisionist, counter-revisionist, neo-pluralist and rational choice approaches towards the question which group dominates Japanese politics, see: Wright (1999). Further, although Japan and Germany have differing cultural traditions, the author thinks that culturalist explanations of Japanese politics are not useful in a comparative study. Therefore, as the author personally sees a neo-pluralist framework as most suitable for cross-country comparison, a policy analysis approach was chosen for this study. 12 In his study on the Ministry of Finance (MOF), Campbell (1977: 40; 45n) has suggested to include MOF Budget Bureau examiners into each subsystem as these officials had great influence on determining programs’ scope. However, this study found no signs that MOF played an influential role. As will be shown, relevant programs enjoyed longevity. Likely explanations are that MOF’s power eroded over time or that evaluating R&D and demonstration programs is even more difficult that common budget items.
32 shingikai are exclusive or inclusive should not be generalised, but be based on investigation of specific bodies. Japan’s industry must be characterised as keeping good relations with the LDP and the bureaucracy. In general, the LDP had a much higher income than other parties13, mostly based on business donations. However, since public financing of political parties was introduced in 1995, this source of revenue became higher than corporate donations. Contributions made up around 50% of LDP revenue before the introduction of public party financing, but they decreased to 19% afterwards (Carlson 2011: 72-75). Regarding the case study, the automobile industry by and large follows the same pattern. Babb (2001: 37; 58f.) described companies like Toyota as supporting the moderate left, but the numbers he reports for political donations in 1998 contradict and qualify his assessment. Although Toyota donated to the Democratic Party (JPY 9.1 million), the LDP received more than six times as much (JPY 56.3 million). Nissan also supported the Democrats (JPY 3.3 million), but this sum explipses in comparison to LDP funding (JPY 30.9 million). Hence, it would be more appropriate to describe the car industry as pro-LDP, but less one-sided in their support than other Japanese industries. Japan’s ministerial bureaucracy is closely related to the LDP and business. Earlier studies tended to describe it closely resembling Weber’s ideal-type. From a German perspective, these characterisations reminded Klein (2006: 288, 212n) of descriptions of 19th century Prussian elitist bureaucracy, which indeed was the blueprint for bureaucratic (re-)organisation after the Meiji Restoration.14 This makes clear that Japanese – as well as German – bureaucracy was and partly still is not a neutral servant of elected governments but an actor with independent objectives. One of these objectives has been clarified by Niskanen’s seminal study (1971), which showed that bureaucracies follow their own agenda, especially via maximising their budget. A factor that could be regarded as stabilising the mainly triadic system is the origin of the ministerial bureaucracy. Since the Meiji Restoration, the bureaucracy is staffed by graduates from Japan’s elite universities, especially law faculties teaching public administration and administrative law (Koh 1989: 19-23). To illustrate the elite character, those passing the class I civil service examination in 1999 were graduating from just 10 universities. Moreover, University of Tokyo graduates, especially from Todai Law School, are always the largest group of those passing, and among those who are appointed into government posts, Todai graduates
13 Sole exception is the Japanese Communist Party (kyōsan tō; JCP), which generates much revenue through its publications such as the daily newspaper “Red Flag” (shinbun akahata) and relatively extensive real estate property, especially in Tokyo. Thus, JCP had higher annual income than the LDP until 2004. These independent sources of revenue also explain why the JCP does not accept subsidies through the public party financing (Klein 2006: 238). 14 While the Prussian model is the main prototype, it has been pointed out that there are several distinct modifications that differentiate the Japanese higher civil service (Koh 1989: 12f.; 24f.)
33 are the most likely to rise to higher ranks such as bureau chief and permanent secretary (Sakamoto 2001: 259). The Science and Technology Agency (kagaku gijutsu chō; STA), which plays an important role in technology forecasting (see: 2.2), is an exception from the rule because it is the only agency which is regularly staffed with technically trained officers even at high-level positions (ibid: 264). Thus, the continuing preference toward graduates from highly prestigious universities could be regarded as a factor that reinforced the system’s stability. Benefits or side-effects of such stable environment could be mutual information exchange and close cooperation based on trust, the foresight-based long-range planning and general reliance on political promises. With the LDP in power, societal members of the subsystem could rely on the continued commitment to a taken course of action. Possible pressure and demand for change by new state subsystem members due to shifts in power were largely absent. Extraordinary close ties were created between the LDP and the ministerial bureaucracy. An inter- and intra-agency procedure of consultation for legislative projects, called ringi sei is a key mechanism. As a procedure, ringi sei forces bureaux to circulate proposed bills in a specific form (ringi sho) through all concerned bureaux inside and outside the ministery to get approval. Thus, it is basically a bottom-up process. As the proposal spends a long time in the system and each seal is regarded as lending cumulative support, it has been observed that the system is limiting the room for leadership by top-level bureaucrats, because their rejection would be regarded as opposing the inter- and intraministerial consensus (Abe et al. 1994: 37). The ringi sei structure is mirrored by an intra-party structure thereby incorporating politicians in the respective groups into bureaucratic legislative planning before a formulated bill enters the diet. This system was informally called “pre-appraisal system” (jizen shinsa sei) (Klein 2006: 290). This decision-making pattern is frequently related to the process of nemawashi (Jun/Moto 1995: 130f.).15 The term literally means digging up soil before planting, but is often translated as “laying the groundwork”, “pre-negotiation” or “consensus-making”, highlighting different important aspects of the process. In the context of policy formulation, nemawashi can mean the following: it has been observed that the ringi sei is the standard procedure for drafting bills, but if politically sensitive or contested issues are addressed, top-level bureaucrats consult with politicians about the content of a bill before the ringi sho is formally injected into the ringi sei (Abe et al. 1994: 37). Hence, the usual bottom-up procedure is replaced by top-down decision-making and subsequent formal standard procedure in politicised areas. Regarding influencial shingikai, it is possible to describe nemawashi as a form of bureaucratic dominance, because ministries use their power to nominate council members to ensure that they are at least
15 The description of the process is useful, but the author does not agree with Jun and Moto’s cultural explanation. While the author agrees with the authors that cultural phenomena like group orientation and senpai-kohai relations are important in Japan, they do not cause processes like nemawashi and ringi sei. However, this socio-cultural orientation may explain stability and continuity of the processes.
34 willing to compromise and council members frequently report that they feel that their function is not to deliberate and formulate policies themselves but to approve predecided drafts from the bureaucracy (Schwartz 1998: 287f.). However, Schwartz also points out that shingikai are just one stage of the policy process and interest groups tend to give their consent to bureaucratically formulated council reports and try to lobby at later stages of the policy process. Systems similar to ringi sei also exist in Japan’s large corporations. Instead of applying cultural explanations for this practice such as avoidance of personal responsibility and consensual decision-making, an organisational explanation is more convincing. In a study analysing the origins and career paths of upper civil servants from the Meiji Restoration until the end of the Second World War, Silberman (1973) has identified following organisational causalities: prior to the Meiji Restoration there existed no ringi sei – neither in government nor business – in Japan. Hence, cultural reasons cannot be the sole source16 of this system. Moreover, Silberman points out similar patterns can be found in large-scale organisations such as different militaries and administrations around the world. Typically, these organisations are characterised by hierarchical order, reliance on expertise and frequent changes in post assignments, e.g. via rotation between bureaux. Hence, the cause for the emergence of a system like ringi sei appears more related to organisational imperatives than to Japanese cultural values. Politicians who take strong interest in particular topics and industrial sectors, known as zoku giin17, are especially active in their respective sector – zoku giin are organised along ministerial sections – and the pre-appraisal system allowed those politicians to be influential in the respective branches (Klein 2006: 97-99; 290). The term is only used for Diet members from the LDP, which again highlights the elevated status of the party for most of its post-war history. A zoku giin is not just sitting on the respective Diet committee, but also on the same party-internal policy division or committee (bukai). The LDP has established the committees as sub-divisions of the so-called Policy Affairs Research Council (seimu chōsakai; PARC), which is the main policy decision-making body18 of the party. Further, it is possible that a single politician is active in more than just one network. Before 1994, the number has been limited by the LDP to membership in two groups (Krauss/Pekkanen 2004: 19). Kido (2007: 5), reported that the number was limited to four, but even this less severe internal restriction has been abolished
16 Silberman does not deny that socio-cultural identity may have played a role since the majority of bureaucrats came from the samurai class and the ranks soon became dominated by Imperial University of Tokyo graduates. 17 zoku means tribe or family, but in this context it is used for political factions. giin means member of parliament. “Industry sector assemblyman” or “special interest legislator” might be proper descriptions of their function in the Japanese political system. 18 It is well documented that the different factions in the LDP play the major role in decision-making concerning party posts. Since this feature is not closely related to the research questions of this study, factions will not be discussed further. For an overview over faction development in Japan, see: Köllner 2004.
35 (Tatebayashi/McKean 2002: 42), thus allowing politicians to join as many committees as they like. It has been suggested that this development is an indirect consequence of electoral reform, because politicians need to inform themselves more to be able to appeal to voters. Thus, zoku have not just the function to guide decision-making in their specialised policy field, they also function as a training ground for new members of the Diet, where they develop expertise on a certain policy area (Krauss/Pekkanen 2004: 19f.). If one does not concentrate on the problematic aspects of the phenomenon, zoku can be regarded as a sign of professionalisation among Japanese Diet members. However, the problematic aspects also must be mentioned. It has been noted that these politicians also use their ties to the bureaucracy to protect sectors from deregulation (Kusano 1999: 69) or misuse their networks for personal enrichment (Choi 2007: 935f.). With respect to the analysis, (automobile) industry and transport zoku giin must be accounted as the political members of the policy subsystem. This is in line with the observation, that legislatures in parliamentary systems – like Japan and Germany – are not significant actors in the policy process, but individual legislators may be subsystem members due to their expertise and thereby command considerable influence (Howlett/Ramesh 2003: 67). However, the problem is that little is known about how the relationship between legislators and industries works. This is due to the informal and opaque nature of these connections. For a long time, only numbers available were from a Japanese study made in 1986 (quoted by: Klein 2006: 99): according to this source the industry and trade zoku, related to the Ministry of International Trade and Industry (MITI), was the largest with 34 members from the House of Representatives and seven from the House of Councillors, followed by agriculture and construction. Transportation was a middle-sized group which consisted of 19 legislators from the lower and six from the upper house. The obvious problem is that the data is outdated. As these networks mirrored the ministerial structure, the administrative reform of 2001 (see: 2.5) has also altered the organisational form of the zoku. As the only recent investigation that covers zoku giin shows (Kido 2007), the zoku have adjusted the structure accordingly to mirror the activities of ministries. Therefore, it can be stated that the number of Ministry of Economy, Trade and Industry (keizai sangyō shō; METI) related zoku giin reduced significantly to 15, while the merger of the Ministry of Construction (kensetsu shō; MOC) and Ministry of Transport (unyu shō; MOC) into the Ministry of Land, Infrastructure, Traffic and Tourism (kokudo kōtsū shō; MLIT) has caused a fusion of their respective zoku-networks into the largest “tribe” with 18 members from both houses (ibid: 13). Today, the METI-zoku is only the fifth largest network behind MLIT (18), the Ministry of Education, Culture, Sports, Science and Technology (monbu kagaku shō; MEXT) (17), the Ministry of Agriculture, Forestry and Fisheries (nōrin suisan shō; MAFF) and the Ministry of Health, Labour and Welfare (kōsei rōdō shō; MHLW) (16 each). Seemingly unattractive topics
36 for Diet member are reflected by zoku with the lowest membership, which are justice (5), environment (4) and cabinet affairs (2). The concentration on certain policy areas by zoku giin is explained by two factors: Possibility to mobilise voters and interest groups as well as access to funding (ibid: 14). Indeed, this dual function should be stressed, as the access to “pork” is usually highlighted. This one-sided concentration on “pork-barrel” politics is too narrow as it cannot explain the former prominent role of METI, as it did not command a large budget of its own, but rather oversaw budgets of subsidiary agencies. Thus, the access to influential businesses is a much more powerful explanation than access to funding. Another feature that influences the interaction inside the policy subsystem is relations between the bureaucracy and private companies. One particular connection is called amakudari, literally meaning “descending from heaven“. In its broad definition, this term describes the transfer from retired bureaucrats into private companies, public corporations or politics. However, Koh (1989: 234f.) defines amakudari as entering private business only. For Koh, entering public corporations should be differentiated as yokosuberi (side slip), because there are no legal restrictions on yokosuberi, but some on amakudari. Regulation was legislated, which set a two-year ban before companies could employ officials that held administrative authority over their business sector. However, there existed several loopholes, e.g. first yokosuberi and then entering private business (Johnson 1974: 954.). Thus, these seemingly clearly distinct forms may actually appear in sequence. One clear effect of amakudari is the establishment of informal ties between bureaucracy, politicians and industry. As these networks are opaque it is hard to determine how influential these connections are and if they strengthen just one side of an “iron triangle”. Therefore, two diverging interpretations of amakudari exist: older assessments stress that bureaucrats are often employed by middle-sized firms, which seek to gain access to the bureaucracy via amakudari in order to equal the structural disadvantage they have in this matter against large MNC competitors (Calder 1989). To this rather positive function could be added that the experience of ex-bureaucrats in politics enhance the ability of parties to monitor the administration. After several corruption scandals involving former bureaucrats were disclosed in the 1990s, the phenomenon has been increasingly regarded as a form of structural corruption (Choi 2007: 933-935). Therefore, regulation legislated in 2007 aimed at closing some of these loopholes and banning amakudari from 2009 onward. However, this only means that the two-year ban is no longer subject to exemptions. Therefore, it can be criticised that there are still legal loopholes. Formerly, the Japanese National Personnel Authority (jinji in) published annual reports (eiri kigyō e no shūshoku no shōnin ni kan suru nenji hōkoku) on granted exceptions, thus legalised amakudari (Tab. 2).
37 Year 1966 1968 1970 1972 1974 1980 1986 2005 2006 2007 2008 Sanctioned 147 136 193 178 189 228 252 66 70 78 105 cases Tab. 2 Sactioned amakudari cases (Source: Johnson 1974: 955 (1966-1972); Koh 1989: 237 (1974-1986); National Personnel Authority: 2005-2008)
Comparing the number of legalised cases as reported by Johnson, Koh, and the last official reports the number has surged in until the 1980s and significantly decreased subsequently. The resurging trend until 2008 may be due to aforementioned legislation, so that those who wanted to leave office took their last chance to do so before legislation banned the practice of exempting bureaucrats. However, these reports did not inform about the descent to public corporations since they not subject to any legislation. Thus, while the extent of post-career employment is not entirely covered, the reports at least provided information about the legalised exceptions. Unfortunately, this source of information has been discontinued after 2008, because exemptions are no longer granted. Although this regulation prevents bureaucrats from directly moving from state to private sector and utilise networks and acquired expertise over bureaucratic process for their new employers, it does not eliminate the phenomenon: in an interview on the access to state support for R&D with a Tier2 supplier company, the interviewee openly stated that his superior is a former METI bureaucrat. Although the firm frequently applied for R&D subsidies in the past, it did so far did not receive any. This is where the ex-bureaucrat comes into play: “We hope that with his help, our relation to METI will improve.” Interpreting the subtext is straight forward: Improving the relationship means that the company trusts in the ability of the ex-bureaucrat to convince his former colleagues that the firm should be receiving financial support in the future. This case demonstrates that the function described by Calder is seemingly still relevant for smaller firms.19 Apparently, such companies still have difficulties to get access to state support in Japan and one possibility to deal with the problem is hiring a former bureaucrat and hope that the professional knowledge and personal ties can be used to get access to the powerful bureaucracy and ultimately funding. Relationships are still extremely important in the Japanese context: the group orientation and identity often prevents outsiders to enter. Thus, relations to a certain group of another person are often the only way to access this group that one does not have a relation with.20
19 This particular Tier2 supplier employs more than 10.000 people around the world. Thus, small in the automobile industry is relatively large if compared to other business sectors. Hence, despite being relatively small by industry standards, many supplier companies do not fit the definition of a SME. 20 Although this is true in many countries, including Germany, Japan is still a country where group
38 It has been demonstrated that the intensity of amakudari has decreased after the burst of the bubble economy. For this study, it is critical to highlight that this overall trend is also happening in the automobile industry (Moerke 2005: 76f.). However, two limitations of this otherwise very useful study must be highlighted: First, the investigated timeframe ends 1998, so that it is not possible to determine if the declining trend has stopped or continued. Second, the investigation concentrates on the 77 largest firms in the manufacturing sector and hence, it is not possible to state if the aim of amakudari may have shifted to relatively smaller companies as in the described case. However, it should be pointed out that such practice is not exclusive for Japan. Very similar procedures can be found in many countries, e.g. in Germany (see: 3.2), in France, where it is called “pantouflage”, or the “revolving door” in US politics. The more recent and probably more problematic, opposite phenomenon that private company personal is seconded to administrative bodies is called amaagari (ascending to heaven). With a few exceptions, it has not been subject to academic analysis. A particularly critical paper (Wang/Chen 2012) has been published after the Tōhoku triple disaster, identifying amakudari and amaagari as one of the causes for nuclear regulation failure in Japan, because these phenomena led to collusion between bureaucracy and nuclear industry. Similarly, in view of authors like Johnson or Choi amakudari is a form of structural corruption.21 However, in their cross-country analysis of corruption, Dahlström and collegues (2012) found that among several factors, meritocratic recruitment is the most significant in reducing corruption. Therefore, despite existing problems, through the practice of meritocratic bureaucratic recruitment Japan and Germany have comparatively fewer problems with corruption than other states. The structural relationships between the LDP, the bureaucracy and business explored here were targeted by the DPJ when it came to head government in 2009. DPJ leadership tried to eliminate the intervention of the majority party into policy-making via eliminating DPJ’s PARC equivalent, the party-bureaucracy nexus via banning direct contacts between Diet members and bureaucrats and the bureaucracy-led cabinet via several measures aiming at strengthing the cabinet vis-à-vis the bureaucracy (Mulgan 2011: 267-270). While these measures could have lessened the strong relationships over time, DPJ’s fall from power is likely to render the attempted reform of Japanese policy-making a short-lived episode.
identity, behaviour and exclusiveness are comparatively stronger than in other states. 21 The problem with the term structural corruption is that it is distinct from the legal definition of corruption. Structural corruption highlights effects that are socially and normatively problematic but legal. While the author thinks it is necessary to highlight this differentiation, it is nevertheless appropriate to use it in a context of political economy. Those who prefer softer terminology may speak of interest collusion.
39 2.2 Long-range planning
Japanese governments conducted economic planning with the main purpose of achieving economic recovery after the end of the Second World War. However, economic planning only defined broad lines of policy and therefore influenced companies in indirect ways. Despite the impact of administrative guidance (see: 2.4), Japanese economic planning was far away from socialist countries planning. It has been pointed out that planning in the 1950s and 1960s suffered from two major weaknesses (Okita 1974: 2f.): Firstly, inter-ministerial conflicts reduced the possible impact of economic planning. Secondly, assessment methods were inaccurate and conservative, so that often 5-year-plans were already fulfilled after two years. While this form of economic planning was rather general, a more specialised form of planning should be investigated in more detail. An outstanding feature of the Japanese innovation policy process is the utilisation of technology foresight surveys by the so-called Delphi method. Japan has continued to carry out Delphi surveys from the 1970s while most European countries ended their Delphi studies after the first oil crisis and restarted national Delphi surveys around the 1990s (Cuhls 1998: 26). The surveys were carried out by the STA.22 First by its planning bureau, later by the National Institute of Science and Technology Policy (kagaku gijutsu seisaku kenkyū jo; NISTEP), which was under the aegis of STA. STA was fused with the Ministry of Education (monbu shō; MOE) into MEXT in 2001, but the surveys are still conducted by NISTEP. The Delphi method is based on a selected panel of experts and a structured questionnaire. The timeframe of all Japanese surveys has been 30 years: Experts are asked to indicate at which point in time the stated objectives of future technology could be realised or if they thought it was impossible to achieve a goal in the next 30 years. From the second survey of 1976 onwards, those who thought that realisation was not possible in the given timeframe were asked to elaborate their reasons. Further, it was asked which – state or private organisation – could promote R&D, by which methods and by what means (ibid: 102). Participants’ anonymous responses to the questions are evaluated and results are entering into a second (and possibly third) round, where experts again are asked to comment on the same questions. The point is that first round judgements are only based on the experts´ knowledge while following rounds confront experts with answers of their colleagues. Thereby, experts get a feedback to their opinion, a statistical overview of all responses and often they are asked to state reasons if their
22 STA’s foundation in 1956 is closely related to the plans of using nuclear energy in Japan: It has been demonstrated that business, academia, media and politicians from almost all parties – including those in opposition – supported the use of this particular energy in resource-scarce Japan in what was called “atoms for peace” program (Yanaga 1968: 177-201).
40 judgement is extremely different to the mean average.23 Therefore, participants can change their mind or confront the panel with their own assessment and critique. Furthermore, it is usually asked which nation is currently the most advanced in a certain field of technology, so that the level of other countries is viewed as a benchmark to be achieved (Cuhls 2007: 38). A useful differentiation has been introduced in the eighth Japanese Delphi survey: topics are assessed towards the time of technological realisation and social application (e.g.: NISTEP 2005: 340). This should be valuable information for decision-makers as it highlights the fact that innovative products will need a certain timeframe to diffuse into market and society. Such information could raise questions about state measures that could support diffusion or help identifying obstacles blocking social application. Minor changes have been applied in the ninth survey: Experts now indicate which sectors, i.e. actors, are deemed instrumental in achieving technological breakthrough and social application (NISTEP 2010: 11). These judgements, which include collaboration between sectors, allow decision-makers to get an idea if innovation will happen through business processes alone or if state intervention appears necessary. With regard to the case study, this means that the Delphi survey informs decision-makers if experts expect the automobile industry to be capable of achieving invention and diffusion independently, or if policy measures are deemed necessary. Moreover, there exists a variety of other forecast activities at different levels in Japan, ranging from ministries with an own R&D structure to private businesses. Kuwahara Terutaka, former head of the Technology Forecast Research Team at NISTEP and today head of the organisation points out: “Among these activities, the STA Delphi survey is designed considering the Japanese science and technology administrative background and provides a basis for all other forecasting activities. As Japanese science and technology administration is distributed in many government ministries and agencies that have their own research institutions budgets, government R&D programs as a whole are implemented through STA’s coordination.” (Kuwahara 1999: 6) Delphi survey utilisation is mentioned in the third S&T Basic Plan (Government of Japan 2006: 18). Another aspect should be mentioned: although surveys strongly focus on technological foresight, there are sometimes political measures explored. One exemplary topic is the introduction of an environmental tax (NISTEP 2001: 386). This is clearly a political or administrative tool, which utilisation is not connected to or dependent on technological innovation. Indeed, the latest – ninth – survey, has the highest number of such political or even social goals: Environmental education, attitude change from owning to sharing, changing
23 From the second round of each survey a graphic is illustrating the points in time when 25%, 50%, and 75% of participants are expecting realisation of the subject. Example of this visualisation, see: Irvine/Martin 1984: 112.
41 1 Japan’s patenting system, /3 of listed firms operate day-care for children, domestic MNC’s hire 1 /3 of local staff from foreigners or that 50% of big Japanese firms adopt English as their official language (NISTEP 2010: 14; 20; 151; 205f.; 210). The increasing number of normative aims indicates that the Japanese innovation system is increasingly paying more attention to (enabling) conditions of innovation.24 Above firm-related topics demonstrate that Delphi experts perceive a need for Japanese companies to become more open to foreigners and especially females. The concern for these aspects can be related to social developments of aging society and internationalisation. Although the possibility to employ so-called “Policy Delphi studies” as policy analysis and deliberation tools was been put forward long ago (Turoff 1970), STA and NISTEP have focussed on technology forecasting instead of assessing policy proposals. Aforementioned examples are still clear exeptions to the rule. Japanese Delphi surveys serve the main purpose to inform decision-makers or decision-making institutions about technical experts’ judgement. Thus, the eighth survey was planned and timed for 2003/04, so that the results could enter the discussions on the Japanese third S&T Basic Plan which covers the years 2006-2010 (Kuwahara 2004: 34). This point needs to be stressed here: the purpose is first and foremost that of information. There is no automatism that identified future topics are getting priority attention or funding from state institutions (Cuhls 2007: 47). Political decision-makers themselves will select which issues they regard as being of critical interest for Japan´s future international competitiveness. It is also reported that Japanese companies use Delphi surveys even more often than in-house, external organisation´s or industry forecasts to identify future trends (Kuwahara 1999: 11). Delphi foresight survey utilisation in different countries varies greatly (Metcalfe/Georghiou 1997: 22f.) which can be explained by the underlying administrative culture of individual states. State planning activity appears to have stood in stark contrast to private business attitudes: an analysis of Japanese economic development since the Meiji Restoration even arrives at the pointed conclusion that prior to the oil crisis, Japanese private companies did not possess a corporate strategy and did not employ strategic R&D planning (Yamauchi 1983: 328-335).
2.3 Governmental R&D funding and strategy
Another aspect that deserves attention is government R&D spending: Japanese governmental R&D funding has been comparatively low in comparison with other advanced economies (Wakabayashi et al. 1999: 3). However, it should be pointed out that is mainly due to the virtual absence of military research (Stenberg 2004: 28), which is related to Japanese post-Second
24 While car-sharing is not a new idea, the possible shift from owning to sharing affects business models. This is a good example that innovation is not only about technology but also about service and processes.
42 World War security policy. Data reveal that Germany used to invest more into R&D than Japan at the beginning of the 1980s, but it was soon surpassed as Japan transformed itself from a follower of technological trends to a leading nation (Fig. 1). Moreover, the graph also shows that R&D investment further intensified since the end of the 1990s, when the overall percentage of R&D compared to GDP has significantly increased (Shiozawa/Ichikawa 2005: 140; Cuhls/Wieczorek 2008: 45).
Fig. 1 GERD as percentage of GDP (Data: compiled by the author from OECD iLibary)
Another step to stimulate more private sector’ R&D was the overhaul of R&D tax credits in 2003. Since then, 2-3% additional deductions can be made, but additional to this permanent change, some timely limited extra incentives were granted (Tanaka 2006: 1). So, while the government increased its R&D budget, it also improved the conditions for private sector R&D investment. However, looking back at the long lasting practice of limited government R&D funding it is essential to note that this was intentional. The logic or philosophy behind this was that government R&D should induce industrial R&D spending in targeted areas (Watanabe 1995: 243). Further, it has been noticed that government-initiated R&D consortia are an often utilised tool of administrative intervention. Further, Japan’s economic growth until the 1990s was sometimes ascribed to the use of R&D consortia as a political tool. More important, this perception resulted in increased numbers of government-sponsored consortia in the USA and the EU. It has further been noted that these projects had an exclusive nature that excluded firms from other countries (Hart 1993). With regard to the topic of interacting innovation systems, this illustrates that as innovation and economic competitveness are interlinked, governments
43 may copy policy tools to emulate (alleged) results. Empirical studies demonstrated that participation in consortia was related to higher R&D spending of participants, an increase in research productivity as well as augmented knowledge spill-over effects (Branstetter/Sakakibara 1998: 231). Also, surveys have found that cooperation in Japanese consortia is motivated by access to complementary knowledge (Sakakibara 1997a: 459). Firms are actually more interested in cooperating with companies they do not directly compete with and which have different specialised know-how. This clear preference can be explained by two factors: first, collaboration with partners that posses complementary knowledge is likely to be linked to emerging industries (ibid: 464), meaning that cooperation is directed at creating new products or services for not yet existing markets. Second, the threat from knowledge spill-over to competitors is not as acute as in intra-industry consortia. Viewed differently, the first reason is a positive-sum game and the second is avoidance of a zero-sum game. Another important aspect of research consortia is that the nature and aims went through a transition. While consortia in the 1960s were often in the near-commercial stage and only consisted of firms from the same industry, the focus shifted towards basic R&D and cooperation between companies from different industries increased during the 1970s and 1980s (Sakakibara 1997a: 456). This trend towards more inter-industry consortia marks Japan’s development from a follower of technological trends to an advanced economy. Further, as explained above, inter-industry consortia represent positive-sum games, not zero-sum ones. These positive results have been qualified: Not questioning the past success, but emphasising the impact of structural change, the argument suggests that the former virtuous cycle between spill-over effects and the quality of participants has degenerated to a vicious one, where reduced effects lead to decreasing quality of participants (Watanabe et al. 2004: 406; 415-417). Moreover, the relative success of Japanese consortia in generating knowledge spill-over might be a result of the differing method of patenting, combined with diverse utilisation pattern of patents by Japanese companies (Cohen et al. 2002: 1364-1366). Also, specific problems of cooperative research in consortia like asymmetry of information, protection of property information and distribution of rewards, profits and patents must be kept in mind (Aldrich et al. 1998: 274). Apart from these qualifications, there are fact-based arguments that the role of research consortia for Japan’s economic success has been overestimated by Western observers (Sakakibara 1997a: 451-454): first, between 1960 and 1991, average government support for consortia only made up 1.6% of total R&D expenditure. Second, industrial sectors with the highest number of consortia (chemicals/petroleum and food/beverages) are certainly among the least competitive sectors of the Japanese economy, while successful branches like office appliances and (electronic) entertainment are found to have a very low number of consortia.
44 These findings suggest that government-organised consortia are not the key to Japanese economic success in the past. If consortia are not the main factor for the economic success, why was this policy tool so frequently and prominently used? The answer lies in the specific (political) economy of Japan (ibid: 470): first, cooperative R&D was used for promoting internal diversification of companies. Japanese firms tend to diversify their businesses in order to not become dependent on a single one. This is a sharp difference towards the trend in Western firms to focus on a core business. Second, consortia were used as a tool to overcome the comparatively low mobility of researchers caused by the life-time employment system. Third, industry collaboration was a substitute for weak industry-academia links in Japan (analysis of the structural reasons, see: 2.5). Stating how many funds are actually provided is complicated: research on government subsidised consortia points out that even if data is accessible, it does not allow identification of the amount received per firm per project per year (Branstetter/Sakakibara 1998: 213). This situation still remains: although annual budget figures for EV-related headline topics are available (e.g.: NEDO 2008a: 1f.), it is not specified how much money individual projects will receive and how these sums will be divided between participating companies, government science laboratories and universities (ibid: 3-23). Hence, R&D funding is opaque rather than transparent and it is difficult to state how many subsidies are channeled towards the Japanese industry and for which research projects. Encouragement of creativity is a new phenomenon in furthering R&D. While Japan has well-educated human resources, they are often said to lack originality. This assessment is usually made by foreign, especially Western, researchers. The author thinks that measuring creativity or originality in research is difficult and may depend on perception. For the background of the case studies, the following was stated about Japanese R&D personnel’ skills by R&D staff of German Tier1 supplier Bosch, which is active in Japan and until 2012 held around 5% of Denso shares. Further, Bosch and Denso cooperate directly in the field of car instrumentation systems in a joint-venture called ADIT (Advanced Driver Information Technology). As the interviewee is working on instrumentation systems, he has regular working relations with Japanese staff: “We are working jointly together on the same topics in parallel, but with different markets. There is a clear market difference, but not one in skills. We are dealing with the same technology, but have different customers and operate in separate markets.” (Axel Kirschbaum, Bosch Instrumentation Systems, 14.02.2012) This assessment shows that at least from the perspective of a company researcher, there is no skill gap between Japan and Germany, two of the leading countries in automobile development.
45 This particular case is important for another reason: while automobile-related innovation is largely incremental, car instrumentation systems have much shorter life cycles (roughly two years) and largely utilise and integrate technologies that originate from consumer electronics. Thus, unlike the majority of automobile innovation, the interviewee and his Japanese counterparts are active in a field characterised by frequent radical innovation or its application into automobile components. Therefore, the question arises if alleged lack of creativity is a real problem for Japanese industry. Be there as it may, in order to address the perceived lack of originality, especially young researchers should be supported and given greater independence (Government of Japan 2006: 22-24). Government now promotes people who think outside the box, the so-called ’nail that stands out’ (Cuhls/Wieczorek 2008: 84). This is noteworthy reference to a Japanese proverb: the nail that stands out, gets hammered down (deru kugi wa utareru). This means that unorthodox behaviour gets sanctioned, which indicates that a dramatic departure from this social principle is desired in R&D. Advancing behavioural change in order to generate more creativity is going to be a long-term objective, but it must be doubted whether this sort of socio-cultural transformation can be limited to the realm of science.
2.4 Administrative guidance
The practice of administrative guidance also has influence on innovation policy. Officially, the term is defined as: “guidance, recommendations, advice, or other acts by an Administrative Organ may seek, within the scope of its duties or affairs under its jurisdiction, certain action or inaction on the part of specified persons in order to realize administrative aims, where such acts are not Dispositions.” (Japanese Cabinet Secretariat 2006: 3) This definition is rather vague, which in turn means that Japanese bureaucrats enjoy broad discretion. Thus, it is widely acknowledged that bureaucracy has large influence on the way laws are implemented: “Legislation drafted by the Diet is not explicitly instructing all bureaucrats’ actions. In the end, bills are interpreted and determined as practical acts and guidelines at bureaucrats’ discretion.” (Ryuen 1999: 15) Ryuen has identified three reasons why legislation tends to be vague: First, implementation requires technical expertise that politicians do not posses. Second, social change would make it necessary to adjust legislation if it was (too) specific. Third, limited time for plenary deliberation makes detailed regulation through the legislative authority impossible. While Ryuen’s second and third reasons are given in any society and therefore understandable explanations for bureaucratic discretion, the first is an often reproduced question of Japanese policiticians’ competence.
46 However, for the purpose of this study, administrative guidance should also be placed in the political context of one-party dominance and established close ties between state and societal actors. This form of state intervention has been much discussed ever since it was described by Chalmers Johnson (1982), mostly concerning government ability to direct and create economic growth via targeting key industries and allocating preferential credits through a state sponsored export-promotion and import restrictions. The above quotation also illustrates that tools such as recommendations or advice can be delivered orally, which adds to informality. However, it is important to note that MITI lost its most powerful instruments such as permiting technology imports and joint-ventures with foreign companies in 1967. Therefore, it has been convincingly argued that MITI needed to cooperate with other ministeries to implement its policies (Mabuchi 1997: 172-181): especially MOF which holds the authority to approve budgets, e.g. for subsidies, and formerly controlled the banking sector, so that it could influence loan distribution, became an important counterweight to MITI. Only of MITI could convince MOF officials of its plans, it had the ability to implement them. This means that policies increasingly needed to be coordinated between ministeries, including administrative guidance on a particular subject, e.g. MITI would have to advice companies to invest in certain technologies and MOF would have to guide banks to give these companies loans for financing these investments. Therefore, it can be argued that this increased complexity of coordination effectively increased the independence of private companies. However, it is interesting to note that even scientists who argue that the system has broken down in the 1970s or 1980s, do not deny positive impacts of MITI policy in the past (Callon 1995: 4). Later, Johnson qualified his approach and pointed out that it is crucial to realise that it is time specific, especially US tolerance of protectionists´ practices and that Japan was catching up to advanced industrial economies (Johnson 1999: 54-56). Despite the existence of an official definition of administrative guidance, it has been stressed that METI lacked any legal basis to enforce its directions. Using a law of resource utilisation as an example, the following can be stated (Lorenz 2006: 160-171): guideline use as a means of administrative guidance is based on legal grounds, but is usually limited to measures falling short of enforcement such as recommendations, advice or public announcement. However, public announcement is already considered to be an indirect sanction and companies are said to be afraid of being openly singled out as uncooperative. This may explain why sharper legal instruments like legal requirements or even administrative fines are seldom utilised, although these are available bureaucratic tools. Further, utilisation of each specific instrument is based on the formulation that it can be employed, which again illustrates the administration’s wide discretion. Regarding the intensity of administrative guidance, it has been observed that a bill on rural agricultural support had been subject to 89 administrative guidance measures in 10 years and that a single bill may be concretised by issuing up to 100 guidelines over several years
47 (Ryuen 1999: 127). A possible reason for the prevailing influence of mainly informal institutions in Japan is tradition: METI´s past and continuing reliance on consensus building and informal sanctions could be regarded as based on the value system of the Tokugawa period (Hill 1995: 121-125). At the same time, cultural explanations should be applied very cautiously: while Confucianism was long said to be the reason for Asian states’ backwardness, today it is often identified as the cause of economic success and dynamic development (Johnson 1995: 38-50). Thus, the incremental character of institutional change might be a more suitable explanation for continuing reliance on informal administrative guidance than cultural factors. Again, it needs to be emphasised that the Japanese state is far from being a single, monolithic unit, which miraculously steers economic development towards a desired end. Interaction between agencies and companies is influenced by the relative strength of the respective units. The “scandal” of unintended acceleration involving Toyota might be a good example: the Japanese agency in charge of transportation safety is reportedly staffed by 16 personnel, of which 15 are only employed on a part-time basis (Spiegel, 01.03.2010: 80). Obviously, the office is under-staffed, so that it is difficult to prevail if confrontation with other agencies or automobile companies occurs. Although there exists an orientation towards consensus-building, Japanese bureaucracy is described as competitive, conflict-ridden and lacking cooperation. This situation is portrayed in the phrase: “There are no ministries, only bureaus.” (Klein 2006: 291) However, critics who focus on this feature of Japanese politics and argue that this makes the system incapable of consensus and inefficient miss the following: the existence of diverse interests, intra- or inter-agency conflicts does not inhibit consensus-building, but rather make it necessary to arrive at some kind of mutual understanding. Consensus is not a continuous status, rather something that has to be reached through ongoing struggle over the diverging options. One visible tool of administrative guidance in the field of innovation policy is the so-called S&T Basic Plan. Established through the S&T Basic Law of 1995, from 1996 onwards, five-year plans have been drawn up to target key technologies. Plans are always in force for the Japanese financial year, which starts in April. Regarding the first S&T Basic Plan, it was been criticised that it applied the logic of the linear innovation model (Harayama 2001: 20). This approach was discontinued as the successive Basic Plan put more emphasis on interaction with and feedback from society (ibid: 20f.). Since the second S&T Basic Plan, the priorities are determined through the newly founded Council for Science and Technology Policy (CSTP) (see: 2.5). Targeted technologies or fields, partly identified via foresight surveys, receive the lion´s share of funds in order to accelerate the invention process, which in turn should explicitly ensure the competitiveness of the Japanese economy (Government of Japan 2006: 20). Four
48 priority fields – life sciences, information technology (IT), environment and nanotechnology – and four additional areas – energy, manufacturing technology, social infrastructure and frontiers – i.e. ocean and space – have been selected for the second S&T Basic Plan. As a result, government-funding is highly focused, the fields received 45% of national R&D funds, the areas another 38% (Stenberg 2004: 14f.). The concentration of the R&D budget became even higher, e.g. the 38% spent on the areas in 2001 reached 46% in 2005 (Government of Japan 2006: 4). As some topics are interrelated, e.g. environment and energy or manufacturing and nanotechnology, synergies are possible so that effects of targeting could be even stronger than figures suggest. In the third S&T Basic Plan, fields remained unchanged and minor adjustments or additions were made in the areas (ibid: 17). So, the Japanese government reemphasised the support towards those subjects by concentrating the R&D budget. However, there is also the downside of focusing, namely the risk that other technological developments are overlooked. The currently active fourth S&T Basic Plan again went through some changes. The original plan was finalised in early March 2011, but overhauled after the Tōhoku triple disaster hit Japan (Aoki 2012: 2): in addition to the subjects green and life innovation as well as science, technology and innovation system reform (for discussion, see: 2.5), the category recovery and revitalisation was added. Again, the eight areas already targeted by former plans remain at the centre of the plan. It has been noted that despite thematic continuity, the plan’s logic has been fundamentally altered: while the former plan adopted a supply push approach, the idea to utilise innovations to solve social and economic problems follows a demand pull logic (ibid: 2f.).
2.5 Administrative reform
It is also necessary to investigate the impact of administrative reform25 on Japan’s national innovation system. The reforms passed the Diet in 1999 and became effective in 2001. With administrative reform, four aims were pursued (Klein 2006: 324): First, with regard to law-making, the cabinet and legislature should gain strength vis-à-vis the ministerial bureaucracy. Second, intra- and inter-agency sectionalism should be reduced. Third, the work of ministries and agencies should become more transparent in order to increase accountability. Fourth, the administrative body should be reduced. Clearly, the first three targets are qualitative. Interestingly, they all stress that politicians should play a more active role in the policy process and that the controversial and largely opaque dealings of ministerial bureaucracy should become
25 Administrative reform was preceded by electoral reform. In 1994, the former single non-transferable vote system in multi-member constituencies was replaced by a mixed system of single seat districts which are combined with proportional representation districts (for details: Lin 2006; Yamaguchi 2001). Both can be interpreted as reactions to the LDP’s loss of power in 1993. The relation between the two and the combined impact on the Japanese political system on the whole cannot be discussed in detail.
49 more transparent. This also seems to indirectly verify the view that Japanese bureaucrats command significant influence on legislation. One of the measures drafted was sending two to six political appointees in ministries and agenicies to strengthen the position of its political heads. Although this should enable improved access to information and control over the bureaucracy, Kato (2002: 323) has estimated that this measure will require 20 to 30 years time to reach its goal. This estimate highlights two aspects: first, the bureaucracy enjoys a powerful and relatively independent position vis-à-vis politicians. Second, despite comparatively revolutionary measures, changing a bureaucratic organisation is going to be an incremental process. The fourth goal is much easier to measure: The number of ministries and government agencies has been reduced from 23 to 13. The already mentioned merger of MOE and STA into MEXT and the upgrade of the Environmental Agency (kankyō chō; EA) into the Ministry of Environment (kankyō shō; ME) were part of the structural changes. As already mentioned, MITI was reorganised into METI. The former MOC was merged with MOT, the so-called Hokkaido Development Agency (Hokkaidō kaihatsu chō) and the National Land Agency (kokudo chō) into MLIT. Apart from this major restructuring, reforms in the innovation system were made. Before turning to reform measures, the former practice of innovation policy-making should be described. The idea of coordinating innovation directed policies is not entirely novel. In Japan, the Council for Science and Technology (CST), which was formed for this task, existed since 1959. The reason why CST must be highlighted is its rather unique policy setting: while other councils were embedded in a network of Diet committees and the “pre-appraisal system” between the LDP and government bureaucracy, Diet committees on S&T and environmental policy were only created in 1980 (Asano 1998: 69). Therefore, decision-making procedures in these policy areas until the foundation of these committees must be regarded as prone to bureaucratic domination.26 Today, there is no longer a separate S&T committee, as parliament mirrored the already mentioned creation of MEXT and thus merged formerly existing bodies into the Committee on Education, Culture, Sport, Science and Technology (monbu kagaku iinkai). However, this is only true for permanent standing committees, because currently there exsists a Special Committee on Science, Technology and Innovation Promotion (kagaku gijitsu inobeshon suishin tokubetsu iinkai). CST was composed as follows: chaired by the Prime Minister, the other members were the heads of MOF, MOE, EPA and STA three industry representatives and two full-time members,
26 The reason why the creation of Diet committees needed 24, in case of S&T, and 9, in case of environment, years after respective agencies have been founded is unknown. However, it cannot be related to their status as agencies, because there existed a National Security Committee (anzen hoshō iinkai) despite the fact that defence was officially just an agency (bōei chō), not a ministery. In the process of administrative reform, defence was elevated to the status of a ministery in 2007.
50 one from industry and academic societies each. The four government organisations are reported to have fed in the views of their respective advisory councils (Tanaka/Hirasawa 1996: 999-1004). Other information provided is more crucial: the council largely simply approved plans drawn up from lower levels (working group, divisional and sectional level), which were largely staffed with bureaucrats. Moreover, full-time members were largely honorary positions with almost no actual influence on policy-making. The first aspect can be observed in many other countries as well. It can be explained by the technical nature of innovation policies, which requires respective expertise. This expertise is often held by bureaucrats, but not by politicians, which means that political decision-makers rely on their subsidiary bureaucrats. The second aspect is more critical: the only non-industry and non-bureaucracy actor was largely just a figurehead without any influence. Although the formal structure suggested that there was an independent voice in the process, in reality this voice remained silent. It should be added that an increase in academic experts at the lower levels of debate over time was found. Nevertheless, it must be highlighted that the structural underrepresentation at higher decision-making levels coupled with the appointment of academic experts on the advisory bodies by STA, led to a situation where STA only sought approval for policies it actually drafted on its own discretion. Tanaka and Hirasawa also report that jurisdictional turf wars plagued CST’s work (ibid: 1010). Further, long-existing practice of effective academia exclusion can be seen as a supporting argument for the “iron triangle” perspective. However, there exists a positive trend of more academic participation in the process. This example of CST is important for two reasons: firstly, it highlights that there was actual space for improvement of innovation policy coordination. Secondly, it demonstrates that coordination requires political interest and leadership. If political decision-makers leave all the work to bureaucrats, results are likely to reflect their views, not society as a whole. Also, it relates to reform motives described in the following paragraph: politicians must become involved with technical problems or at least have to use their given power to ensure that academic and societal actors are included in decision-making processes. With the foundation of the Council for Science and Technology Policy (CSTP), a new institution emerged. Its structure closely resembles that of its predecessor CST (see: Appendix Fig. 9; Fig. 10). The Prime Minister chairs CSTP, six of the 14 seats are held by ministries related to S&T policy, one for the President of the SCJ, while other members have a background in Japanese industry or academia (Cuhls/Wieczorek 2008: 51). Improving coordination among government agencies and their different innovation strategies is CSTP´s main purpose. Since each ministry operated its own R&D system in the past, unnecessary duplications and rivalry should be reduced. This situation even has been given an own name: tatewari, which means vertical division (Stenberg 2004: 14). However, it is also critical to point
51 out that despite all divisions agencies used similar tools – administrative guidance – to implement policy. However, dating back to initiatives taken in the 1980s, the number of interministerial transferees has been increased in order to promote inter-agency cooperation. Indeed, studies have found that among those career bureaucrats who reach the post of section chief in 1998, 53.4% had participated in interministerial exchange programs (Sakamoto 2001: 268). Turf wars are examples for this kind of sectionalism, which should be curtailed: MOE and STA were not allowed to fund industry directly, while MITI could not fund universities directly (Shiozawa/Ichikawa 2005: 159). Such legal restrictions were limiting innovation strategies of the respective agencies and inhibited cooperation between industry and academia. With CSTP’s establishment and the reorganisation into METI and MEXT, both ministries are now forced to cooperate within the new body. A good example for the new approach is cooperation of these ministries in cluster policies: because there remain legal barriers, each started its own, MEXT the knowledge cluster initiative and METI the industrial cluster program, but collaboration between project managers is taking place regularly as both projects seek to establish new university spin-offs (Kondo 2006: 170-172). Further, CSTP also plays a role in the budgetary process. CSTP defines the priority fields through the Science and Technology Basic Plan. According to those predefined areas, ministries develop budgets and policy measures, so that responsibility still rests in their hands.27 However, CSTP reviews those budget proposals and passes its evaluations on to MOF (Stenberg 2004: 14f.). Therefore, CSTP is probably the most powerful actor in innovation policy, but there is also the question remaining how conflict resolution works internally. In the worst case, formerly existing conflicts between ministries and bureaus have just been relocated to higher political echelons. Thus, CSTP’s efficiency and effectiveness is likely to depend on the willingness of ministry representatives to cooperate and the leadership of the Prime Minister as council chairman. In general, administrative reform has stregthened the postion of the cabinet and the Prime Minister towards the bureaucracy.28 Nevertheless, using this potential power still is a question of leadership: whereas Prime Minister Koizumi utilised this power comparatively often, his short-lived successors Abe Shinzō, Fukuda Yasuo, Asō Tarō, Hatoyama Yukio, Kan Naoto, and Noda Yoshihiko showed less inclination to do so. This list also shows that there is no difference
27 Ministry of Finance (zaimu shō; MOF) senior economist Tanaka Hideaki (2003: 118-223) has pointed out that while budgets are reviewed by MOF, the cabinet issues “Guidelines for Budget Requests” that prescribe ceilings for requests, i.e. specifying the maximum increase or minimum decrease from the previous budget, before ministries submit their proposals. Thus, although MOF is important in checking detailed budget planning, the cabinet predefines the framework. However, Tanaka stresses that guidelines are not a true limitation, but rather the starting point of competition between ministries in budget negotiations. With regard to the study, it is crucial to note that in 2003, all discretionary expenditures had to be lowered by minimum 2%, except S&T promotion. 28 Exploring foreign policy, a detailed description of the changes is included in: Shinoda 2007: chap. 1
52 between LDP and DPJ politicians when it comes to leadership style. Although Prime Ministers like Koizumi show that Japanese politicians can have strong leadership quality, it can be generalised that this is rather the exception than the rule (McElwain/Reed 2009: 282-284; Shinoda 2011). With regard to the problem of bureaucratic dominance in innovation policy-making described by Tanaka and Hirasawa, the post-reform situation appears to have improved: “Council members don’t write drafts, we debate them and make changes. Sometimes bureaucrats write the draft at their discretion once given a topic, and sometimes each member will supply them with what each member thinks should be in the document, then bureaucrats will consolidate them and make a first draft. We debate about it and decide what changes need to be made. 7KHQEXUHDXFUDWVPDNHWKHQH[WGUDIW ,IQHFHVVDU\WKHFRXQFLO PHPEHUV VXJJHVWPRUHFKDQJHV$QRWKHUYHUVLRQRIWKHGUDIWZLOOEHPDGH 7KHSURFHVV FRQWLQXHVXQWLOFRXQFLOPHPEHUVDJUHHRQDYHUVLRQ 7KHDQVZHU WR\RXUTXHVWLRQ UHDOO\GHSHQGVRQZKDWZHDUHWDONLQJDERXW 7KH)RXUWK %DVLF6 3SODQUHTXLUHG RYHUD\HDUWRSUHSDUH 7KHEXGJHWGRFXPHQWZH KDQGHGWRWKH30ODVWZHHNWRRN DERXWDPRQWK 7KHDFWLRQSODQIUDPHZRUN WRRNDFRXSOHRIPRQWKV $RNL5HLNR &673H[HFXWLYHPHPEHUDQGSURIHVVRUDW+LWRWVXEDVKL8QLYHUVLW\ This statement proves that debate has become more substantial than in the past. Reforms were seemingly successful in introducing more open debate and policy documents are adjusted due to non-bureaucratic members’ input. Also, it underlines the consensus-oriented approach of the entire process. With regard to the theoretical framework, CST can be said to have purely engaged in decision-making, more precisely rubber-stamping bureaucratic policy proposals. Its successor CSTP is mainly involved in policy formulation and decision-making. By defining target technologies, CSTP clearly decides which direction the national innovation system is pursuing and it also structures the formulation, which is still carried out by specialised ministries. This is an example that demonstrates that policy is made in a non-linear fashion: CSTP decisions largely influence formulation, decision-making and partially implementation of government agencies. Decision-making of one high-ranking superministerial council precedes the formulation of concrete policies and programs by subsidiary organs. Further, this body is active in evaluation as it reviews the budget proposals and it utilises evaluations and foresight surveys when defining targets and identifying key technologies. This partly resembles Kingdon´s observation that control over the agenda – here, identifying the targeted areas – does not give full control over the policy outcomes – the actual policies developed by the ministries and passed by the Japanese Diet. Etzioni might state that CSTP is making the fundamental decisions of innovation policy and the ministries and agencies are enacting many incremental decisions –
53 which go through various policy cycles – in the context of or towards the aim of achieving these fundamental goals. With regard McCool´s observation, CSTP could be regarded as a forum to ensure accommodation between fragmented policy subsystems. Indeed, the whole administrative reform process in Japan confirms another aspect of subsystem specialisation: it is stated that sub-governments are unable to reform themselves and that change has to be initiated by exogenous forces (McCool 1989: 277). Efforts aimed at administrative reorganisation were mainly promoted by political parties, largely opposition and LPD-secessionists, not by bureaucrats, so that it could be claimed that reform originated from those politicians on the outside. Another important change related to innovation policy is the status of government agencies. Also enacted in 1999, agencies formerly attached and more or less directly controlled through ministries have been transformed into independent administration agencies (dokuritsu gyōsei hōjin; IAAs) from 2001 onwards. Therefore, this transformation has been labelled “agencification” (Shiozawa/Ichikawa 2005: 160-175). Agencification aims at improving efficiency through granting more independence to respective agencies. Ministries continue funding, but give up the detailed micromanagement of agencies. Agencies set self-formulated goals, which are evaluated externally and those results should be the basis of future budget processes. Further, bureaucratic red tape in funding processes should be cut back, but analysis highlights that the degree of simplification also depends on the specific task of an agency: while a research orientated IAA like the 2001 reorganised National Institute of Advanced Industrial Science and Technology (sangyō gijutsu sōgō kenkyū jo; AIST) enjoys more flexibility, an actor like New Energy and Industrial Technology Development Organization (shin enerugi sangyō gijutsu sōgō kaihatsu kikō; NEDO), which main task is project planning and coordination, will continue to be closely monitored by its supervisor METI (ibid: 168-170). This means that IAAs which decide, design and implement policies will probably remain closely controlled, but agencies addressing technical and therefore rather apolitical tasks are likely to profit from this reform. However, it is widely overlooked that the reform also has some negative aspects. Concerning AIST, the positive perception from Shiozawa and Ichikawa, who formerly worked for METI and NEDO respectively, should be balanced by a mixed assessment: “Clear merit of the transformation to an IAA is that we now have more flexibility and freedom in our organisation than before. Now we can collaborate with companies, universities and other institutes more freely. But, on the other hand, because we are still getting considerable amount of subsidy from government, including salary, we are forced to decrease number of employees. We are now busy to write proposals and to get funding from various sources. And, because our R&D activity largely depends on short term intermittent project funding and direct funding
54 from the private sector, it is more difficult to keep or raise our own scientific research potential, which is our reason of existence. (Owadano, personal communication, 24.03.2010) According to this assessment from AIST staff, it is necessary to realise that greater freedom and less bureaucratic paperwork towards other government agencies is partly counterbalanced by the need to raise funds for projects. Further, more competition, project-based instead of staff-based funding and the rationale that basic research should already consider future applications have some drawbacks. Despite those issues, the overall evaluation is positive, because the higher degree of operational freedom outweighs the caused additional work. Placing NEDO and AIST in the policy cycle model also clarifies their roles. While the former possesses limited authority to formulate, decide and implement policies in the field of renewable energy, the latter operates within the predefined context of CSTP, METI and NEDO decisions. AIST´s operational freedom only permits to conduct research in designated areas as deemed best, but it cannot pursue an own R&D agenda. Data available on AIST confirm that researchers are first and foremost active in those prioritised by the S&T Basic Plan.
Fig. 2 Composition of AIST researchers by research field (Data: compiled from AIST website)
A closer look at AIST shows that it is focussed on various natural sciences and medicine. Moreover, while many institutes are located in Tsukuba, institutes with a longer history remain in their original locations all over Japan. Hence, it is best to regard AIST as an umbrella organisation that does not enforce a high degree of coherence. While AIST had 2.281 research staff in 2012, it accepted 4.500 researchers from the outside – 1.700 from companies, 2.000 from universities and 800 from other organisations – to work at its facilities. Thus, it appears that a main mechanism for knowledge transfer is timely limited cooperation. National Japanese universities have also been transformed into IAAs since 2004. It must be
55 stressed that there is also a very high number of private universities that absorb most students in Japan’s higher education system (Cuhls/Wieczorek 2008: 59). Before reform, national universities were controlled by MEXT and links between industry and academia were weak. To improve this situation, the Japanese government made several reforms. The US Bayh-Dole provision, which allows private companies to own intellectual properties rights generated in government-contracted research, was adopted in 1999 (Shiozawa/Ichikawa 2005: 148). Further, so-called technology licensing organisations (TLOs), were promoted to allow universities to profit from their research results through patenting and TLOs are seen as an extra monetary incentive for university lecturers (ibid: 147; Nabor 2007: 56). All in all, higher education reform aimed at improving competition between universities and fostering industry-academia cooperation, e.g. via regional clusters. However, the results of this reform measures are not yet visible. There is also general doubt about the effects of the Bayh-Dole provision and science parks, claiming that universities play a much more complex role in national innovation systems than purely performing economic functions (Mowery/Sampat 2005). Further reform proposals were included in the fourth S&T Basic Plan itself (CSTP 2010: 11-13; 35-40): both, quality and quantity are targeted. To achieve better coordination and avoid overconcentrated funding, an interministerial R&D management system and improved assessment methods are recommended (ibid: 39). Simultaneously, qualitative aspects like the promotion of female researchers are named as a goal of system reform. In the same direction aims the call for promoting security for young researchers while increasing their mobility: this may sound unproblematic, but in Japan, combining these goals is a particularly difficult task as mobility of researchers is particularly low.29 A data-based study has demonstrated another aspect of this problem: among 16 surveyed countries, Japan has one of the lowest percentages of foreign scholars teaching at Japanese universities (only India and Italy had a lower figure), plus being the country with the fewest nationals teaching at foreign higher education institutions (Franzoni et al. 2012: 5-7). Such emphasis on system reform is remarkable, since former plans focussed on technological fields and exploitation of future innovations for the national economy. Keeping in mind the similar trend in foresight, this could indicate that decision-makers have adopted the view that it is not only important what should be investigated, invented and utilised, but also that it is important how a national system is supporting those issues in a broader context. Among the recommended reforms, an overhaul of CSTP and the appointment of a science advisor to the
29 Like company employees, researchers do not frequently move between universities due the persisting lifetime employment system. Moreover, spending time in private firms and returning to university research is much more difficult for researchers in Japan than in other countries. For critical assessment of the Japanese tertiary education system’s weaknesses as well as possible improvement strategies, see: Yonezawa/Meerman 2012; Yonezawa 2011; JSPS 2010; Yonezawa 2007.
56 Prime Minister are the most outstanding. CSTP should have more representation from academic societies. Both steps suggest that the inclusion of academic expertise into the innovation system is regarded as vital. Thus, while the reorganisation of CST into CSTP made policy formulation more inclusive and less bureaucracy-dominated further steps into this direction are deemed necessary. Another important aspect included in the fourth S&T Basic Plan is strengthening international scientific cooperation. Especially regional exchange is central. The so-called East Asia Joint Research Program (e-Asia JRP), which was developed by MEXT and JST, is the embodiment of this policy: it is explicitly multilateral, meaning that at least three countries (represented by S&T ministries and/or funding agencies) have to agree on collaboration. This means that government bodies of different partner nations have to agree on general aspects like research area, IPR utilisation or funding framework prior to project determination. Noteworthy is also the concentration on natural sciences (Aoki 2012: 7f). To sum up and to relate to the theoretical framework, administrative reform in Japan from 2001 onwards included reshaping the national innovation system. Reorganisation clearly is a procedural tool to reconfigure interaction patterns between various innovation system actors. Reform works in two, seemingly opposite, directions: centralisation and decentralisation. Centralisation is pursued through the installation of CSTP, which main task is providing more coherence through coordination. Since tatewari minimised coordination, linking R&D measures of different agencies together in order to focus on priority fields, which are defined by CSTP, is resulting in more inter-agency communication. However, reorganisation of government agencies and national universities into IAAs is going in the opposite direction. Both are now enjoying more operational freedom and are able to act less constraint by supervising ministries and bureaucratic procedures. This step is obviously meant to spur more competition between universities themselves, but also vis-à-vis research orientated IAAs like AIST. At the same time, deregulation and incentives like royalties via TLOs aim to increase cooperation and exchange between IAAs, academics and industry. Therefore, the logic behind reorganisation seems to be about streamlining targets in the central forum of CSTP, while at the same time encouraging the actual R&D performers to search for their own approach towards meeting those goals. Thus, despite steps towards decentralised research agencies and universities, the Japanese innovation system remains highly centralised and continues the practice of targeting key technologies.
2.6 Environmental policy
It has been noted that the Japanese environmental policy approach tends to be largely technological, so that environmental problems have usually been framed as “brown” issues instead of “green” ones (Vinger 2008: 5f.). Apparently, the Japanese approach towards
57 environmental issues has indeed been largely technological, which is the reason why Japan’s environmental image is polarised: on the one hand, it is applauded for developing EVs, while being criticised on conservation issues – most prominently whaling (Wong 2001: 89-143) – on the other hand. Politicians, bureaucracy and industry alike try to promote an environmentally progressive image, e.g. the EXPO at Aichi 2005 or the failed bid for the Olympics 2016 by Tōkyō, which put forward the idea of sustainable “Green Games”. The reason for this as well as a hypothetical connection with the Japanese cultural concept of nature has not been explored so far (Vollmer 2006: 15f.). Another notable feature of Japanese environmental policy is its heavy reliance on administrative guidance, which is the reason why Japanese environmental policy is sometimes described as co-regulation between the state and industry. Japan was, together with the USA and Sweden, among the pioneers of environmental policy. However, this cannot be attributed to any special Japanese concern about nature, but rather to an increased impact of pollution. Japan´s priority after the Second World War was clearly on economic growth while environmental concerns were virtually absent (Fukui 2002: 3f.). Air pollution and water contamination increased rapidly and began to affect public health: in the 1960s, mercury and cadmium poisoning caused the so-called Minamata and itai-itai (meaning: it hurts, it hurts) diseases, citizens´ protest movements put the problem on the political agenda. Therefore, environmental policy in Japan started out in 1967 with the enactment of the Basic Plan for Environmental Pollution Control. A notable feature of this legislation was that it contained a “harmony clause” which stipulated that pollution control must be compatible with a strong economy (Lam 2011: 237). This may explain the above observation that Japan tends to adopt “brown” solutions for environemtal problems. Institutionalisation of environmental policy in a government branch followed with the EA establishment in 1971. Environmental policy is a prime example that demonstrates the LDP’s flexibility. When environmental problems worsened and manifested during the 1960s, opposition occurred at the local level and progressive party members, independents or progressive LDP mavericks could oust the LDP from power in municipal elections with an environmental agenda (Lewis 1980). While many governing parties in Europe – including Germany – largely ignored public concern about environmental issues and thereby provoked the emergence of “Green” parties, the LDP responded to a series of election losses at the municipal level by addressing environmental issues via policy. Thus, LDP’s sensitivity towards losing power made it responsive to citizen’s demand. This ability to react to public demand is possibly one of the reasons why there is no successful Green Party in Japan (see below). It should be pointed out that the EA did not have the rank of a ministry, resulting in a comparatively weak regulatory authority vis-à-vis other bureaucratic bodies. However, EA could promote its policies through several channels (Wong 2001: 51-57; Graham 2002:
58 126-130): it was established as an agency in the Prime Minister´s Office, which granted access to the head of the executive and allowed EA some informal influence. EA was headed by a minister of state, who was a member of the cabinet. Further, it was designed as a coordinating agency, which included the right of recommendation. Although this right does not grant power, it can be utilised to initiate debates and to promote the agency’s view. The only other government body that possesses this right is the MOF. However, EA needed the consent of other ministries to issue guidelines or to present bills to the Japanese Diet. This means that EA was forced to compromise with ministries in policy-making, because its jurisdiction was extremely limited, mainly centred around water and air pollution. Last but not least, when EA was founded, its staff was pooled together from various ministries. These ministries intentionally installed their staff to influence EA positions and policies, so that many officials had dual loyalties. Johnson (1982: 77f.) has documented that more than half of the initial 500 EA staff came from the then Ministry of Health and Welfare (kōsei shō; MHW).30 Not until 2001, this arrangement was changed: during the aforementioned major institutional reorganisation, EA was upgraded to the ME. The role of local governments in pollution control has helped to reduce environmental degradation and negative impacts on public health. The tools which local authorities frequently used were so-called local governmental research institutes (LGRIs). These organisations were especially important for SMEs as many small businesses could not afford to conduct their own pollution control research or buy expansive equipment. Main tasks of LGRIs were technical guidance and testing on request for regional firms as well as conducting their own R&D activities (Ito 2007: 73). Although LGRIs seem to have a positive influence on the diffusion of environmental technology in the past, these institutes face problems that might undermine their capability to provide technical guidance in the future: the number of LGRIs decreased, their staff has been reduced and coordination between industry and academia is a new, additional task (ibid: 84f.). A factor that has significantly contributed to the continuing commitment to environmental issues is the so-called Kyōto-Protocol of 1997. According to the protocol, the reference year was 1990. From this base year’s level, Japan would have to reduce emissions by 6%, the USA by 7%, the EU by 8% between 2000 and 2012. Japanese industry lobbied against it, especially after the US administration of George W. Bush had abandoned the protocol. Therefore, on the one hand, there was understandable concern about losing competitiveness in the global market, but on the other hand there was support for ratification by NGOs and the media, so in the end the Koizumi administration chose to commit the country to the protocol by ratifying the bill on May 17th, 2002. It has been suggested that the Kyōto-Protocol has been transformed into a
30 Merged in 2001 into the Ministry of Health, Labor and Welfare (kōsei rōdō shō; MHLW).
59 powerful symbol of Japanese concern about environmental issues like global warming and the dedication to resolve those problems (Tiberghien/Schreurs 2007: 78-82). Last but not least, it is noteworthy that since the beginning of the new millennium, there is a tendency in Japan to combine environmental and economic topics. Former Prime Minister Koizumi Junichiro and his Environmental Minister Koike Yuriko repeatedly emphasised the role of environmental technology as the key to revive the national economy after the stagnation of the 1990s (Tanaka/Ahlner 2003: 9). ME even promotes the “Environmental Revolution” as the next step after the “Industrial” and “IT Revolution” (Guilamo 2007: 12). On the whole, a strong interaction between environmental and economic policy is visible in Japan. The willingness of Japanese industries to engage in emission reduction is exemplified through the 1997 Voluntary Action Plan by Keidanren (now: Nippon Keidanren), Japan´s largest business federation. In order to avoid regulation, Keidanren committed itself to reduce
CO2 emissions at a level lower than 1990 by 2010. This aim was achieved every year since 2000 (Andersson/Widegren 2006: 17). Nevertheless, Japanese GHG emissions actually increased by 8.1% in 2005 (ibid: 18), which was a further gain compared to 7.4% in 2004 (Guilamo 2007: 19). Enhanced emissions are largely due to increased energy use by consumers (Wieczorek 2007: 60). This trend is thought to be caused by intensive use of electric household and office appliances as well as the internet. Thus, while the emissions of production processes have been lowered, increased utilisation combined with constant energy demand of appliances has led to more emissions. The issue of energy end-use is addressed through the so-called top-runner program of 1999, which sets energy-efficiency parameters (Nordqvist 2006: 5-10). This program is also implemented in the vehicle sector, so that the Japanese institutionalised a tool for steadily improving fuel economy. As a policy instrument, the top-runner program is interesting since it spurs inter-industry competition. Specifically, it highlights the importance of low gasoline consumption which equals lower emissions. Although competition is intensified, this policy tool is yet another example of the rather technical approach towards environmental problems, but the rationale behind it is coming under scrutiny. The Science Council of Japan (SCJ), a special organisation under the jurisdiction of the Prime Minister since 1949, which is representing the interests of Japanese scientific community, stressed in a report on future development: “In the 21st century, however, sustainable development will be possible only if we are prepared to change individual and group values.” (SCJ 2004: 6) Thus, although there are doubts about solely continuing this practice, this largely technological approach of problem solving in environmental issues seems to have been quiet successful in the past. Today, Japan is the most energy-efficient economy, if the indicator primary energy use per unit of GDP is used (ANRE 2008: 29; Ushiyama 1999: 1174). The Hatoyama administration entered the failed negotiations at the Copenhagen summit with
60 the goal to cut emissions by 25% by 2020 (SZ online, 10.12.2009). With regard to the problems Japan experiences to reach the current reduction target, combined with the already achieved energy-efficiency in production, this goal could be said to be overly ambitious. One year later, Japan announced before negotiations started that it will not renew the treaty if major competing economies like China, India, Indonesia and the USA would not participate (The Independent, 02.12.2010). Thus, Japan stressed the economic costs of joining the treaty and gave clear priority to competitiveness vis-à-vis non-participants. The Tōhoku triple disaster further reduced Japan’s ability to achieve emissions reduction. As electricity formerly generated by nuclear power is currently replaced by firing imported oil and gas, it must be expected that emissions will increase and hence, target achievement appears unrealistic. ME has not published data on GHG emissions since the disaster, but a Japanese newspaper published estimates that are based on ME data (Yomiuri online, 05.10.2012): as expected, the data show that a sharp increase is prognosticated. Hence, it can not be surprising that Japanese government officials are reluctant to enter binding treaties under the current conditions. Regarding the case study, as 21% of Japan’s emissions stem from transportation (Saito 2005: 6), EV mass diffusion would enable major reductions. Therefore, the aim of the Hatoyama administration may have reflected optimism towards the possibility to introduce and commercialise new, environmentally-friendly technologies, like co-generation systems and EVs in the near future. An important issue in the current and future interrelated development of environmental and energy policy in Japan is the triple disaster, which occurred on and after March 11th, 2011. A magnitude 9 earthquake which hit the Tōhoku region, followed by a devastating tsunami that killed about 20.000 people and caused the failure of the cooling and emergency systems of Tōkyō Electric Power Company’s (TEPCO) Fukushima Daiichi nuclear power plant, which resulted in nuclear meltdowns in 3 reactors, hydrogen explosions and the release of radioactive materials into the environment. Until this disaster, nuclear energy was considered safe and environmentally friendly. Although there were some doubts and resistance when Japan started using nuclear power, past governments made a distinction between nuclear weapons, which were officially banned from Japanese territory due to the bombings of Hiroshima and Nagasaki, and civilian use. Since the disaster, a debate on nuclear power use emerged, but significantly less intensive in comparison to Germany. After the disaster, all nuclear power plants were shutdown for safety inspections. With the exception of two reactors in Ōi, all reactors currently remain offline. The decrease in available energy has resulted in conservation efforts by firms and citizens alike. Official aim was to reduce energy use by 15% to prevent blackouts and it can be stated that this approach worked
61 relatively well. Implementation of conservation measures showed that it is indeed possible to save large amounts of energy, but in the long-range perspective, saving is not a sustainable solution since the Tōhoku region, businesses and industries should be re-build. Thus, Japan must decide if it wants to reduce nuclear energy use and promote a shift towards renewable energies or if it is going to continue relying on nuclear energy. The Noda administration announced its intention to phase out nuclear energy generation in Japan until 2040 and replace it through renewable sources. In the meantime, shortages are covered by increased use of fossil energy. The newly-elected Abe administration has shown sympathies for nuclear energy, but no clear decision has been made on the issue. Therefore, it is currently unclear if this means that the shut-down reactors are going to stay offline or to which extent reactors are going to be restarted. Although it is not the main subject of this study, the triple disaster and a possible change in environmental and energy policy have important consequences, especially for grid-charged PHEVs and BPEVs: these EV types are thought to enable a shift towards less oil use. Basically, oil should be substituted with electricity. Key question is how electricity is generated: if it is primarily produced from other fossil energy sources like coal, EVs are not cleaner than modern ICEVs and hence senseless. Ideally, the electricity should be generated from renewable sources such as wind, solar, water or geothermal energy. Nuclear energy is a difficult and highly controversial issue as it has specific benefits and downsides: on the one hand, it can be seen as
CO2-neutral, because there are no primary emissions from nuclear power plants. Thus, nuclear energy is sometimes framed as “green” energy and countries like France plan to power future EVs through nuclear-generated electricity. On the other hand, there are risks for human health and the environment associated to nuclear energy, so that many reject the notion of “green” nuclear energy. Despite this normative question, which is framed and answered differently in every country, there is also an economic side. On the one hand, a change towards EVs requires sufficient electric energy. If there is an energy shortage and electricity rates increase, it becomes less attractive for consumers to use EVs. Further, if nuclear energy would be phased out, it must be replaced with other energy sources, which requires time and money. It appears inevitable that the government will have to take a major share of such an investment, which could lead to less investment in other areas, including automobile R&D or consumer subsidies for EVs. On the other hand, the disaster may reinforce research into renewable energies, including the use of hydrogen and fuel cells. Thus, it is also possible that policy is going to reinforce the promotion of sustainable energies in the future. Summing up, despite current problems, there nevertheless seems to be a lasting effect: Japanese industries learned during the oil crises that environmental protection efforts could lead to less
62 resource consumption equal with decrease in production cost. It is possible that the triple disaster related increase in electricity rates is going to have a similar effect on Japanese companies, which have to find ways to deal with the issue. It must be pointed out that those cost reduction effects usually are only realised over a longer period as initial development and installation of technologic pollution control and energy saving equipment can be expensive. However, in the long run, technologies or production processes that are less resource-intensive help companies in competition as they are more cost-efficient. Further, today eco-friendly production and low energy consumption of the finished product are features that firms can use in marketing their goods and for creating a positive brand image. Japanese companies regard environmental technology as an increasingly important factor for their future competitiveness (Guilamo 2007: 19), which has been demonstrated in several short case studies, e.g. on Toyota, Hitachi and Sanyō (Andersson/Widegren 2006: 18-25) or Toshiba (Tanaka/Ahlner 2003: 28-33). It is noteworthy that all these firms are established, large-size MNCs and that their activities started at the early or mid-1990s, which gives them the role of a trendsetter for companies like BMW, who advertise that they want to run their production plants only with renewable energy in the near future. Last, and with regard to the theoretical framework, the role of (environmental) non-governmental organisations (NGOs) in Japan should be clarified (Wong 2001: 69-74; Danaher 2002): in general, NGOs – especially non-business ones – are comparatively weaker than their Northern American or European counterparts. This is mainly rooted in bureaucratic disapproval and the perception of NGOs as a threat to administrative authority. Therefore, the legal conditions are unfavourable, e.g. funding and donating is constraint as tax deductions depend on the function (as defined by state officials) of the specific NGO. Thus, donations are limited and NGOs do not command large sums. Further, NGOs in Japan tend to focus on local issues, so that there are no influential national umbrella organisations. Preoccupation with local problems tends to result in “not-in-my-backyard” (NIMBY) politics. Although Lesbirel (1998: 141) observed support against fossil and nuclear power plants siting from neighbouring communities, he does not report any support from other prefectures. Hence, opposition against potentially polluting projects was essentially local. Opposing groups had to organise their resistance without any significant support from beyond their immediate vicinity. As NIMBY politics rather express unwillingness to bear a burden by oneself than fundamental conviction that the issue at hand is generally problematic and undesirable, public environmental concerns stop short of manifesting themselves on the national level. Thus, they can become influential in local affairs, but there is a lack of national (as well as international) cooperation between NGOs. This NIMBY mindset and the aforementioned ability of the LDP to partly coopt and pacify
63 environmental NGOs explain why there was no Green Party on the national level until the Tōhoku triple disaster induced a newly invigorated anti-nuclear movement. This movement recently organised its political arm with the foundation of the Green Party (midori no tō) and induced the foundation of the “Green Wind” (midori no kaze).31 While the foundation of these two parties could be interpreted as a sign that environmental issues are becoming more prominent in Japanese national politics, the Upper House election on July 22nd, 2013 showed that these parties need to establish themselves more firmly.32 Against the background of numerous foundations of new parties and many cases of subsequent (partial) reintegration into LDP or DPJ since the end of the “55 system”, it is impossible to predict if these environmental parties are going to become a part of Japan’s party system or if they are going to disintegrate or merge with other parties. This absence or the lack of electoral success of an environmental party is even more noteworthy as despite long prevailing single-party rule and the short-lived tendency towards a more concentrated party system, Japan always maintained a multi-party system. Although NGOs are comparatively weak, they are becoming more influential, especially in the field of environmental politics since the agreement on the Kyōto- Protocol in 1997. Thus, it can be claimed that NGOs were usually not included into policy subsystems in Japan and they were kept weak by structural constraints. The more recent trend towards cooperation now seems to allow NGOs some influence in selected policy subsystem. However, it appears that NGOs are perceived as useful tools and not as equal partners or embodiment of social expertise. All in all, Japan has been labelled as one of the leading countries in what is called eco-innovation (OECD 2008: 22), which is described as a way to achieve sustainable, environmentally-friendly economic growth. Japanese industry and government seek to uncouple growth from resource use, mainly because the country lacks an own natural resource base. The
31 The official foundation ceremony was attended by German Greens representative Bärbel Höhn, former Minister of Environment in Northrhine-Westphalia and current Member of Parliament. This hints that the Japanese party will primarily focus on the issue of nuclear energy like their German counterpart. Besides this party, the Green Wind has established itself with breakaway DPJ representatives Yamazaki Makoto and Fukuda Eriko which were later joined by Abe Tomoko from the Tomorrow Party of Japan (Nippon mirai no tō). Several Green Wind candidates empahsise their intention to transform Japan into a post-nuclear society; see: http://mikaze.jp/member/index.html [12.07.2013] 32 In the election to the House of Councillors no “green” candidates could secure a seat, neither directly nor undirectly via the national proportional representation district. The race was closest in Yamagata Prefecture where four candidates competed for one seat: Green Wind’s incumbent Funayama Yasue lost with 44.55% to LDP candidate Onuma Mizuho with 48.22%; see: http://www.asahi.com/senkyo/senkyo2013/kaihyo/B06.html [22.07.2013] However, absence of a “green” party must not be equated with lack of environmental concern in Japan. An 800 page volume on 21 European political systems found that countries renowned for eco-conciousness such as Denmark and Norway had rather unsuccessful “green” parties. It has been suggested that the reason behind this are established parties that have integrated ecological policies into their programs and hence reduced the need for a decidedly environemental party (Ismayr 2003: 45). This explanation can be applied analogously to Japan.
64 Tōhoku triple disaster painfully uncovers the interconnections between energy, environmental (and transport) policy. The questions of energy mix, emission reduction and EV use are intertwined and will be a major issue for Japanese politics in the near future. Although the increased use of renewable energy to power EVs appears ideal, it is currently unclear if this path will be chosen. Even if this is the case, it will require long-term commitment for around 10 to 15 years (as the German case illustrates (see: 3.5)).
65 3 The German National Innovation System 3.1 Political framework conditions
In order to enable a meaningful comparison between Japan and Germany, this whole chapter will highlight similarities and differences between characteristics of the two systems and their influence on the political economy in general and the NIS in particular.
3.1.1 Federalism One fundamental difference to the unitary polity Japan is the federal system in Germany. Competences are not just divided between ministries and agencies, but also between the federal, regional and municipal levels. For this study, municipal policies will be described in the case studies only. It is critical to point out that municipalities do not hold significant regulative power concerning research, education or industrial policy. Their role is confined networking activities and setting impulses, i.e. in infrastructure development. In comparison to Japanese prefectures the German regional states, called Bundesländer (or simply Länder) are far more independent. While prefectures do not have ministries, Länder do. They are implementing legislation often on behalf of the federal level. Like other federal polities, Germany is applying subsidiarity, i.e. that a matter ought to be executed by the least centralised authority that is capable of addressing it effectively, as its main organising principle. Further, while there is only one Civil Service Law in Japan, each Land has a slightly different set of administrative rules. Moreover, German regional states have guaranteed access to tax revenue33 which makes them much more independent than prefectures whose access to funding is largely subject to central government’s discretion. These interwoven relations between the different levels are referred to as executive federalism (Exekutivföderalismus). “This system is a unique blend of “interlocking” policy formation, decentralization of policy implementation, and “unitarization” of policy content.” (Lehmbruch 1997: 47) What Lehmbruch expresses with the term unitarisation is the tendency of political actors to establish uniformity to ensure equality among citizens irrespective of location. The main reason for this is Article 106 III 2 of the German Basic Law that postulates the “uniformity of living conditions”. Thus, despite federalism, German policians and bureaucrats have emphasised broad compromises to conform to this postulate. As will be discussed below, lately more elements of competition have entered the fedeal system, but the general tendency is still oriented towards consensus. The main organ that worked towards unitarisation is the Bundesrat, Germany’s second chamber that represents
33 Some taxes are exclusively going to the budget(s) of one of the three levels. However, there are taxes, most notably corporate, income and value-added tax, which are divided between the federal and the Länder level. Further the Länder have to pass on a certain percentage to municipalities. For a detailed description of the subject, see: Renzsch 2010.
66 the Länder governments.34 The Federal Ministry of Education and Research (Bundesministerium für Bildung und Forschung; BMBF) today remains an important player in directing German innovation policy, but major changes adopted in 2005 can be seen as undermining that position. However, before describing the change of 2005, it is necessary to highlight the former setting. For a long time, education and science was institutionally separated from research and technology policy on the federal level. Initially, today’s BMBF was focussed on nuclear affairs and went through several reorganisations and designation changes. From 1969 it was labeled Federal Ministry of Education and Science (Bundesministerium für Bildung und Wissenschaft; BMBW) and focussed on coordinating education policies of the federal states and supporting research through funding. However, from 1972 onward, the Federal Ministry of Research and Technology (Bundesministerium für Forschung und Technologie, BMFT) existed parallel to BMBW. BMFT’s core competence was supporting basic and applied R&D as well as technology transfer from universities and institutes to industry. Hence, it can be stated that the German political system represented and partly promoted the specialisation and diversification of the science and research sector. The separation of spheres was partly overcome in 1994, when BMBW and BMFT were merged into BMBF.35 Moreover, as the regional states have to provide funding, they are often opposed to federal plans like establishing new university chairs. While the intention of such federal plans is strategically sensible, it is insensitive to states’ problems of actually being able to hire and pay staff. Concerning universities36, according to the German Basic Law, the creation of universities and the maintenance of the buildings was the responsibility of the federal level while the Länder were in charge of the actual operation. This meant that they have had to pay the utility cost, academic staff and other personnel, and may decide to charge tuition fees up to an amount of € 500 per semester (plus administration fees). This system had several consequences: the federal level was involved, but the main actors for university operations were the Länder.
34 A number of institutions associated to the Bundesrat are organising inter-Länder negotiations. Membership in these institutions is voluntary, not mandatory. Therefore, the decisions reached in negotiations have to be transformed into bills in each Land afterwards. Decisions are only made unanimous, which underlines the consensus orientation. In some cases, only Länder are members, in other cases the federal government is also represented, but lacks voting rights. An example for the former is the Standing Conference of the Ministers of Education and Cultural Affairs which coordinates education policy, an example for the latter is the Standing Conference of the Ministers of the Interior. 35 In comparison to Japan, changing the composition of ministries (Ressortzuschnitt), i.e. merging ministeries or transferring specific bureaux from one ministery to another is more common. While this structural instrument formally is a competence of the Chancellor, the political reality is that ministerial composition is subject to coalition arrangements (Ismayr 2003: 457). Thus, different compositions are outcomes of coalition negotiations and reflect policy preferences of ruling coalitions or coalition parties. 36 The German tertiary education system is basically operated by the state. Those universities which are counted as non-state operated are largely financed and managed through the Catholic or Protest Church, so that the actual number of non-institutional, private universities is even lower.
67 This situation, as well as other problems stemming from the divided competences and responsibilities in the German education and science system, caused calls for reform, meaning unifying responsibilities and competences at one level. Most citizens were in favour of federal jurisdiction to ensure a nationwide – hence equal – system. However, as the Länder were and are opposing loses in competences – equaling power and influence – reform resulted in full responsibility over university operation, including construction, for the regional level. This means that a major issue of divided competences has been overcome with the overhaul of 2005 (Tuner/Rowe 2013: 390). However, BMBF continues to play a role in tertiary education, because the Länder still lack the necessary financial resources to realise desired projects on their own. This means that BMBF can continue to influence tertiary education through extra funding as well as through coordination and moderation. It could be said that BMBF utilises the structural financial weakness of the Länder as a backdoor to stay in tertiary education policy-making. Thus, it can be claimed that the rearrangement of the federal system and the distribution of competences between federal administration and Länder in 2005 was unable to fully resolve the topic education and that it is highly unlikely that the present situation will be reformed soon. The major shift in German innovation policy in 2005 had further consequences: First, BMBF lost some competences through the federal reform to the Bundesländer, like the aforementioned shared responsibility for university construction. Second, the jurisdiction over IT, energy, transportation, nuclear, and space was shifted from BMBF to the economics ministry, which now was officially called Federal Ministry of Economy and Technology (Bundesministerium für Wirtschaft und Technologie; BMWi). Since BMBF has developed out of the former Federal Ministry for Nuclear Affairs (Bundesministerium für Atomfragen)37 and was established as a research and technology ministry in 1962, the loss of jurisdiction can be described as a crippling blow against the ministry in its former form. The nuclear and space departments were BMBF’s nuclei and shifting these competences to BMWi also affects innovation policy-making. In other words: “Since the identity of BMBF had been strongly shaped by the two large divisions for space and atomic energy, the loss of those two main pillars must indicate a fundamental change in the identity of the ministry.” (Weyer/Schneider 2012: 184) Reorganisation means that all strategic research sectors have been transferred to BMWi. This can be interpreted as creating a closer integration of industrial and research policy in these sectors, while leaving coordination in research fields that are regarded as non-strategic to a hollowed-out BMBF. From this perspective, research policy could be used to improve the competitiveness of certain industrial sectors by investing in R&D in related sciences.
37 Although the institutions developmed into different roles the genesis of both, BMBF and Japan’s STA, occurred in the context of civilian use of nuclear energy in Germany and Japan.
68 In comparison to Japan, the institutional changes in the German innovation system are subject to to parallel yet unrelated developments. First, changes occurred in the context of the reform of federalism. Education was only part of the overall reorganisation of federal and regional level relations. Main aim was not innovation or education but disentangling the interwoven relationship to clarify jurisdiction and decrease the veto power of the Länder on federal policies. While this is a major administrative reform, this reorganiation lacked a clear direction: unlike in Japan, where reform adopted New Public Management (NPM) logic, i.e. oriented towards economic efficiency, the German administrative reform only followed that rationale to a minor degree as Bach and Jann found (2010: 463): “The ideal-type NPM agency has not been a powerful model in Germany. In line with the dominating rule-of-law tradition, legality is the bureaucracy’s most important source of legitimacy, whereas efficiency and performance play only a secondary role. […] The regulatory reform discourse is, at least in Germany, much more important than the managerial one.” The effect of the reform of German federalism on the NIS is similar to Japan’s administrative reform as it is occurring in a greater context, not a targeted reform effort. Second, the transfer of strategic research sectors from BMBF to BMWi must be characterised as an attempt to integrate economic and innovation policy more closely than before. Thus, this step is a conscious decision, not an indirect outcome. The case studies can possibly shed some light on the question if BMWi is assuming a more active role in linking research and economic policy in a strategic sector like future transportation. This question is important as the federal level did not practice sector-specific economic policies, i.e. industrial policy, but practiced a macroeconomic policy (see: 3.4). Hence, if BMWi would implement industrial policies, this would be a major shift in German economic and innovation policy-making. Also, it is clear that BMBF has to adopt a new role in innovation policy-making. Thus, the case studies could lead to some conclusions what this new role is.
3.1.2 Party system The second important difference in comparison to Japan is related to the transition of power. Unlike Japan, Germany has seen several profound changes in government. There are two larger parties, the conservative Christian Democratic Union (CDU) and center-left Social Democratic Party of Germany (SPD). For most of Germany’s post-war history, these parties dominated the political scene, either in the roles of leading the administration or opposition. During the 1950s and 1960s the CDU was the dominant political party: CDU Chancellors Konrad Adenauer, Ludwig Erhard and Kurt Georg Kiesinger ruled until 1969 and the party managed to absorb several smaller conservative parties during the 1950s. The Christian Social Union (CSU) is the
69 Bavarian sister-party of the CDU. In federal parliament both parties always work together as a single faction. As the CSU was able to establish itself as the quasi state party of Bavaria after the war, it is a strong player in the conservative camp. Over the last 10-15 years these larger parties, especially the SPD, have problems reaching former election results, because the party system expanded and emerging parties took voters from the established center-left and center-right catch-all-parties. The oldest smaller party is the liberal FDP. Often, this party was critical for forming a government, so that there have been both, liberal-conservative and social-liberal governments in the past. Thus, despite a limited number of supporters, this party often ended up as the junior partner in coalition governments. In 1980, the Greens (Die Grünen) were founded. Although a variety of ecological issues was on the political agenda of this party, their main aim has been ending the use of nuclear power in Germany (Schreuers 2013: 88-93). The rise of this party marked a transformation from a three-party system with the FDP as the deciding factor for coalition formation to a four-party system which consisted of two opposing camps. FDP became more focussed on economic liberalism and became the favourite coalition partner for CDU/CSU. SPD and Greens teamed up as the more socially and ecologically progressive camp of the political spectrum. After reunification, the successor party of the former German Democratic Republic (GDR; East Germany) state party became a factor in the German party system. After renaming the party several times and a merger with a splinter party that mainly consisted of former disappointed Social Democrats38, union members and leftists groups, this party is today known as “the Left” (Die Linke). After the merger, the party became more influential: before its base was mainly in the former GDR and regarded as a regional party, but post-merger it was also possible to enter several parliaments in Western Bundesländer. Thus, the German party system substantially diversified39 and there is no such party as the LDP in Japan. Diversification is quite remarkable as parties must pass a 5% threshold40 to enter
38 Reforms in the labour market and social security systems of the Schröder administration alienated a considerable number of SPD members and voters. To illustrate, SPD’s federal general election results that were at 40.9% in 1998 and 38.5% in 2002 when Schröder was Chancellor, decreased to 34.2% in 2005 and 23% in 2009. Oskar Lafontaine, Minister of Finance under Schröder, resigned from his cabinet post, Diet seat, and as SPD chairman and was a driving force behind the unification of the Left. 39 There are signs that it could diversify further: the so-called “Pirate Party” (Piratenpartei) which successfully entered four Länder parliaments represents mostly young people that feel that established parties do not address their interests, especially freedom of the internet and social-liberal topics. Against the background of the Euro crisis, the “Alternative for Germany” (Alternative für Deutschland; AfD) was founded. AfD channels anti-Euro and anti-EU sentiments. While opinion polls for the upcoming federal election find both at 3%, it is estimated that the maximum potential could be 9% for AfD and 11% for the Pirate Party. See: ZDF Politbarometer; http://www.heute.de/CDUCSU-legt-zu-SPD-verliert-29330012.html [06.09.2013] 40 Alternatively, if a party wins three direct mandates it enters the Bundestag with the proportion of total votes even if this figure is below 5%. The threshold also applies to regional state parliaments, but some
70 parliaments, which is relatively high in comparison to other political systems in Western Europe. Although the conservative parties CDU/CSU and LDP show a similar ability to preserve their roles as the main party of their respective multi-party system, CDU/CSU more frequently found themselves in the opposition and always needed a coalition partner to form the government. For this study, the Left will not be considered as a factor, because it never was part of a ruling coalition on the federal level and the Left only joined ruling coalitions in Eastern Bundesländer which do not host any automobile OEMs. Largely due to these differences, Germany does not have a similar relationship between a party, the bureaucracy and business. As there are two major parties and an increasing number of smaller parties, business cannot simply ally with only one party, but must keep good relations with all relevant parties. In the only systematic analysis of business’ donations to parties in Germany, Höpner (2009) found following results: substantially more funds went to CDU/CSU and FDP than to SPD and Greens, which only changed mildly when these parties took office in 1998. Despite this strong overall preference, the automobile industry is found to be the most prone to donate to all parties on relatively equal terms. This non-partisan pattern suggests that manufacturers are indeed more interested in cultivating amicable relations with all parties than backing a specific party or camp. It has also been noted that although not involved in a major illegal party donation scandal known as the Flick affair BMW completely refrained from political donations in the early 1980s. Thus, while the general tendency that business supports conservative and business-friendly parties is similar to Japan, there are important differences: first, while the LDP is the major recipient of donations in Japan, similar percentage of donations is divided amongst CDU/CSU and FDP in Germany. Second, while the Japanese automotive OEMs display a strong tendency to support the LDP their German counterparts are rather non-partisan in their donations. In a similar fashion, it is risky for top-level bureaucrats to ally with a party. Derlien (1988: 74) has shown that 50% of division heads (Ministerialdirektor) pursued their career without acquiring a party book. This must be ascribed to the fact that top-level positions of career bureaucrats (state secretaries (Staatssekretär) and division heads) can be removed from office into retirement or inactive status without giving any reason by ministers. Thus, while party affiliation can help individual advancement through the ranks of bureaucracy, it can also end the career if there is a change in power. Hence, party affiliation is potentially rewarding but risky. Therefore, research on party connections of high-ranking bureaucrats shows that while many are affiliated to a party, there is also a considerable portion of non- or opposition-affiliated bureaucrats in office (Manow 2005: 251). Indeed, although Derlien (2003: 410) critised what he
parties representing ethnic minorities are exempted from this rule. One example is the Südschleswigsche Wählerverband (SSW) which represents the Danish minority in the northern State of Schleswig-Holstein.
71 perceives as increasing patronage, he also pointed out that even the first fundamental change in German post-war political history, i.e. the complete removal of government parties (CDU/CSU and FDP) by opposition (SPD and Greens) in 1998, only 50% of top positions were exchanged after the election. Besides the fact that many bureaucrats do not align themselves to a party, it has been suggested that the reason why newly elected administrations do not exchange the majority of top-level bureaucrats and that the level of politisation of the bureaucracy is relatively low is linked to federalism (Manow 2005): as federal and Länder administrations have to cooperate in many fields, even a ruling coalition dominated federal bureaucracy has to cooperate with Länder administrations that are controlled by opposition parties. This explanation is plausible as in fields of federal-Länder co-regulation or cooperation, Länder divide along party lines, i.e. federal administration and federal opposition camps to determine their goals and negotiation strategy. These negotiations are usually not conducted by politicians, but trusted bureaucrats. However, it must be highlighted that this only is valid for the federal bureaucracy. There are currently no studies that investigate party affiliations of Länder bureaucrats. This means that the relatively low level of party patronage on the federal level could be due to reliance on strongly party-affiliated Länder bureaucracies. Moreover, Müller (2000: 330) has pointed out that European parties are influential as political coordination mechanisms between the government, its administration and society: for Germany, although less patronage oriented than countries like Austria, Belgium or Italy, patronage is certainly exercised and influential. In this context, (party) patronage should be understood as the power of a party to appoint persons to positions in public and semi-public life (Kopecký/Scherlis 2008: 356). 41 Indeed, not only the already described top-levels of bureaucracy are partially subject to patronage, but also posts in the judiciary, public broadcasting networks and other quasi-autonomous NGOs. Close relations between the state and parties are also embodied in MPs. In 2007, 40.2% of Bundestag MPs were public servants (Braendle/Stutzer 2010: 224). These public servants are usually not top-level bureaucrats but first and foremost teaching professionals – teachers and professors constitute roughly 50% of public servants in parliament (Ismayr 2003b: 451) – police officials, and members of the armed forces among others, this high figure represents that patronage extends to various sectors of society. Hence, in their cross-country comparison of European countries, German patronage is characterised as broad in scope and motivated by control by Kopecký and Scherlis (2008: 362). In relation to the observations in the previous paragraph, these observastions suggest that there is extensive patronage that is not limted to the top-level of federal bureaucracy. Looking at the way federal bureaucracy functions, there are both similarities and differences to
41 Kopecky and Scherlis (2008: 356-358) further make the useful distinction between patronage, clientelism, pork-barrel politics and corruption.
72 Japan. The majority of bills is developed by bureaucrats, usually drafted under the aegis of division heads. The drafting bureau contacts all other inter- and intra-ministerial bureaux concerned and interest groups to develop the draft (Referentenentwurf). During the deliberations, permanent advisory boards (Beiräte) consisting of interest groups representatives and scientific experts, usually conduct hearings where various perspectives of deliberated policies are discussed. These hearings give bureaucrats an overview over stakeholders’ positions. While there is no formal requirement that these positions have to be integrated into the bill, taking their views seriously during the drafting phase can deter possible negative reactions. Thus, there is a tendency to hammer out drafts that do not alienate important stakeholders. As bureaucrats have limited influence on the composition of the advisory boards whose interest group representatives are chosen by these groups, these bodies can be said to be less subject to manipulation than Japanese shingikai. During the development of the Referentenentwurf, the draft circulates through all related bureaux and is adjusted as deemed appropriate. If the draft reaches the minister, it usually becomes a cabinet sponsored bill. An interesting parallel to Japan can be observed: as interest groups are incorporated into the process of drafting, in the past politicians felt compelled to give their blessing because drafting had included negotitations between different interests and rejecting the reached compromise would result in disappointment in the bureaucracy and involved interest groups (Rudzio 2011: 86). To mitigate this problem, the process has been altered, so that now Diet party factions and interest groups must be informed about the draft at the same time. However, the approach is still largely bottom-up, and closely resembles the ringi sei in Japan. Koh’s (1989: 263) claim that ringi sei is uniquely Japanese must be rejected. Not only is the basic structure very similar, but the institutionalised integration of Diet party factions and interests groups also gives the process a similar scope. While ringi sei and PARC are linked informally, the ties in Germany are formal. Thus, it can be stated that the characterisation of Japan as exceptional is only correct from the US-American perspective, which is dominating the international scholarship of political science in general and Japanese politics in particular. However, from a European perspective the influence of Japanese bureaucrats on policy-making is quite similar to most continental systems. From this perspective, it can be stated that the US case where members of Congress dominate the deliberation, formulation, and decision-making is rather the exeption than the rule. Also, if one looks at the bureaucratic careers, there are similarities and differences to Japan. Regarding the characteristics, both bureaucratic bodies have strong similarties such as dominance of juridically trained males. Concerning occupation after the end of the bureaucratic career, there are more differences than similarities: although some top-level bureaucrats which are forced to retire due to changes in the government constellation occasionally enter jobs in public companies and public banks (Derlien 2003: 407), this is rather the exception than the
73 norm. Because these cases are rare due to aforementioned relative continuity in federal bureaucracy, it is not as common as amakudari. All in all, while there are considerable connections between the bureaucracy, parties and business in Germany, the pattern is different from Japan. While Japanese bureaucracy, LDP, and business developed special relationships, the different institutional structure and absence of a single dominant party results in less symbiotic relationships. While similar business preferences towards conservative parties are observable, the regular transitions in power make business behave less one-sided than in Japan. As German politicians have more influence on bureaucratic appointments and postings it appears that a larger number of bureaucrats tries to remain neutral and that those bureaucrats which cannot be retired are rotated to posts which are regarded as non-sensitive. Further, since 1967 there are parliamentary secretaries of state. These individuals are not career bureaucrats but appointed MPs that support the minister to control the ministery.42 Moreover, past coalition arrangements showed that parties are willing to cooperate despite differing political ideologies, which by and large limit purges to the ministerial top-level positions.43 Thus, it can be claimed that German bureaucrats are more closely controlled than their Japanese counterparts, largely to ensure that bureaux follow the party, or better coalition, policy preferences.
3.1.3 Research landscape Germany’s system must be described as highly specialised and differentiated. There exists a large group of research associations, which are supported through public funding in variant degrees (Tab. 3). This variation is related to the specific R&D focus of individual associations, meaning that those specialised on basic R&D receive more public funding than applied R&D oriented ones. Further, federalism also affects funding: public funds are divided in differing ways for individual research performing associations.
42 There are doubts if this function is performed efficiently. Anecdotal evidence suggests that these appointed bureaucrats are largely isolated from intra-bureaucratic processes. Former minister of state (term signifies parliamentary secretaries of state equivalents in the Chancellery and Foreign Ministery) Ludger Vollmer (Greens) claimed that he was not informed properly and consequently called the post an absurdity (Unding) (Der Spiegel, 4/2005). 43 However, it must be strssed that willingness to form uncommon coalitions such as CDU, FDP and Greens (called Jamaica coalition due to the associated party colours black, yellow and green), SPD, Greens and the Left or SPD, FDP and Greens (dubbed traffic light coalition due to associated colours red, yellow and green) is limted to the Länder and municipal level. On the federal level, parties do align along the center-right and center-left lines.
74 Germany Japan HGF MPG FHG WGL (2011) AIST (2012) Employees 36.000 16.918 22.000 16.800 2.938 Scientists 12.269 5.470 n.a. n.a. 2.281 Institutes 18 82 66 86 41 Budget (in billion) € 3.76 bn € 1.53 bn € 1.9 bn € 1.4 bn € 6 bn (JPY 79.734 bn) Public-contracted ratio 70-30 85-15 30-70 85-15 95-5 Federal-Länder ratio 90-10 50-50 90-10 50-50 - Tab. 3 German and Japanese public R&D institutions (Data compiled from associations’ websites. All data as of 2013 except WGL and AIST)
Helmholtz Association (Helmholtz-Gemeinschaft Deutscher Forschungszentren; HGF) is Germany’s largest scientific organisation in terms of employees. Its primary focus is “big science” such as (nuclear) energy, aero(space), transportation, and health. As these fields suggest, most HGF research institutes tend to focus on basic or applied large-scale R&D. HGF receives around 70% of its funding from public budgets and 30% through contracted R&D. 90% of public funds are provided by the federal level and 10% from Länder level (Helmholtz Association website, 12.12.2012). Max-Planck-Society (Max-Planck-Gesellschaft; MPG) shares the basic R&D focus, but differs in other respects from HGF. MPG researchers can define their research completely independent and MGP institutes not only cover natural sciences and medicine, but also encompass social sciences. In general, MPG is almost completely publically financed: federal and Länder level finance 50% respectively. 44 Fraunhofer Society (Fraunhofer Gesellschaft; FHG) is focusing on applied R&D in fields such as energy, environment, mobility, communication or health. Although the lion’s share of FHG’s funding is contracted R&D, 30% of contracts are with public institutions, meaning that not a small fraction of its total budget is coming from public sources. Leibniz Association (Wissenschaftsgemeinschaft Gottfried Wilhelm Leibniz; WGL) is situated between HGF, MPG and FHG as it specialises in application-oriented basic R&D. WGL encompasses a wide spectrum of scientific disciplines without any clear focus. Although WGL also receives funds from contracted R&D, it is largely publically financed and federal and Länder level provide 50% of funding respectively. Besides these R&D performers, there is also the Federation of Industrial Cooperative Research
44 This general rule does not apply to large-scale R&D such as MPG’s Institute for Plasma Physics. Like HGF shows, German large-scale R&D follows a different arrangement, i.e. 90% support from federal sources and 10% Länder funds.
75 Association Otto von Guericke (Arbeitsgemeinschaft industrieller Forschungsvereinigungen; AiF). Its central activity is cooperative industrial research (Industrielle Gemeinschaftsforschung; IGF), which mainly caters to SMEs. While the aforementioned research societies, especially those focused on basic R&D, are mainly funded by BMBF, AiF/IGF is financially supported by BMWi, which initiated AiF’s formation in 1954. According to AiF, its activities support R&D activities of around 50.000 German SMEs. While strong diversity and specialisation are one of the strengths of the German NIS, there are also negative aspects. The relatively narrow focus of many institutes makes them insular institutions. Therefore, it is necessary to develop improved knowledge transfer mechanisms and a higher degree of coordination. A good example for missing coordination is the MP3 standard: developed by a FHG institute, this technologic standard completely changed the music industry and FHG is said to earn € 50 million annually through licenses (Dalziel 2010: 12f.). However, the market for MP3 applications such as music players is completely dominated by East-Asian and US firms. Thus, from a NIS perspective, the economic gains for Germany could have been much higher if the cooperation between industry and research performers had been better. Therefore, coordination in general and knowledge transfer in particular have been identified as the main weaknesses of the German research system (Fraunhofer ISI et al. 2008: 13f.). In comparison to Japan, the organisational structure of publically funded R&D performers in Germany is more branched out than the centralised AIST. Due to its specialisation on large-scale science that is directly dependent on government, only HGF resembles AIST in its politically defined agenda. Due to the long tradition of public-private cooperation in R&D, all large German R&D associations currently receive more funding through contracted research than AIST. If one compares the number of R&D institutes, it appears that AIST is also more centralised than the public German R&D performers. However, German associations do not underly AIST’s relatively narrow focus on natural sciences and medicine but also engage other research fields. Regarding only natural sciences, it appears that both countries share a relatively high degree of R&D specilisation. Thus, it appears that the higher differentiation of the German system results from a generally broader scope of activities. On the backside, this suggests that Japan is focussing funding stronger than Germany. Concerning administration-internal divisions, it appears to be less problematic than in Japan. Although several ministries, especially health, defence, and agriculture, have several research institutes under their aegis, these tend to specialise in questions specific to their parent organisation’s mission (e.g. disease control, ABC weapons protection and animal health). Therefore, these research institutes are active in research on topics related to safety or risk control of potential dangers. As the fields of activity are narrow and there exists no exclusiveness such as described for the Japanese case, it can be stated that the problem of separated divisions does not appear in Germany.
76 3.2 Role of regional policy
In Germany, distinguishing regional from federal policies is quite complex. Often, policies are drafted and coordinated regionally, but largely funded through federal funds. Hence, federal and regional policies are intertwined and theoretically clearly separated lines are actually blurred. As pointed out in the preceding sections, regional and federal levels are also connected through politicians, who usually start their careers in regional states and later enter federal politics. For this study, intertwined responsibilities and divided jurisdiction over tertiary education are most critical (see: 3.4). Although the general tendency to intervene into markets directly is comparatively weak, there exist a number of extraordinary close ties between politicians and the German automobile industry. These links are both formal and informal. The strongest networks probably surround Volkswagen (VW): founded as an SOE during the Nazi-era45, VW was privatised in 1960. However, the state of Lower Saxony owns 20.01% of VW’s shares with voting rights and its Prime Minister is always a member of VW’s supervisory board. Hence, there exists political interest in the success of the company and Lower Saxony’s Prime Ministers will try to influence decisions in favour of their home state. Simultaneously, they can use their role in state and federal politics to protect the company from harm. This protection through vested political interests is enhanced through the so-called VW-Law (Gesetz über die Überführung der Anteilsrechte an der Volkswagenwerk Gesellschaft mit beschränkter Haftung in private Hand; short: VWGmbHÜG or VW-Gesetz): all important decisions like a change of the articles of the association or seasoned equity offerings are 4 46 requiring a /5 majority and decisions about production location (including relocation and 2 closing) require a /3 majority in the supervisory board. As the state owns 20.01% of the relevant shares, it has a de facto veto concerning a change in the articles of the association. Further, not only is the Prime Minister of Lower Saxony member of the supervisory board, but under the German system of co-determination, 50% of supervisory board members are employee representatives. In large companies like VW, these members usually are representatives of IG Metall (Industriegewerkschaft Metall; Industrial Union of Metalworkers). This means that employees’ representatives can veto decisions regarding production locations. The VW-Law has been subject to conflict between the European Commission (EC) and Germany. It is a federal law due to the fact that VW was owned by the federal government until privatisation. Thus, the EC sued Germany at the European Court of Justice (ECJ). From the
45 Volkswagen means “People’s Car” and reflects the contemporary ideology. 46 In Germany, usually 75% are required, not 80% as in the case of VW.
77 perspective of the EC, the VW-Law is contradicting the freedom of capital movement, which is one of the four pillars of the European Common Market. Thus, the EC wants Germany to change the VW-Law to accord with European Law or abolish it. The ECJ ruled in favour of the EC. However, the amendments made by the German government in 2008 were seen as insufficient, because while the other stipulations were adjusted to normal standards, the 80% majority requirement remained unaltered. The EC threatened to sue Germany anew at the ECJ within two months time, if the requirement was not brought down to the normal 75%. Despite this threat, there was a long time of inaction and only in 2012, the EC took this step. Also, the case includes a civil penalty of € 46.5 million if Germany does not change the law to accord with European demands. After learning of the renewed lawsuit, German Minister of Economics and Vice-Chancellor Philip Rösler (FDP), who is from Lower Saxony and has been Minister of Economics, Labour and Transport in this state in 2009 before becoming Federal Minister of Health at the end of that year, stated the following: “I regret the step of EC to now again file a suit against the VW-Law. The Federal Government has altered the VW-Law in December 2008, [and] the new law is in accordance with specifications of the ECJ ruling from October 23rd 2007. Volkswagen is one of the figureheads of German industry and an example for the innovative power of the German economy. The Federal Government is positively standing behind the VW-Law and therefore will actively defend it before the ECJ.” (Handelblatt online, 20.03.2012) (author’s translation) Even before the EC decided to reopen the case, then Prime Minister of Lower Saxony, David McAllister (CDU) stated that his administration was willing to “set a sign in the battle for the VW-Law” in 2011 (NDR online 2012).47 Prominent politicians like former Chancellor Gerhard Schröder (SPD) and former Federal Minister of Environment and today’s SPD chairman Sigmar Gabriel, both established ties with VW during their terms as Prime Ministers of Lower Saxony. The VW case demonstrates that there are no party divisions over the role of the state in the company and the obvious tendency to protect it via special regulations in the VW-Law. The examples further highlight that politicians from Lower Saxony seek to maintain the status quo even if they leave state politics and move up to the federal level.48 Another example is the current chairman of the German Association of the Automobile Industry (Verband der Automobilindustrie; VDA) Matthias Wissmann. He was born in Baden-Württemberg and started his political career in the CDU youth organisation in this state. Later, he was elected to the Diet and became head of BMFT (1993) and Federal Minister of
47 At the time of writing, the ECJ has not passed judgement. However, the European Attorney General has advised ECJ to dismiss the case, which suggests that Germany is likely to win the case. 48 Stolz (2003) has shown that while the general hypotheses that politicians use regional posts as stepping stones towards a position at the federal level is still valid for Germany, it is much less common than expected.
78 Transportation (1993-1998) of the Kohl administration. Since 2007, Wissmann is VDA chairman, the chief lobbyist of Germany’s automobile industry. He is also the coordinator of the German industry for electro-mobility and the National Platform Electro-mobility (Nationale Plattform Elekromobilität; NPE) steering committee (see: 4.3.3). The most recent example is Eckart von Klaeden (CDU), currently Minister of State at the Chancellery, announced that he will become Daimler’s head of Global External Affairs and Public Policy after the end of the current legislative period in September 2013. These few examples already highlight strong interlinks between German automobile industry and politicians. In comparison to Japan, these changes from political office to industry positions are the functional equivalent of amakudari. Main difference is that instead of bureaucrats,49 politicians start working for industry lobby groups or companies. Also, while amakudari has been partly curtailed and regulated by the aforementioned 2-year waiting period in Japan, no such restriction exists for German politicians. Moreover, there is no such source as the reports from Japan’s National Personnel Authority in Germany. This gap is subject to critic from NGOs and some such as the NGO Lobbycontrol try to monitor changes from politicians and high-ranking bureaucrats into business. As amakudari in Japan, this close and opaque relationship to business can be described as a form of structural corruption or collusion. However, reports of this NGO focus on few cases (Lobbycontrol 2013), so that the picture is not as complete as in Japan. Hence, until today, Patzelt’s (2002: 99) observation that post-parliament careers are understudied remains valid. Summing up, while companies and lobby groups seek to create close relations with politicians in Germany by offering post-career employment, their Japanese counterparts appear more concerned with securing a channel into the bureaucracy. This suggests that the strength or influence of the targeted group is regarded as crucial by business, which in turn could mean that the most influential player in political decision-making is different in both countries. However, this is the aggregated perspective. Actual influence can divert from the aggregate pattern, largely dependent on the deliberated policy. Moreover, it can be stated that the scope of the post-career business employment cannot be compared accurately due to total lack of documentation in Germany. Thus, it can be stated that despite imcompleteness, Japan is more transparent on this issue, because fairly detailed information on the number of amakudari and bureaucrats’ former office posts used to be accessible.
49 German bureaucrats are banned to enter employment in a sector formerly under their jurisdiction for 3 years if they reached the mandatory retirement age and 5 years if they left office before this point in their career.
79 3.3 Technology Assessment
Although Germany practiced a form of foresight, the approach markedly differs from Japan’s long-range planning. Following the set up of the US Office of Technology Assessment (OTA) in 1972, many European countries created similar agencies (van Eijndhoven 1997). Although first considerations to establish an OTA equivalent were made in 1974, only ten years later the Diet Research Committee set up a sub-committee that covered technology assessment (TA). In 1989, it was decided to establish the Diet Technology Assessment Bureau (Technikfolgenabschätzungsbüro Deutscher Bundestag; TAB). TAB was operated by researchers from the Department of Applied Systems Analysis (Abteilung für Angewandte Systemanalyse; AFAS) of the Karlsruhe Nuclear Research Centre (ibid: 274). Although formally just a department, AFAS acted independently. In 1995, this independence became official, when AFAS was upgraded into today’s Institute for Technology Assessment and System Analysis (Institut für Technikfolgenabschätzung und Systemanalyse; ITAS). In 2009, the fusion of the University of Karlsruhe and the Research Centre Karlsruhe into the Karlsruhe Institute of Technolgy (Karlsruher Institut für Technologie; KIT), incorporated ITAS as an independent research institution of KIT. Simultaneously, ITAS belongs to HGF. There were also institutions similar to TAB and ITAS on state level. Most prominent example is probably Baden-Württemberg (Akademie für Technikfolgenabschätzung in Baden-Württemberg). However, due to a severe debate50 between supporters and opponents of TA, this institution has been closed down. The political debate about TA focussed on its early warning function. Critics, mostly from CDU/CSU and FDP saw it as too negative and hindering new technology application. Similar debates have occurred in other countries, e.g. the USA dissolved OTA due to pressure from the Republicans (Herdman/Jensen 1997: 139-142). In Germany, TAB and ITAS remain intact, but it appears that critique from politicians and industry has resulted in a stronger focus on positive impacts and less inclination to highlight risks. Since 2003, ITAS cooperates with the Fraunhofer Institute for Systems and Innovation Research (Fraunhofer-Institut für System- und Innovationsforschung; ISI) in the management of TAB. Fraunhofer ISI is conducting Delphi foresight studies on behalf of BMBF (Cuhls et al. 2009), thus collecting and supplying information for innovation policy-making to the administration. Therefore it can be stated that ITAS and ISI jointly support parliamentarians in the Bundestag via TAB, while ISI solely conducts research and forecasting for the administration. Hence, it can be stated that ITAS and ISI’s task is similar to that of STA in Japan, but with different recipients and also apply a different methodology. While the timeframe
50 Actually, there were two parallel debates, one in science how to improve TA and a political one, which questioned TA’s benefits altogether. For an overview over the scientific debate and a plea against the instrumentalisation of scientific results by politicians, see: Gloede 1992.
80 in the Japanese Delphi surveys covers the coming 30 years, ISI’s latest foresight study for BMBF covered 10 years and more into the future. Thus, it is on the one hand vaguer when it comes to the future perspective and also excludes all aspects that are regarded as occurring in the 10-year timeframe. The logic appears to be that every innovation that is likely to occur within the next 10 years is already on the radar of BMBF, the science community and researching companies, so that there is little need for foresight and policy recommendations. Although it is not openly stated, there could also be another underlying logic: if a topic has been under the radar, but is going to be realised within the coming years, it is very likely to happen outside of Germany. Thus, if the train has been missed, there is arguably little that can be done to change the situation. Also, if this is the case, catching-up to leading countries will require more than adequate foresight. Thus, it can be observed that Germany practiced no foresight at all and only in the late 1980s adopted TA. While TA was initially disputed and instrumentalised by both technology advocates and sceptics, it nevertheless survived as a source of information for political decision-makers. TA is now complemented by Delphi surveys, which indicates that German decision-makers also look for some kind of strategic long-range outlook. As BMBF is ordering the Delphi surveys, it appears that one way to compensate the aforementioned loss of key divisions is to assume the role of a strategic intelligence unit for the administration.
3.4 Governmental R&D funding strategy
Apart from different administrative organisation patterns and party constellations, Germany also adopted different economic as well as science and technology policy preferences than Japan. Therefore, before describing allocation strategies, it should first be investigated what kind of research was favoured if there are major recepients of that resource allocation. Looking at the historic approach towards furthering innovation, it is maybe most appropriate to describe it as a twofold Janus-faced system. The first division refers to the target of S&T policy: on the one hand, German policies focussed on large-scale high-technology projects, which were conducted by a small number of very large companies, which evolved into MNCs over time. The most prominent examples are nuclear energy, IT, the high-speed train InterCityExpress (ICE)51, space and aero industry (Weyer/Schneider 2012: 181). On the other hand, German R&D promotion policy focussed on SMEs. A differentiation can also be made in the way innovation was driven forward: in the aforementioned areas with government intervention and MNC cooperation, the aims were largely high-technology innovations, while SMEs rather concentrated on the incremental improvement of existing technology and high-tech innovation
51 The ICE can be described as the German counterpart to the Japanese Shinkansen bullet-train.
81 in sectors like optics or biotechnology. These sectors are also subject to state support, but there are no large-scale (infrastructure) technologies like the aforementioned examples. Further, the division into those two spheres can be explained by policy. After the Second World War, CDU governments were in favour of so-called ordoliberal economic policy. The concept of ordoliberalism was largely developed by German and Austrian economists like Walter Eucken, Franz Böhm, Alfred Müller-Armack and Wilhelm Röpke, as a response to the global economic crisis of the late 1920s. In their view, a market-based economy needed strict rules to avoid market failure and hence, ordoliberals stress the importance of the state as an impartial referee who is enforcing that all market participants are playing according to the rules. Influenced by these ideas, German economic policy after the Second World War emphasised competition and trade orientation (Owen 2012: 17f.). Further, state-owned enterprises (SOEs) that the German government had inherited from the Nazi-era like VW were privatised. Indeed, the federal level largely refrained from intervention in the form of sector-specific policies but concentrated on framework conditions. This form of macroeconomic policy which focuses on free market and competition, called Ordnungspolitik, 52 was championed by the federal economic ministry. However, ordoliberalism did not oppose SOEs in areas that were regarded as critical social infrastructure such as telecommunication and railways. This partly explains the division in the innovation system: aforementioned industries and projects all can be regarded as having strategic importance. Like in many other countries, nuclear energy was regarded as the key to become less dependent on foreign fossil energy sources. Space, aero and IT industries do have a military application value, which was an important motive during the Cold War era and continues to have high political significance. The ICE was mainly important as an infrastructural improvement. This means that the federal government only diverted from its largely non-intervention approach in areas that were regarded as not purely economic, but possessing strategic or military value. The second division refers to the complementary roles of the administrative levels. Differing strongly from the federal level, the Länder did engage in sector-specific industrial policies to support and develop their regional industries. Lehmbruch (1997: 48-50) stated that if federal governments wanted to engage in sectoral policies, they require the cooperation of the Länder. Thus, besides the split into large-scale projects and SME support, there exists a second division along government levels. While the federal level largely focuses on broad, unspecific macroeconmic policy, Länder have a tendency to sponsor sector specific policies as part of regional development policies.
52 The name reflects its roots in ordoliberal thinking as Latin ordo and German Ordnung both mean order in English. This orientation is largely due to the support from Economic Minister Ludwig Ehrhard and Müller-Armack, who headed the ministry’s policy department (Grundsatzabteilung) as section chief after the Second World War.
82 This twofold Janus-faced system has consequences for R&D funding. As described in the preceding section, funding is coming from different sources. Namely, federal and Länder level can supply funds for R&D, demonstration projects,53 and under certain conditions also tertiary education. As already demonstrated, both levels may act together or share tasks. BMBF can drive forward its agenda mainly through providing R&D funds or other financial incentives. After BMBF has lost important competences regarding tertiary education to the regional level, a new approach emerged. BMBF is now promoting competition between universities by providing funds for so-called excellence clusters. These clusters should represent advanced research facilities and the idea is to strengthen cutting-edge research in Germany. As a consequence, universities and their main financers, the Länder, are competing to access federal extra-funding. Through such measures, BMBF still can influence decision-making to a limited degree. However, the practice which has been labeled as the “excellence initiative” is timely limited, because continued funding of a genuine Länder responsibility is not in tone with constitutional provisions. This means that the recent compensation strategy to maintain influence through the provision of additional funding may have to be abandoned.54 Further, this means that the strategic strengthening of a limited number of universities as research centers may end as a short-lived episode. Although this approach to concentrate funding on few projects and places may sound reasonable, it contradicts German tertiary education tradition. Therefore, there is considerable resistance against this new policy direction: a main argument is that the additional funds improve the possibilities to conduct research, but the studying conditions for students are constantly deteriorating.55 Hence, critics point out that improving these conditions is more important than supporting a limited number of excellent researchers. Overall, R&D expenditure is increasing. This process is mainly driven by EU’s so-called Lisbon
53 While simultaneous support from different administrative levels is possible in Germany, EU law prohibites additional funding from the EU level. During an interview at Metropolregion (see: 4.4.3), it was pointed out that for this reason firms that seek funding should investigate if EU funding might be more generous. 54 BMBF and the Länder recently tried to negotiate abolishing the constitutional provision known as cooperation ban (Kooperationsverbot) to enable long-term cooperation between the two levels. However, while BMBF Minister Johanna Wanka (CDU) only wants to cooperate in – read subsidise – tertiary education and research, the majority of Länder – including some governed by CDU coalitions – wants support for all education facilities, including kindergardens. As the Bundesrat, Germany’s second chamber which represents state governments is currently dominated by SPD and Greens, i.e. federal opposition, a compromise between CDU/CSU, FDP, SPD and Greens is precondition to alter the constitution. As negotiations recently failed (Spiegel online, 29.07.2013), the only legal option is timely limited cooperation. This is an example that illustrates the strong postion of the Länder in German politics, so that conflict between levels may overwrite conflict between parties. 55 This is mainly due to increasing student numbers that are not paralleled by more teaching staff: Germany is currently reducing the way to the qualification to enter universities (Abitur) from 13 to 12 years of schooling, so that currently two graduation cohorts enter universities instead of one. Moreover, mandatory military service (for males) was discontinued since July 2011, so that the number of students increases further.
83 Strategy. Lisbon Strategy was drafted at the 2000 EU Lisbon Summit and aimed at turing the EU into the most competitive knowledge-based society by 2010. To achieve this aim, the Barcelona European Council meeting in 2003 agreed on spending 3% of individual member countries’ GDP on R&D. Main idea behind this strategy is that the EU like its members cannot compete with emerging economies unless it pursues innovation-led economic growth. Latest available data indeed prove that both federal and Länder administrations are increasing R&D spending (Fig. 3).
Fig. 3 German R&D expenditure by government level (Data: BMBF 2012)
It has been observed that the increasing role of the EU in innovation policy-making – especially post-Lisbon Strategy – has actually promoted regional innovation systems, even in states which are traditionally centrally organised (Kaiser/Prange 2005). Simultaneous Europeanisation and regionalisation has attracted legitimate criticism, mostly focussing on inconsistancies between “best practice” and diversity as well as competitiveness and cohesion (De Brujin/Lagendijk 2005). The Lisbon Strategy is – together with the so-called Bologna Process56 –problably the most serious EU impact on the German innovation system. Although Germany has not reached the 3% aim yet, R&D is one of the few subjects that were exempted from fiscal austerity measures. In comparison to Japan, it can be claimed that both countries apply a similar logic and strategy of innovation-driven growth. However, Japan’s total R&D expenditure in comparison to GDP is currently much higher than Germany’s (Fig. 1).
56The German education system is going through a reform process, which was induced by EU’s Bologna Process. The aim is establishing comparable and EU-wide recognised academic degrees. Thus, the old system is being replaced with 3-year BA and 2-year MA degree programs. Further, the way to the qualification to enter universities (Abitur) is currently reduced from 13 to 12 years of schooling.
84 As for the Länder role in funding, it is best described as selective. Regional states support those programs through own funding, which seem to contribute most to the strengths of a state. A good example is funding of renewable energies: Länder favour those generation methods, which are fitting well to regional characteristics (Weidner/Mez 2008: 372). Coastal states like Schleswig-Holstein prefer wind energy, partly coastal states with large rural areas like Lower Saxony combine wind energy with bio-gas and Nordrhine-Westphalia, home of Germany’s largest urban agglomeration called Ruhr metropolitan area (Ruhrgebiet) with a long mining industry tradition opts for waste and landfill gas exploitation. Hence, general federal policies might be reinforced through more focussed or customised regional ones. In other words, regional policy may select the measures most suitable for the specific Land and try to increase effects of federal funding through additional regional instruments. Moreover, given the relatively strong position of regional states, there are cases that Länder lobby at the federal level to finance R&D projects in their region. It is worth mentioning that past regional infrastructural and industrial policies have partly resulted in failures, so that the role of regional states cannot be reduced to well-informed refiners of federal policy. As already mentioned, the innovation system itself was divided, and this also applies for funding. Few strategic projects could receive large support, while the many projects conducted by SMEs receive less funding. Returning to the federal level, caution must be advised against equaling general budgets with influence. Among the relevant federal ministries, the Federal Ministry of Transport, Building and Urban Development (Bundesministerium für Verkehr, Bauen und Stadtentwicklung; BMVBS) traditionally has the largest budget (2013: € 26.4 bn; 5th largest budget item with 8.52% of total federal budget) (BMF 2013). However, major funds go into infrastructure construction and maintainence and are not innovation related. BMBF follows (€ 13.7 bn; 6th rank; 4.43%) and BMWi trails behind (€ 6.1 bn; 9th; 1.97%).57 Looking into the actual budget items qualifies these macro data. BMBF’s item energy technologies that finances the bulk of projects relevant for this study stays at 63 million, BMWi’s item transport technologies at 58.4 million and BMVBS items related to the National Innovation Program Hydrogen and Fuel Cell Technology (Nationales Innovationsprogramm Wasserstoff- und Brennstoffzellentechnologie; NIP; see: 4.5.6) accumulate to 57 million. Thus, these three ministries command roughly similar budgets directed at EV related activities. Therefore, their respective roles in the actual process will be more closely analysed in the following chapters. Summing up, regional and federal policies towards funding innovative activities like R&D are intertwined. Most commonly, the Länder are coordinating projects in cooperation with regional companies and research institutions. The federal level is then deciding which projects will be
57 This is the present situation. Before, the budget of BMWi was even smaller as the currently largest sub-items actually are aerospace-related, i.e. former BMBF budget items.
85 supported. In addition, Länder may decide to drive forward the issue with own funds. This situation has several benefits from the perspective of the federal administration: first, it does not need get into network micromanagement, which is left to the Länder. Second, the Länder should ideally compete with each other to secure additional federal funds for their regional economies. Third, the federal level can choose the projects that seem to be most promising, because the federal level can specify the criteria of selection. As it is not possible for the Länder to challenge decisions legally or question the criteria, which are usually formulated quite vaguely to give the decision-makers enough room to justify their decisions, the federal level is almost free to pick whatever projects it favours. Also, the federal administration can also use this approach to keep this competition going on by supporting several projects and not necessarily the strongest competitors. However, it must be highlighted that this may be a model from the past: German policy traditionally tried to ensure even living standards in the whole country and thus supported comparatively weak Länder. A trend towards more competition, more uneven living standards and more clustering is visible. Related to this is the approach of the BMBF to encourage “excellence clusters” at universities, something opposed to the past policy of an even, but high standard. However, while this description suggests a top-down pattern, it must be highlighted that this is a fairly recent development and that there are many instances of successful bottom-up politics.
3.5 Environmental policy
Unlike Japan, Germany was not among the pioneers of environmental policy, but rather following an international trend. Similar to Japan, economic recovery after the Second World War was among the main objectives that naturally led to a marginalisation of environmental issues. With regard to the aforementioned tendency of Japanese environmental policy to frame subject as “brown”, it can be stated that German environmental policy is more likely to frame problems as “green”. However, the currently advanced position of German companies in renewable energy generation indicates that there is also a substantial amount of “brown” approaches. The beginnings of environmental policy developed under the SPD-FDP coalition under Chancellor Brandt. The first move was the creation of an expert council on environmental issues in 1971 and the creation of the Federal Environment Agency (Umweltbundesamt; UBA) in 1974. Like in Japan, the agency did not have the rank of a ministry, but nevertheless was able to initiate effective pollution control, especially for water and air. The institutionalisation was accompanied by the development of many grassroots movements that were concerned with environmental problems. Aforementioned foundation of the German Greens in 1980 can be seen
86 as a step to unify those groups and give them a voice in parliament or as an expression of the importance of environmental issues as perceived by the public. When the CDU/CSU-FDP administration under Helmut Kohl came into office in 1982 it continued the path of command and control policies. It can be claimed that environmental policy was not very high on the internal agenda, but that the administration reacted to public pressure to introduce stricter pollution control standards. Just five weeks after the Chernobyl nuclear disaster in 1986, the administration founded the Federal Ministry of Environment, Nature Conservation and Nuclear Safety (Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit; BMU), largely to appease public concerns about the dangers of nuclear power and radiation. The newly founded ministry was formed from departments from the Ministries of Interior, Agriculture and Health. UBA became an agency overseen by BMU. Nevertheless, the Greens attracted more votes in the 1987 general election, managing to increase their share from 5.6% in 1983 to 8.3%. When trained environmental economist Klaus Töpfer (CDU) came into office in 1987 as second head of BMU, there was a sharp increase in the visibility of environmental policy initiatives. Before, Töpfer had been Minister for Environment and Health in Rhineland-Palatinate and advisor on environmental issues for the state-owned Reconstruction Credit Insitute (Kreditanstalt für Wiederaufbau;KfW). After German reunification in 1990, economic and social policies gained overriding importance. Also, there was more administration-internal reservation and when Töpfer was made Minster of Construction in 1994 it can be described as his disempowerment.58 He was replaced by current Chancellor Angela Merkel in 1994. Under her leadership the number of environmental policy initiatives decreased and environmental policy ranked low on the administration’s agenda. Nevertheless, with Merkel as head of BMU, Germany joined the Kyōto Protocol. In this process, Merkel’s role must be described as important: in the negotiations preceding the Kyōto summit, she declared German willingness to make comparatively large contributions among the European states (Weidner/Mez 2008: 357). This is critical, because at Kyōto, the EU as a whole joined the protocol with an average reduction of 8%. Following this pledge, the EU member states negotiated and defined their individual contributions. According to the final agreement, Germany had to reduce its emissions by 21%. In comparison to Japan, this number may appear ambitious, but actually the government had not to take drastic measures to reach this goal. By 2007, Germany had reduced its emissions by 21.3% (UNFCCC 2009: 9), by 2011 by 26.5% (Schreuers 2013: 98). The reason for this seemingly drastic improvement is simple: the designated base year 1990 includes East German emissions. After reunification, most East German industries disappeared, because they were
58 Töpfer headed the United Nations Environment Program (UNEP) in Nairobi, Kenya from 1998 to 2006.
87 uncompetitive. It is no exaggeration to state that former Eastern Germany was largely de-industrialised after reunification. Hence, a great amount of emissions disappeared through the shift from planned to market economy, not through strict environmental policy measures. The phenomenon occurred in all former planned economies in Eastern Europe, e.g. Poland achieved 30%, Russia 33.9% and Latvia even 54.7% emissions’ reduction (UNFCCC: 2009: 9). All in all, the Kohl administration has a positive record as many actual improvements in environmental conditions took place during their office. It can be critised that there are shortcomings regarding nuclear energy, nature conservation, land use and regulation of chemicals, but even critics conclude that the overall result is positive (Kern et al. 2003: 10). During the whole 1990s, Germany and other states with high environmental standards like Denmark or the Netherlands spearheaded EU wide adoption of these standards (Vogel 1997: 565f.). Like the case of Merkel’s role in the pre-Kyōto negotiations illustrates, Germany was willing the make comparatively substantial contributions, which explains why international agreements could be reached. This step towards stronger regional environmental protection is also one important achievement of the Kohl administration. Although the administration was – with the significant exception of Töpfer – not a strong supporter of environmental policies, it nevertheless took action to improve environmental quality, mostly through reducing air and water pollution. This can also be described as conscious party politics: the CDU/CSU-FDP coalition wanted to minimise the Greens’ success by responding to public demand for stricter environmental regulation (Weidner/Mez 2008: 362). In 1998, the Kohl administration was voted out of office after 16 years and replaced by the SPD-Greens coalition under Gerhard Schröder (SPD) with Jürgen Trittin (Greens) as Minster of Environment. During their term, several environmental policy initiatives were driven forward, but automobile related issues had a low profile. It could be presumed that a coalition government with a green party would have strongly supported EV development, but this was not the case. Several reasons can be found for this neglect: for the Greens, the end of nuclear power generation had overarching importance, thus other environmental issues were addressed, but not as actively pursued as phasing out nuclear energy. Further, the Greens generally favoured public transport solutions and improved conditions for cycling over automobile transport. This finding can be backed up by a position paper on alternative automobiles: “Green transportation policy is particularly devoted to means of public transport, especially railways. Indeed, railways and buses deliver essential contributions for eco-friendly mobility. […] This paper devotes itself exclusively to the question how automobile traffic may be organised more eco-friendly. This is no relativisation of the importance of the eco-friendly combination public transport, cycle and pedestrian traffic. For this [combination] we continue to fully convinced make policy, because we know it is the backbone of an eco-friendly
88 transportation policy. It is also no redefinition of [our] Green transportation policy. Rather, it is contributing to the strategy “Hence with oil”, decided by the Green parliament faction in unison at the 2005 New Year’s Conclave at Wörlitz, in the field of automobile technology and use: a Green automobile strategy.” (Bündnis 90/Die Grünen 2005: 1) (author’s translation) This formulation suggests that any Green automobile policy was not undisputed and hence, requiring affirmation that it would not change the traditional positions on transport issues. Moreover, it is worth mentioning that this automobile strategy was formulated after seven years in office, shortly before the Schröder administration lost power. This reveals several aspects of the Greens transport policy: first, automobile transport was seen as something that should be avoided and thus, did not receive much attention.59 Second, adopting an automobile strategy had to be carefully explained to party members and supporters, because it still was not fitting Green mainstream politics. Third, statements made after adopting this broader transport policy orientation show that party representatives back this new approach. A prominent, but controversial case is former Foreign Minister Joseph (commonly called Joschka) Fischer (Greens): he was hired as a consultant for sustainable development by BMW in 2009. While some see it as a sign for the maturation of the party and the breakthrough of environmental topics on OEM level, yet others see it as the sell-out of “Green” ideals. The Greens also released a strategy paper authored by transport scientists through their political foundation (Canzler/Knie 2009): this paper reflects the development of Green automobile policy, which is now calling for smaller, less powerful cars and new inter-modal transportation business models instead of simply rejecting car transport. Further, in the manifesto for the last federal election in 2009, the party advocated supporting EVs: Declared aims were a speed limit of 120km/h on highways and 30km/h in cities (excluding main traffic routes) and to target two million EVs until 2020 (Bündnis 90/Die Grünen 2009: 73f.), which is double the amount the Merkel administration settled on (see: 4.4.3). A major factor for inaction towards EVs surely was Schröder himself. Before becoming elected Chancellor, he was Prime Minister of Lower Saxony, the home state of VW. Schröder was known as a strong supporter of the domestic automobile industry, which earned him the nickname “car chancellor” (Autokanzler). The best documented example of Schröder’s close ties to the domestic automobile industry is related to the so-called EU end-of-life vehicles directive (Wurzel 2000): in this case Schröder was directly lobbied by Ferdinand Piëch, then chairman of VW and the European Automotive Manufactuers Association (ACEA), whom he knew personally through his time on VW’s supervisory board, to stop the already reached
59 The topic was addressed indirectly as the Schröder administration increased fuel taxes to cross-finance increasing pension costs. This ecological tax reform aimed at shifting non-wage labour costs to environmental resource use taxation. For detailed discussion of ecological tax reform, see: Streeck/Trampusch 2005 and Wurzel et al. 2003.
89 agreement on the subject. As a result Schröder was willing to force to compel his smaller coalition partner and even to denounce already negotiated EU compromises to protect German automobile industry interests. The German automobile industry has doubted the HEV concept for a long time (see: 4.6.9-4.6.12). In an interview with the political weekly “Der Spiegel” in June 2012, Daimler CEO Dieter Zetsche, when asked if he fumed at himself for letting Toyota become the pioneer of hybrid propulsion systems, stated: “Toyota succeeded in establishing a very eco-friendly image through the Prius. This is a marketing accomplishment which I salute. The European manufacturers held the conception that the cost-benefit ratio of hybrid drive systems is disproportioned. Till this day, it is difficult for costumers to earn the higher purchase price of a hybrid car through reduced [gasoline] consumption.” (Spiegel online, 11.06.2012) (author’s translation) This statement forcefully demonstrates that even today, there is reluctance towards HEVs within the top-ranks of German automobile industry. Hence, it is not surprising that Schröder did not actively encouraged R&D on those vehicles or took regulative steps beyond ecological tax reform to further development inside the German OEMs during his term as German Chancellor. Schröder lost office to Merkel in 2005. Due to a comparatively strong Left, neither CDU/CSU-FDP nor SPD-Greens won enough seats to form a new government. Lacking other options, CDU/CSU and SPD formed a grand coalition and as CDU/CSU won more seats, Merkel became Chancellor. The cabinet-post of Minister of Environment was given to Sigmar Gabriel, who is presently SPD chairman. Although Merkel initially demonstrated interest in environmental issues and was labeled as “climate chancellor” (Klimakanzlerin) by the press, her administration did not live up to the expectations. An indicator that environmental policy under Merkel did not wholeheartedly supported a quick diffusion of EVs is the following case. In 2007, Renate Künast, one leader of the opposition Green Diet faction, openly advised the public to buy Toyota cars instead of German ones, because they had lower emissions. Künast received many critical comments about being unpatriotic and lobbying for the Japanese automobile industry. When the EU Commission intended to introduce a single emission standard for all passenger vehicle segments in 2007, this step met strong opposition from Berlin. Essentially, the proposal suggested an average emission limit of 130g CO2/km for new passenger cars from 2012. The proposal contained a weight-based emission limit value curve, which was designed to accommodate producers of heavier vehicles like German OEMs. This tool acknowledges that heavier cars have higher emissions and hence allowed producers to fall short of the target if sales of an OEM are largely in heavier luxury cars and SUVs. Thus, this proposal was already accounting for different specialisations within European car industries. However, this proposal
90 still was not satisfactory for the German car industry and its political allies. In Germany, the issue was framed as an attempt of the EU Commission to create competitive advantage for Italian and French vis-à-vis the German OEMs. The original proposal was altered in 2008, after Merkel and French President Nicolas Sarkozy agreed on a compromise that delayed the target to 2015 and contained clauses that allow car-makers to include ecological innovations that are not included in the official EU test cycle (Hey 2010: 216). Effectively, (German) producers which fall short of the target can use this loophole to avoid penalties. The subsequent round for the following emission standard that started in 2010, again met intense hostility from Germany. Then Bavarian Minister of Economy Erwin Huber (CSU) stated that “the German people must not be degraded to a people of compact car drivers from Brussels” and went on to state that “the EU is wrecking the German luxury and sedan class – premium brands like BMW, Audi, Mercedes and Porsche”. (SZ online, 22.05.2010) Representing the home state of BMW and Audi, Huber directly lobbied for the interests of these important Bavarian companies. A similar fate met the EU emission labeling pattern. Emulating existing energy efficiency labels for goods such as light bulbs, air-conditioning systems or refrigerators, the original intention of EU legislation was to inform consumers about the ecological footprint of automobiles. Already required since 2004, the formula was subject to change, becoming effective in 2011. Merkel again opposed the original classification pattern and supported German car industry in altering the formula to include weight as a factor. The changed formula and labeling pattern (scale: A (best) to G (worst)) results in a paradox situation: SUVs like the Porsche Cayenne S Hybrid with high total emissions (193g CO2/km) receive better EU emission ratings (B) than compact cars like Toyota’s Aygo (D) with lower total emissions (106g CO2/km) (Zeit online, 04.06.2012). This current system is obviously distorting the scale in favour of heavier cars, which serves the interest of German car-makers, which tend to produce heavier models.
91 Excursus: vehicle weight
Fig. 4 Average passenger vehicle fleet weight (Data: ICCT 2012: 26; data for 2011 are incomplete)
As Fig. 4shows, German OEM fleets tend to be heavier than those of their Japanese competitors. While this can be explained by their tendency to focus on luxury cars and sedans, which is especially true for BMW, Daimler as well as for VW subsidiaries Audi and Porsche, in which way does this impact EV development? Heavier cars require more powerful batteries to achieve the same acceleration and range. However, more powerful batteries are both more expensive and themselves heavier. Thus, it is not only less attractive economically to produce EVs for German OEMs, they are also locked in a vicious cycle of higher initial weight leading to higher battery weight. Further, it must be kept in mind that BMW and Daimler only entered into the compact segment during the 1990s: BMW acquired Mini in 2001 and launched the 1-series in 2004. Daimler released the A-class in 1997 and launched the Smart brand in 2001). Thus, their fleets in the 1990s were even heavier than today. Moreover, the data indicate that vehicle weight is generally increasing. While this is mainly due to more sophisticated drivers’ assicstance systems and safety measures, this general trend makes it more difficult for all OEMs to produce EVs. This is not just a problem for EVs: Knittel (2009) has shown that technologically gained fuel economy improvents are to a large extent countered by increasing vehicle size and weight since the 1980s.
Presently, the EU Commission and the Environmental Committee of the EU Parliament proposed the limit of 95g CO2/km from 2020 onward. Moreover, both bodies drafted a
“regulation corridor” from 78 to 68g CO2/km at 2025. Also, EV sales should receive 1.5 credits in the calculation of average fleet emissions. In response to this proposal, VDA declared: “The aim is very demanding and unreachable with only classic propulsion [systems]. Increasingly, cars with alternative propulsion concepts must be established at the market.
92 Therefore, on the one side, regulation should set impulses for technology development and not hem innovation and value creation through rigid [emission] limits. On the other hand, no requirement exceeding the year 2020 should be set now, because it is uncertain if customers will opt for alternatively propulsed vehicles. Currently, there is no sound technical basis for long-term targets.” (VDA press release, 24.04.2013; author’s translation) Also, VDA proposed credits with the factor 2 or 3 for EVs. Two conclusions can be derived from VDA’s official position. First, the wording reflects that the association acknowledges that further emission reductions require alternative, mainly electric, propulsion. However, the statement shows that the industry would prefer improving conventional ICE technology. Second, German automobile industry is doubtful about the prospects of diffusion and hence is against aiming for any further reduction. This also reflects that the industry as a whole is still doubtful about the success of EVs and is reluctant to commit itself to this technology. VDA chairman Wissmann addressed the issue in a letter to Chancellor Merkel: “Dear Angela, we cannot allow that our capable and powerful premium segment, which almost makes up 60% of employment at our German car-makers, is literally regulated to ruin through arbitrarily set [emission] limits.” (FAZ online, 21.05.2013) (author’s translation) This letter documents how lobbying works and how closely enmeshed German politics and automobile industry are. As Wissmann and Merkel served in the Kohl cabinet, they know each other for a long time, which facilitates communication. Moreover, VDA links the contribution to employment and alleged dangers to employment caused by stricter regulation. Only a few days after the letter, Merkel publicly announced at a summit on electromobility that she supports higher credits and careful regulation (Spiegel online, 27.05.2013). She completely adopted VDA’s view and again a week later, Germany proposed a compromise between the positions held by the EU (Commission and Parliament) and VDA (Spiegel online, 07.06.2013). Differing from former interventions to prevent stricter regulation, lobbying was only partially successful. On June 24th 2013, the Irish Presidency60 and the EU Parliament reached following compromise: the requirement will be 95g CO2/km from 2020, but the proposed targets for 2025 were given up. Until 2020, EVs receive double credits in the formula that calculates the fleet average and until 2023, this preferential treatment will be phased out. As Germany is officially represented by the Presidency as the collective actor of the member states, it was included in the compromise. However, besides the EU Commission and Parliament, the official sanction from the Committee of Permanent Representaitves (COREPER)61 is needed to complete the process.
60 The Presidency of the Council of the European Union represents the individual member countries and is the functional equivalent of a Second Chamber or Upper House in the EU rule-making process. 61 COREPER is the acronym of the body’s French name Comité des représentes permanents. Although the presidency is conducting the discussion, COREPER is the body that actually represents individual member countries during the vote.
93 On June 26th 2013, the German government intervened to remove the officially scheduled vote on the topic from COREPER’s agenda (Spiegel online, 26.06.2013). It became clear that Merkel had contacted French President François Hollande and the Prime Ministers of Great Britain and Ireland, David Cameron and Enda Kenny behind the scenes to delay the vote. Similar to Schröder’s behaviour towards the end-of-life vehicles directive, Merkel broke several informal EU rules that resulted in uncommonly open criticism (SZ online, 26.07.2013): An anonymous EU diplomat stated that German officials acted “brutal as a bulldozer” and the EU Parliament’s Environmental Committee Chairman, German Matthias Groote (SPD) said “Mommy took the sledgehammer approach [literally: the crowbar]”.62 Further, the newspaper report claimed that the French administration indirectly retaliated by not registering certain Mercedes-Benz models that utilise a cooling agent officially banned by EU regulation.63 The motive behind Merkel’s manoeveur was to stall for time in order to lobby other member states to obstruct the COREPER vote through a blocking minority, possibily counting on influencing Croatia, which joined the EU on July 1st 2013. Thus, while the German lobbying effort could not prevent the 2020 target, it could prevent predefining the follow-up target and received higher credits. Even after this partial success, it appears that the German administration continues to lobby and protect German automobile industry. Regarding the case study, the opposition to stricter regulation partly reflects German luxury brands – such as BMW and Daimler – conservative view on EVs and their specialisation on relatively heavy sedans. It is noteworthy that VW supports the EU target, which demonstrates that mass producers and specialised luxury car-makers have differing interests on this subject because the composition of their fleets is different. Another discourse also demonstrates the inconsistency of Merkel’s policies. In 2009, the administration drafted the so-called “environmental bonus” to support the automobile industry during the global economic downturn following the bankruptcy of Lehman Brothers Bank. The program was originally limited to € 1.5 billion, but great public interest let to an extension to € 5 billion. Qualifying conditions for the subsidy were not demanding: citizens who wanted to get the € 2.500 bonus for a new car purchase had to wreck their car, which had to be at least nine
62 Mommy (Mutti) is the most common nickname for Chancellor Merkel among German politicians and political observers due to her tendency to adopt a rather diplomatic and careful approach to decision-making and formulating in public. This example shows that Merkel certainly can act just as partisan and calculating as other politicians, but prefers to do so behind the scenes. 63 Germany’s agency in charge of vehicle registrations (KBA) accepted Daimler’s use of a legal loophole to register new models as mere variants of old models, allowing Daimler to use the cooling agent R134a instead of R1234yf, which Daimler describes as unsafe due to the potial to ignite in case of car accidents and form toxic hydrofluoric acid. Although the certifications of OEM’s home countries are commonly EU-wide adopted, France does not accept the German practice and demands conforming to EU regulation. Therefore, it is plausible that the French agency in charge has political backing and that this unusual step is indeed a form of retaliation against unruly behaviour of the Merkel administration.
94 years old and one year in their possession. Differing from other countries with similar stimulus programs, there were no environmental criteria such as an emission limit for newly bought cars. Thus, real environmental benefits of this program were strongly questioned. One opinion voiced by opposition was that absent environmental criteria would minimise positive environmental effects. Missing environmental criteria were marked as a mistake. The administration’s line of reasoning was that new cars generally had superior ecological performance than old ones. This argument is validated through a study conducted by IFEU by order of BMU. Analysis could demonstrate that while other segments remained a stable level of new registrations, mini, small, and compact segment registrations increased significantly (IFEU 2009: 4f.). Hence, some concerns about the impact of the program were ungrounded as consumers largely chose to buy fuel-efficient compact cars. The study further qualified findings to a more balanced notion: if new cars are compared against ones that are nine years and older, the level of emissions (NOx/CO/NMVOCs/benzene/Diesel particles) is dramatically lower, but given the total number of cars in Germany the effect is estimated to lead to reductions of 9% benzene, 7% CO, and
Diesel particles 4 % (ibid: 7). Further, the estimated reduction of CO2 emissions of passenger cars is only 1% (ibid: 9). Due to those limited environmental benefits, the public termed the subsidy “wrecking bonus” (Abwrackprämie) instead of the official name. All in all, it would be better to see the program for what it really was: the administration offered consumer’ incentives to ease effects of the economic crisis and officially labeled it as an environmental initiative. Limited environmental benefits were achieved, but the main concern was not environmental, but economic. Hence, it can be criticised that the subsidy underutilised potential environmental gains and that more substantial effects were not achieved due to the design of the policy tool. Despite her image as “climate chancellor”, the given examples rather show that the Merkel administration supports the German car industry against international competitors via watering down stricter EU emission regulation or certification. In this particular field, there is continuity in German politics, irrespective of different coalition compositions. German administrations supported domestic industry instead of exposing it to more competition regarding environmental impacts. Domestic policies and actions on the EU level demonstrate that the automotive sector is regarded as an important economic factor that rather must be protected from too much environmental regulation than being pressured to become more eco-friendly. While this behaviour is not directly directed against EVs, the VDA statements show that stricter standards may only be met with EVs. Thus, protection indirectly prolonged the time German OEMs did not need to seriously consider EV development. Although Germany can be classified as active and ambitious in environmental regulation and climate-related policies in general, the domestic automobile industry appears to be a blind spot.
95 3.5.1 Fuel policy If one wants to understand why German OEMs were rather reluctant towards HEVs, fuel policy must be considered. Embedded in the EU context, Germany encouraged the development of Diesel technology. After the Kyōto Protocol had been established the EC and ACEA reached a voluntary fuel economy agreement that included favourable treatment of Diesel cars. The rationale behind the decision was that Diesel cars emit less CO2 than petrol ones. Critics have pointed out that this concentration was a major mishap as Diesel cars emit more other pollutants, e.g. NOx or HC (Cames/Helmers 2013: 11-13). Due to the political preoccupation with CO2 and the agreement, the EU allowed Diesel cars to emit more of these pollutants than petrol vehicles. After the agreement was reached European OEMs, especially PSA, Daimler, and VW, concentrated on the development of Diesel technology. In turn, largely due to preferential treatment in many EU member states, Diesel sales surged (ibid: 3). Although Germany backed this agreement it is also found that it send mixed signals to consumers: while Diesel fuel is taxed lower than petrol, the vehicle tax on Diesel cars was higher than for petrol cars until 2009 (ibid: 15). Due to these policies, Diesel vehicles only make economic sense to drivers who drive much longer distances than the average. Therefore, Germany has a lower percentage of Diesel cars in total vehicle population in comparison to other EU members. However, solely blaming politicians and the car industry for the surge of Diesel cars in Europe is too one-sided. One clear result of the R&D backed by political assurances was that Diesel technology improved greatly. While Schipper and colleagues (2002: 309; 325) agree that different taxation has contributed to the increased popularity of Diesel cars, they have pointed out that Diesel cars were formerly perceived as heavy, polluting, and lacking power. With the advent of direct injection and turbo charging technology, Diesel cars overcame these weaknesses. Basically, the cars now combine lower fuel consumption and driving performance of petrol cars. Therefore, Diesel cars became also more attractive for consumers. Be there as it may, preferential treatment of Diesel technology in Europe clearly had an effect on OEM behavior. Backed by politicial promises and favourable Diesel fuel taxation, European car-makers invested into this technology as an efficient and eco-friendly concept. This partly explains why German OEMs investigated advanced EVs (BPEV and FCEV), but by and large neglected hybrids (see: 4.6.9 – 4.6.12). That there was a political-economy dimension to this choice is nevertheless undeniable. When ACEA and the EC debated about the future Euro 5 emission standard in 2003, ACEA excluded Toyota from the talks because the Japanese argued that HEVs were superior to Diesel cars with regard to environmental performance. Toyota’s contemporary hybrid project manager Hirose Katsuhiko also pointed out that HEVs would be cheaper than Diesel vehicles in the future, because Diesel would need to be equipped with
96 expensive after-treatment equipment (Cames/Helmers 2013: 13). Thus, it is clear that once European OEMs had invested into Diesel technology, they tried to suppress any contradictory information that might force them to scrap their investment and compel them to follow the Japanese approach. On a general level, the agreement between EU members and OEMs to focus on Diesel technology as a CO2 reduction measure is a case of technologic lock-in and path-dependence. Once the decision had been made, companies were reluctant to explore alternatives like HEV technology, because it would set them behind technologically and financilly. Therefore, investment into Diesel technology with political reassurances must be regarded as one factor that contributed to neglect of HEV development.
3.5.2 Company car tax relief While it will be later shown how EVs are promoted in Germany, a policy that is contradicting these efforts must be discussed: the tax relief for company cars. Two types of company cars exist: either the car is bought by the company and given to its employees as a part of their salary, or the vehicle is given to the employee for a certain amount of time (usually around 3 years; after this period the company is selling the car on the used car market) and it can be used for both company and private purposes. The cost for private use has to be carried by the employee, but the business-related cost can be deduced as business cost for the company. Concretely, the cost of the purchase can be deduced from the corporate tax and business-related operation cost can be deduced from employee’s income tax. This tax deduction method results in the tendency that companies favour expensive luxury cars with comparatively high fuel consumption, because high cost can be reported to the tax offices. Higher cost leads to higher deduction. Theoretically, all vehicles can be registered for this tax benefit, but institutional buyers like companies are found to have 80% purchases in the premium car segment (Hey 2010: 222). This means that the tax relief structurally favours producers of expensive, relatively high consumption vehicles produced by German brands like Audi, BMW, or Daimler. Critical scientists have called the tax relief “a perverse subsidy with considerable impact” (ibid). The possible question why the relatively expensive (P)HEVs and BPEVs of Japanese assemblers are not having higher sales can be answered: these cars are only expensive relative to vehicles in their own segment, but are less expensive than models from the luxury segment. Further, these EVs have lower consumption than luxury models and hence do not produce as much deducible cost. Therefore, it is not surprising that firms continue to favour these models. Further, employees also do not resist this practice for the following reasons: first, although they have to bear higher fuel cost for private use, the tax relief system allows them to drive luxury cars they otherwise would (possibly) not be able to drive. Second, there is still much social prestige
97 associated with company cars in general and with luxury cars in particular.64 Hence, both – companies and employees – are not interested in changing the existing system to become more eco-friendly and efficient. The current tax relief supports the specialisation of German (premium) car-makers to develop high performance but also high consumption vehicles. It would be wrong to regard this tax incentive for companies as the reason for this specialisation, but it nevertheless does not encourage German automobile producers, particularly those in the premium segment, to become more fuel-efficient and eco-friendly. Rather, it sustains the existing logic of the bigger and faster, the better. Therefore, if the German government wanted to send a clear signal to the producers, it would have to introduce ecological parameters like fuel efficiency of a car as a condition for deducible cost. All in all, it appears that the tax relief is a popular subsidy for firms, which indirectly supports the premium car-makers, which are an important pillar of the German export-oriented economy. If the adjusted regulation for company cars which should equal ICEVs and EVs is going to result in a shift towards EV company cars cannot be answered. Although fleet managers should no longer have financial incentives to favour German luxury brands, it is possible that the existing prestige of these vehicles combined with associated social status will stand in the way of company EVs. With only the Green Party in support for changing the current legislation, the chances for an introduction of ecological efficiency criteria are close to zero.
3.5.3 Energy policy One important difference to Japan that highlights the interrelation between different fields of policy concerns the energy mix. As aforementioned, Japanese electric power industry took steps to replace coal even before the Oil Crisis hit. Germany’s condition and reaction was different: a shift away from coal had not yet appeared and due to the increasing oil prices German politicians chose to subsidise the domestic coal industry. Concretely, German government sponsored an agreement that required the domestic electricity producers to increase their use of domestic coal. In order to make this arrangement work, it created import barriers for foreign coal and collected a special levy from consumers (Kohlepfennig) that to cover the higher price for electricity producers (Taylor 1992: 50). While coal mining was not internationally competitive, its support had two major reasons: first, the coal industry absorbed a large amount of unskilled workers that would have had a difficult time finding employment elsewhere. Second, domestic coal was a secure energy source that reduced dependence on oil imports. Although Germany also intensified nuclear R&D and the construction of reactors, this was less
64 A survey in Germany found that company cars were the second most popular company benefit after a company pension (SZ online, 17.05.2010).
98 pronounced than in Japan because differing from Japan Germany continued to rely on domestic coal. Despite the lower reliance on nuclear energy the topic nevertheless must be briefly addressed in the context of altering the energy policy (Energiewende). A major achievement of the Schröder administration is initialising this change of the domestic electricity mix. While the SPD had backed nuclear power in the 1970s and early 1980s, the party changed its position after the Chernobyl accident. In 2000, the administration reached a compromise with the nuclear plant operators and in the following year amended the Atomic Energy Act to phase out nuclear power plants by the early 2020s. Due to the goal of ending nuclear power generation, the Greens strongly advocated the use of renewable energies. 65 Thus, after the legislation had been amended, the administration started to strongly support renewable energies. If one compares the electricity mixes of 1996, 2010, and 2011 the policy outcome becomes clear (Tab. 4).
1996 2010 2011 Nuclear 32% 22.5% 17.8% Brown coal 31% 22.7% 24% Black coal 25% 18.2% 18% Natural gas 6% 14.1% 14% Renewables 4% (hydro only) 16.9% 21% Pumped-storage n.a. 1.1% 1% Others 2% 4.5% 4.2% Tab. 4 German electricity mix in 1996, 2010 and 2011(Source: DAUG 1996: 321; UBA 2010 & 2011)
While shares of nuclear, brown and black coal have been reduced, natural gas and especially renewable sources have been greatly increased. The visible decrease of the nuclear share from 2010 to 2011 must be related to Merkel’s reaction to the Tōhoku triple disaster. The Merkel administration treated nuclear energy markedly different before and after the disaster. Germany’s four principal electric utilities EnBW, E.ON, RWE and Vattenfall, which operate all German nuclear plants, backed out from the nuclear compromise negotiated under the Schröder administration after the 2009 general election: when the SPD was replaced by the FDP as smaller coalition partner, Merkel revised the phaseout scenario by amending the Atomic Energy Act on October 28th, 2010. This decision would have prolonged nuclear power
65 The major policy tool the administration used to promote renewable energy, the so-called Feed-In Law, had been established in 1990 under the Kohl administration. By amending this law, the Schröder administration gave more generous incentives, which partly explains the dynamic growth of renewable energy generation in Germany.
99 generation for at least twelve years and hence was a major deviation from the original agreement. Just five months after that decision, Merkel again revised the plan after the triple disaster in Tōhoku. On March 14th, eight of the nation’s total 17 nuclear power plants were temporarily shut down as part of a three-month moratorium on aforementioned government plans. In July, it was announced that the shut down became permanent and it was promised to phase-out all remaining until 2022.66 This sudden shut down explains the sudden drop of nuclear power generation on a year-to-year basis document by Table 4. In order to replace the nuclear power generation capacity, the Merkel administration announced that the speeded up build-up of renewable energy and “smart grids” should be given priority. Here lies the relation with EVs: the shift towards renewable energies is generally supporting this concept, because it makes EVs truly emission-free. However, organising the shift and the related required infrastructure investments into “smart grids” is affecting EVs. Under the current German system, consumers pay for the reorganisation of the energy infrastructure through increased electricity rates, which consequently directly makes grid fed vehicles more expensive in operation. Thus, only if gasoline prices increase more rapidly than electricity rates, it makes sense for consumers to chose PHEVs or BPEVs. The theoretical framework requires a look at environmental NGOs in Germany. Generally, these organisations can be described as more influential and powerful than Japanese ones. However, regarding the topic of automobiles, the influence is not very strong. This has the following reasons: First, many environmental NGOs are concentrated on topics that are not related to automobiles. Like the Greens which have their roots in various environmental movements, many groups are preoccupied with fighting nuclear energy and the conservation of eco-systems or endangered species. Groups dealing with traffic issues often take an approach like the Greens: preferred option is strengthening public transport systems and individual transport by cycle or on foot. This discomfort with cars has resulted in largely fundamental opposition,
66 There are rivaling views on Merkel’s decision. In a government declaration on June 9th, 2011 Merkel presented her position: “In Fukushima, we had to note that the risks of nuclear power cannot be safely mastered even in a high-tech nation like Japan. Who realises that must draw the necessary conclusions. Who realises that must make a new assessment. This is why I say for myself: I have made a new assement because the residual risk of nuclear power can only be accepted by he who is convinced that that it does not occur. […] Before Fukushima, I accepted the residual risk because I was convinced that it would not occur in a high-tech nation with high safety standards. […] However much I advocated prolonged use of German nuclear power plants within the framework of our comprehensive energy concept last autumn, so unmistakably I declare before this house: Fukushima has changed my attitude towards nuclear power.” (author’s translation) The complete declaration can be accessed through: http://www.bundesregierung.de/Content/DE/Regierungserklaerung/2011/2011-06-09-merkel-energie-zuk unft.html [03.03.2013] Scientific observers (Schreuers 2013) and the press rather see her decision as a reaction forced by public disapproval. Disappointment with the conservative coalition manifested itself shortly after the decision at the state election in Baden-Württemberg. This state, which was conservatively ruled throughout the whole post-war era, produced the first Greens led government (Greens-SPD) in a Land.
100 which manifested itself in advocacy for stricter emission regulation and calls for a speed-limit on German highways67, more public transport or cycling lanes in cities. At the same time, this anti-car attitude led to disinterest in improving ICEs or alternative vehicles. This means that there was more confrontation between environmental NGOs and the automobile industry than constructive dialogue. Environmental NGOs rather aimed at overcoming automobile transport than making it more eco-friendly, thus they had comparatively little interest in EV development. Moreover, there is a number of automobile (consumer) NGOs that stand somewhere between the opposing industry and environmental NGO positions. However, regarding a speed-limit, most of these groups support the industry in opposing it.
67 There is no general speed-limit on the German highways (Autobahn). The debate is surfacing every now and then usually calling for a limit of 130km/h.The only major party in support are the Greens, which advocate a limit of 120km/h (Bündnis 90/Die Grünen 2009: 74). Other parties and the automobile industry resist this proposal. Main arguments are that the non-existence helped German car-makers to develop the fastest and at the same time safest cars. Further, the German “Autobahn” supports the international reputation of German automobiles as sporty, powerful and fun to drive. Therefore, it appears highly unlikely that a speed-limit will be introduced.
101 4 Electric vehicle development 4.1 Regulative framework conditions of electric vehicle development in Japan
Regulation of automobiles in Japan is divided, so that several government agencies play a role in the development and regulation of EVs. MoE implements emission standards to limit environmental degradation as well as negative effects on public health. MLIT is responsible for maintenance programmes, vehicle inspections and safety. METI is in charge of industrial and energy policy. In the past, METI tried to actively change the composition of the automobile industry. When Japan became under international pressure to open up its economy in the 1960s, MITI wanted to use mergers to concentrate economic power and gain competitiveness (Johnson 1982: 277; 286-288): aim was to develop two national car manufacturers, namely Toyota and Nissan, instead of maintaining the rather high number of ten independent OEMs (Daihatsu, Fuji Heavy Industries (Subaru), Honda, Hino, Isuzu, Mitsubishi, Nissan, Suzuki, Tōyō Kōgyō (Mazda) and Toyota). Obviously, MITI did not succeed with this strategy, as most of these OEMs stayed independent or entered into international alliances. This highlights that there are effective limits to METI’s power, which sometimes have been severely overstated in the reception of Johnson’s study. Further, METI administers a substantial part of Japanese R&D expenditure and therefore is a main bearer of technological innovation promotion in Japan. METI combined industrial and innovation policy through its well known “visions”. Due to this interlinked approach and the extensive exclusion of societal interests other than industry, the distinction of industrial and innovation policies into “policies with publics” and “policies without publics” respectively, may not be useful for the Japanese case. Important agencies under the aegis of METI are AIST and NEDO. During the course of administrative reform, AIST became an IAA in 2005. AIST reorganised formerly existing research institutes to concentrate R&D efforts on the following fields: sustainable society, industrial competitiveness, local industrial development and industrial technology policy (AIST 2007: 3). It could be said that AIST is an umbrella organisation, which coordinates the specialised research facilities, currently seven laboratories and 21 research centres. With regard to the inner workings of AIST (ibid: 7): the strategic goals are determined in a top-down process through discussions with METI and industry representatives. At the same time, the actual research themes are developed bottom-up, planned and carried out by research units. So, after the reform, AIST is still connected to METI and the industry in order to serve their needs, but research organisation is left to AIST scientists working in the laboratories. It could be said, that the goals are still predefined by political and business actors, but finding a way to this goal rests with the science teams. NEDO was established in 1980 to develop alternative energies. As it uses tools like contracted research and competitive loans or research subsidies to private
102 companies or research consortia, it has been labelled a R&D management and funding agency (Shiozawa/Ichikawa 2005: 168). At the same time, NEDO received more administrative authority as METI largely targets and plans policies, but leaves implementation to NEDO (ibid: 166). Therefore, it might be best to characterise NEDO as METI´s specialised branch for alternative energy technologies and AIST as a semi-public basic research service provider. However, this theoretically clear distinction can become quite blur, e.g. the so-called PEFC Cutting-Edge Research Center, a project started by AIST in 2005 is managed by NEDO since 2008, but remains a unit under AIST. Further, the change in power from the LDP to DPJ in 2009 also could influence the roles of the agencies: Due to the big political change, which took place last year, role of NEDO as a funding agency is now being reviewed. AIST is expected to contribute and to promote "Green Innovation" much more than ever. We have to behave as a useful tool for METI. (Owadano, 24.03.2010) This statement also indicates that despite agencification, METI still influences the work and organisation of IAAs. Hence, the degree of independence enjoyed by IAAs should not be overestimated. As the review of agency status is an ongoing process, it is unclear if and how further reorganisation will take place.
4.2 Foresight on battery-powered and hybrid electric vehicle technology in Japan
Unlike the FC case (see: 4.5.3), there is little foresight on battery technology. Thus, it must be concluded that until battery technology topics appear in the Delphi surveys in the 1990s, batteries did not attract much attention of forecasters and in turn government funding. However, examples clarify one particular technological innovation process: the fifth survey regards the future for practical use of advanced NiMH or LiIon batteries (NISTEP 1993: 170), while the sixth and seventh already assesses their widespread use (NISTEP 1997: 261; 2001: 364). The eighth and ninth even discusses low cost secondary batteries (NISTEP 2005: 354; 2010: 122). EV-related topics are taking more spotlight in the latest report: EV batteries for 500km range, charging via induction while parking and highway-driving, control technology for more efficient HEVs and the transfer of energy stored in PHEV batteries to the (smart) grid (often dubbed vehicle-to-grid; V2G) (NISTEP 2010: 36; 38; 123). All these topics reflect the vision of an increasing integration of grid and transport via IT.
4.3 Government support for battery-powered and hybrid electric vehicles in Japan 4.3.1 Initial support (1971-1989) The first step Japan took in supporting BPEV-development came in 1971 with a five-year government-industry R&D program, sometimes referred to Electric Vehicle Project, with a total
103 budget of JPY 5.7 billion by MITI (Åhman 2004: 11). The program was mainly carried out by AIST and was organised as a large-scale project. This kind of project could be characterised as a standard operation procedure of that time. So-called Large Scale Industrial Research and Development Projects, also referred to as large-scale or big projects, were established by the Japanese government in 1966 (Harayama et al. 2009: 196). Primary objective was to support expensive, long-term and thus high-risk R&D projects and the state was the driving force behind those projects. Thus, the Electric Vehicle Project was conducted under the leadership and full sponsorship of the Japanese government, but in close cooperation with industry and academia (AIST 1977: 2). One consequence was the creation of an EV development unit in Toyota (Hasegawa 2008: 30). Cooperation was established in the following way (AIST 1977: 2): two AIST research institutes, namely the Mechanical Engineering Laboratory (MEL) and the Governmental Industrial Research Institute at Osaka, developed test and evaluation methods. R&D on specific BPEV components such as the battery, motor and control device, vehicle body, utilisation system and charging method was performed by working groups, consisting of one to five private firms. Thus, this approach represents government research contracted to and carried out by private businesses. Government agencies coordinate the participating companies and evaluate the results, but the actual product is developed by various firms. The constructed BPEVs could be described as early prototypes or experimental vehicles. The project was divided into two stages. During the first, five different vehicle types were developed: lightweight and compact passenger car and truck respectively as well as an electric route bus (ibid: 4-15). These vehicles were equipped with improved lead-acid batteries, different electric motors and control devices. Also, the latest battery types of that time (zinc-air, iron-air, iron-nickel, sodium-sulpher (NaS)) were investigated to test their applicability in BPEVs. Results of the first stage were utilised during the second to construct vehicles that represented the optimal combination of tested battery types, electric machines, control devices and weight-reduced bodies. The performance of these experimental BPEVs with regard to maximum speed, between 68 and 94km/h, was already promising. The main problem was that the mileage per charge, ranging from 150 to 330km could only be realised at 40km/h constant speed.68 Further, starting and accelerating were problems, so that combination of different battery types, one to increase the cruising range and another to provide satisfactory acceleration, called hybrid battery system was designed. However, another serious challenge was battery life: while the most durable option could stay functional for 1000 recharge cycles, most options only could be charged between 200 and 300 times. Thus, users would have had to exchange the complete battery regularly, which means that operation of these BPEVs was not economically viable.
68 In its official history, Daihatsu claims that it already developed an EV that could reach 90km/h and 119 km range, unfortunately without indicating constant or average speed, in 1968 (Daihatsu undated). Thus, it is difficult to measure how much technological progress was made by the program.
104 Several vehicles already featured regenerative braking (see below). The project also investigated the ecologic benefits of the constructed prototypes and found that they were using significantly less petrol during road travel (up to 50%), but also that their manufacture process required much more oil (up to 350% in the case of trucks). Hence, AIST concluded that future research should concentrate on reducing the weight of vehicles and to improve the energy efficiency of their operation (ibid: 19). All in all, the results of the five-year Electric Vehicle Project could be said to be quite impressive and innovative, but the invented BPEVs still had serious flaws compared to ICEVs. However, strong interest of Japanese politicians, bureaucrats and industry in vehicles with electric powertrains and motors was only sparked by the economic shockwaves resulting from the first oil crisis in 1973. Back then, BPEVs were regarded as an option to reduce the dependence on foreign, mostly Middle Eastern, oil and harmful exhaust emissions from transportation (Åhman 2006: 436). Dependence on oil was hightened by the fact that Japan’s electric power industry had initiated to switch domestic coal to cheaper and cleaner oil imports during the 1960s. To illustrate, it had reduced its consumption of domestic coal by nearly 50% between 1967 and 1971 (Uriu 1996: 101). Thus, although Japan began investigations in this technology before, the oil crisis nurtured broader commitment to the development process. After the initial Electric Vehicle Project was over, the Japan Electric Vehicle Association (JEVA) initiated a demonstration project for electric route buses. Six units were constructed with 18 lead-acid battery sets by four companies (Takahashi/Hiramatsu 1986: 61). Which companies produced the batteries is not reported. Infrastructure in the form of 10 chargers and an automatic battery exchanging facility were also built and the buses were operated by the municipal bus service of Kyōto. According to the data reported by Takahashi and Hiramatsu, the project served to investigate the relation between the accumulated mileage and the recharge cycle life of the installed batteries. In 1978, the Electric Vehicle Engineering Research Association (EVERA) was established in order to develop mass-producible BPEVs. According to the few available data (ibid: 61-63), van and pick-up type vehicles were each equipped with high energy density and long life type lead-acid batteries to investigate the differences in performance. The van could transport 4 persons and maximum 150kg, while the pick-up only had room for two passengers, but had a loading capacity of 300kg. Similar to the Electric Vehicle Project, top-speed was between 77 and 79km/h, while maximum range was between 108 and 143km at 40km/h, but the weaknesses were identical. Despite the obvious shortcomings in comparison to existing ICEVs, all the initial projects displayed fairly promising results. Maybe inspired by the first positive trials, MITI drew up a basic market expansion program for BPEVs in 1976. It was originally designed to cover 10 years, but the plan was altered and
105 expanded several times. First changes were made in 1983, due to slow technological development and falling oil prices. If the market expansion program was initiated because of the promising initial results of the large-scale BPEV R&D projects is unclear. Further, research was conducted under the Moonlight Project69, which main purpose was R&D on energy conservation technology. Sakakibara (1997a: 450) highlighted that among others, the Sunshine and Moonlight R&D projects were fully covered by the government. She also claims that this is not standard procedure in Japanese R&D policy and refers to programs that were only covered to 70% by the government authorities.70 Full governmental R&D sponsorship came with a price for the participating companies: all patents, those filed by public funded institutes as well as those of private companies, belonged to the Japanese government (AIST 1977: 26). Thus, while companies had the opportunity to do research financed by the government, it had to give up all exclusive property rights resulting from that research. One theme under the Moonlight Project was on flywheel power vehicles and the research was carried out between 1978 and 1981 by the MEL, back then part of MITI subsidiary AIST (JETRO 1990a: 8f.). The concept of flywheels is applied in what became known as regenerative braking: during braking, a part of the kinetic energy is converted into electric energy which is used to recharge the battery of the car. To illustrate the importance and usefulness of this concept it must be stressed that this mechanism can extend the driving range of an electric vehicle up to 25% (Chau/Wang 2005: 748).
4.3.2 Renewed emphasis (1990-1996) The second restructuring was implemented in 1991 when energy and environmental issues reappeared in world politics. The Iraqi invasion of Kuwait and the following liberation by US-led forces again triggered higher oil prices. At the same time, California drafted the so-called Zero-Emission Vehicle Mandate (ZEV-Mandate; see: 4.3.3.2) and preparations for the Rio summit put environmental issues back on the political agenda. All these factors contributed to increased awareness of problems like global warming and continuing oil-dependency. Therefore, EVs resurged as a resolution to mitigate both problems. MITI´s target of 200.000 BPEV units by 2000 was very ambitious as a large number of barriers for market expansion was identified: in comparison to standard ICEVs, the batteries, electric machine and control systems needed to improve their performance, there was a lack of recharging or battery changing
69 Another term frequently used in the literature instead of program is project. The Japanese word keikaku can be translated in both ways or as plan. Official Japanese documents speak of the Sunshine Program and the Moonlight Project, but there exists no uniform translation for the merger of the two, which is referred to as New Sunshine Program or Project. 70 Prior to her academic career, Sakakibara worked for MITI (last rank: deputy director). Thus, if an ex-bureaucrat scholar highlights the unusual nature of 100% coverage, it reflects that these R&D projects were of high national interest.
106 infrastructure and probably most important, the costs were too expansive (Iguchi 1992: 62f.). The impact of the market expansion program must be regarded as limited, but not completely unsuccessful. Between 1977 and 1996 a mere 655 BPEVs have been put on the roads of Japan. The market expansion program officially ended in 1996 and was replaced by the electric vehicle purchase incentive program. Over 400 BPEVs of the total 655 have been deployed by compact vehicle specialist Daihatsu, which is the reason why the company has been labelled as the standard bearer of EVs (Patchell 1999: 1003). Although the number of supplied cars is small, the program´s continuity signaled manuifacturers the future relevance of electric drivetrains. From 1976 to 1993 government funding of BPEVs appeared to have been scarce, for the following reason: “No comprehensive data exists on how much this support actually was but in the plans of the MITI, this was supposed to be a commercialisation phase were targeted support was offered to vehicles produced. As the number of vehicles actually produced was very low, the targeted support also became low.” (Åhman 2006: 438) The beginning of the 1990s is marked by a more comprehensive strategy. The support was no longer limited to manufactured units. Instead, it became broader: in 1992, the Lithium Battery Energy Storage Technology Research Association (LIBES) was founded with the goal to develop more advanced batteries that could be utilised in mobile and stationary applications (Patchell 1999: 1013). One year later, LIBES was incorporated as a part of the so-called New Sunshine Program, which was fused out of already existing R&D projects, namely the Sunshine Program, the Moonlight Project and the Global Environmental Technology Project. According to information provided by METI, the New Sunshine Program also covered the R&D expenses fully, which means that it inherited the national program status from its predecessors. Further, METI officials (rank: Deputy Director and Assistant Director of the Automobile Division in the Manufacturing Industries Bureau) pointed out that R&D projects are subsidised by 50%, 67% or 100%, depending on the purpose of the program. This means that that programs that regarded as critical for national competitiveness are prioritised and fully funded. Hence, it can be stated that BPEV R&D projects were fully covered by the Japanese state as a part of the general alternative energy generation and energy conservation policy. It appears that the oil shock made Japanese politicians, bureaucrats and industry aware of the dependency on foreign energy. In order to reduce vulnerability, Japan prioritised R&D that could reduce the dependence on foreign oil. Further, support for necessary infrastructure was initiated. The ECO-Station Project was started in 1993 and targeted the construction of 2000 alternative refuelling stations by 2000. About 50% of these were projected as BPEV recharging stations. However, this aim was widely missed as there were a mere 36 BPEV charging facilities in 2002 (Åhman 2006: 440).71
71 According to CHAdeMO association (CHAdeMO 2013), there were 1605 fast charging stations in
107 Another project also tried to speed up BPEV development: in 1994, EA subsidiary National Institute of Environmental Studies (NIES) brought together a group of automobile supplier firms and Daihatsu to construct the so-called Eco-vehicle (Patchell 1999: 1002). However, it appears that most of the actual development work was conducted by Shimizu Hiroshi, a professor from Keiō University, who has developed several EV prototypes in the past (NIES 2011). The prototype had innovative features like in-wheel motors and solar charging (Chan 2002: 253). The Eco-vehicle was renamed Luciole and showcased at several occasions including the so-called Low-Emision Vehicle Fair during the summit negotiations in Kyōto in 1997. This project was remarkable, because it differed from other government programmes in many ways: first, EA orchestrated this project through NIES and the Global Environment Research Fund (GERF), which was created in 1990 to carry out EA research activity. EA took the initiative despite MITI´s role as the main actor in technology development policy. Second, the object of support was not a single component, but a fully integrated, marketable vehicle. This is in marked difference towards the initial R&D project of 1971: although private firms from various industries co-developed BPEVs under the supervision of AIST, these were clearly not marketable prototypes. Third, all different participants had to collaborate directly in design and production in order to reach this goal. The Eco-vehicle project alone cost JPY 61 million and ended in 1996 when a prototype was developed (GERF 1996: 163; 170f.; 173). However, additional JPY 19.867 million were used for the development of a battery management system. Although the reports indicate that the prototype could reach a reasonable range of 140km at 80km/h and one of the smaller car companies, Daihatsu, participated in the Eco-vehicle development, the prototype never was commercialised. The reasons are unknown, but it stands to reason that production costs were too expensive, the limitation to two passengers and its concept as a commuter car was not marketable. Thus, despite the official aim of developing a marketable car, it appears more suitable to describe it as a futuristic concept car. Again in 1997, the plan was reshaped in another way: From then on BPEVs were not the only target, but also HEVs, FCEVs, methanol-fulled and compressed natural gas vehicles were supported. It has been suggested that the inclusion of HEVs was adopted due to the reduction targets of the Kyōto-Protocol. Further, it must be pointed out that this could be regarded as a significant shift in EV policy: ss the previous goal is said to have been energy independence (Åhman 2004: 9), after the negotiations in Kyōto, this aim was complemented with lower emissions. The term market expansion plan might indicate something larger than what was actually initiated, but it surely provided the car industry with a niche-market to test and gradually improve their BPEVs. Also, the reoccurring adaptations of the plan exemplify the
Japan in January 2013.
108 flexibility of Japanese administration: aims were sometimes overambitious, but failure to meet was not sanctioned with the termination of the program.
4.3.3 Policy transfer and learning: influence of US environmental regulation Today there are various international influences on national innovation systems, most notably competition and foreign regulation. For export-oriented companies and national economies such as Japan and Germany, regulation in key markets is of vital interest: in the case of automobiles, these are emission standards, fuel efficiency and safety requirements. Therefore, this investigation into external factors is necessary to identify possible external influence on EV development.
4.3.3.1 The ‘Muskie Law’ Japan´ s first vehicle emission standards were introduced in 1960, but they were not particularly strict and could easily be met. However, this changed when the USA adopted the so-called ‘Muskie Law’, a section of the Clear Air Act of 1970. The regulation required large cuts in carbon monoxide (CO), hydrocarbons and nitrogen oxide (NOx) emission levels. The EA reacted to this legislation from their US counterpart by calling for stricter exhaust regulation as well. The major Japanese carmakers Nissan and Toyota – like their US competitors – opposed
EA´s proposal of 92% NOx reduction by 1976, stating that it was technically impossible. At the same time, seven Japanese municipalities commissioned an own team to investigate possibilities to improve air quality, as this issue was of public concern for local residents (equalling voters). Back then, Honda and Mazda, which were relatively small challengers of the two large archrivals Toyota and Nissan, set out to attack their competitors on the field of emission technology. Originally, Honda developed a new type of engine called compound vortex controlled combustion (CVCC) in 1972, which then alone72 met the standard, but the CVCC was soon abandoned (Yarime et al. 2008: 193). As other companies in Japan and the USA struggled to meet the regulation, Ford, Chrysler and Isuzu licensed Honda’s CVCC technology (Hasegawa 2008: 60). As Toyota also could not meet the required standard, company president Toyoda Eiji himself visited Honda Soichiro – founder and then president of the company – to request a license for this motor technology (Sato 2006: 202). This was a huge step for Toyoda, since he had to acknowledge that his firm could not find a technological solution while the upstart rival could. Later, Honda and Mazda introduced the three-way catalyst converter and early prototypes achieved benchmarks in fuel economy (Wallace 1995: 143). Both companies shared information with domestic institutions in order to prove their market-dominating rivals wrong by showing that the EA´s reduction targets could be achieved. Based on this evidence the
72 Mazda constructed a rotary Wankel engine, which was capable of meeting the requirement shortly after.
109 exhaust emission standard was implemented as proposed by the EA, but the deadline was postponed to the year 1978 (Fujii 2007: 56f.). This case provides an interesting insight into the Japanese political and bureaucratic process of policy learning: US lead to stricter emission levels had to be coped with, because of the importance of the American market for car exports. However, it is critical to notice EA´s strategy in this particular case. EA had just been formed in 1971 and its rank as an agency reflects that by this time, environmental issues were comparatively new to politics and that EA was not on the same level with other established bureaucratic actors like MITI. It is critical to recall the aforementioned “colonisation” of EA by MHW officials. It, more precisely the health policy background of the majority of EA staff, must be regarded as one of contributing factors why EA adopted a pro-regulation approach. Moreover, public demand in favour of regulation and the possibility to establish administrative authority over a topic provided motives for favouring pro-regulation policy. Being the main advocate of tighter regulation, but without a strong position in the political and bureaucratic system, EA´s chances of success must have appeared limited. Therefore, EA as well as the city´s inquiry team based their argumentation on the evidence obtained by Honda and Mazda. The interest of the general public and EA in improving air quality coincided with the interest of the relatively small competitors to gain market-shares from their established rivals and to demonstrate technical expertise to the public and state institutions. EA´s resort to competitors´ expertise seems to have been a skilful move to overcome limited resources and bureaucratic standing with the aim to achieve its political and organisational objectives. The position and argument were backed up by data from relatively small car manufacturers, so no ministry or rivalling company could argue the contrary. It is also noteworthy that the Japanese administrative body as a whole was under the misperception that the US government was committed to enforce the ’Muskie Law’ (Åhman 2004: 7), but the US car industry successfully lobbied for a postponement of the regulation to the year 1983. Even more, these companies argued the US administration into viewing the Japanese requirement as a non-tariff import barrier, so that the US government pressured the Japanese to exempt imported vehicles from compliance until 1981 (Wallace 1995: 144). In the same year, the USA pressured Japan to limit automobile exports to the US market via “voluntary restraint”, a practice that continued until 1994 (Shimizu 2003: 126f.). All in all, the strategy of EA seems to be based on gathering information and its utilisation in bureaucratic negotiations. Being able to prove the technical feasibility of their emission targets coupled with strong public concern about air quality provided the EA with enough bureaucratic muscle to largely implement its original goals. The fact that the compliance date was delayed until 1978 must be regarded as a concession EA had to make towards the established car manufacturers and their supporters in powerful ministries.
110 This case is also interesting with regard to the theoretical framework: EA, the municipalities and their citizens as well as the smaller OEMs shared the goal of stricter air pollution standards. Consequently, they all worked towards enacting this legislation. However, this alliance does not fit the type of an advocacy coalition (Sabatier 1988: 139): Honda and Mazda certainly did not share a common belief system with EA and municipal officials about negative impacts of emissions, but furthered their business interests nor was this alliance stable. This case exemplifies the useful distinction between policy networks and communities. It could be said that EA and municipalities shared the political idea to limit hazardous emissions. For EA, emission regulation was its main administrative authority and therefore this issue was more or less its raison d´ être, which was reinforced through MHW “colonisation”. The problems like poor air quality, related health issues and smog manifested themselves first and foremost in large municipalities, which is the reason why citizens and local politicians supported regulation. Thus, these actors could be described as an advocacy coalition or a policy community. Honda and Mazda must be assigned to a policy network as their action is based on economic interests. Therefore, the adoption of the ‘Muskie Law’ demonstrates that despite different motives, networks and communities may actually support identical policies. Although Nyland (1995) explores relationships between government and non-profit organisations, her findings could be used analogous to idea-centred communities and interest-based networks: if they share interest, they may cooperate for a limited span of time. Later, this alliance will dissolve as these groups normally pursue different interests. Also, it is clear that even inside communities, actors may hold various interests. Although they share the perception of emissions as a problem, EA and municipal officials pursue their organisational and political interests at the same time. This case further shows that subsystems are interrelated: emission control is an issue of what could be labelled environmental protection subsystem, but the decisions made influenced the automobile transportation and innovation subsystems.
4.3.3.2 The impact of the Californian Zero-Emission Vehicle Mandate In 1990 the Californian Air Resource Board (CARB) created the so-called ZEV Mandate with the aim to improve air quality. The ZEV Mandate required car manufacturers with more than 35.000 sales to conform with the mandate. The regulation required those companies to sell a certain percentage of ZEVs out of their total sales: 2% in 1998-2000, 5% in 2001-2002, and 10% in 2003 and beyond. The fine for every vehicle sold above of the quota was US$ 5.000. Resorting to this approach seems to have different backgrounds: first, Californian air pollution was serious. The Los Angeles basin was the only region in the USA identified as having extreme air pollution according to the scale used by the US federal EPA and further out of the 20 regions with the worst air quality in the US, nine were located in California (Brown et al.
111 1995: 83). Cars were at the heart of the problem, as in 1992, vehicles emitted 75% of NOx and 50% of hydrocarbons (Wallace 1995: 126). The presentation of General Motors (GM) Impact, a BPEV, in January 1990 influenced CARB to regard this car as a solution for the pollution issue (ibid: 161-163; Larrue 2003: 5). Second, California was going through a recession as the end of the Cold War brought cuts to military expenditure, which affected the high-tech industry and an emerging EV industry appeared to be a probable replacement for the slumping defence sector (Scott 1993: 307f.). Against the theoretical background of the study, it must be highlighted that it is difficult to clearly place California’s emissions regulation at the regional or national level. The state of California has been granted the unique legal right to implement its own emissions standards as long as they are stricter than federal regulation. This special status was granted when the aforementioned severity of Californian air pollution was acknowledged by political actors. For the following reason, CARB’s regulation is not purely regional: while other US states cannot set emission standards independently like California, they can choose between adopting federal or Californian standards (Vergis/Mehta 2012: 140). As a number of states73 regularly follows California’s role as a global leader in emission standards, it is a regulatory regime sui generis, neither regional nor national. Although this special status must be acknowledged, it will be treated as a regional policy in this analysis, because it is determined at the regional state level. The ZEV Mandate affected the American “Big Three” – GM, Ford and Chrysler – as well as major Japanese car manufacturers, namely Toyota, Nissan, Honda and Mazda, but left German OEMs untouched as they were below the sales threshold. The regulation did not prescribe any specific solution, but by the time of enactment, BPEVs were regarded as the only compliance option (Schot et al. 1994: 1065). The critical importance of the North American market to the Japanese car industry can be exemplified by the fact that over half of Toyota´s overseas sales went to this destination since 1970 (Shimizu 2003: 121f.). Therefore, Toyota, Nissan and Honda started to invest heavily in the development of BPEV-technology (Åhman 2004: 14), while US firms put up strong resistance to the mandate. They argued that the necessary battery-technology did not yet exist: indeed, the requirement would have forced them to adopt available lead-acid batteries, because the more advanced nickel- metal hydride (NiMH) and especially lithium-ion (LiIon) batteries had not been successfully scaled-up (Larrue 2003: 10f.). As the battery is the core of a BPEV, the car has to be built around it, which against the background of then existing development cycles means that the ZEV Mandate required the producers to integrate the battery technology of 1994 into their models for the first mandate year of 1998.
73 Low emission vehicle (LEV) I (1994-2003) category standards: Maine, Massachusetts, New York and Vermont. LEV II (2003-2010): Arizona, Connecticut, Maine, Maryland, New, Jersey, New Mexico, Oregon, Pennsylvania, Rhode Island, Vermont, Washington.
112 Here it is necessary to qualify Larrue’s observation slightly. It is true for European and US producers that advanced battery types were not available. As will be shown for the German case, NiMH batteries were still considered experimental (see: 4.4.2). However, when Toyota and Honda released their HEV models, exactly this battery type was used. As the automotive industry has high durability specifications, no OEM would have used technology that they considered experimental. However, Larrue’s observation is correct in the narrower context of BPEVs. Batteries used in the Prius only had 2km purely electric range at 50km/h and the Insight initially had no electric drive capability. Thus, NiMH batteries were not suitable for BPEV operation but viable in HEVs. Therefore, it must be concluded that the Japanese OEMs profited from domestic battery producers such as Matsushita (Panasonic)74, which were leading in the development of advanced batteries. Thus, besides OEMs’ original contribution to use these batteries in HEVs instead of BPEVs, they were in a position that allowed them earlier access to a key technology. Hence, it is another factor that highlights the importance of national systems. Despite internationalisation, this is a case that demonstrates that industries may profit from breakthroughs in other industries. One can conclude that the cooperation between companies (Matsushita, Toyota and Honda) from different sectors (automobile and electro-chemistry) induced from a foreign regional level legislation (California) inside national boundries (Japan) resulted in the successful development of HEVs. The Californian ZEV Mandate had a technology-forcing character at the beginning, but CARB acknowledged in 1995 that necessary advanced batteries needed more time to be developed and integrated. Therefore, it appears that the Japanese OEMs did not share their information concerning advanced batteries with CARB, so that the Californian authority based their decision on assessment of US OEMs. The regulation was amended in 1996 through a memorandum of understanding, in 1998 HEVs and in 2001 so-called neighbourhood electric vehicles (NEVs) were awarded with partial ZEV credits. This means that the companies could lower the number of full-ZEVs by selling HEVs or NEVs. Interestingly, CARB already put forward HEVs as a complicance method in 1994 (ibid: 20n). Japanese manufacturers were very successful with selling HEVs: Honda and Toyota did not anticipate the positive response to the Insight and Prius models from US-consumers and initially could not satisfy the demand (Parker 2001: 103f.). GM’s strategy was rather different: as NEVs could not be sold in the US market, they were given away freely to non-profit businesses, hospitals or schools in 2002 with the option for the operators to buy them in 2003 or return them (Larrue 2003: 17f.). GM´s strategy was obviously to introduce the NEVs before the mandate´ s deadline in 2003, but without the intention to make a business. Legislation was again amended
74 Since 2008, Matsushita officially carries the name of its most well known brand Panasonic.
113 in 2002, extending the timeframe until 2009.75 The ZEV Mandate can be regarded as largely failed. Even scholars who see the regulation as successful (Pilkington 1998), have to admit that this has to be qualified: it induced R&D on improving fuel economy, but the efforts were focussed on improving ICEV technology and not developing BPEVs. Data from patent analysis (Pilkington/Dyerson 2006; Yarime et al. 2008; Oltra/Saint Jean 2009) indeed demonstrate that OEMs continued to file more patents for ICEVs than for EVs. Thus, it can be stated that the regulation failed in overcoming the ICEV paradigm, but simultaneously induced Japanese OEMs to become more active in patenting activity on EVs than their European and US-American rivals. At the beginning, CARB´ s deadline was too optimistic and simply technically not feasible. After reaching this conclusion in 1995 the regulation has been watered down and especially US manufacturers appeared to be more active in legal struggles over regulation than trying to improve their technological expertise. The US automobile companies also could have pursued the development of HEVs like their Japanese rivals, but they did not. Even more telling is the following background: according to Joseph J. Romm, who worked for the Clinton administration on different posts in the Department of Energy, there was an informal agreement between the administration and the “Big Three” that gas-mileage efficiency requirements, known as Corporate Average Fuel Economy (CAFE), would not become stricter and the industry would in return concentrate on the development of hybrid technology. He also suggests that the ZEV Mandate got Japanese manufacturers so nervous that they would lose the race for EVs, so that they committed themselves much more to realisation than their US counterparts.76 The US automobile industry did not produce HEVs and abandoned the informal bargain when George W. Bush was elected. At the same time, US companies questioned the partial credits for HEVs, obviously because the Japanese successfully developed and commercialised the technology while they were lagging behind. The first phase was a poorly informed attempt of technology-forcing, while the second phase after 1995 was dominated by a market-driven regulation. Looking back, it appears that CARB went from one extreme to another with amending the ZEV Mandate by and large in line with the wishes of the US automobile industry. Critical regulation assessments point out that it has been hollowed-out, e.g. that NEVs should be regarded as “golf carts” as they could not operate on the road, but were limited to closed campus environments (Larrue 2003: 17f.). The influence of California´ s ZEV Mandate on the Japanese innovation process can be divided into two areas: the response of the automobile manufacturers and the reaction of the
75 According to California’s Assembly Bill 1493 and the Californian Code of Regulations, which defines the used terms, presently following exemptions apply: OEMs with less than 60.000 sales in the three consecutive years are exempted from the regulation until 2016. 76 Interview in the documentary “Who killed the electric car?”, time index: 1.03.00-1.04.30
114 administration. First, as aforementioned, Japanese car producers responded to US regulation by investigating ways to integrate an electric machine into a vehicle. As full-fledged BPEVs faced serious troubles in the areas of driving-range, acceleration, reliability and cost, especially if compared to standard ICEVs, HEV development was a promising option. However, the question arises, why Japanese OEMs were actively searching for a workable solution while US firms were more concerned with stopping or delaying implementation. Therefore, two hypotheses should be put forward: first, the Japanese carmakers were also active in lobbying for a more flexible, “softer” mandate, which would allow them to fulfill the required proportion through HEV sales. Especially the behaviour of Nissan and Honda, which waited with engaging full-scale R&D on HEV-technology until regulation was amended in 1996 (Yarime et al. 2008: 207) suggests this answer. Several subsequent mandate amendments, together with the successful efforts of Japanese manufacturers to develop necessary technology enabled them to comply. In this regard, a monograph by Mikler (2009) is noteworthy: based on the so-called Varieties of Capitalism (VoC) approach, German, Japanese and US car-makers’ environmental strategies are analysed. As an institutional approach, VoC divides capitalistic national economies into two types, liberal (LME) and coordinated market economies (CME). It must be hightlighted that VoC does not claim that observed differences are resulting from culture, but rather stem from institutional design and historic path-dependence. Mikler finds that as based in typical CMEs, German and Japanese makers are prone to cooperate with their governments, while the ideal-type LME, US state-business relations are adversarial. In light of this study, it could be argued that Japanese and US OEMs applied modes of operation that fit their domestic state-business relationship patterns. This would mean that Japanese firms are more inclined to cooperate with regulators to find feasible solutions while their US counterparts rather resort to litigation. Second, it can be reasoned that the Japanese saw the requirement as a way to gain an advantage towards their international and national rivals, if they were the first to master the technology (see: 4.3.4; 4.6). Further, a successful development could be advertised as ecologically friendly. The reaction of the Japanese administration was very different from the ‘Muskie Law’ case. As aforementioned, BPEV target numbers were aimed high and more support was given to R&D projects. However, there was no transfer of the strict technology-forcing approach used by CARB in Japan, meaning that a similar requirement was never enacted. To the knowledge of the author, the reason for this has not been investigated, but he would like to suggest that unlike regulation of NOx emissions, there was no clear proof that the technology could be introduced to the market, so that no agency could argue the necessity of regulative emulation. BPEVs were – and largely remain today – not attractive enough for consumers since they are unable to compete against ICEVs in the combination of driving-range, acceleration, and speed. Given
115 these features and a higher price, Japanese decision-makers could have concluded that such a product could not be forced into the market. It needs to be stressed that this is just a possibility, which underlines a gap in policy analysis as well as many other approaches: description and analysis of positive decisions are at the centre of research, but negative and non-decisions are seldom investigated since information is scarce.
4.3.4 Enter the hybrid (1997- ) In December 1997, shortly after the Kyōto summit, Toyota released the Prius, the first HEV entering mass production. However, prior to this event, HEVs have attracted little attention from the public as well as policy-makers. Tracing hybrid development, it has been reported that Toyota already developed the technology in 1977 for a sports car (Yarime et al. 2008: 203). The following questions arise: why did it take 20 more years to introduce the technology into the market? What was the role of Japanese policy in this development? To begin with, it appears that there was no intention to utilise hybrid technology for mass production until 1992 when Toyota´s new president, Toyoda Tatsuro, took over. This means that although the basic knowledge was around for 15 years, Toyota never took any serious step to commercialise their invention. However, this changed at the beginning of the 1990s. As already stated before, increasing oil prices and the Californian ZEV Mandate will also have contributed to the rediscovery of hybrid technology. In fact, Toyota formed an EV research group inside its electronics division in 1991 as a reaction to the regulation and in 1992, all firm internal EV research was unified into a single research division (Hasegawa 2008: 43f.). However, there is a second origin of the Prius: in 1993, R&D executive vice president Kimbara Yoshio – with full support of Toyoda Tatsuro and former chairman Toyoda Eiji – started the so-called G21 project, which aimed at creating a fuel efficient and environmentally friendly next generation vehicle (ibid: 27f.). In 1995, the G21 project was scaled up and members from the EV research group were working on the hybrid system of the future Prius. The original schedule was an introduction by December 1998, but when Toyoda Tatsuro’s successor, Okuda Hiroshi learned about the climate summit in Kyōto, he pressured for market readiness by the time of the conference (Yarime et al. 2008: 204). Thus, it can be concluded that Toyota’s management had a clear vision for an eco-friendly car since at least 1993. Further, the symbolic value of a “green car” was fully understood by the executives, so that they tried to utilise the Kyōto summit to strategically improve Toyota’s brand image. Also, there could be a reason that is rooted in company history and the intense competition between Japanese car manufacturers: it appears that management and R&D staff saw the Prius as a way to redeem the aforementioned opprobrium dealt by Honda in the technology race caused by the ‘Muskie Law’ (Hasegawa
116 2008: 46f.). This time, Toyota wanted to be the first to innovate and earn the reputation as an eco-friendly car producer. The question why Toyota did not introduce HEV technology earlier can be answered by two aspects: first, there was no pressure to investigate. Only when California applied pressure, steps were initiated to meet the ZEV Mandate. Second, the technical development itself proved very difficult. Various issues can be named here: Toyota’s engineers came up with a rather unique solution in merging the existing concepts of series and parallel hybrid systems into a series-parallel one.77 Although this step could be regarded as a mere incremental innovation, it was nevertheless crucial for the success of the project. Another issue already mentioned was insufficient battery performance. Moreover, Toyota could not produce this crucial component independently, meaning that they had to rely on Matsushita to deliver NiMH-batteries. Probably most significantly, orchestrating the electric machine and the combustion engine in the series-parallel hybrid system as well as managing the battery required control units. It can be stated that the whole concept of the Prius is dependent on management by electrical, computerised components. Thus, Toyota engineers – by and large mechanical experts – had to master these technologies to succeed. Turning to the political background: the Prius release announcement took MITI and NEDO by surprise. Also in 1997, the Advanced Clean Energy (ACE) program was planned, without any knowledge of Toyota´s plans. This conclusion is based on the fact that ACE was changed when the Prius was introduced: more advanced research in hybrid and bus concepts, ceramic engines and flywheels was supported (Åhman 2006: 440). However, it is surprising that government agencies were in the dark about Toyota’s plans. The company had showcased the Prius prototype at the 1995 Tokyo Motor Show and announced scheduled release for November already in the Nihon Keizai Shimbun on March 26, 1997 (Hasegawa 2008: 46). It can only be assumed that the agencies anticipated a later release otherwise there could have been an inclusion in the ACE program planning. Further, the administration responded quickly to the development: HEVs became included in MITI’s Clean Energy Vehicles Introduction Program (CEV), covering the years from 1998 to 2003. CEV integrated the aforementioned electric vehicle purchase incentive program, so that it can be stated that CEV is a decedent of MITI’s initial market expansion program. CEV granted subsidies to consumers that covered 50% of the additional cost of alternative vehicles (JARI 2003a: 2f.).78 HEVs took the lion´s share of subsidised cars under this program, completely overshadowing BPEV units that also were supported (Fig.5).
77 Prior to the Prius release, HEVs were dichotomously categorised as series or parallel. Post release, categorisation has been extended to three or four types (Chan 2002: 259f.) 78 Besides EVs, CEV also granted support for vehicles that operated on CNG and methanol.
117 Fig. 5 Units subsidised under Clean Energy Vehicle Program (Source: JARI 2003a)
As the graph demonstrates, CEV resulted in steadily rising sales of HEVs. Japanese government kept providing incentives for EV acquisition. Besides CEV, the Japanese government initiated a range of programs that aimed at increasing the application of alternative vehicles (JARI 2003a: 3f.): MITI also sponsored a program called Local New Energy. The scheme would subsidise 50% of costs for advanced efforts for the promotion of new energy for local governments. Local governments were also supported by two different MoE projects. Under the condition that a local government administered areas that were under the so-called Pollution Control Program or
Automobile NOx Law, the Low-Pollution Vehicle Diffusion Program sponsored 50% of construction cost for CEV refueling stations and up to 50% of cost if more than 5 CEVs were procured. Another program called Environmental Improvement Project gave fixed sum subsidies to local governments for the purchase of BPEVs and HEVs.79 This program also gave fixed sum subsidies to private businesses, but their subsidies were 50% lower then those for local governments. Moreover, MLIT gave financial support for application of cleaner vehicles. One program sponsored 50% of incremental cost for alternative buses and trucks for bus and trucking companies under the same conditions as MoE’s Low-Pollution Vehicle Diffusion Program. Also, MLIT funded demonstration projects that included clean cars and car sharing. As all other programs specified the lump sum amount or percentage of the subsidy, it appears that this means that MLIT covered all costs of such projects. Moreover, several tax incentives were granted: automobile tax was reduced in the first year by 50%, a discount on the automobile acquisition tax was granted, and the construction of refueling stations was supported by business tax credits and exemptions from the property tax and special land position tax. Unfortunately, no data on the number of supported vehicles or their distribution on local governments and private businesses are available. Thus, the scope and impact of these subsidies and tax incentives cannot be measured and compared to CEV. However, the numerous
79 Subsidy for HEV purchase: refuse truck (JPY 8.46 million), truck (JPY 3.74 million) and bus (JPY 3.67 million). For BPEV acquisition: Microbus (JPY 8.85 million), compact car (JPY 3.4 million) and scooter (JPY 150.000).
118 programs make clear that the Japanese government broadly supported EV application amongst other low emission vehicles. According to JARI, from a total of 28 EV models, 19 were supported via government subsidies in 2003 (Tab. 5).
OEM Model Type Price (in Subsidy (in JPY) JPY) Araco Corp. Everyday Coms 4-wheel motorcycle 685.000 140.000 BPEV CQ Motors QUNO 4-wheel motorcycle 1.290.000 200.000 BPEV Daihatsu Hijet EV mini van BPEV 2.900.000 800.000 Hino Blueribbon City HEV bus 31.500.000 5.570.000 Dutro Hybrid HEV deivery truck 4.700.000 530.000 Selega R HEV bus 32.800.000 Honda Civic Hybrid HEV 2.120.000 230.000 Insight HEV 2.100.000 230.000 Mikuro PANEO 4-wheel motorcycle 1.120.000 240.000 BPEV Mitsuoka Convoy 88 4-wheel motorcycle 888.000 210.000 BPEV MC1 EV 4-wheel motorcycle 568.000 80.000 BPEV Nissan Hypermini BPEV 3.500.000 940.000 R’nessa EV BPEV * * Tino Hybrid HEV * * Nissan Capacitor Hybrid HEV truck 14.426.000 4.520.000 Diesel** Prosper Notty E-scooter 385.000 Suzuki Twin Hybrid HEV 1.390.000 240.000 Takeoka Milieu R 4-wheel motorcycle 696.000 BPEV Toyota Alphard Hybrid Mini van HEV 3.660.000 Coaster Hybrid HEV bus 14.050.000 4.510.000 Crown Royal Mild HEV 3.970.000 60.000 Hybrid
119 Crown Sedan Mild HEV 2.935.000 Hybrid Estima HEV 3.350.000 240.000 Prius HEV 2.150.000 210.000 RAV4 BPEV * * Yamaha Passol E-scooter 240.000 50.000 Zero Sports Elexceed 4-wheel motorcycle 1.980.000 380.000 BPEV Tab. 5 2003 Government subsidies for BPEV and HEV purchase by model (Source: JARI 2003b; 2003c) *Model not available in 2003 ** Today known as UD Trucks
As the table shows, a large number of firms had developed EVs, although models of smaller producers largely fall into a category that may be ridiculed as golf carts as they had top speeds between 50-60 km/h and a range of around 50km. Looking at the larger car-makers, it is clear that Toyota had already started to apply hybrid drivetrains to a large number of vehicles. Honda, Nissan and Suzuki also competed, but with a limited model range. Besides giving incentives to Japanese consumers, local governments, and businesses, the government also moved forward to set an example. Since 2001, EVs – among a list of a total 101 items – are procured by the Japanese government under the so-called Law on Promoting Green Purchasing (Tanaka/Ahlner 2003: 24-26). One aim was that all government automobiles would be LEVs by 2004 (Tiberghien/Schreurs 2007: 87). The latest are the “Green” Vehicle Purchasing Promotion Measures, which passed the Diet on May 29, 2009. Measures simultaneously aim for two objectives (JAMA 2009: 1): stimulating vehicle sales in Japan and at the same time promoting the reduction of Greenhouse Gases (GHG). The first aim is pursued for economic reasons, as the Lehman shock again led to economic recession and this slowdown resulted in lagging car sales. Although not stated openly, the second goal seems to be promoted, because of the difficulties Japan experiences in complying with the Kyōto Protocol. The measures were timely limited, since the incentives were only granted to automobiles sold from April 10, 2009 through March 31, 2010. Measures can be divided into two parts: a replacement and a non-replacement program. To count as a replacement, the subsidised model must comply with the latest fuel efficiency standards and the old vehicle must have been registered for at least 13 years (ibid). Further, the amount of the subsidy depends on the type of vehicle purchased: standard and small cars are eligible for JPY 250.000 while mini-vehicles (so-called kei-cars, which literally means light or small vehicle) are
120 rewarded with JPY 125.000. The non-replacement part subsidies are smaller, JPY 100.000 for standard and small vehicles or JPY 50.000 for mini-cars (ibid: 2). Also, purchased models must have fuel efficiency at least 15% better than the latest standard of 2010 to be eligible. Overall funds allocated by the Japanese government are JPY 370 billion (or $US 3.7 billion), so that a limit of 690,000 cars could be subsidised. It must be pointed out that this is an additional incentive: press reports stress that depending on the vehicle type purchased, the top amount of subsidies could reach € 11.500 (Spiegel online, 08.01.2010). This amount can be achieved through a combination of “Green” Vehicle Purchasing Promotion Measures plus tax abatement and subsidies provided by prefectures and municipalities. In March 2009, another initiative was put forward to support EV diffusion. Together with MLIT and MoE, METI heads the so-called EV&PHV Information Platform (EV PHV jōhō purattofōmu). 80 The platform promotes the use of BPEVs and PHEVs by creating demonstration sights in municipalities. Municipalities can apply to the so-called EV&PHV Town Initiative Promotion Committee (EV PHVtaun kōsō suishin kentōkai), which consists of representatives of the three ministries, OEMs, researching firms in the field, and experts. If a municipality is selected to become a project town, committee members and prefectural governments cooperate to put the plan into action. Information on METI’s website are categorised along prefectures and reports are drafted by the prefectural governments. If and to which degree municipal governments are involved in the process is not clear. It appears that some applicants are trying to appeal to all the ministries by selecting popular tourist spots, arguing that their popularity among Japanese and international tourists makes these locations prime demonstration sights which are promoting the use in Japan as well as displaying the image of an eco-friendly technology producing country. Probably the best example is Kyōto, which is highlighting the creation of new (charging) infrastructure, its role as a tourist magnet that attracts 70 million tourist annually and the possibility for OEMs, diagnostic and electrical equipment makers to cooperate and test their products in order to revive the automobile industry (Kyōto Prefectural EV/PHV Town Promotion Action Plan 2009: 2). Further, the plan places itself in the greater Ōsaka tourist region, emphasising the use of Shinkansen with BPEVs and PHEVs to combine eco-friendly long-range and last-mile transport (ibid: 26). Similarly, Tochigi Prefecture stressed in its action plan that these EV types could be used as taxis or rental cars to enhance the natural image of Nikkō, another major Japanese tourist spot (Tochigi Prefectural EV/PHV Town Promotion Action Plan 2011: 15). The city of Nikkō and the surrounding national park are already well accessible by train from Tōkyō, so that CO2 emissions could be
80 Information in this section was directly obtained from METI officials and METI’s website of the platform: http://www.meti.go.jp/policy/automobile/evphv/index.html >@. The fact that the information is centralised on METI’s internet presence already indicates that METI plays the leading role vis-à-vis the other involved partners.
121 lowered further through broader utilisation of BPEVs or PHEVs. On the one hand, these action plans reflect the presence of several ministries with different agendas: appealing to all ministries seems to be a method of enhancing the chances of being selected and receiving funding for the projects. On the other hand, these concepts do in fact create an eco-friendly atmosphere as these projects are highly visible. The author has visited both cities and made the following observations: nearly every bus in Kyōto is labelled as a hybrid. Moreover, most tourists use these buses or the underground with affordable one-day tickets, so that the large number of tourists does not create much additional traffic and pollution. In Nikkō, tourists do use the train routes and use buses to cover longer distances between major sights in the city and the adjacent national park. If these buses could be replaced by BPEV or PHEV versions, emissions could be reduced to a lower level. However, this is just one way to justify an application. In the case of Fukui Prefecture a very different reasoning is employed. Fukui points out that it has the highest ratio of car ownership in Japan and hence should be promoting EVs. Further, the role of nuclear energy for powering PHEVs and BPEVs is stressed and advertised as a factor that makes Fukui an ideal location for demonstration projects: “Further, as our prefecture hosts 14 nuclear reactors, we are producing
CO2-free, clean energy, which we are supplying to the whole nation and thereby have been greatly contributing to the [Kyōtō] Treaty against Climate Change for a long time.” (Fukui Prefectural EV/PHV Town Action Plan 2009: 3) (author’s translation) This statement clearly indicates that nuclear energy was seen as eco-friendly. It could be used to promote electricity-powered automobiles. If this plan can be sustained after the Tōhoku triple disaster is questionable. From a more general point of view, the EV&PHV Town Initiative portrays the role of regional and municipal governments in the Japanese policy process. They are largely dependent on central government subsidies for performing their tasks, which are also largely determined from Tōkyō (Klein 2006: 328-330). Nakano (1997: 161) has identified three categories for the ways subnational government bodies try to secure budgets from the centre: first, central government proposed subsidies that can be obtained via formal requests, which are usually granted. This is identified as the most common method. Second, petitions through influential actors like governers, MPs, or amakudari officials of the respective local administration for limited and hence contested funds. Third, MPs’ direct lobbying to secure funds for their constituency, which represents pork-barrel politics. This particular case resembles a combination of the first and second categories, because it is a project developed by central government ministries but prefectures are appliying for a limited number of project slots. However, it is fairly clear that the central ministries are dominating the process and let prefectures compete among each other. This project shows rather clearly that subnational governments have comparatively limited
122 policy-making power in Japan, which is mainly due to financial dependence on the central government. Although a similar mechanism will be described for Germany as well (see: 4.3.3), German states have much stronger influence on policy processes than Japanese prefectures. An important move towards EV commercialisation on a larger scale aims at standardising charging machines for BPEVs and PHEVs. For this purpose a joint- venture called CHAdeMO has been founded by Toyota, Nissan, Mitsubishi, Fuji Heavy Industries, and TEPCO, Japan’s largest electric power utility. These five companies are the executive members of CHAdeMO and a total of 147 regular and 175 supporting members as well as 67 observers cooperate through the association. According to Shiga Toshiyuki, Nissan Chief Operating Officer, despite fierce competition between car producers, standardisation is a task of the whole industry in order to serve the convenience of consumers (Japan Times, 16.03.2010). Katsumata Tsunehisa, then president of TEPCO, stated that the standard also must be established outside Japan, which is probably the reason why the Japanese government supports the consortium with US$ 13.7 million (Spiegel online, 16.03.2010). CHAdeMO is also a prime example how closely – internationally as well as intra- and inter-industry – interwoven the subject of electric mobility is. Other Japanese partners are electronic MNC Toshiba and telecommunication company KDDI. Further, the largest global automotive supplier Bosch, French car producer PSA and Italian energy provider Enel are also collaborating through CHAdeMO. After this initial step, cooperation in charging infrastructure construction continues with the support of the government. Toyota, Nissan, Honda and Mitsubishi announced that they will intensify their investment in charging points (Toyota press release, 29.07.2013): the aim is to increase the number of normal chargers by 8.000 (currently: 3.000) and fast chargers by 4.000 (currently: 1.700). Participating OEMs stated that they intend to utilise a subsidy program totaling JPY 100.5 billion provided by the Abe administration for EV infrastructure build-up. This latest move appears to be more a part of Abe’s overall investment driven economic policy that aims at economic growth than a consistent step towards sustainable mobility. Abe’s policy aims at a revival of Japan’s economy through a combination of public investment, an artificially lowered value of the Yen and mild inflation to induce citizens to spend their savings. As discussed earlier, Japan’s emissions are increasing due to the current replacement of nuclear energy through fossil fuels, so that this program must be regarded in the framework of overall economic policy, not one that specifically aims at emissions’ reduction through EV use.
4.4 Government support for battery-powered and hybrid vehicles in Germany
123 4.4.1 Early developments (1971-1989) In 1971, German energy utility RWE was the driving force behind a project on electric buses and transporters. These prototypes were build in cooperation with commercial vehicle manufacturer MAN and aero- and defence specialist Messerschmidt-Bölkow-Blohm (MBB). Chemical and medical industry giant Bayer was responsible for the development of the plastic body. Although assigned tasks are not documented, (automotive) battery producer Varta and Bosch participated in the project. Prototypes could reach a speed of 60km/h (bus) and 80km/h (van), batteries were expected to have a life cycle between 75.000 and 100.000km, but had to be changed after 50km for recharging (Zeit, 16.04.1971). Therefore, batteries were packed into a trailer that could exchanged relatively uncomplicated. Bus prototypes were tested in the city of Koblenz and due to the limited range, battery trailers had to be exchanged three times a day. Effective ranges were between 60 and 105km, the difference largely caused by landscape characteristics. RWE founded two subsidiaries called GES and Selak.81 GES focussed on EV development with OEMs and Selak on recharging infrastructure. Under the roof of GES, car-makers, utility companies and representatives of government agencies cooperated to develop normative and technical standards as well as promoting these standards on the international level (Zeit, 12.03.1971). A concrete result was adjusted regulation: originally, German driver’s licences only allowed driving ICEVs. Thus, after coordination through GES, regulation was adjusted to encompass ICEVs and BPEVs and tax incentives were provided for BPEVs by then Ministry of Transport (Bundesministerium für Verkehr; BMV) (Zeit, 03.08.1973). In 1974, GES initiated a trial with 20 VW Transporter and 30 Mercedes-Benz LE 306 vans in the city of Mönchengladbach. While VW investigated on its own and did release very little information on the process, Daimler openly cooperated with electric equipment producer AEG in this GES project. In 1982, Erich Pöhlmann, an engineer that developed BPEVs was supported by RWE in founding his enterprise. The Pöhlmann BPEV was even showcased at RWE’s annual shareholders meeting in Essen. Pöhlmann and RWE did intentionally not seek financial assistance from BMFT, because “otherwise we would have to disclose all our new ideas imidiately”, a RWE management board member explained (Zeit, 26.02.1982). The same year, GES participated in the development of four VW CitySTROMer prototypes and following 24 trial vehicles, which were based on the Golf I. GES was also involved in the mini-series production of 50 improved CitySTROMer in 1985, based on the Golf II. However, RWE dissolved GES in the same year and sold generated know-how to project partners and reduced its electromobility-related activities to an internal working group.
81 Both names are acronyms. GES is the abbreviation of Gesellschaft für elektrischen Stadtverkehr, which means electric city transport company, Selak stands for Stromversorgung elektrisch angetriebener Kraftfahrzeuge, which may be translated as electricity supply for electric-powered vehicles.
124 Unfortunately, more information is not available. Thus, it cannot be stated which technology was transferred and to which partners. Moreover, an official overview by RWE’s archivist for the German Electromobility Association (BEM EV) states that the company concluded that it had done enough and that it left EV development to the automobile industry (BEM EV undated). This would mean that following stagnation is due to reservation of German OEMs towards BPEVs. Whether it is true that RWE felt that it had done all in its power to support EV development or if it dissolved GES due to missing financial returns cannot be determine from the limited information provided. While information cannot be reviewed indepently, it at least shows that an important actor like RWE was not willing to enter automobile production, but chose to focus on its core business. Further, the intentional private sector centric approach suggests that at least RWE had positive expectations about near commercialisation in the 1970s and early 1980s. All in all, government was largely absent and only displayed minimal support by adjusting legislation and providing tax incentives. Absence of public R&D programs and the self-reliant approach of industry are outstanding features of this phase. Therefore, it must be stated that the state left development to industry and largely refrained from interference via policies and active coordination. It appears that the few policies that were implemented resulted from bottom-up communication of industry preferences. While OEMs investigated EVs, progress must be characterised as slow.
4.4.2 Technology testing (1990-1996) As in the Japan, California’s ZEV Mandate caused renewed interest in EVs. Although the regulation did not affect German OEMs directly, it increased awareness that the topic would stay on the agenda. Car-makers had engaged R&D on BPEVs during the 1980s and contemporary forecasts of BMW envisioned commercialisation of BPEVs equipped with NaS batteries in the early 1990s (DeLuchi et al. 1989: 256). VW participated in a demonstration project in Zürich, Switzerland with a HEV that was – like the CitySTROMer – based on the Golf in 1991. On the administrative side, there was little support for EVs at that time: BMU argued that the energy mix, especially the coal-firing power plants that produced 55% of domestic electricity, did not promise significant environmental benefits. Thus, EVs would rather redistribute emissions from cars to electricity producers (Hoogma et al. 2002: 67). This view was shared by BMV and both ministries rather advocated increased efficiency in car usage, partly through the reduction of unnecessary car use. Against this reluctance, BMFT argued that EVs would be developed and commercialised somewhere on the globe, and thus German companies should be able to supply technology for EVs. Further, the development took place against the background of German reunification. Hence, the main concern of the Kohl administration was managing the
125 shift from uncompetitive industries to new, competitive ones in former Eastern Germany. Thus, despite BMU and BMV reservations, the island of Rügen was chosen as the site of a demonstration and testing project that was initiated in 1992. Rügen project was the largest German trial of EVs up until this point. Total 60 BPEVs from four car-makers (BMW, Opel, Mercedes-Benz (Daimler) and VW), that supplied passenger cars and (delivery) vans, and one bus manufacturer (Neoplan) were tested in the project. Daimler and VW managed the project through a joint-venture called Deutsche Automobilgesellschaft (DAUG) under the supervision of technical certification organisation TÜV Rheinland, which acted on behalf of BMFT. Other partners of the project like battery system makers, utility companies and research institutions were represented on a committee that supported DAUG. Two research institutions, namely the Institute of Vehicle Technology, HTW Dresden (a university of applied sciences) and IFEU Heidelberg, an ecologic research institute, participated as scientific partners. HTW Dresden monitored and evaluated the technical performance of the tested BPEVs, while IFEU Heidelberg investigated the environmental effects of their use on Rügen. Due to the aforementioned macro-economic interests of BMFT, it provided DM 26 million funding of the total DM 60 million total costs, while the state of Mecklenburg West-Pomerania only provided DM 300.000 (Hoogma et al. 2002: 69). While Länder generally can be influenctial actors in economic and innovation-oriented policies, this case must be placed in historical context: it highlights the structural economic and financial post-reunification weakness of the Eastern Bundesländer, which illustrates the strong impetus of the federal government to develop this “new” part of Germany. The original schedule was to implement the project from 1992 to 1995, but due to difficulties in delivery, participating firms called for extension until 1996, so that the project was prolonged for one year. The main problem all participants faced was clearly insufficient performance of NaS batteries, which caused OEMs to switch to other battery types (DAUG 1996: 42; 62; 87; 91). OEMs made extensive use of the realistic conditions by testing various combinations of technology: Daimler tested combinations of battery and transmission. This included electric machines procured from three different suppliers, namely AEG, Bosch and Siemens. VW tested all vehicles with an identical machine, but tested three different battery types from different suppliers (Varta: PbGel; Hoppecke: NiCD; ABB: NaNiCl2). Further, OEMs found that other systems, especially heating, consumed much energy, thereby decreasing the effective range of test vehicles (ibid: 34; 50; 114). Also, Opel found that repeated fast-charging led to accelerated cell degradation, i.e. a reduced battery life-cycle (ibid: 97). The ecological assessment by IFEU produced mixed findings. It was the first German study that included the car production and energy generation processes in the research methodology. Results largely validated the view of BMU and BMT: local emissions were close to zero.
126 Regional NOx emissions were lower, but SO2 increased. Globally, tested BPEVs used more primary energy and produced more CO2 emissions. However, IFEU pointed out that these findings were dependent on the contemporary domestic electricity mix and that results for countries with lower degrees of fossil sources in electricity generation produce completely different results: “The comparison turns out very clearly in favour of the passenger EV if directly generated renewable electricity is used or total electricity generation is largely based on non-fossil energy sources, which appears inevitable for the future.” (ibid: 383) The statement partly reflects the German policy debate of the 1990s that called for an increased share of renewable energy. Indeed, analysis of industrial policy found that public support82 for environment, energy and energy conservation increased from 3% in 1995 to 47% in 2005 (Buigues/Sekkat, 2009:117). These findings reflect that energy issues were only second to economic development of former Eastern Germany in general economic policy. It can be claimed that the results seemed to support existing skeptics that advocated a wait and see – or rather wait and continue development – approach. All companies stated in their contributions to the final Rügen project report that experience gained through the trial would be fed back into present BPEV R&D (DAUG 1996: 35; 72; 107; 123). Participants further concluded that the test improved communication and cooperation between OEMs and battery producers. However, the report demonstrates that BPEVs were still having a number of practical problems that stood in the way of commercialisation. OEMs concluded that they needed to conduct further research on certain battery types in order to enter future serial production (ibid: 50; 115). The Rügen project had several results: first, it proved that hopes for NaS batteries were overrated and that other types would have to be investigated. However, advanced types like NiMH were not tested as they were classified as being at “prototype or laboratory stage” by battery producer Hoppecke (ibid: 154). Second, firms learned that they generally would have to develop more energy efficient components to increase range. One particular case is important when comparing Japanese and German OEMs. Audi showcased the A4 duo HEV prototype at the Frankfurt Motor Show in 1989. It utilised NiCd batteries and an improved version with NaS batteries was presented in 1991. Audi claims that at least ten prototypes were delivered to chosen customers for field testing. It is unclear why Audi did not participate in the Rügen project, but the likely explanation is that only BPEVs were tested, not HEVs. Finally, in 1997 – the same year Toyota released the Prius – Audi started series production of the A4 duo (parallel PHEV). It was based on the stationwagon variant A4 Avant.
82 Buigues and Sekkat use the terms industrial policy and public support policy interchangeable. They differentiate horizontal, i.e. undiscriminatory, from vertical support, i.e. assistance to specific sectors. Instruments are differentiated into subsidies, which includes soft loans, government guarantees or specific tax reductions, and procurement. Thus, their term support refers to a macro perspective. Hence, their findings illustrate a shift to energy (price)-related policy instruments (see: Buigues/Sekkat 2009: 127), not energy related R&D.
127 The electric machine prototype was jointly developed with the University of Leoben, Austria and taken to the series production level in cooperation with Siemens (Audi 1996: 7). It appears that Audi had the same experience with NaS batteries as the participants of the Rügen project as the final version utilised lead gel batteries. For highlighting its eco-friendliness, the car’s Diesel engine could also be operated with bio-Diesel. Unlike its Japanese counterparts, the A4 duo was a flop that did not find many customers, seemingly due its high price of DM 60.000.83 Thus, series production was halted after only about 100 models were assembled (Audi website, 27.10.2011). In comparison to its Japanese competitors, Audi used less advanced batteries but employed a more advanced “refueling” method, by constructing a PHEV. Without consumer subsidies to compensate the premium, Audi was unable to attract enough German customers.
4.4.3 Attempted catch-up (2004 onwards) In 2004, there are first signs that suggest that the German government saw the need to support the domestic OEMs. A policy document of BMBF’s transport technology bureau (Referat Verkehrstechnologien) from December 12th 2004 explicitly names the second generation Toyota Prius and Honda Civic IMA and points out that they had driving performance like ICEVs, but with lower emissions. This document was drafted based on a paper authored by BMBF and staff from Germany’s leading technical university RWTH Aachen as well as an expert work shop on hybrid technology. Thus, this document can be described as the result of a bottom-up process. It states: “The German automobile industry has given up its former reservation vis-à-vis hybrid propulsion and meanwhile engages those concepts.” (BMBF 2004: 2) This statement clearly shows that BMBF partly considered the car manufacturers to have missed an active approach toward HEVs. Due to the environmental benefits the document identifies the following issues for future R&D activity: electric machines (function as motor and generator), gear drive, energy accumulator (batteries), control units and converters, (propulsion) energy management and a revision of the propulsion system in order to achieve efficient integration of all components in HEVs (ibid: 3-5). The policy document states that these areas will be matched to existing R&D programs labeled “mobility and transportation”. However, the document does not specify if additional funds will be available or if R&D in the identified areas will be prioritised before other projects or if the higher prices of HEVs will be subject to consumer subsidisation at a later point in time. Hence, this policy document rather is a mild confirmation that the government is interested in hybrid technology development by the German automobile industry than an aggressive push towards the development and market introduction of HEVs in Germany. The position paper documents the view of a relevant bureau,
83 In today’s prices, this would be approximittly € 30.000 or JPY 3.000.000. An A4 Avant ICEV costed between DM 50.000 and DM 55.000, depending on the features.
128 but it appears that it stood alone in 2004. As the aforementioned statement of Daimler CEO Zetsche and development strategies discussed later show, German OEMs had not given up reservation towards HEV concepts. Hence, this position paper documents a beginning reorientation inside the administration, but it had seemingly little influence on OEMs. A more forceful move only occurred five years later. The declaration of the National Development Plan Electro-mobility (Nationaler Entwicklungsplan Elektromobilität; NEP) in 2009 was followed by the establishment of NPE on May 3rd, 2010. NPE brings together actors from industry, politics, academia, and society. To ensure coordination among participants from the administration, a Federal Government Joint Unit for Electric Mobility (Gemeinsame Geschäftsstelle Elektromobilität der Bundesregierung; GGEMO) has been set up. This unit consists of personnel seconded from the four mainly involved ministries, namely BMWi, BMBF, BMVBS, and BMU. This organisational instrument indicates that the government is taken the topic more serious than before. It has already been observed by the media and scientists that the actual agenda is largely defined by industry, but the broad spectrum of participants is thought to avoid one-sided capture by interest of a particular industry (Altenburg et al. 2012: 75). However, it is also clear that NPE is geared towards supporting domestic OEMs to catch up to advanced competitors such as Japan. All actors have agreed to apply a systematic approach, which is open to different technologic solutions in order to achieve the goal of 1 million EVs by 202084 through a market orientated process. In essence, this formulation means that no specific EV subtype will be favoured, so that it is up to the automobile industry to develop PHEVs, BPEVs or REEVs that the customers will buy. The body was organised into a main group and seven working groups. These seven groups85 were divided along the following areas of study: 1. Drive train technology and vehicle integration 2. Battery technology 3. Charging infrastructure and grid integration 4. Standardisation and certification 5. Materials and recycling 6. Training and qualification 7. Framework requirements
84 This goal was first formulated at a National Strategy Conference Electro-mobility on November 25th, 2008 by BMVBS Minister Wolfgang Tiefensee (SPD), BMU Minister Gabriel, BMW, Daimler and VW (HZwei 01/09: 26). However, the creation of the policy platform as an organisational structure marks the beginning of the actual deliberation process. 85 The actual composition of the working group members is changing over time. However, comparison between former and current version only show that working groups 1 and 7 have decreased in number, namely one person each.The latest composition can be accessed under: http://www.bmu.de/files/pdfs/allgemein/application/pdf/nat_plattform_elektromobilitaet_ags_bf.pdf [03.07.2012]
129 The first six groups published intermediate reports on their subject areas on November 30th, 2010, roughly after half a year of their establishment. Their reports were used for a first overall intermediate report. This general report incorporates two main lines of reasoning: on the one hand, German industries are capable of managing the shift from ICEs to EVs due to their excellence in engineering and product development. On the other hand, there is urgency to act as competitors are receiving support by their respective governments. The last sentence of the preamble highlights this sense of being a follower: “It must be acted swiftly and jointly to reach a leading position and avoid further falling behind developments in national economies like China, Japan, France or the United States.” (NPE 2010: 8) (author’s translation) Further, the report points out that it is necessary for German industry to “leap-frog” (ibid: 10) in order to catch-up to competing economies. With regard to the possible customers who are necessary to reach the aim of 1 million BPEVs by 2020, clear conclusions are drawn: in short-term perspective, typical customers are going to be commercial users, especially fleet operators such as parcel or delivery services, car sharing operators and public transport and the report points out that their requirements are already met by current BPEVs and REEVs (ibid: 33f.). The report suggests that policy to promote the adoption of these cars by commercial users could be utilising fiscal incentives and special promotional loans from the state-owned development bank KfW (ibid: 34). For the mid-term perspective, the report also identifies the characteristics of typical users. According to the prognosis, users are going to live in an urban area, own two or three vehicles, be tech-savvy instead of “green”, own an own garage, have a high income and may have the possibility to use a company car (ibid: 34f.). This essentially means that BPEVs are regarded as a luxury product, even for the mid-term scenario. Described users can afford to buy a BPEV because they are not depended on its daily use. This scenario can be questioned. Another scientific study, which was conducted by order of BMWi doubts that German early adopters are going to be urban dwellers (Fraunhofer ISI 2012: 12-14): first, driving patterns suggest that people living in cities with less than 100.000 inhabitants have the most viable usage profile. Second, the study finds that people in urban agglomerations do not drive enough to reach an economic break-even, meaning earning the surplus price of BPEVs through fuel savings. Third, the study stresses that environmental benefits are also strongly associated to driven distance. Only if the distance is comparatively long, the ecological effects of BPEV production, which are higher than those of ICEVs, are outweighed by fuel savings. The study thus concludes that the planned shift towards more renewable energy in Germany is a necessary condition if BPEVs should have significant positive ecological effects. The actual working group reports demonstrated a varying degree of development in the analysed fields and hence their recommendations and proposals for the political
130 decision-makers reflect differing levels of government support. The first group finds sufficient technological expertise in Germany for the components of electric drivetrains, which are electric machine86, power electronics, high-voltage harness and electric drives. However, the group identifies one important weakness: currently, the components have only a limited volume and are typically produced for small series production. To be able to enter automobile production, the production methods and technology have to be improved. Also, the related price effect is of critical importance for German car and component makers to succeed in international competition. It is pointed out that China and Japan are the benchmarks for Germany: China due to the large state-funded programs, which will result in large volumes87 and Japan due to the long experience with hybrid systems (NPE WG1 2010: 2). 2 Further, the report states that the aim should be to achieve a /3 cost reduction, doubled power density and power loading, increased average operating efficiency by 5%, as well as improved reliability and quality based on the performance in 2010 of electric drive systems by 2020 (ibid: 4). With regard to actual competition, the report finds a clear judgment: in electric machines, Japan has already higher economies of scale and experience through high volume of production in HEVs. For the same reason, Japan is regarded as being several years ahead in power electronics, but Germany is regarded as capable of catching up. Due to planned state-supported build-up of large fleets in France and China, these countries are expected to experience a steep learning curve and production know-how. German industry is seen as behind due to lacking production experience. German OEMs did develop HEVs comparatively late and hence are behind foreign competitors. As experience can only be gained through entering mass-production, the companies still face the problem of finding customers. Summing up, the working group demonstrates that the underlying skills and capacities in drivetrain technologies are present in German industry, but that industry has to decide to use these skills for constructing EVs. The report highlights that Germany is still in the mode of planning and developing while several other countries already enter the early market phase. Risks are lacking scale of production and that some components momentarily do not meet the quality requirements of the automobile assemblers. Thus, it is simultaneously urging industry to bring their products to mass production level and asking political decision-makers to consider financial incentives for technology promotion. While the findings of the first group require rather limited state support the findings of the second working group are more alarming and see the necessity for much more state assistance if
86 This formulation is frequently used in the mentioned reports. Media publications and automobile OEM info sheets usually simply call it electric motor, but as the actual functions are that of a motor and a generator, it is somewhat misleading. 87 It can be said that it is still a niche market in China, but given the overall size of the Chinese market, this niche produces relatively high volumes in comparison to the German or European market.
131 the goal should be reached. The working group identified battery technology as the Achill’s heel of German EV development. The report highlights that 60-80% of battery cost is related to battery cells, so that cells are the actual key component. Future competitiveness of any OEM hence depends on access to this technology. The report further points out that from the perspective on national competitiveness, it is crucial to build up know-how through production and linking battery (cell) producers and assemblers. Conducted analysis highlights the following weaknesses (NPE WG2 2010: 4): lack of battery experts and university chairs for electro-chemistry, low domestic production of LiIon battery cells and batteries, lack of R&D on material and availability of natural resources like cobalt. Further, the following strengths are identified: high competence for automotive systems, automobile OEMs as customers, an innovative chemical industry, good research infrastructure and a well connected research community. While the weaknesses are concrete, the strengths listed are general. It is questionable if general competences in the German automobile and chemical industry as well as in the science community can balance the specific, structural weaknesses in the relatively short timeframe until 2020. Moreover, given the fact that cars have a development time between two and four years, the timeframe for integrating results into products, the timeframe is actually situated between 2016 and 2018. The working group acknowledges this fact and states that the number of 1 million EVs by 2020 will have to reached largely through the use of second generation LiIon batteries, which are projected to enter mass production suitable for automotive use from 2017 (ibid: 6). However, the report emphasises the weakness in domestic production and concludes that political support is crucial for the establishment of production facilities (ibid: 11). Moreover, the group recommends investment in post-LiIon technology, to avoid missing the development in this field, basically committing the same mistake twice. The report of the third working group deals with an issue that can be called a German uniqueness. It is not only dealing with the issue of charging infrastructure, but also deals with grid integration of EVs. Before going into the details, it must be stressed that most of the problems discussed in the working group are occurring in a future scenario with much more EVs than the political aim of 1 million by 2020. Other studies (e.g. e-mobil BW/Fraunhofer IAO 2010: 100) have estimated that 1 million EVs would mean an additional annual electricity demand of 2.2TWh, which is just 0.36% more than the total electricity consumption of 2008. This means that the whole million EVs could be supplied through today’s electricity infrastructure without causing any problems. Issues debated by the working group described below are hence not caused by EV introduction, but by the coinciding overhaul of the electricity infrastructure and a long-range perspective on EV use. This fact does not mean that the discussion is academic and unnecessary. On the contrary, the specific characteristics of
132 electricity infrastructure, which are long-term use and high initial investment, make anticipatory, long-range planning sensible. Although there is no immediate pressure from the introduction of EVs, it is crucial that the factor of EVs is already integrated into the parallel transformation of the electricity grid as both shifts are highly interrelated. Thus, timely planning and search for possible synergies makes perfect sense. In essence, grid integration means that all electricity for EVs should come from renewable sources, not from carbon-based or nuclear power plants. This is not simply a political aim, but an expectation from the general public. The group itself states that it is “common sense in Germany that electromobility should be [purely] realised with electricity from renewable energy sources” (NPE WG 3 2010: 4). This aim has implications for the way electro-mobility has to be developed and it is affected by the planned nuclear phase-out until 2022. Thus, the German grid has to be altered comprehensively and this future vision creates several problems. First, the amount of electricity in the grid is necessarily more often fluctuating as wind does not blow steadily and the sun does not always shine. Second, more volatile production of energy may lead – in fact currently already led – to a situation where renewable sources have to taken offline in order to preserve grid stability. This means that the potential of renewable sources might not be utilised efficiently due to insufficient grid infrastructure or energy demand. Related to this issue is the opposite scenario: weather conditions may cause insufficient energy production for the actual demand, leading to black-outs. Here is the point where EVs and smart grid integration is seen as a possible solution for the dilemma: the idea is to use the surplus energy in times of strong production from renewable sources for charging EVs and in a future step, to enable the grid to access the electricity stored in EV traction batteries to stabilise the grid. This means that grid and vehicle must be able to communicate with each other. Further, using the power stored in the battery by the grid can have negative impacts such as decreased range and battery life-cycle. Therefore, the working group develops a phase-model (ibid: 16f.), which is mapping the development agenda: it forecasts a development from user-controlled charging over grid-controlled charging ending in bi-directional charging. It must be added that the model does not specify any dates, so that this model might accurately represent the development dynamic, but is unable to provide a timeframe. This fact sets the issue of grid integration notably apart from the field of batteries. For batteries, the agenda and development steps are already predictable, whereas the scenario for smart grid and EV integration is in a conceptual phase. There is a vision, but no actual plan. For the time being, the working group suggests to focus on home-charging of EVs (ibid: 11). This has several effects: if home-charging is practiced, the need for public – especially fast-charging – infrastructure decreases and charging is largely going to take place during nighttime. Although the current electricity infrastructure of homes is regarded as suitable, the
133 experts recommend considering modifications to domestic installations to guarantee safety. Home-charging is seen as the solution with the greatest potential for grid-vehicle communication and hence, grid stabilisation effects. However, some issues come up with this scenario: first, home-charging will largely take place at night, which complicates or excludes the use of solar energy. It may still be possible to use locally produced solar energy – even from the house of the EV-holder – but then the generated electricity has to be stored before being used for charging. Second, home-charging is only possible for house owners. City dwellers, which are usually regarded as the main adopters of EVs, predominantly live in apartments without a garage or parking lot. Hence, they cannot practice home-charging. Thus, it is a viable solution for suburb environments, but not for inhabitants of major cities. These issues partly contradict NPE assumptions. Inconsistencies between scenario assumptions might become clearer during the federal “showcases” (see below), so that some might be adjusted for in the following steps of the process. All in all, the group’s report superficially looks consistent, but more careful investigation highlights problems such as unclear timeframe for the grid to vehicle communication or partially contradicting assumptions such as charging at home and largely urban adopters of EVs. As aforementioned, a million EVs do not make the overhaul to smart grid technology necessary, but the interconnected nature of both systems makes timely planning and integration sensible.88 Thus, the shortcomings of the report are not a serious obstacle to achieving the policy aim. Nevertheless, it is necessary to highlight these flaws, because it demonstrates that there is room for improvement. The results from the fourth working group are easily summerised: legal competence for the necessary certification of new vehicle types like EVs is held by BMVBS and its subsidiary agencies. It is generally possible to certify all vehicle types as fit for normal traffic, except FCEVs which are not buses or standard vehicles, namely two-, three- and light four-wheelers. The reason is that EU requirements regard the storage methods and tanks of these small and hence fragile vehicles as having an insufficient security level (NPE WG 4 2010: 7). Another issue is that several components such as LiIon traction batteries, fuel cells and capacitors are subject to international regulation for the transport of hazardous goods. Towards this issue, the position of the working group is clear: an EU or even global standard regarding labeling, packaging and documentation is desirable as it facilitates trade and exports. Industry calls for exempting LiIon traction batteries from hazardous good labeling and requirements are outright
88 Renewable energy use and grid build-up are controversial issues, because they are not syncronised and there are signs of oversubsidisation via guaranteed feed-in-tariffs that drive electricity rates up. The former issue is related to federalism: planning of energy infrastructure is a Länder responsibility, thus federal government can try to coordinate, but lacks jurisdiction to draw up plans for the whole nation. As Länder largely seek to strengthen generation in their states, finding political solutions will be difficult.
134 dismissed (ibid: 18): hazardous accident potential is given, so that experts rank public security interest higher than companies’ profit motives. Further, today’s starter batteries are labeled in the exact same way and this did not inhibit utilisation in ICEVs. Hence, industry reasoning that EVs might appear dangerous to customers is strictly opposed by the experts. The report also points out that all possible issues (ibid: 8-12) are already discussed in EU or even EU-US-Japanese working groups in parallel, thus additional need for standardisation and certification appears unnecessary (ibid: 13). Judging from the report, finding methods of legal certification is regarded as a largely judicial issue, which does not pose a significant obstacle in the EV development and commercialisation process. International standards appear to be under negotiation and follow a standard procedure mode, where political influence might be more harmful than useful, so that it should be left to technical and legal experts. In comparison to all other working group reports, the field of certification and standards can be regarded as the least problematic. The fifth working group deals with a more challenging subject. Materials and recycling are broken down into four categories: battery materials, light-weight construction materials, resource security and recycling concept as well as materials for other key components such as electric machine or heat management. Regarding battery materials, the group points out several important aspects of international competition (NPE WG5 2010: 6): Asian countries like Japan, Korea, and China are far ahead in consumer and HEV-specific batteries. It is found that the scenario for PHEVs and BPEVs is different, meaning that there is a chance to catch up to these countries if German automobile and electro-chemical industries act swiftly. Further, it is pointed out that Germany should already research on and plan for the future industrialisation of post-LiIon batteries to capitalise on its current strong research position in this field. As aforementioned, this position is shared by the second working group. The group also provides a research roadmap, which largely is a consequence of the findings (ibid: 7): regarding first and second generation LiIon batteries, the plan only calls for optimisation of materials until 2014. This reflects the fact that Asian countries are far ahead in production know-how and technology, thus there is fairly little that can be achieved in Germany. For third generation LiIon batteries, the agenda is more encompassing: among the proposed steps, development of high voltage cathodes, as well as separators and electrolytes stable under high voltage conditions is most critical until 2014. Follow-up steps proposed for completion until 2017 and 2020 can be categorised under the point development of processes for mass production. Fourth generation (post-LiIon) batteries have the most detailed research agenda, which can be summerised as basic R&D up until 2014, mixture of basic and applied R&D until 2017 and development of prototypes until 2020. The group also highlands that mass production of this type cannot be expected before 2025. This roadmap demonstrates that there is little to nothing that can be done
135 regarding competitiveness in first and second generation batteries. It appears that the only realistic chance is to concentrate on the development of third and fourth generation batteries to overcome the current weakness at a later point. The working group is explicitly calling for government support due to international competition: “In the USA, China [and] Japan, there are promotion programs of differing content and financial endowment, partly in the billions, for the next generation of electric vehicles. To make Germany attractive in international competition, the build-up of the whole battery process chain (from the production of materials over the cell components and cells to cell packs and batteries) must be expedited. To this end, incentives from the state side and the combination of competences and efforts of all involved [industrial] sectors are necessary.” (ibid) (author’s translation) Following this open plea for state support and coordination, the experts recommend inter-industrial consortia which cooperate with science institutes under the guidance of a state-organised agency like NOW. This basically means that the existing structure for hydrogen and fuel cell research activities should be duplicated for battery and materials R&D. It is critical to point out that an expert forum that largely represents industry is calling for state intervention. Seemingly, the state is needed to coordinate technology development in this particular field, because German industry did not engage in inter-industry alliances and is lacking behind. Light-weight construction has similar significance for the future automobile development and production. The working group stresses that the relatively higher weight of EVs, which is caused by the batteries, should be countered through weight reduction of other vehicle parts. Experts point out that it is sensible to plan EVs as integrated systems, i.e. that interdependencies between car components should be taken into account during vehicle development. Thus, components should not be improved on their own, but it should also be checked how the impact on other components evolves. First, metals, synthetic materials and combinations of those – so-called multi-material design – should all be used to achieve the aim of lighter cars (ibid: 10). Indeed, there is research at the University of Kassel on utilising wood-based combinations in automobile construction to achieve more weight reduction (Spiegel online, 19.06.2012). At the moment, it is unclear if the investigation will find that those materials are feasible for mass production. However, this example shows that research with innovative ideas is conducted to reduce weight. Another issue that is pointed out is temperature management (NPE WG 5 2010: 11). Just as during the Rügen trial, temperature regulation systems are still major electricity consumers in all cars. Use of temperature management systems effectively reduces the range of EVs and hence, it is reasonable to avoid usage. Reducing the need for temperature regulation can be achieved through various materials such as foams for insulation or colours and finishes that are able to absorb or reflect ultra-violet radiation. Results from such research are not
136 exclusively beneficial to EVs, but that they could be utilised for all vehicles as reduced weight and electricity use would reduce the gasoline consumption of ICEVs. Further, an analysis of German competitiveness is provided. Germany is regarded as a leading nation in material development and production. This assessment is somewhat qualified by the finding that multi-material design is a big challenge for many suppliers, especially SMEs. These firms are often highly specialised in only one production process or material grade, which is why the working group proposes more joined development and production centers to facilitate inter-firm learning. Regarding the use of weight reducing materials, the know-how is regarded as advanced by international standards. However, currently the use is limited to areas which are non-critical for vehicle safety. Also, the car industry still favours conventional construction with metal materials, because these materials and related production processes have lower costs than synthetic or combined materials and processes. Regarding batteries, Germany is leading in recycling and dismantling technologies, which should be integrated into future system-based research. The weakest point is found in glass-fiber and carbon-fiber reinforced materials, where Germany has a solid scientific base, but lacks behind Japan and the USA in automation. As automation is essential for automobile assembly, closing this gap is regarded as crucial. In its roadmap, the group highlights that it regards the shift from project-based research to system-based research as critical (ibid: 15): experts even state that isolated projects without a system context are not sensible for efficient EV development as the traditional practice of isolated component improvement is regarded as too ineffective. It can be argued that the weakness in battery technology is the main reason for this approach. German automobile industry may have to engage EVs from a systematic, inter-disciplinary approach, because it is complicated to catch up in fields like battery and electric machine, where especially the Japanese rivals are several years ahead. Therefore, utilising technology from other fields may be a feasible way to catch-up. Moreover, recommended technologies indeed could be used for all vehicle types, which allows greater economies of scale and reduces the risk of investigating a too specific development trajectory. Finally, not being type-specific means that no matter which particular vehicles will be most common – (P)HEVs, BPEVs, FCEVs or more fuel efficient ICEVs – the developed technologic solutions could be used. The third subitem of resource security and recycling can be summerised as follows: as a resource poor country, Germany is dependent of imports and to reduce dependency, it should practice recycling as much as possible. Regarding raw materials most critical for EVs, the report arrives at specific conclusions (ibid: 18). Lithium supply is regarded as unproblematic. Regarding rare earths, especially neodymium, experts point out that the position of China as a dominating exporter is much more problematic. As demonstrated in the past, the country may choose to stop or limit exports of this key resource and thus, all non-Chinese competitors could
137 face supply problems. The group highlights that a single new discovery outside the PRC could change the picture completely, but it appears to be wishful thinking instead of a strategic solution. For cobalt, the picture is again different. Reserves are sufficient, but more than half of the sources are in politically unstable countries like the Democratic Republic of Congo, which affects availability. A possible issue is that the PRC is backing SOEs and domestic private companies in acquiring cobalt mines in Africa, so that supply for non-Chinese firms again could become a problem. All the findings hint to the conclusion that recycling is crucial to reliable resource supply. The report further highlights that 25-30% of demand could already be covered through recycling, but that a integrated value chain and business model should be developed to minimise losses, and thus, the creation of a collection system is recommended. These issues must be mainly solved by industries, but the group identifies regulation and collection system as issues where political support could be beneficial. The section on other materials (ibid: 23-26) is related to all above items. By and large, it should be investigated if other materials could replace materials that are currently in use, to make future cars lighter, less electricity consuming and independent from scarce resources. The sixth working group on education and qualification is mirroring most issues described in the above reports from the human resource perspective. The general premise of the working group is that Germany is already lacking and will experience even severer shortage of qualified personnel for the EV industry. This assumption covers both, white and blue collar workers. It is stressed that Germany should train and qualify its national workforce, because although international – especially East-Asian – academic experts are available, it is questionable if they are willing to work in Germany (NPE WG 6 2010: 5f.).89 The experts were divided into two subgroups, covering academic and vocational training. In the academic realm, four key disciplines were identified, namely electric and information technology, vehicle technology, machinery engineering and electro-chemistry. The working group stresses that academic research and related competence development must proceed vertically and horizontally (ibid: 8). In this context, vertical means that the mentioned disciplines must acquire a deeper understanding in their subject area and horizontal means that interdisciplinary connections between the subjects must be deepened. Established divisions are regarded as inhibiting EV purpose design. In unison with the fifth working group, the basic premise is that EVs require a different design and development approach, i.e. systematic integration of a wider range of components, than ICEVs. Further, the report points out that despite the Bologna Process still lengthy academic education requires prompt measures. As
89 Under the Schröder administration, Germany tried to attract international IT experts to compensate for short supply in the labour market. The result was insufficient and thus, there is general skepticism about German attractiveness for foreign workers. Although the situation could be addressed by a more liberal immigration policy, this currently appears too sensitive to put it on the political agenda.
138 academic training under the new system takes at least three years until completion, the timely development of electromobility curricula is central to educate a specialised workforce. Here, the greatest responsibility is assigned to universities: developing and implementing relevant – preferably interdisciplinary – curricula is the task of faculties and chairs. However, the groups also stresses that job opportunities for graduates, funding from public and private sources as well as intensive cooperation between chairs and private firms will facilitate the shift. Already existing specialisation on electro-mobility (e.g. RWTH Aachen University and Technical University Munich) should be intensified to facilitate the shift towards specific academic training. While automobile related academia-industry cooperation is traditionally strong, the group emphasises that such links are only minimal in the field of electro-chemistry (ibid: 11). There are several reasons for this situation: first, the German chemical industry almost completely ended battery production, so that it cannot absorb many graduates. Second, with the noted exception of fuel cell development, electro-chemical research did not receive much public funding after the 1980s. Thus, the experts conclude that many areas critical for traction batteries are insufficiently covered by scientific research and education. Exactly like working groups two and five, the identification of electro-chemistry as the Achill’s heel of German EV development is highlighted. It is concluded that only a joint national effort may overcome this particular weakness. To be precise, universities must intensify research and education, the state must scale up funding in this scientific field and private firms should give research funds, cooperate in research projects and give employment to graduates. The report also states that an analysis of international competition between universities, which covered Italy (Politecnico di Torino and Politecnico di Milano), Japan (Chiba University) and the USA (Ohio State University), shows that there is no fundamental disadvantage and that all tertiary education institutions go through similar transformations to address EV-specific problems academically (NPE WG 6 2010: 12). It is also found that planned state investment in these countries might make them pull ahead of Germany. The main problem with this information is that it neither provides any specific data nor insights into the method of investigation. Hence, the result cannot be tested independently and the reasoning cannot be comprehended as detailed information is missing. Concerning vocatinal training, the working group identifies branches crucial for successful domestic development and production of EVs. Identified branches are electrical engineering and electronics industry, vehicle technology, machinery and plant engineering as well as vehicle and electronics craftsmanship (ibid: 5). Surprisingly, no need for vocational chemical industry training is mentioned. The reason seems to be that the automobile industry wants to absorb battery and higher voltage car-internal grid know-how and integrate it into existing training courses. The group states that a number of 20 existing occupational profiles in the metal and
139 electronics industry are regarded as meeting the criteria for electro-mobility related profiles either comprehensively or at least essentially (ibid: 14). This means that only minor adjustments are regarded as necessary to qualify the future workforce. Further, experts recommend training active workers in relevant aspects to utilise their potential. Building on their findings, the group recommends the following steps to be taken: holding of a national conference on specialised academic and vocational training for electromobility with all relevant stakeholders like BMBF, BMWi, university professors, vocational trainers, vocational school teachers and professional associations in the first half of 2011. As many actors are involved in academic and vocational training in Germany, this very broad approach is chosen to ensure a result that is accepted by all participants. The conference should work out a roadmap for the creation or adaption of academic and vocational training profiles. The roadmap should be implemented until 2015 to timely address the prevailing issues. For academic training, the group recommends the creation of new chairs for electro-chemistry, post-graduate training opportunities and academia-industry cooperation in pre-competition stage. In vocation training, promotion of new job profiles and retraining of active workers are proposed. To conclude, the sixth working group is mostly positive about adjusting academic and vocational training. Especially vocational training is seen as unproblematic. In the academic field, the group underlines findings of the other groups that electro-chemistry is Germany’s prime weakness in international EV competition. An important explanation for this situation is provided: in the past, this discipline was marginalised in comparison to others and the only small domestic battery industry was not an attractive working place and career path for students. Thus, the greatest emphasis is on jointly overcoming this situation through intensive cooperation and increased research funding. Although the insight of the experts is definitely correct, it is questionable if the existing weakness in the academic field as well as the only limited industry size can be changed in the relatively short time-span until 2015. The problem appears not related to research quality, but on the scale of academic teaching: the currently small number of university researchers should not only support German companies through research, but also train a supposedly growing number of students. It must be doubted that the limited number of university experts can train the desired number of students. Even if the academic side can be strengthened and new chairs with electromobility relevant research and education can be established, the training under the new BA/MA system takes at least three years, which means that the first graduates may not be available before 2018. This skepticism is limited to academic training. As vocational training is co-developed by the state and industry and largely conducted inside the firms, the adoption of new knowledge and know-how into qualification portfolios is less lengthy and more pragmatic than in the academic framework. Since 2011, the recommended national conference on training and education has been held
140 annually and it appears that stakeholders all work towards the same direction. As a concrete outcome of the first conference BMBF sponsors a program at the University of Ulm that should create a common platform for electro-mobility teaching, teaching materials and standards for internships in the field (BMBF 2011). Summing up the results of all group reports, it is important to stress that the working groups do not work isolated from each other, but are sharing certain convictions about electromobility. Described issues like battery development, intensified academia-industry collaboration in pre-competition stages, focussed investment in post-LiIon batteries or the need for a more comprehensive development approach towards EVs are the best examples. Shared perspective is necessary to avoid contradicting recommendations or one-sided interpretation and political capture by vested interest groups. A major step forward is embodied by the second report of NPE. It contains the definition of a phase-model for developing into the global lead-market for electric mobility, which is basically a commercialisation scenario. According to this model, the first phase of market preparation lasts until 2014. From 2014 to 2017, the market ramp-up phase follows and the time from 2017 to 2020 is the beginning mass market (NPE 2011: 5). This model impacts and partly structures decisions and support measures as it gives a clear idea until which time necessary developments will have to be completed if the aim of a million electric vehicles should be reached until 2020. Hence, it provides a framework that gives direction to all participants. It also highlights which problems have to be solved to enable commercialisation. The second report also highlights and qualifies the aims of the Merkel administration. First, it stresses that the actual composition of EVs will be containing various types, concretely 45% BPEVs, 50% PHEVs and REEVs and 5% commercial PHEVs are forecasted (ibid: 31). This is important as the German public, which judging on the publications also includes most media, tends to regard the plan as aiming for BPEVs only. Moreover, this shows that strangely HEVs are not considered in this scenario. This appears to be due to the fact that NEP focuses support on BPEVs, PHEVs, and REEVs but excludes HEVs (Government of Germany 2009: 7). Thus, the report clarifies that aforementioned leap-frogging means omitting HEVs and aiming for the commercialisation of other subtypes. Second, the report points out that the aim of 1 million EVs will not be reached if incentives are not provided. The NPE experts estimate that without incentives, the reachable sales will be only 450.000 units (NPE 2011: 43). Building on this scenario, the NPE formulates monetary and non-monetary incentives, which should enable 1 million EV sales by 2020. The possibility to use bus and taxi lanes with EVs and privileged parking areas (with and without charging points) in inner cities for users have been proposed as non-monetary incentives (ibid: 44f.). The following monetary incentives have been formulated (ibid: 45-48): a change of the compensation rules for privately used company
141 cars is regarded as central. Currently, the private use of a company car is subject to taxation as it is regarded as a non-cash benefit of the employee. The base indicator for taxation is the list price of the vehicle. Under the present condition of higher prices of all alternative vehicle types against conventional ICEVs, the employees would have to pay more taxes if their firm provides them with an EV as company car. Thus, NPE recommends a modification of the base indicator for EVs to treat EVs and ICEVs in the same way. For companies, NPEs is suggesting a step in a similar direction. Depreciation for EVs in business use should be faster. Concretely, writing-off 50% of acquisition cost in the first year from 2012 is proposed. This higher depreciation can be used for tax deferral by companies. Further, NPE suggests that the effect should be reviewed at the end of 2013 to allow an evaluation and derived policy adjustment. As another measure special interest loans (2.5% interest) up to € 30.000 for private customers from the state-owned KfW is proposed. The final proposal is the direct subsidisation for EV purchase. As reference indicator the storage capacity of the battery is used. Private customers should get 150€/kWh and businesses 100€/kWh up until a maximum of 20kWh. This means that the maximum incentive would be € 3.000 for private and € 2.000 for business customers, which is considerably lower than in other countries like Japan. Again, NPE proposes to implement this measure from 2013 and review the effects in autumn of that year to allow evidence-based policy adjustment. Aside from these proposed measures, NPE also put other issues on its own and the government’s agenda. First, the 2012 initiated variable registration plate was considered as being able to promote EVs. The variable registration plate is a plate that can be used by the same owner for two cars. The main plate which is identifying the holder of the vehicles can be placed on different cars, while the minor plates that identify the actual car are unchangeable. The main idea behind the variable registration plate is to allow lower tax and insurance cost. In the view of NPE, this also promotes EVs due to reduced overall operation cost and the possibility to use EVs as car for everyday short-distance transport, while ICEVs are satisfying the need for long-range transport. Second, NPE states that actors on the different state levels, federal, state and municipal, should consider procurement programs that include EVs. The state could support an initial niche market and set a signal that it supports the development of alternative mobility. Third, NPE stated that it will investigate support measures for commercial EVs for its subsequent report of 2012. As a reaction, the Merkel administration announced that company car regulations will be adjusted, but opposed direct subsidisation. So far, even the adjustment has not been implemented (Tagesspiegel, 29.05.2013), meaning that the administration is pumping funds into R&D and demonstration but does not take steps to reduce the incremental price of EVs. Although exceptions like the aforementioned wrecking bonus occurred in the past, the general dislike for direct subsidisation is related to ordoliberalism, because in this perspective direct
142 subsidisation runs counter to the ideal of a non-interfering and impartial state. The non-monetary proposals are subject to municipal regulation, thus federal and Länder action is impossible. In the third report, NPE again called for the complete adoption of proposed measures to reach 1 million BPEVs in 2020. The chosen formulation in the executive summery is somewhat cryptic, but nevertheless clear: “A deviation from the proposed support measures for market development or their delay could directly result in a reduction of reachable sales in Germany. Additional hurdles for market development of electro-mobility like too narrowly composed measurement criteria further reduce the number of [electric] vehicles. From the perspective of NPE, monetary and non-monetary incentives still must be implemented consequently.” (NPE 2012: 5) (author’s translation) In plain language, this means that NPE experts are urging the federal government to adopt all measures, including consumer subsidies, in order to achieve the goal. In the actual report, NPE is estimating that the currently adopted measures are only going to increase the forecasted number of under 500.000 EVs by 10-20% (ibid: 47), which would result in a number of 600.000 EVs at best. However, the experts open a backdoor for the political decision-makers by re-emphasising the importance of financial incentives, but highlighting a specific time of possessing critical importance: “Correspondent to the logic of the NPE phase-model, it can be assumed that the phase of market preparation (until 2014), limited effectiveness of monetary incentives is given due to the high TCO [total cost of ownership] gap and only little range of electric vehicles in some segments. In the phase of market ramp-up (2014-2017), a significantly reduced TCO gap and an increasing range of electric vehicles can be anticipated. Therefore, market incentives again should be critically checked prior to this phase. With the beginning mass market (2017-2020), an increasingly self-sustaining market should allow phasing out strong incentives.” (ibid) (author’s translation) This shows that NPE still regards incentives as critical for reaching the target number, while identifying the timeframe when these incentives are going to be presumably most effective. Recommending a renewed consideration at a later time also expresses the political nature of the problem. NPE wants the German state to support EV commercialisation by subsidies, but cannot openly attack political decision-makers. This has three main reasons: First, the participants – and especially industries – need long-term cooperation with the state. Second, if policies are not adopted, it partly highlights the limited impact of NPE or its impotence in policy-making altogether. Third, the current non-subsidisation approach is not a major concern for the German car-makers as the number of available German EVs is still limited. However,
143 NPE points out at the beginning of the third report that German OEMs are scheduling the release of 15 electrified models (ibid: 3). Thus, until these vehicles are not on sale, current policy is not hurting German assemblers’ interest. Hence, opening this backdoor of delayed subsidisation is not surprising, but rather a typical outcome of a political counseling process, which includes vested business interest. This interpretation can be backed up by the following statement of BMVBS undersecretary of state Bomba: “If I take a look around, I definitely cannot buy a German [electric] vehicle at the moment.” (HZwei, 01/2012: 31) (author’s translation) It can be concluded that the German government is not going to enact subsidisation before affordable German EVs90 are available, because especially Japanese and French OEMs would reap the benefits. Overall, the reports reveal that the German OEMs are lacking behind, mainly due to no domestic battery producers and not having entered into mass production. Many improvements indeed appear on experiences gained during production, so that the currently slowly beginning commercialisation (see: 4.6.9-4.6.12) is an important step to begin the attempted catch-up. A good example for interweaved federal and regional policies toward EVs is the BMVBS contest “showcase electromobility” (Schaufenster Elektromobilität), in which 23 participants competed to become a model region. Originally, the competition was designed to designate three to five regions as a national showcase project, but in the end, four regions were awarded and will receive federal funding. The four model regions will be receiving federal funds up to € 50 million (out of a total of € 180 million) over three years, from 2013 to 2015 (BMVBS 2012). For this purpose, single or teams of Bundesländer, sometimes in cooperation with OEMs, participated in the competition and presented their showcase concepts, which then were evaluated by a jury of 13 experts 91 from industry associations, academia, traffic and environmental NGOs. The competing Länder choose different organisational forms to participate in the competition, sometimes they participated directly, sometimes indirectly through a public agency or by supporting an industry consortium or metropolitan area.92 The following states participated: 1. Baden-Württemberg
90 At the time Bomba made his statement, the only available (excluding the leased Mini E) EVs in Germany were BMW Active Hybrid 7 (minimum price: € 105.900), Mercedes S400 Blue Hybrid (€ 85.323), Porsche Cayenne S (€ 78.636) and VW Touareg Hybrid (€ 75.765). The prices indicate that these cars are a luxury that cannot be afforded by average consumers. Delivery of the Opel Ampera (€ 42.900) had just started. 91 The complete list of the jury members and their affiliation can be found under: http://www.bmu.de/files/pdfs/allgemein/application/pdf/schaufenster_elektromobilitaet_jury_bf.pdf 92 The complete list of participants and the respective organizational form are listed in the following BMVBS document: http://www.bmvbs.de/cae/servlet/contentblob/79390/publicationFile/52535/foerderbekanntmachung-scha ufenster-elektromobilitaet-schaufensterbewerbungen.pdf [10.04.2012]
144 2. Bavaria and Saxony 3. Berlin and Brandenburg 4. Hamburg 5. Hessia 6. Lower Saxony 7. Nordrhine-Westphalia 8. Saarland 9. Thüringen and Saxony-Anhalt First, it is important to point out that 12 out of 16 regional states participated in the competition. Second, out of the total number of 23 competitors, it is noteworthy that all four winners included at least one Bundesland. The winners were Baden-Württemberg, Berlin and Brandenburg, Lower Saxony as well as Bavaria and Saxony. It must also be highlighted that the winners are the leading German car producers’ home states: Baden-Württemberg is the home of Daimler, Porsche and the world’s largest supplier Bosch. While Bavaria hosts BMW and Audi, Saxony is home of two VW assembly and one engine factory. Lower Saxony is the place of VW’s headquarter and three main domestic assembly plants. Berlin and Brandenburg do not host significant automobile producers, but since Berlin is the federal capital, it can be assumed that it was partly chosen for image reasons. Even prior to the official decision, news reports found that “the [selection of the] capital Berlin is considered as a given” (HAZ, 2012: 11). Apart from image considerations, the main reason for the inclusion of Berlin and Brandenburg is surely that the capital is by far the biggest German municipality, with around 3 million inhabitants. As BPEVs are mainly regarded as urban vehicles for the foreseeable future, it is necessary to demonstrate and test the technology under realistic conditions, which can be found in Berlin. Further, German cities are small if compared to other metropolitan areas in Europe or Asia. As the aim of industry and politicians alike is to create competitive products for export, it is critical to include the largest city Berlin as a showcase for electric vehicles made in Germany. It is remarkable that Hessia, home of Opel was not awarded. Keeping in mind that five regions could have been appointed as national showcases, so that Hessia and Opel could have been included, it is the more striking that it was not assigned. This is all the more significant as Opel is producing the REEV Ampera (identical with the Chevrolet Volt), the first modern German car that is able to travel short distances purely electric. The true reasons for the decision are unknown, but at least some issues related to Opel must be taken into consideration: first, Opel is fully-owned by GM. Second, the company is in economic difficulties and GM announced plans to close two plants in Europe, so that a lot of German employees are in danger of losing their
145 jobs.93 Third, GM does not allow Opel to enter the booming emerging markets like China or Brazil, which are reserved for GM’s Chevrolet brand, so that the company is limited to the increasingly difficult European market94 (Reuters Deutschland, 23.03.2012). Further, a German news magazine reported that GM drafted a strategy paper, which stated that the company intends to shift production from high-wage countries like the USA, the UK and Germany to low-wage countries such as Poland, Russia, China, India, Mexico and Brazil (Spiegel online, 26.03.2012). Under these circumstances, it is possible that the decision was directed against GM and against supporting Opel, which seems to have been given up by GM already, at least as a largely German manufacturer. Although it may be argued that the federal administration could have supported the struggling OEM by putting more emphasis on electric mobility and the German pioneer in this field, this line of reasoning must be doubted. When Opel was close to bankruptcy in 2009, the federal administration decided against state support to rescue the company, because Chancellor Merkel and then BMWi Minister Karl Theodor zu Guttenberg (CSU) did not want to interfere with market processes. In their view, companies that are failing in competition should not be kept alive artificially through state support or even a bail out like the Obama administration orchestrated to rescue GM and Chrysler. Thus, it is very well possible to see the decision as a continuation with this approach. Moreover, this position is in line with the traditional German ordoliberal economic policy. Hence, the decision which OEM gets chosen in the competition is highly political. Prior to the decision, at an interview at e-mobil BW, the state agency of Baden-Württemberg coordinating all activities related to EVs, the author asked the agency’s head Franz Loogen if he thinks that the fact that Baden-Württemberg has already successfully won in a cluster competition of BMBF helps the then on-going BMVBS competition, he stated: “We are the only region in Germany who is able to research, industrialise and produce those products and who is also able to coordinate traffic with all our IT systems in a very modern way. We don’t really know whether we will be successful in this second [BMVBS] showcase competition. If you consider only the hard facts, then we are the only region who can bring all those topics into a loop: industrialising, demonstrating, and feed-backing demonstration into production. On the other hand, we don’t know if we will be successful a second time, because with the eyes of the state of Germany you want to support every region a bit.” (14.02.2012)
93 To be precise, at the time the decision was made, it was rumoured but not clear that the Bochum plant would be closed down. GM announced that Bochum would be closed after BMVBS decision. Therefore, only the rumours can have influenced the decision, not the subsequent closure. 94 The problem of Opel and its British sister-brand Vauxhaul appears to be structural. GM’s plans would result in a 30% reduction of production capacity, which clearly indicates lack of demand. German Metal Workers Union representatives have urged GM to open markets currently blocked for exports which would be the only realistic way to utilise current overcapacity. However, this appears unlikely as GM is seeking to strengthen Chevrolet as its main brand on the global scale.
146 This statement demonstrates that the federal level is not purely considering actual competences, but also has an interest to spur competition between regions and the respective OEMs as “regional champions”. As stated before, this view can be partly verified through the decision, which excluded Hessia and also Nordrhine-Westphalia, where Bochum is located, the Opel plant most likely to be closed by GM and also hosts Ford’s German factories as well as the Saarland, which teamed up with the French OEM Peugeot. Oversimplifying, it is possible to say that the federal ministry’s jury chose the regions with the currently most successful German automobile producers and the capital over regions with struggling or foreign manufacturers. This view can be backed up by comments of political decision-makers. BMVBS Minister Peter Ramsauer (CSU) commented the decision: “It remains true: at least one million EVs should be on our streets in 2020. More than half of those vehicles should be German products.” (BMVBS 2012) (author’s translation) In an interview in late 2011, BMVBS undersecretary of state Rainer Bomba (CDU) also stated this aim (HZwei, 01/2012: 31). This hints that the German government does not intend to fall behind other major automobile producing countries, but aims to secure a major share in the future car technologies and sales for German OEMs. This is also consistent with the non-subsidy policy and the critical remarks from Erwin Huber regarding EU emission standards. Two examples should be highlighted to demonstrate that there are also significant differences between Länder in dealing with the anticipated shift towards electric mobility. The state of Baden-Württemberg chose to found a state agency, called e-mobil BW, whose sole purpose is the furthering the development away from ICEVs towards EVs. The agency has the judicial form of a limited liability company, but it is fully-owned by Baden-Württemberg. Such forms are often chosen to avoid creating bureaucratic agencies with a task that appears to be timely limited and to not extend the number of bureaucrats. In the case of Lower Saxony, the model is somewhat different. The state and different societies that represent industry, science and municipalities each hold stakes in a limited liability company called Metropolregion Hannover Braunschweig Göttingen Wolfsburg. The name means metropolitan region and includes the names of the four major cities involved. These four municipalities own 46% of the company, industry and science societies 23% respectively and the state of Lower Saxony 8%. Moreover, the Metropolregion is engaged in many different regional projects, meaning that it is not purely focussed on promoting EVs. Although it is currently Metropolregion’s main project, there are many other subjects, ranging from industrial competitiveness to cultural events. Comparing the approaches of Lower Saxony and Baden-Württemberg, one can state that they are both engaged in networking, but using different methods. The e-mobil BW is one central
147 actor, who mainly works in three ways. First and foremost, the agency is cooperatively developing plans with companies in the region how projects like the showcase competition can be realised and how state and companies can try to access federal and EU funding for projects. This means that they are furthering regional interests by cooperating and assisting regional firms in future-oriented development. Second, the agency publishes reports that are meant to facilitate change by informing different target groups. Some of the publications are best described as guidebooks, i.e. its publication on light weight construction in Baden-Württemberg introduces all universities and research institutes that have competences in this area (e-mobil BW 2012). Before the profiles and contact data are displayed, eleven thematically-ordered lists indicate which science performers have competences in the particular field. Thus, it is easy for companies to find science institutions in their field of interest without having to read the whole publication. Another publication is especially directed at local-level decision makers to inform them about possibilities to promote electromobility in their municipalities (e-mobil BW/IAW 2011). Yet another study is investigating IT- and energy-related issues to the anticipated shift towards electromobility (e-mobil BW/Fraunhofer IAO 2010). The study has been jointly published by e-mobil BW and the Fraunhofer Institute of Industrial Engineering and Organiszation (Fraunhofer IAO). It should be pointed out that the targeted audience of this report is far less clear than in the above examples: it appears to be mainly directed at SMEs, which do not have an own strategic planning division like MNCs, but which nevertheless are going to be affected by the anticipated shift towards electric mobility. Core of the study is to investigate several aspects related to electromobility such as changing energy infrastructure, increasing intermodality and fleet usage and the consequences for future business models. Thus, one of the main findings of the study is that EVs require a different infrastructure and intelligent, IT-based management systems. Building on these results, the study concludes that there are many possible business applications of IT and energy technology that could be developed and commercialised in Baden-Württemberg. Although it is not explicitly formulated in the study, the findings also mean that automobile companies, energy and IT firms have to collaborate or that automobile OEMs and tier 1 suppliers have to diversify their operations to realise the potentials. If companies just stick to their respective established business models, the result is most likely unsatisfactory. In other cases, the intended audience is openly mentioned and the range of groups can be fairly diverse. A good example is a study on the status of academic training in the field of sustainable mobility in Germany, which was conducted by the agency together with Fraunhofer IAO and PricewaterhouseCoopers: “The study enables companies to get an overview over the German tertiary education range in the field of sustainable mobility without having to investigate individual institutions. This eases the recruitment process and enhances options for the selection of academically trained
148 personnel. Academies receive new clues through the investigation of company requirements to what extent their range could be geared to become even more practical. Students and high school graduates, who are interested in sustainable mobility, get an encompassing overview over the variety of degree programs. Moreover, this study contains recommendations how policy can contribute to a more effective organisation of information and communication processes between academia and firms.” (e-mobil BW et al. 2012: 6f.) (author’s translation) Further, this agency is cooperating with local organisations like the Stuttgart Region Economic Development Corporation (Wirtschaftförderung Region Stuttgart, WRS), which is a company owned by the city of Stuttgart and five neighbouring administrative districts, that engages in networking and supports start-up companies to establish themselves in the region. Similarly to the activities of e-mobil BW, this regional actor published a bilingual (German-English) information brochure that introduces companies from the region of Stuttgart, which have relevant electromobility competences (WRS 2011). According to the credits of this brochure, the publication has been published with the support of e-mobil BW and the federal BMVBS and under the coordination of the National Organisation Hydrogen and Fuel Cell Technology (Nationale Organisation Wasserstoff- und Brennstoffzellentechnologie; NOW). This example – as well as the two above – demonstrates that actors from different organisational levels and backgrounds may work together and support each other in promoting a common goal, in this case EVs. Third, its website is used to centralise information that is interesting for companies active or interested in the topic of EVs. The website not only informs about regional or national conferences or industry fairs, it is also providing information to other sources of information. One concrete example is information about the JETRO New Energy Business Meeting in Osaka 2013, including how interested companies can apply to JETRO to cover their expenses (e-mobil website, 23.05.2012). Lower Saxony’s approach is different. By assembling interested firms, science institutions and municipalities in different societies first and then bringing them all together under the roof of a managing company, a network structure was created. This prior existing network is open to new members and adopted the subject of electric mobility. Now, this topic is driven forward by Metropolregion among others. The Metropolregion had been active in the fields of energy and mobility before the federal level initiated the “showcase” competition. In an interview with Gerold Leppa, head of Metropolregion, he stated that VW approached Metropolregion and suggested that it could participate in the competition. This idea was in turn presented to the government of Lower Saxony, which supported the plan. In this particular case, regional policy-makers are reacting to business interest. Thus, it is a case of bottom-up policy-making at the regional level. The information is interesting as it illustrates that there are various channels
149 between the state and private enterprises. Despite close relations betwen VW and Lower Saxony’s administration, the company approached Metropolregion first. Only then its ideas were presented to the state government. Thus, although direct high-level planning between VW and Lower Saxony’s Prime Minister – as aforementioned member of VW’s supervisory board – could easily be made, the OEM employed a bottom-up approach through the actor it wanted to perform the task. Metropolregion is combining related issues like the parallel shift towards renewable energy in the region to create a coherent framework and vision for the future of the region. This reginoal vision is much more ambitious than official federal plans: declared aim is to use 100% renewable energies for electricity, heating and transportation by 2050 (Metropolregion 2011: 3). This means that the already existing network and its members practice a self-guided approach with self-set aims, while in the case of Baden-Württemberg a central actor seeks to create a network to promote a specific topic deemed critical for the future development of the regional state. From the description of Leppa, it can indeed be concluded that Metropolregion functions bottom-up. He pointed out that while this facilitates certain processes, there are also weaknesses. This highlights that both, centralised top-down and bottom-up approaches, have specific strengths and weaknesses, which means that it cannot be decided which is more appropriate. For the specific case, however, the regional bottom-up is seen as benefitial: “As the main aim of the project is facilitating the acceptance of electro-mobility, the Metropolregion has structural advantages like public responsiveness due to interaction with citizens or local [i.e. municipal] and regional bureaucratic approval processes, which are contributing to attaining this goal.” (Gerold Leppa, 28.12.2012) However, it was also clearly stated that other participating regions, especially Berlin and Brandenburg as well as Baden-Württemberg were in the lead due to their prior participation in the BMBF electromobility project during the interview. Not only time itself, but rather issues like setting-up organisational structures and establishing patterns of interaction between involved political and economic actors make Lower Saxony lagging behind those regions. This highlights another aspect of regional competition: Länder that are able to successfully compete early on gain structural advantages that are difficult to compensate for others. Last, but not least, it appears that involved individuals like the interviewee are very well informed about the situation of companies in the region: Leppa stated that Continental would supply important components to Renault. The author did not have this information and unsuccessfully tried to verify it afterwards with publicly available sources. However, around three months after the interview, press articles reported that Renault’s latest BPEV, dubbed Zoe, is utilising an electric machine developed by Continental (Spiegel online, 23.03.2013). Apparently, public actors gain
150 insights into firm strategies and plannings through the bottom-up process, which should enable them to support firms adequately.
4.5 Fuel cell electric vehicles 4.5.1 Short history of fuel cell electric vehicles Although there are some similarities between the historic development of BPEVs and FCEVs, there are distinct differences. The oldest and quite simple version of a fuel cell was created in 1802, but the working principle was studied by Christian Friedrich Schönbein between 1829 to 1868 (Stambouli/Traversa 2002: 437) while most textbooks ascribe fuel cell development to Sir William Grove´s invention in 1839 (Verspagen 2007: 103). For a long time, fuel cell development was not pursued. Only the utilisation in the NASA spaceflight missions of the Gemini and Apollo projects pulled attention to other possible applications (Anderson/Anderson 2005: 109f.). These were mainly energy generation and storage, while the integration into automobiles was not high on agenda. The world’s first FCEV was actually a tractor produced by US agricultural machinery specialist Allis-Chalmers in 1959. The first passenger FCEV was the GM Electrovan, which was presented in 1968. This vehicle was highly experimental as the FC system needed the complete space of the van and the FC only had a lifetime of a mere 1000 hours (Weider et al. 2004: 72). Only around the beginning of the 1990s, when global environmental problems got more pressing coinciding with the again surfacing issue of energy security, FCEVs became something like the embodiment of a clean energy future and a society based on hydrogen consumption instead of oil or coal. The history of fuel cells is a fine example for the distinction between invention and innovation: the initial development was not practically applied for a very long time and it can be claimed that innovation will occur when FCEVs or co-generation systems are commercialised. This illustrates that innovation is linked to diffusion and is not the same as invention.
4.5.2 Regarding fuel cells First, it is necessary to point out that fuel cells have a wide range of possible applications and their use it not limited to the automobile industry. In Japan, mobile and stationary fuel cells are today subsumed as “new energies” (shin enerugii), which are part of renewable energies (saiseikanou enerugii) (Fülop 2006: 147f.). Fuel cells can be utilised for decentralised power generation systems, but now they are also considered as a power source for portable devices like laptop computers and mobile phones (Kunimi 2007: 250f.). In fact, FCEVs were not considered as a viable solution up until the 1990s (Åhman 2003: 2). This is the same time when polymer electrolyte fuel cells (PEFCs) reached highest prominence of all fuel cell types. The interest in
151 PEFCs as a probable solution is due to their distinct features: PEFCs operate at around 80-90°C which is significantly lower than the other types of fuel cells (Stambouli/Traversa 2002: 6-8) - namely solid oxide (SOFC), molten carbonate (MCFC) and phosphoric acid (PAFC) - as well as higher energy density. These characteristics make PEFCs the most viable solution for automobile and portable applications. It should be added that there are two kinds of polymers that are applied in PEFCs (Bae et.al. 2001: 189f.) which also underlines that the technology is not yet fully standardised. Therefore, it is hard to attribute PEFC development only to transportation issues. Rather, promotion of FC technology is at the crossroads of energy, economic and environmental policies (Weidner et al. 2003: 1f.) All following issues are related to the political interest in PEFCs (Maeda 2003: 2-6): firstly, automobile regulations like the already discussed ZEV Mandate put pressure on automobile companies to come up with eco-friendly vehicles and FCEVs were becoming a possible resolution. Secondly, lack of domestic energy resources is an ongoing concern for Japan and to a lesser extent for Germany. In Japan, technology-intensive solutions like fuel cells are seen as a way out of energy dependency. This follows the logic that a constraint production factor, in this case oil, is substituted by an unconstraint one, namely technology (Watanabe 1999: 722-225). Thirdly, environmental concerns also influence the development and public interest in the technology. Last but not least it should be emphasised that fuel cells posses a multi- purpose usability so that a number of industries, e.g. automobile, electronics, chemical or energy take interest in development and commercialisation of PEFCs. This wide range of stakeholders could be seen as an advantage but also as a stumbling block. A large number of interested industries could provide a larger amount of R&D funds and a high number of applications – and therefore potentially high returns – could make the market more attractive for investors. However, similar to discussions around BPEV introduction, which is described as a technology shift (Schot et al. 1994: 1060-1064; Patchell 1999: 998-1000), this situation can also create problems: if there are many stakeholders with varying technological expertise, different interests and absence of clear development trajectories for components can also result in uncertainties. These are perceived as risks by many companies and this can lead to a standstill in development as no firm or industry is willing to make the first move. To prevent a scenario like that the role of the state is crucial: financial and infrastructural supports are important, but coordination of the different stakeholders and consensus-building is maybe even more relevant, because this communicative process mitigates the emergence of uncertainties.
4.5.3 Foresight on fuel cell technology in Japan As fuel cells can be utilised in various applications, it is necessary to investigate the history of the state-sponsored development and also to clarify when and why the technology was being
152 considered for transport applications. As pointed out earlier, Delphi method foresight surveys are an important source of information for policy-makers. The first Japanese Delphi survey of 1970/71 already proposed the development of fuel cells. However, it only examined the subject area of energy, not transportation issues (Cuhls 1998: 167f.; 207; 228). Fuel cells were regarded as promising in energy generation, especially as a possible storage for energy produced by solar power. At the same time, MITI released its vision for the 1970s and declared that Japan should shift from a resource-intensive to a knowledge-intensive industrial structure (Watanabe 1995: 240). Options of fuel cell technology utilisation continued to focus on energy generation systems. The fourth Japanese Delphi survey – being the first of these studies to be translated into English95 – discusses the future utilisation of fuel cells, but only for large-scale power generation or co-generation systems (IFTECH 1988: 130). This foresight survey does not contain any topic related to FCEVs. Alternatives discussed back then were alcohol or methanol fuel (ibid: 130; 202). The fifth survey is the first to include the topic of fuel cells in cars, but remains rather vague: “Widespread use of methanol and other fuel cells as highly efficient, environmentally safe, portable power sources, e.g. for electric vehicles.” (NISTEP 1993: 170) Further, the fifth Delphi survey discusses hydrogen motorcars (ibid), but its formulation is rather unspecific as FCEVs or ICEVs using hydrogen as an alternative fuel could be subsumed under this term. Together with the aforementioned topic, this indicates that technological development trajectories were unclear at the time of the fifth survey. First, hydrogen and methanol were regarded as fuel options. Indeed, FCEV prototypes often used methanol reformers to obtain the hydrogen needed, because methanol is easier to store and considered as safer than pure, compressed hydrogen. Second, the hydrogen utilisation method, either in FCEVs or in ICEVs, was not clarified. Also, the study suggests fuel cells for co-generation systems for residential power supply (ibid: 29; 166-169), which is in line with the original focus on power generation. Analysing the development of the subsequent series of surveys elucidates interesting aspects of the Japanese expertise in fuel cell as well as battery technology. First of all, the bulk of topics relating to these technologies are concentrated in the energy section of all reports. Sections dealing with environmental and transportation topics regularly refer to the connection between the areas (e.g.: NISTEP 2001: 371; 527). This may indicate that the most important reason for the political and scientific interest in those issues is energy, or more precisely energy scarcity in Japan and that environmental or transport problems are regarded as secondary. Further, it is possible to capture the technological progress through the changes that are made in topic formulation. Thus, while the fifth survey only mentions fuel cells as power source for
95 The Japanese Delphi survey consists of a report on the findings and a catalogue of the topics and questions respectively. While the report has been shortened, the catalogue has been completely translated.
153 automobiles (NISTEP 1993: 170), the next survey already links fuel cells and batteries for practical use in vehicles (NISTEP 1997: 262). Also, while the fifth report is rather vague, simply referring to fuel cells in general, the seventh survey states which type of fuel cell is perceived as suitable for the task (NISTEP 2001: 366). The eighth survey is more specific, because hydrogen energy systems and fuel cells are introduced as subsections of the energy chapter (NISTEP 2005: 350-353): MCFCs and SOFCs are linked to stationary and large-scale energy production while PEFCs could be applied to automobile or stationary use. The nineth survey, which is the most recent study, again became more specific: MCFC-based semi-GW power stations, SOFCs for stationary use, MCFC/SOFC combined systems, combined use of fuel cells and solar cells for residential use, stationary 1kW PEFC for JPY 500.000 at maximum as well as more recent applications like mobile FCs, enzyme reaction based FC, integrated coal gasification FC combined cycle (IGFC) (NISTEP 2010: 119-121). Regarding FCEV, the most important topics are PEFCs which operate between –40 and 120°C, have a life cycle of 15 years and possible production volume of a million units per year, construction of 5.000 hydrogen refilling stations and rare metal free FC (ibid: 122; 170). Being able to ascribe a particular type to a certain practical utilisation indicates that past R&D efforts have resulted in advanced insight in possibilities and limitations of different FC types. Such accumulated knowledge may allow decision-makers to focus on one certain type deemed to be in the national interest or critical in global competition. Further, specifying price ranges or power conversion rate indicates that certain types have reached a state of (near-)application. The wording reflects the growing maturation of the technology as the assessment shifts from technical innovation towards diffusion and the related issue of cost.
4.5.4 Promotion of fuel cell technology in Japan Research on FC technology was conducted at universities and research institutes from the 1950s (Nakui 2006: 489; 492), but it appears to have received little support and funding. However, these research institutes – organised under AIST – developed into FC research centres later on. More substantially government-funded R&D on fuel cells already started in the early 1970s: in May 1971, MITI set up an ecology research group, which purpose was to determine the impact of human and industrial activity on the environment and to come up with a way to limit those effects, especially with regard to an eco-friendly energy system. After drafting two research reports, the oil crisis hit the country and now MITI was even more interested in new, alternative energy sources as a resolution to the serious problem. Based on the proposals of the ecology research group, the Sunshine Program was initiated with the aim to substitute technology for energy, including hydrogen energy (Watanabe 1995: 240-242). Thus, fuel cells and hydrogen energy were among the targeted technologies of this
154 research project, but renewable energies, especially solar, as well as clean coal technology, were at the centre of interest. However, the alternative that received most government funding was nuclear research. Unfortunately, there is no source indicating that the ecology research group used the Delphi survey as a source of their work. However, it should be noted that the focus on solar energy and the rather complementary role of fuel cells adopted by MITI is also present in the foresight study (Cuhls 1998: 207). In this respect, the similarity between the survey and the Sunshine Program is remarkable, but it is not clear if the decision-makers relied on the expertise of the survey. During the 1980s, R&D was focused on PAFCs, shifted towards MCFCs at the beginning of the 1990s, before attention was focused on PEFCs around the end of the decade (Weidner et al. 2003: 58). Under the Moonlight Project and at the start of the New Sunshine Program, the Japanese government sponsored mainly types suitable for large-scale power generation and co-generation like MCFCs (Fukasaku 1995: 1067; 1074, 15n; JETRO 1990b: 10).
4.5.5 Fuel cell electric vehicle promotion in Japan At the beginning of the 1990s, the Japanese government started to support FCEV development. Research on PEFCs was among the themes of the already mentioned New Sunshine Program. However, the funds for R&D on automobile applications of PEFCs were limited: the R&D budget for this type was less than 10% of the overall state-sponsored fuel cell funding and only a not specified part of this was spent on automotive use (Harayama et al. 2009: 203), because PEFCs may also be used for stationary applications. Again, the timely connection between the Delphi survey and the inclusion of fuel cells suitable for automotive use in the New Sunshine Program is peculiar.96 While its predecessor did not explore mobile applications, when this possibility was however vaguely discussed, its investigation became state-sponsored through the newly merged R&D program. Therefore, some hints lead to the conclusion that the Delphi survey supported or even initiated state activity towards FCEVs: the very purpose of the studies is to inform decision-makers about future key technologies, the close linkage between the publishing of the survey and the inclusion, but also the limited funds spent on automotive PEFCs under the program. This could reflect the fact that PEFCs were relatively new, so that other types received more attention and capital. But for the sake of clarity, this evidence is only circumstantial and does not prove that the scientific expertise embodied in the surveys influenced decision-making. It is also possible that powerful societal subsystem members from the Japanese industry lobbied for state
96 The Japanese version of the survey was published in 1992, so that it preceeded the New Sunshine Program, which was started in 1993.
155 assistance and funding for this particular technology. Nevertheless, it can be claimed that the approach towards FCEVs was not solely focused on this new vehicle type, but was rather holistic. However, the following confirms the rather slow pace in utilising PEFCs in FCEVs: during the first phase of the PEFC-centred R&D activities under the New Sunshine Program, only residential applications were produced and during the second phase (1996-2000) only two companies, Mitsubishi Electric and Aisin Seiki97, worked on automobile applications (Avadikyan/Harayama 2003: 190). Further, it has been claimed that FCEV technology was included in the ACE program in 1997. This would be consistent with ACE´s notion of promoting future technology and the fact that HEVs, the original targets of this project, were already commercialised by Toyota and Honda. However, FCEVs seemingly were not supported through the Clean Energy Vehicles Introduction Program, because Åhman (2006: 440) and JARI (2003a) report exact numbers for BPEVs and HEVs, but do not mention FCEVs. As another part of this comprehensive program, the World Energy Network (WE-NET) was initiated by NEDO, focusing on hydrogen infrastructure, production, storage and utilisation (Watanabe 1995: 268; 270). WE-NET was originally planned to cover 28 years, which indicates that hydrogen-based mobility was rather a long-term development project than being considered market-ready. The project was divided in three stages: a first phase of basic R&D 1993-1998, the second demonstration phase 1999-2003, followed by early commercialisation phase from 2004 onwards (Åhman 2006: 437). However, in 2002 WE-NET was transformed into the Japan Hydrogen and Fuel Cell Demonstration Project (JHFC), now also including the activities of the Japan Electric Vehicle Association (JEVA) (JHFC 2011b: 6). JEVA had been established under MITI in 1976 as a non-profit organisation consisting of OEMs, supplier companies and energy suppliers. Like its predecessor, JHFC aims at the realisation of FCEV mobility. It is divided into an infrastructure demonstration study and a FCEV road testing study, which are both subsidised by METI. Infrastructure is currently limited to 15 hydrogen stations, from which nine are located at the agglomeration of Tōkyō and Yokohama, two in Kyūshū, two in the Kansai area, one in the Chūbu area and one in the town of Nikkō (JHFC 2010: 5f.). Also, two stations were operated during the 2005 EXPO under the wings of JHFC.98 There is a wide range of possible hydrogen sources: electrolysis, liquid hydrogen, liquefied petroleum gas (LPG), methanol, kerosene, naphtha or spare hydrogen from industrial production processes amongst others. All of these were tested in the different stations which were constructed and operated by different companies
97 Aisin Seiki is a Tier1 supplier and part of the Toyota keiretsu. However, shares are also held by companies affiliated to Mitsubishi and the firm is not exclusively supplying Toyota. 98 Data from JHFC indicate that these stations were only operated during the financial years 2004 and 2005 (JHFC 2011a: 35; 37). As the Japanese financial year spans from April to March, this means that operation was limited to the calendar year 2005, when the EXPO took place in Aichi Prefecture.
156 from the energy, oil or gas industry (Kunimi 2007: 267f.). Although the firms operate the stations, the costs are entirely covered by JHFC (Weidner et al. 2003: 65). The Japanese state was funding all the possibilities, because there existed no data which could determine options that will secure a safe and steady supply or about the costs of operation. Therefore, given this variety of rivalling options, companies will be reluctant to open testing stations themselves. Confronted with this situation, funding the installation of a testing and demonstration infrastructure respectively is a necessary step to gather information and overcome the standstill, which is caused by the fear of financial loss by the companies. Consequently, JHFC declared that one of the objectives was to investigate the various methods of hydrogen generation99 pertaining to cost and conditions of actual refueling station operation (JHFC 2005: 6). The data gathered by JHFC indicate that natural gas steam reforming has the highest efficiency of all methods (JHFC 2011a: 28; 47; 49f.). This can further be backed up by other sources: one study found that currently 96% of total hydrogen is generated through this process and that it is the least expensive production method (Bičáková/Straka 2012: 11563; 11569f.). This indicates that the infrastructure demonstration study helped investigating which method was the most economic, so that that industry and state now have a clear overview over the specific production cost associated to different generation methods. If the same principal of full coverage of expanses also extends to the FCEV demonstration study is unknown. However, since 2002 Japanese agenicies have initiated leasing programs, so that automobile firms could begin road testing of their vehicles. In Japan, the automobiles require certification through MLIT and participate in JHFC (JETRO 2006: 6). Currently, only fleet operators use FCEVs, as they are the only customers that can support the expensive technology as well as the necessary infrastructure. Therefore, the state government or municipalities are the main operators of FCEVs. This is in line with the already mentioned Law on Promoting Green Purchasing from 2001 (Tanaka/Ahlner 2003: 24-26). Examples of such fleet testing are the FC buses that were used for public transport at the EXPO 2005 at Aichi (EXPO 2005a; 2005b) or a bus trial at Tōkyō, carried out 2003 and 2004 by Toei Bus (Kunimi 2007: 254), which is a bus service operated by the Tōkyō Metropolitan Bureau of Transportation. Both examples demonstrate that testing is often conducted by (semi-)public operators, does not need to be lasting a long time – in case of the Aichi EXPO only half a year – or require a large vehicle fleet. As these examples indicate, although R&D support started in the mid-1990s, the level of activity became increasingly higher around the year 2000. Notable is the increase of budget and research projects since that time (Avadikyan/Harayama 2003: 187; Maeda 2003: 18) and official
99 For an overview over the locations, station operating companies and the respective method of hydrogen, see: JHFC 2005: 12f.)
157 sources point out that the Japanese government has committed itself to PEFC promotion since 1999 (NEDO 2008a: introduction). One particularly interesting step that underlines this strong support is the initiation of a FC project team of senior vice ministers from METI, MLIT and ME by Prime Minister Koizumi in 2002 (Ishitani/Baba 2008: 73). The aims were not limited to technological issues, but also included creation of public awareness and promotion. One example for this is the joint publication of a Low Emission Vehicle Guidebook by the three ministries, which was distributed to parties, including central and local authorities, interested in introducing EVs among other alternative vehicles (ME 2004). This illustrates that the Japanese state realised the cross-cutting nature of FC technology and therefore a strong need to coordinate and promote activities. However, although joint promotion and awareness campaigns are visible, FCEV R&D seems to remain the domain of METI. It is important to stress that many of the projects carried out during this time were continuations or follow-ups to the projects incorporated under the Sunshine, Moonlight, New Sunshine Programs, as the government unified most activities under the so-called Polymer Electrolyte Fuel Cell and Hydrogen Energy Utilization Program in 2001 (Nakui 2006: 490-493). This means that even though the aims have not been achieved in the originally intended timeframe, R&D was prolonged as FC technology was still regarded as a future key technology. FC research in Japan has been supported by the state over almost four decades until today and the described transformations of research programs demonstrate that development of complex technology may require great staying power. Support of FCEV development is increasingly addressing problems that could hamper commercialisation. Projects towards standardisation and safety are included into the strategy. Safety measures are rarely addressed in Europe, but if one keeps in mind that Japan frequently experiences natural disasters like earthquakes, the attention towards save hydrogen use is certainly understandable. Moreover, increasing focus on regulatory aspects also indicates that technology development was regarded as close to commercialisation. The budget figures for 2005 (ibid: 490) show that more than 10% of the METI budget for fuel cell related R&D was reserved for the investigation and establishment of standards and codes. Seemingly, the research process was already advanced enough that standards could be developed. Standards are a precondition for commercialisation as they are used for regulations that govern the legal sale and operation of products. Thus, it was investigated how fuel cells could be incorporated under the Building Standard Law, Fire Service Law, Road Law, Road Trucking Vehicle Law and others (ibid: 491). Parallel to this process, emphasis on cooperation between academia and industry increased. In a review paper for a scientific journal, NEDO official Nakui Kōji (2006: 489) explicitly identified the lack of communication between those separated spheres as being the key problem for
158 progress: “One of the most serious obstacles for active feedback between academic research and commercialization of fuel cell has been a lack of system that enables academics and manufacturers to share information and cooperate among themselves.” In order to overcome the historically weak links between those spheres several regulative measures were enacted. Accordingly, NEDO and MEXT encouraged more cooperation between academics and industrial researchers in the field of fuel cells from 2005 onwards (ibid: 490). In 2008, NEDO initiated several new PEFC R&D projects, which all incorporate national and private universities, institutional actors like AIST and private industries (NEDO 2008a: 2-24). It is the declared aim to leverage the know-how and expertise of the scientific and industrial communities in order to achieve a breakthrough of PEFC technology, which is also the reason why NEDO organises meetings to the project leaders to achieve synergies (ibid: introduction). Another particularly interesting issue is the interconnectedness between fuel cell technology and other priority fields of the S&T Basic Plan. Although it became included rather late into the Basic Plan, nanotechnology is regarded as an important factor. The reason for this is that nanotechnology has come to intersect with the major priority fields, namely life science, IT and environment (Stenberg 2004: 16). Advancement of the latter three fields will largely depend on applying nanotechnology, so that it could be said that nanotechnology is complementary to or enabling progress in the other sectors. With regard to the possible synergies between those fields, the question arises if assigning priority to all of them was made intentional by the decision-makers. Owadano Yoshiro, Research Coordinator for Energy and Environment at AIST stated: “In general, environmental/energy were used to promote nanotechnology, but, things are changing the other way round. Now, nanotechnology may be used if it contributes to solve environmental/energy issues. In the case of fuel cell R&D, because cost barrier is very high for automobile application, breakthrough by basic research was intended.” (Owadano, 28.12.2009) This opinion is underlined by a recent R&D program, planned from 2008 until 2014: utilisation of nanotechnology - in form of nanomaterials for polymer electrolyte membranes, catalysts or membrane electrode assemblies, for advanced fuel cells – is explicitly included (NEDO 2008b: 86). However, the statement also highlights another aspect. It exemplifies again that innovation policy-making has to deal with a high level of uncertainty. Synergies between environmental and energy research respectively and nanotechnology can be observed, but opposite to previous thought, the trade-off seems to stem from nanotechnology, which means that the intersecting relationship between these technologies is reverse. Moreover, this case shows that differentiation of research into subsections might be sensible with regard to political or
159 budgetary purposes, but may not reflect the actual work. Putting it different, much of advanced research projects will be at the nanoscale, but is aiming to achieve a breakthrough in another scientific discipline. So, it might be best to think about the budgetary item nanotechnology as basic research in this field, while other sectors, e.g. fuel cells, are a kind of applied nanotechnological research. Another aspect highlights the role of the Japanese bureaucracy and its close ties to the Japanese industry: in December 1999, the Director General of the Agency for Natural Resources and Energy (shigen ererugii chō; ANRE), a METI subsidiary, founded the so-called Fuel Cell Commercialisation Strategy Study Group (nenryōdenchi jitsuyōka senryaku kenkyukai) as a private study group (kondankai) (Maeda 2003: 11).100 However, other sources claim that the impulse to set up this group actually came from MITI (Avadikyan/Harayama 2003: 200), while others even claim that the study group was a government committee, organised within MITI (Ishitani/Baba 2008: 64). If this was true, the initiation of this committee could be regarded as a type of administrative guidance, because the state itself organised a body to foster a goal of economic and technologic development. Violating the recommended limit of 20 councilors, it consisted of 28 people, who were largely from industry or academia: nine university professors, four automakers, three each from petroleum suppliers, electric utilities and electronics manufacturers, two from gas utilities and one material manufacturer, a national research institute, a NEDO representative and a journalist (Maeda 2003: 12). The main purpose of this circle was the identification of obstacles hindering FC commercialisation and the formulation of policy recommendations that could take on those problems. When the group finished this task in 2001, the report was published by METI. One step was the creation of an industry forum, which main task was to enable the self-organisation and coordination of relevant companies. Thus, the Fuel Cell Commercialization Conference of Japan (nenryōdenchi jitsuyōka shuishin kyōgikai; FCCJ) was created in March 2001 (Ishitani/Baba 2008: 64). Today FCCJ has 104 members, mostly companies from the manufacturing and energy sector (FCCJ website, 07.09.2013).101 Parallel to the newly created FCCJ, the shingikai continued its work until 2005, when it was dissolved. With the notable exception of Mitsubishi and Subaru, all Japanese car producers are members of FCCJ as well as GM, Ford, Mercedes-Benz (Daimler) and Hyundai. The absence of Mitsubishi Motors is particularly striking, as a total of seven companies102 from the Mitsubishi keiretsu
100 The name is misleading, because kondankai members are compensated from public funds and parent agencies‘ bureaucrats serve as secretarial staff for these groups (Schwartz: 1998: 107) 101 In 2010, FCCJ had 114 members. At that time, NEDO was listed as an observer, but according to the latest information, it no longer has any official relation with FCCJ. 102 Asahi Glass, JX Nippon Oil, Mitsubishi Electric, Mitsubishi Gas, Mitsubishi Heavy Industries, Mitsubishi Kakoki Kaisha, Mitsubishi Rayon. In 2010, the number was nine as Mitsubishi Corp. and Mitsubishi Materials were also members.
160 participate in FCCJ. Further, Toyota subsidiaries Hino and Daihatsu are upon the members and together with the example of Mitsubishi, this may qualify the seemingly long list of participants. Large conglomerates are still very influential, so that the actual number of players may be considerably lower. It is crucial to realise that neither the study group nor FCCJ held any official status and that their recommendations were not legally binding, because they both were established by private initiative, not by legislation. Nevertheless, the impact of the shingikai must not be underestimated: the Japanese government has adopted the target numbers for FCEVs as well as fuel cells in stationary use, mostly co-generation systems (Weidner et al. 2003: 60). The scenario for FC technology diffusion proposed by METI seems to have solely been modelled after the report of the study group (Avadikyan/Harayama 2003: 202). At first, the target of FCEV commercialisation was set between 2010 and 2020, but a revised roadmap was published in 2008, now aiming to start this process at 2015 and enter full commercialisation around 2020 (FCCJ 2008). Interestingly, a NEDO pamphlet published three months after FCCJ´s revised scenario, also states that practical use, which is equal to mass diffusion and therefore commercialisation, should be achieved between 2020 and 2030 (NEDO 2008a: 3). Similarly, a JHFC brochure featured the same graph FCCJ had used in its official press release for illustrating the altered commercialisation scenario (FCCJ 2008; JHFC 2008: 8). However, despite the seemingly close connection between FCCJ on the one side and METI and NEDO on the other, it is reported that FCCJ did not accept financial assistance from the Japanese government (Ishitani/Baba 2008: 70). The differing characterisations of the study group exemplify the opaque nature of Japanese bureaucratic action. Although clear evidence is missing, all presented scenarios are plausible. Moreover following alternative explanation would be possibe: the group started as a kondankai and later was elevated to shingikai status. According to Schwartz (1998: 113), it is not an uncommon procedure to first hold informal consultations and later transform a group and give it official status if the discussed topic has found its way on the political agenda and should be addressed through policy. Further, it would fit the description that kondankai are especially covering issues related to technology, administrative reform and internationalisation. To determine which of the contradictory explanations of the previous literature is correct, a questionnaire (Appendix II) was created and sent to the professors who were members of the original study group. As the report published by METI contains a members list, identifying the name and affiliation of each member, the supposedly neutral members were contacted. Unfortunately, only a single member was willing to answer the questionnaire, so that the following description of shingikai activity solely relies on this informant’s view. According to the informant, the study group was a shingikai from the start, not a private
161 kondankai. The informant himself stated that he became a member due to recommendation of MITI. Internal debate focussed to technical issues of FC utilisation, not the social impact of technology. Deliberation was based on data and research from both industries and university scientists. The informant further stated that no particular subgroup – government officials, company representatives or scientists – dominated the deliberation process. Further, no attempts of political influence on group’ activities was reported. Contradictory, the informant replied that the main goal of the shingikai was to sanction predecided government slash bureaucratic plans, not to present members’ perspectives or even independently develop policies. Finally, the informant reported that the shingikai and FCCJ had no relation, meaning that there was no overlap in membership as far as industry representatives are concerned and that both groups did not exchange views or coordinated their efforts until the dissolution of the study group in 2005. How to make sense of the information provided by the shingikai member and the other studies? All authors agree that the group had significant influence on policy-making, so that it might be best to regard the study group as a quasi-official government body. The fact that METI published the group report and policy was largely modeled after the recommendations seems to support this view as legislative proposals require endorsement from a shingikai, not a kondankai. However, taking the first hand account serious, it appears that MITI bureaucrats indeed rigged the deliberation: first, at least a part of the members appears to have been selected by MITI. Second, MITI reportedly largely predetermined the outcome, i.e. its own policy proposal. Thus, this seems to confirm the top-down and bureaucratic dominance perspective of Japanese policy-making. However, looking at subsequent developments, this perspective is contradicted. When FCCJ revised its commercialisation scenario in 2008 this was soon adopted by NEDO. As FCCJ is reportedly independent from the shingikai and represents company stackholders, this suggests that in this case, the direction of influence was reversed, i.e. bottom-up. However, this could just indicate that FCCJ and NEDO drew the same conclusions, as they both have insight into the latest technical developments, FCCJ directly through its members and NEDO indirectly through the organised and funded R&D projects as well as through NEDO’s former observer status at FCCJ. Therefore, both organisations are aware of remaining problems that hinder commercialisation. Further, all authors point out that the report assigned specific roles for each actor in the development of FCEVs (ibid: 67; Avadikyan/Harayama 2003: 201; Maeda 2003: 15f.): industry should be the main actor in development and commercialisation, while government and academia play supporting roles. Japanese industry wants to invent the technologies for FCEVs and co-generation systems on its own, with government support for basic R&D, initial infrastructure build-up and standardisation, and limited support of academia through contracted,
162 mostly basic, research and education of engineers. Comparing this plan to the actual development, it appears that all three actors fulfill their prescribed function. Unlike the case of the Eco-vehicle, no government agency tried to reach a breakthrough via a state-organised consortium. The Japanese government supports infrastructure, demonstration and standardisation measures as well as basic R&D, but refrains from actively influencing the research process of private companies, which is also confirmed by the varying approaches of the individual automobile manufacturers (see: 4.6). Measures promoted by a team of senior vice ministers were exactly the same as recommended by the study group report and the respective ministries increased activities (Ishitani/Baba 2008: 73-75). Thus, although the group of vice ministers group was set up after the report (Nakui 2006: 489), it appears to have simply rubber-stamped the suggestions. This inter-ministerial agreement seems necessary due to the cross-cutting nature of research and related applications making it impossible for METI to simply put a proposal of its subsidiary ANRE – or even a shingikai – into action, but necessary to get the formal consent of other involved ministries. Contributions of research agencies like AIST and universities remain limited and are mostly in the realm of basic research. As stated before, many projects are organised and co-financed by NEDO, but conducted by AIST and researchers from universities and companies. This reflects the status as a funding agency and intermediary research service provider. The relatively high level of collaboration between AIST and industry is concentrated in the field of basic research and therefore at a pre-competition stage. However, even under these conditions cooperation can stay limited: “Usually, our public projects stay in pre-competitive stage, but, some companies decide not to participate in a project because they do not like their higher potential leak to competitors.” (Owadano, 28.12.2009) Interestingly, this is much in line with research about motives for participation in Japanese R&D consortia (Sakakibara 1997b: 151-155): although cost sharing and economies of scale in R&D are reasons for cooperation, the most frequently stated motive is to gain access to complementary knowledge of other participants. This demonstrates that firms use cooperation to monitor the technological capabilities of business rivals. Another possible reason for this is that industry-academia cooperation has historically been weak and that regulative changes like the adoption of the Bayh-Dole provision, which should increase collaboration, will need time to overcome this division. Furthermore, industry has created its own R&D apparatus and relied on its own innovative capabilities, so that it can act independently. However, as pointed out before, the Japanese state is now actively bringing together industry and academia, e.g. in NEDO projects, to promote collaboration. Since this is a recent trend, it could be claimed that success of these projects will foster cooperation, while limited progress will discourage it.
163 All in all, it appears that recommendations of the shingikai and later those of FCCJ, its independent quasi-successor, had tremendous influence on FC R&D projects. Main similarity between the groups is that all actors contribute to the development process in the prescribed roles accordingly. Private companies are the main R&D performers, the state assists with funding basic R&D, standardisation, infrastructure and demonstration projects, while academia, although becoming more integrated, still remains a supporting actor. However, the available information suggests that these two influential groups have differing impact on the policy-making process: while the shingikai apparently was created to give seemingly neutral blessings to MITI policy, FCCJ seems to have reversed the direction of influence. FCCJ is further changing another characteristic: the formerly purely Japanese network has integrated international stakeholders so that it can function as a forum for discussion of important intra-industry issues, but FCCJ first and foremost functions as a lobby group. Rejecting financial government assistance could be interpreted as a gesture to highlight its independence towards administrative guidance. Although it is not exclusively addressing FCEV development, but a wide range of possible applications, FCCJ is a powerful societal member of the policy subsystem. Summing up, there appears to be a strong interaction between state institutions and industry on the issue of FC development and commercialisation. However, the question arises, if this really exemplifies a case of state guidance: although the state set up both groups, its role apparently diminished. While the shingikai seems to have by and large rubber-stamped MITI policy proposals, METI subsequently did the same with FCCJ proposals. Therefore, the direction of guidance rather appears to have been reversed, because the various industries addressed the state and the administrative body seems to have largely followed industry´s recommendations. The Japanese state has created this particular forum as a nexus to those companies interested in FC utilisation to obtain information about barriers of market introduction and strategies to overcome those obstacles. Thus, it can be concluded that MITI was important in the initial stage. Through its original policy outline, MITI formulated strategic aims and a roadmap and also induced industry to cooperate with universities and public research organisations such as AIST and coordinate amongst each others. However, METI then appears to have adopted the industry view on modifications to the future roadmap. From the available information, it is not possible to judge if later openness should be interpreted as intentional or accidental. However, as MITI initiated the institutionalisation of FCCJ, the former appears more plausible. Nevertheless, it can be stated that fuel cell policy was initially top-down and subsequently changed to bottom-up policy modification. With regard to the policy subsystem, it could be said that FCCJ is the collective actor representing the societal part of the subsystem. It appears that the various industries utilise
164 FCCJ to establish a consensus and formulate their policy recommendations. In this case the state institutions seem to have adapted the recommended steps to pave the way for Japanese firms to develop and market fuel cell technology, because it is regarded as a solution for energy and environmental issues as well as being economically profitable.
4.5.6 Promotion of fuel cell technology in Germany Similar to Japan, hydrogen and fuel cells appeared on the agenda after the oil crisis in the 1970s. However, the same differentiations applied. Just like in Japan, renewable energies and hydrogen were supported, but the energy type that received the lion’s share of public R&D funding was nuclear energy103 (Wüstenhagen/Bilharz 2006: 1682f.). Hydrogen and various FC types were mainly considered in the context of energy supply, not of automobile use. During the second half of the 1980s, Germany initiated two programmes that again display the intertwined nature of policy-making. The first project is called Solar Hydrogen Bavaria (Solar-Wasserstoff Bayern; SWB), which lastet from 1986 to 2000: as the name indicates it was located in Bavaria and the main shareholders of the operating company were Bavarian firms. The main shareholder with 60% was electric power company Bayernwerk, which was fully owned by the state of Bavaria, BMW, Siemens, MBB and Linde owned 10% each. Half of the costs were carried by the consortium, 35% by BMFT and 15% by the state of Bavaria (Winter/Fuchs 1991: 724). Basic concepts and ideas have been advocated by industry representatives Ludwig Bölkow (MBB) and Reinhard Dahlberg (AEG). 104 Although the plans met critique by economists and environmentalists alike, powerful politiancs, especially CSU chairman and Bavarian Prime Minister Franz Josef Strauß, backed the project and facilitated its implementation (Spiegel, 04.11.1996: 227). Hence, an alliance between industry and state politicians successfully advocated the project and both the federal level and the state of Bavaria heavily funded it. The project explored possible interconnections of a future hydrogen-based economy and included electricity generation through photovoltaics, hydrogen generation via electrolysis as well as a filling-station for the produced hydrogen and the operation of BMW hydrogen-ICEs. The second project was called Hysolar. It was based on cooperation between Germany and Saudi-Arabia. Costs were financed by several state or semi-public organisations such as the BMFT, the state of Baden-Württemberg, German Aerospace Center (Deutsche Versuchsanstalt
103 While following similar paths in search of new forms of energy, Japan and Germany both encouraged change on the demand side by encouraging industrial adaptation and sought to secure stable energy supply through government action (Japan created a government oil company Germany signed bilateral gas treaties with Russia). For an overview, see: Ikenberry 1986. 104 AEG and MBB were both located in Bavaria. Both companies were integrated into then Daimler subsidiary DASA, which is today owned by Airbus maker EADS. Bölkow created a foundation that bears his name in 1983, which mainly addressed questions of sustainability.
165 für Luft- und Raumfahrt; DLR105), the King Abdulaziz City of Science and Technology as well as the universities of Stuttgart and Jiddah/Dharan (Winter/Fuchs 1991: 729). As SWB, Hysolar explored a future hydrogen-based energy system. However, while SWB focused on the creation of a local integrated system of hydrogen generation and utilisation, Hysolar explored the feasibility of a global energy system. In this respect, the similarities between Hysolar and WE-NET are much graeter than those with SWB. The project built on spectacular theoretical numbers: partner-country Saudi-Arabia could presumably produce as much exportable energy in form of solar hydrogen on just one per cent of its territory as it exported as oil. Hence, the project sought to explor methods which would allow a new hydrogen-based energy system. In short, Hysolar can be desbribed as an attempt to simulate a post-oil and gas energy system. This highly experimental character may also explain why Hysolar is exclusively funded by (semi-)public institutions, while SWB had industrial partners and financers. The German part was located in Baden-Württemberg. Similar to Bavaria, Prime Minister Lothar Späth (CDU) supported this program and ensured public financial support. Späth was labeled the “spiritus rector” behind the project with Saudi-Arabia (Spiegel, 04.11.1996: 228). The project started in 1987, but the results reveiled that the envisioned global energy network was not feasible. The photovoltaic power conversion rate was still too low and transport of liquefied hydrogen would have required about 30% of the stored energy. Hence, the plans were given up without much public response.106 Both projects originated in a similar pattern. Masterminded at the Länder level, it appears that the regional states successfully used their political influence to obtain federal funding. This is a fine example how regional states are developing and promoting industrial policies. It also shows that the federal level was rather passive. Hence, it can be stated that the policy development was bottom-up. When it comes to an evaluation of the projects, it should be clearly differentiated between political and public expectations on the one side and scientific assessment on the other. While public expectations and political visions were subject to disappointments, scientists had been more cautious. Thus, when the slow progress became clear, politicians adopted more careful wording. At the 11th World Hydrogen Energy Conference in Stuttgart 1996, then Minister of Environment Merkel warned against furthering “irreplevisable near-term expectations” (Spiegel, 04.11.1996: 226). Like other politicians, Merkel came to publicly decrease expectations about hydrogen and moved the subject closer to the scientific view. Winter and Fuchs, who were
105 This is the former designation. It has been renamed Deutsches Zentrum für Luft- und Raumfahrt (DLR). 106 A similar program, which tested hydrogen-generation via hydro power and long-range transport, between the EU and Canadian Province of Québec met the same difficulties and hence also suffered the same consequences (Weider et al. 2003: 26f.). Project planning and status has been documented by: Drolet et al. 1994.
166 involved with the projects, gave a clear statement after the first stages were completed: they pointed out that the technology was far from being price competitive and rather suited for local systems than global ones. However, ecological benefits and the finite nature of hydrogencarbon sources made the research on sustainable produced hydrogen important in the long run. In their words (Winter/Fuchs 1991: 734), “solar hydrogen can […] be regarded as insurance, and as a precautionary measure taken for the sake of future generations.” It appears that the progress and interim results of the two described projects affected the way research was supported during the 1990s: total R&D support of DM 28.5 million peaked 1994. Available funds were reduced to DM 24 million in 1995 and further decreased to DM 13.9 million in 1999. The main reason behind this decrease was that the government adopted the view that hydrogen-based energy generation still far from being market-ready, but at the same time was convinced that fuel cells were a future key technology (Weider et al. 2003: 5f.). Consequently, funding was shifted from hydrogen-related research towards R&D on specific FC types. Thus, the decreasing budget during the 1990s is a result of shifting away from costly hydrogen infrastructure research towards FC types. The PEFC type, which is the one commonly used in FCEVs, became supported through a federal R&D program since 1994. This means that the projects severely decreased the expectations about a hydrogen-based economy in the near-term, but sustained the interest in FC technology. Although Daimler released their first FCEV prototypes during the 1990s (see: 4.6.9), government funding was concentrated on stationary applications such as co-generation systems and building services engineering (Weider et al. 2003: 6). As in the Japanese case, it is not possible to clearly link reports to political decisions, but the sequence of project implementation, documentation, and subsequent policy adjustment strongly suggests that policy was influenced by data and practical experience gained through R&D. Also similar is the concentration on SOFC and MCFC before focusing on PEFCs. Here, both countries apparently followed the same technological learning curve. What seperates both countries is the question of hydrogen infrastructure: while Germany initially concentrated on this issue and then abandoned it in the 1990s, Japan first concentrated on FC types and subsequently intensified infrastructure R&D in the WE-NET program. Therefore, when the Kohl administration was criticised for falling behind countries like Japan, BMBF Minister Jürgen Rütters (CDU) stated in the Diet: “The [future] perspective for hydrogen technologies in increasingly soberly assessed in Europe. Research on hydrogen technologies is currently promoted stronger in the USA and Japan […]. However, the anticipated findings, e.g. from the so-called WE-NET program in Japan, largely are already available in Germany.” (Weider et al. 2003: 12; author’s translation).
167 4.5.7 Fuel cell electric vehicle promotion in Germany After the overall decline in the 1990s, R&D support became intensified after the year 2000. The aforementioned trend continued: hydrogen R&D decreased and FC type R&D skyrocketed (NIP 2006: 6). While hydrogen and FC R&D were supported by € 6 million on annual average between 1975 and 2000, funding between 2001 and 2006 increased to € 20 million per year (Garche et al. 2009: 193). Shortly before the increase, the federal government and the OEMs BMW, Daimler, MAN, and VW as well as Aral, RWE, and Shell founded the Transportion Energy Strategy (Verkehrswirtschaftliche Energiestrategie; VES) under the leadership of BMVBS in May 1998. Subsequently, Ford, GM, Total, and Vattenfall joined this group. The main aim of this group was to develop a strategy for the future utilisation of renewable energies. At the beginning, this included CNG, methanol, and hydrogen, but since the early 2000s, it became clear that hydrogen was the main aim (Marz/Krstacici-Galic 2010: 14-16). In 2001, VES recommeded the creation of a demonstration project to test possible utilisation and gain practical experience. Thus, the Clean Energy Partnership (CEP) was founded in 2003. Besides the aforementioned companies, several other energy utilities and public transport firms joined CEP. While CEP was initially centred in Berlin and Hamburg, it later extended to the Ruhr area and Hessia. In 2006, the first Merkel administration initiated aforementioned NIP to strengthen Germany’s position in international competition in this would-be future key technology. It appears that NIP was created to counter other nations FC development programs, especially Japanese, US, and Canadian efforts (NIP 2006: 5). According to the program outline, NIP was the brainchild of a working group called Hydrogen Strategy Council (Strategiekreis Wasserstoff; SKW) that had been organised by the Schröder administration in 2004. In this forum, which was attached to the contemporary Ministry of Economy and Labour (Bundesministerium für Wirtschaft und Arbeit; BMWA), industry and scientists advised the government. In detail, the working group called for sustained, reliable financial support, emphasis on demonstration and standardisation of technology and norms (BMWA SKW: 61-65). Building on council findings that additional investment of € 1 billion was needed to compete with Japan and the USA, it was decided that the federal government and industry had to share these costs. Consequently, NIP was designed to invest € 500 million over 10 years (NIP 2006: 12; 15). Later, its investment target was increased to € 1.4 billion, meaning that the federal government will provide € 700 million (Garche et al. 2009: 192). Moreover, BMVBS undersecretary of state Bomba stated that support for FC technology will continue after NIP runs out in 2016 and therefore advocated the development of of post-2016 scenario to frame future policy (HZwei 1/2012: 8).
168 The allocated budget should be concentrated on field testing and demonstration projects (65%), while only a lesser portion was designated on additional R&D (30%) and a minimum for administration and promotion (5%). As several ministries hold jurisdiction over related fields, the oversight over distinct modules is divided accordingly: BMWi is in charge of stationary applications, but cooperates with BMVBS and BMU where necessary. BMVBS oversees mobile applications and the use of hydrogen as transportation fuel. Finally, BMBF is coordinating the continuing basic R&D as well as research on portable FCs. These different spheres of activity illustrate that the main actors are BMWi and BMVBS, which also supply most NIP funding from their budgets (BMWi: € 200 million; BMVBS: € 500 million). BMBF’s role is confined to basic research and BMU only has an advisory function. Therefore, it appears clear that the motive for support is mainly economic, not environmental. Regarding the distribution of total allocated funding, 10% are for special markets, 12% for industrial co-generation units, 24% for home energy systems, and 54% are earmarked for transportation and related hydrogen infrastructure. These are further subdivided into specific headline topics (Fig. 6)
Fig. 6 Distribution of NIP transportation and hydrogen infrastructure budget (Source: Garche et al. 2009: 194)
In order to coordinate involved ministries and industry the National Organisation Hydrogen and Fuel Cell Technology (Nationale Organisation Wasserstoff- und Brennstoffzellentechnologie; NOW) was created. As aforementioned, NOW also took over coordination of NEP activities since 2009. Although NOW basically assumed the task of VES, VES continues to exist in parallel. However, it appears that it is largely ineffective. Organisationally, NOW is not a bureaucratic agency, but a state-owned company, fully-owned by BMVBS. Attached is an advisory board that consists of representatives from all involved ministries, three scientists and
169 ten industry stackholders. The affiliation of these business representatives is not documented by NOW, but the author’s investigation found that they come from Daimler and VW, two FC (component) producers107, one each from Swedish energy utility Vattenfall, a heating equipment producer, French oil and gas giant Total108, an industry lobby group, a research institute, and the head of a regional FC promotion agency. Due to the broad scope of NIP, automobile OEMs are only a minority. Considering continuity of individuals and represented organisations, following connections could be indentified: four NOW advisory board members were also members of SKW. Two of these individuals are scientists, one working for a university and one at a Helmholtz-associated research centre. One member is a representative of Northrhine-Westphalia and another worked for technical gas producer Linde and now represents the hydrogen promotion agency of Hessia. Another interesting detail is that Nilgün Parker (BMVBS) was a member of SKW.109 Parker has been singled out by NOW advisory council chairman Werner Tillmetz as the person who ensured the establishement of FC support under the first Merkel administration (HZwei 01/12: 8). Thus, this is a case of strong bureaucratic influence on decision-making. Turning to organisations, representatives of Daimler and VW can be found in SKW and NOW. Moreover, representatives of Hessia’s hydrogen promotion agency were also part of both groups. Thus, if one considers these bodies as the nuclei of policy subsystems, it can be stated that besides federal ministries, Länder representaives, and independent scientists, Daimler and VW were continuously active in the policy development process. Due to the obvious impact of SKW and the similarities to the Japanese shingikai, the author identified four SKW members and sent them a translated version of the Japanese questionnaire. Unfortunately, not even a single member replied. Therefore it is not possible to report details on the deliberation process. However, there are no documented cases of more or less pseudo-deliberations as in Japan. Therefore, it will be assumed that all members could influence policy formulation. A noteworthy aspect of NIP is that it embodies continuity. Although its roots lie in the Schröder administration, the Merkel administration picked up the idea and put it into motion. Thus, it verifies the common perception of German politics that power transitions have a fairly limited impact on most policy areas. German Länder have a strong coordinative role. Actor and level interlinkages can again be
107 One of these representatives used to work for a local utility until 2012. 108 This representative is also actively involved in the management of the CEP demonstration program in Berlin. 109 Parker was an MP before she started working for BMVBS. Since 2010, she is section chief of BMVBS’s policy department for energy, environmental and climate protection and also chairwoman of the International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE), an international institution that works towards a future hydrogen-based economoy.
170 illustrated by an example from Baden-Württemberg: Aforementioned WRS is the co-host of the so-called f-cell conference, an annual industry fair linked with a science conference. Both events are dedicated to energy – in particular hydrogen – technology, fuel cells and batteries, located in Stuttgart. Main sponsor of the f-cell events is Daimler, which illustrates how closely interwoven, state, business and science levels are. The level of interconnectiveness can also be understood by a look at the list of official partners (f-cell undated): the federal level is represented by NOW, Baden-Württemberg via the Ministry of Environment, Climate and Energy Economy and e-mobil BW. Further, the Land owns 50% of the Messe Stuttgart, the operating company of the fair facility. The other 50% are owned by the city of Stuttgart and the local Chambers of Trade as well as Industry and Commerce are silent partners. Hence, municipal government and local business community are also involved. The neighbouring Rhein-Neckar region is also involved via a publicly owned enterprise similar to WRS. Participating science institutions like two Fraunhofer institutes, DLR, ZSW, KIT and WBZU are mainly financed through federal and Länder funds. Companies are also present, but even here interconnections exist: EnBW is one out of four main German utilities companies. EnBW is mainly owned by Baden-Württemberg, thus making it impossible to tell to which degree participation is based on economic interests in future technology and to which degree based on political influence. This also makes it hard to measure how financial contributions are distributed among state and business actors.
4.6 Automobile producers’ electric vehicle development strategies
Before turning to a detailed description of OEM development strategies a classification framework should be developed. As a first step, differentiation into an incremental or revolutionary approach appears useful. Loosely connected to the innovation types, incremental should be understood as an ideal-type step by step approach, embodied by the sequence from ICEV over HEV to PHEV and further to BPEV or FCEV. This approach describes a slow transformation from combustion engines over hybrids towards purely electric types. Thus, revolutionary should be understood as a strategy that omits intermediate steps like hybrids and aims directly for BPEV or FCEV. A second analytical category that may allow insights into OEM development strategies concerns hybrid types. Technically, hybrids can be subdivided into series, parallel and series-parallel types (Chan 2002: 259f.). Differentiating between those types may allow capturing continuity and change in OEM’s strategies as well as technology transfer between car producers. A third analytical tool should be employed for FCEV development. Automobile companies
171 follow three different approaches towards fuel cell stack 110 development: in-house manufacturing, cooperation with or technology transfer from other car producers and procurement from specialised FC system developers (JETRO 2006: 6f.). Before exploring company strategies, these types need some clarification. Although the term in-house may be interpreted as completely independent development, it rather means that manufacturers procure components from different FC device manufacturers and utilise these devices to construct the FC stack for their vehicles on their own. The FC stack is the central component of a FCEV and influences the other modules of the car. Therefore, the FC stack is the central piece of technology inside a FCEV, which could be regarded as the core or heart of the vehicle. The second and the third approach is rather straight forward as the FC stack is jointly developed with other car producers or simply bought from specialised firms. Another issue should be mentioned before exploring the different development strategies. Expertise from EV subtypes is adaptable as all other subtypes explored in this study share many components: electric motors, electronic control systems as well as batteries. To be clear, batteries in FCEVs are mainly used to enable regenerative braking, they are not the main power source as in BPEVs, but nevertheless FCEV schematics usually include batteries as one important component (e.g.: JHFC 2010: 10). Therefore, all car producers with experience in one subtype may transfer know-how and certain components between subtypes.
4.6.1 Toyota As Toyota’s development of the Prius has already been described in detail, it will not be repeated. However, it is necessary to investigate activities after the release more closely. The Nagoya-based OEM consequently “hybridised” its product range after the Prius was suceessfully commercialised. As mentioned, HEVs fall in the category of series-parallel hybrids. By 2003, five different Toyota HEVs (Alphard, Crown Royal, Crown Sedan, Estima, and Prius) were available in Japan. Among OEMs, Toyota is unique in the intensity of application throughout different car segments and models. Subsequently, Toyota included its luxury brand Lexus into this steady HEV expanision strategy. Today, 23 hybrids are offered by Toyota and Lexus, which underlines the OEMs leading position in this technology. Developing FC stacks and hydrogen tanks on its own, Toyota by and large falls into the first category. The producer started its R&D activities on fuel cells in 1992 (Kunimi 2007: 253), the same year Toyoda Tatsuro became company president and initiated a more environmentally conscious vehicle design and brand image. It can be claimed that Toyota successfully transferred knowledge it gained in BPEV and HEV development to FCEV construction as its
110 A FC stack consists of several layers of individual fuel cells, which are combined in the stack to increase the total electrical output.
172 first FCEV, the RAV4L-EV, was an all electric sport utility vehicle (SUV), which was presented to the public in 1996 (Yarime et al. 2008: 205). The company continued its R&D efforts and improved the technology, so that different development steps became visible. An example is the joint development of FC buses with its subsidiary Hino, a manufacturer specialised in trucks and buses (Kunimi 2007: 253). This means that Hino’s so-called FCHV-BUS is equipped with two Toyota FC stacks (JHFC 2009: 6). Although both companies have been cooperating since the 1960s, Toyota formalised the relationship through increasing its shareholding from 11% to 21.1% in 1998 (Shimizu 2003: 138f.) and acquiring the majority in 2001, so that Hino became a subsidiary. The second generation FCHV-BUS has been developed before the 2005 EXPO at Aichi (EXPO 2005a; 2005b), while its predecessor was already tested in Tōkyō. This development step could be regarded as a way to test a limited number of vehicles in a segment which is suitable to function as a fleet market. Moreover, testing the technology in buses is a logical first step in technology testing, as it allows testing vehicle operation without the need for R&D intensive miniaturisation. Even the latest development result, the 2008 FCHV-adv remains subject to R&D: although improving performance is continued, the main aim appears to be reducing the cost of production (Yoshida et al. 2011: 10). Although the OEM primarily relied on its own R&D for technology development, Toyota also cooperated with GM since 1999, which could be regarded as a reaction to the alliance between DaimlerChrysler, Ford and specialised FC system developer Ballard Power Systems111 (Yarime et al. 2008: 207). Thus, while focusing on in-house development, Toyota partially followed the second approach. Moreover, Toyota also cooperates internationally to drive forward FCEV related research: the OEM participated in a project investigating methods to reduce the amount of platinum needed in a FC via the creation of particles which carry platinum at the surface, but have non-precious metals at the particle core (dubbed core-shell catalyst) (Sasaki et al. 2010). This project was conducted in the US Brookhaven National Laboratory and sponsored by the US Department of Energy.112 As the reduction of platinum use is a major cost issue of current FCEVs, Toyota appears to engage in international cooperation, even if government sponsorship requires the publication of results. Publication may not be an issue since the current R&D explores potential solution strategies equaling basic R&D, not applications. Thus, results are rather general, hence at a pre-competitive stage. Latest developments suggest that Toyota will pursue a HEV-, increasingly PHEV-based
111 Ballard’s development into a fuel cell expert is related to initial R&D for the Canadian military, which was later followed by civilian projects, namely the world’s first FC bus. For more details, see: Hall/Kerr 2003: 464ff. 112 In fact, the laboratory is operated by the DoE’s Office of Science.
173 strategy and intensify FCEV development. Toyota Vice Chairman Uchiyamada Takeshi113, the lead engineer of the first Prius project declared that he rather expects FCEV commercialisation than that of BPEVs. “Because of its shortcomings – driving range, cost and charging time – the electric vehicle is not a viable replacement for most conventional cars. We need something entirely new.” (Reuters, 04.02.2013) Although BPEVs are developed, they are not regarded as a viable option in the near future. Best example for this is the iQ EV, a mini BPEV. Initially regarded with high hopes, Toyota has scaled down expectations, aiming at only a few hundred sales per annum in Japan and the USA. Hence, the model will not be profitable. Asked why the OEM developed the car, but obviously does not seek to commercialise it, Toyota Germany Spokesperson Henning Meyer stated: “We wanted to proof that we can do it [build a BPEV]. […] For the sake of feasibility, this car is a carrier of technology. We earn money selling hybrids.” (Spiegel online, 22.11.2012) This statement clearly shows that car manufacturers do not always apply strict business logic. Especially in the field of EVs, OEMs produce prototypes or build mini series for testing and demonstrating their latest technological capabilities, which can be mixed with image considerations. Another announcement supports the view that Toyota is probably stronger leaning towards FCEVs: a concept called Fuel Cell Hybrid Vehcile (FCHV) has been scheduled for release in 2015. According to information released, the FCHV will use the battery, control electronics and e-machine of present Toyota HEVs and combine it with a FC (Spiegel online, 03.09.2013). It is noteworthy that Toyota Germany called these HEV components parts of Toyota’s building set (Baukasten), which confirms that Toyota has standardised and modularised 114 these components for its product range. It appears that modularisation and the long experience with HEVs allows Toyota to merge the HEV and FCEV concepts. At present, the price is not clear, but news reports indicated that it should be between € 70.000 and 80.000 for the initially planned 1.000 unit mini series. Hence, it can be concluded that Toyota will continue to mainly concentrate on commercialising (P)HEVs while continuing to develop FCEVs and probably to a lesser extent BPEVs to stay in the lead of environmentally friendly propulsion systems. Its approach makes Toyota a prime example for the evolutionary strategy.
113 Uchiyamada’s role in the Prius project is described by Hasegawa (2008). As Hasegawa is an automobile journalist, his sources are mainly Toyota insiders, but his book is more descriptive than analytical. It is not unfair to state that Uchiyamada, the “father of the Prius”, is one of the heroes of Hasegawa’s inside story. 114 Modularisation cannot be discussed in detail here. However, a short explanation should be given. Modularisation means that OEMs standardise different (sets of) components to enable combinations of them among a range of models. According to informants from various Japanese OEMs and Tier1 suppliers, all companies follow this trend to enable cost savings. These are not mainly realised over standardisation and related economies of scale but through reduced development cost.
174 4.6.2 Honda Honda is an outstanding example that EV types share many key components, which allows OEMs to transfer results back and forth between different subtypes (Tab. 6). Similarly functioning components and vehicle architecture enable adjustment and utilisation across various electric drive vehicles and transferability is not unidirectional. Therefore, analysis concentrating on a single subtype will necessarily miss these interconnections. Also, this transferability may allow companies to prioritise a certain type without falling too far back behind competitors, which concentrate on other subtypes.
Model Subtype Release Components based on earlier models Inheriting model year EV plus BPEV 1997 Insight HEV 1999 NiMH battery, electronic control unit EV plus (ECU), power control unit (PCU) FCX V-1 FCEV 1999 Body chassis EV plus FCX V-3 FCEV 2000 Body chassis EV plus Power mangament system Insight High-pressure tank Civic GX Civic HEV 2001 NiMH battery, ECU, PCU * EV plus Accord HEV 2003 NiMH battery, ECU, PCU EV plus Civic HEV 2005 (2nd) FCX FCEV 2008 Electric machine (improved version) EV plus Clarity Insight HEV 2009 (2nd) Fit HEV 2010 Electric drivetrain Insight (2nd) Civic HEV 2011 (3rd) Fit BPEV 2012 Electric machine (dereived from) FCX Clarity Tab. 6 Component utilisation and modifications among EV subtypes (Source: author’s investigation) *Since Civiv HEV, battery, ECU, and PCU are packed together as Intelligent Control Unit (ICU)
According to Honda, it started R&D on EVs in 1988. Honda’s first EV, the EV plus BPEV, was
175 released in 1997. However, it was only leased, not sold. Moreover, production was halted when the OEM released the Insight in 1999. Insight was followed by the Civic Hybrid, which also utilised NiMH batteries in 2001. From 2003, a HEV version of the Accord was sold in the US and Thailand. Again, NiMH batteries were used. An interesting feature of this model was the ability to shut down half of the 6 cylinders.115 In 2005, the second generation Civic HEV was released, embodying the latest improvements in Honda’s ICE and electric machine technology. The second generation Insight, released in 2009 employed an improved hybrid system and used batteries from Sanyō. In 2011, the third generation Civic HEV followed. Instead of NiMH batteries, it was equipped with LiIon ones. Regarding FCEV development patterns, Honda adopted a very different strategy, which could be described as a dual approach. The company combined the first and third type. The first, third and fourth generations of Honda´s FCEV were originally equipped with Ballard FC stacks and shortly after the respective presentation integrated its in-house developed stack (Yarime et al. 2008: 210). In fact, Honda presented the first and second generation FCEV at the exact same date, the Tokyo Motor Show in September 1999. The main difference lay in the fuel and FC stack: the first generation (FCX-V1) was powered by a FC stack from Ballard and used hydrogen, while the second generation (FCX-V2) utilised an in-house stack and methanol, which would be reformed on-board. Already in 2000, Honda presented the third generation (FCX-V3), which was built in different versions: one was equipped with a Ballard, the other with an in-house stack that both used hydrogen. This new model embodied some drastic improvements in technology: as the complete FC system could be reduced in size and be located in the so-called “sandwich floor” and the tank became much smaller, it could transport 4 instead of 2 passengers, be refilled much faster and the weight was reduced from 2000 to 1750kg (Weider et al. 2004: 91). Some of the improvements must be attributed to Honda’s previous EV activities: all FC models were based on the body and chassis developed for Honda’s EV plus, the energy management system of the Insight and high-pressure tank of the CNG-fuelled Civic GX. At the same time, no improvements in range (180km) and cold start capacity could be made. Since the year 2003, all following generations, called Honda New FCX are equipped with in-house developed FC stacks (Honda, undated a; b): the latest model, dubbed FCX Clarity, was released in 2008. Its electric machine was an improved version of the one developed for the EV Plus. Hence, this is a good example for learning from previous R&D. Honda already developed electric drivetrains, machines and energy management systems for BPEV and HEV models, so that it was unnecessary to duplicate those efforts. Honda’s latest BPEV, called Fit (Jazz) EV, again highlights why it is important to study subtypes simultaneously: the car’s electric machine
115 Car-makers like Daimler also used this technology, but just for cars with large engines. Just lately, OEMs like VW introduced this feature in engines with four cylinders.
176 and other electric components were originally developed for the FCX Clarity (Honda 2010). Production began in 2012, initially limited to 1.100 units per annum with delivery limited to Japan and certain US states (New York Times, 16.11.2011). It must be noted that the LiIon batteries for the Fit EV are produced by Toshiba, while the OEMs PHEVs are equipped with LiIon batteries from Blue Energy, a joint-venture of Honda (49%) and the specialised Japanese battery producer GS Yuasa (51%). This and the already mentioned shift from Matsushita to Sanyō for the Insight and the following establishment of Blue Energy indicate two important aspects: first, OEMs prefer an exclusive battery supply. Honda went from Matsushita to Sanyō, because Matsushita was firmly linked to Toyota. When Sanyō announced plans that it would become a subsidiary of Matsushita to escape bankruptcy in November 2008, Honda reacted by again changing its main partner for battery development and supply by establishing Blue Energy with GS Yuasa in April 2009. Although GS Yuasa is also the partner of Mitsubishi Motors, cooperation takes place in separate joint ventures. Moreover, Honda’s rivalry with Toyota is more intense than with Mitsubishi. Second, even if OEMs are engaged in battery partnerships, they may still utilise technology from other sources. Generally, Honda seems to have mainly concentrated on improving and selling HEVs, while developing FCEVs as a long-term aim in parallel. If the Fit EV marks the beginning shift away from HEVs to BPEVs cannot be seriously evaluated at the moment. Although Honda claimed that it was working towards FCEVs since 1989 (Weider et al. 2004: 90), the model history suggests that Honda had limited experience at the beginning of the development process, so that the company chose to integrate Ballard´s technology. Kawaguchi Yuji, then head of Honda’s FC development division, said that the relationship with Ballard was characterised by cooperation and competition (ibid: 97f.). However, it is also apparent that Honda understood the centrality of the FC stack for its future vehicles and therefore intensified in-house development. Outside technology integration from FC system developer Ballard stopped in 2003, which indicates that Honda had accumulated enough expertise through its own R&D efforts to continue in-house FCEV development without external technology. Overall, Honda adopted an evolutionary strategy as actually sold models are all HEVs. In parallel, FCEVs have been continuosly refined and BPEV development is of rather low priority.
4.6.3 Nissan Nissan’s approach towards EVs is less clearly identifiable. It appears that a preference for BPEVs existed, but HEV and FCEV technology was also included. Regarding traction batteries, Nissan made a different choice than Honda and Toyota: LiIon-batteries were judged as the more advanced type and Nissan worked together with Sony from the beginning of the 1990s. The joint effort was embodied in the BPEV version of the R’nessa (Altra in the USA): 30 of these
177 vehicles were given to CARB in 1998 to demonstrate Nissan’s commitment to comply with the ZEV Mandate (autochannel 1997). Although Nissan had already entered a new partnership in battery development, it utilised the results of the Sony cooperation, presumably because the new partnership had not resulted in superior batteries. Already three years earlier, in 1995, the OEM shifted to Hitachi: the result was the Hypermini release in 2000, which was powered by LiIon-batteries from Hitachi (Hasegawa 2008: 111). Only about 300 Hyperminis were produced and the majority was delivered for testing to municipal fleets in Japan and in California (Clemenger 2007).116 This hints to the fact that the technology was not market-ready and that the model was rather utilised for testing than for commercial breakthrough. In the same year, Nissan finished the development of its own hybrid system, which was first applied in the Tino (Almera) Hybrid. According to interviews conducted by Pohl (2012: 168), Nissan switched from its original focus on BPEVs to HEVs due to intense rivalry with Toyota. Slow progress limited the ability to introduce BPEVs or HEVs and after the alliance with Renault in 1999, hybrid R&D was halted (Yarime et al. 2008: 208). After the unexpected success of HEVs, Nissan announced an alliance with Toyota in 2002. Even before this step and despite its collaboration project on LiIon-batteries, the company procured NiMH-batteries from the Toyota-Matsushita joint-venture (Ahmadjian/Lincoln 2001: 692) and used Toyota’s hybrid system instead of its own (Hasegawa 2008: 111). Thus, the alliance could be regarded as a formalisation of the already existing cooperation between the car-makers. Nevertheless, this technology transfer is a remarkable step since both firms are archrivals. Indeed the purchase of NiMH-batteries was the first time Nissan procured technology from a Toyota subsidiary (Patchell 1999: 1004). Nissan also collaborated with NEC in LiIon battery development after the year 2000. The seemingly irrational or shortsighted hold in HEV development after the alliance with Renault marks the clear emergence of a revolutionary strategy towards EV commercialisation. Prior to this decision, all subtypes were developed in parallel so that a clear differentiation into revolutionary or incremental is not possible. Chosing a revolutionary approach can be explained by Nissan’s economic condition. New CEO Carlos Ghosn tried to concentrate efforts on making Nissan profitable again after years of shrinking market share. Thus, licensing technology from Toyota while examining the strengths and weaknesses of Nissan and drawing up an own strategy was possibly the only rational way for an outsider like Ghosn, who had to make the alliance between Renault and Nissan work. Indeed, as part of the strategy to revive Nissan117, it
116 Trials were hosted in Kyōto (138 units), Ebina (15), Tōkyō and Yokohama (20 each). In California, the University of California, Davis (15) and the city of Pasadena (11) also received Hyperminis for testing. 117 Due to the limitations of this research, Ghosn’s overall strategy cannot be discussed here. However, it is noteworthy that Ghosn restructured keiretsu suppliers and changed the procurement policy (Shimokawa
178 appears that the management decided to concentrate on BPEVs and FCEVs instead of challenging Toyota and Honda in the HEV field. As it has been claimed that Nissan’s hybrid system was more than 50% more costly to produce than Toyota’s (Clemenger 2007), this step would be plausible. In the field of BPEVs, the release of the Leaf is the hallmark of this development. The Leaf is powered by batteries that resulted from the collaboration with NEC and these batteries are produced by a joint-venture between the partners called the Automotive Energy Supply Corporation (AESC). The second generation Leaf was released 2012 in Japan and will come to overseas markets in 2013. AESC will provide new LiIon batteries118 which allow a greater range: according to the Japanese test cycle it will improve from 200 to 228km, while the European cycle registers 199km instead of 174km. The new Leaf shows that OEMs incrementally improve their models: its air conditioning unit needs 70% less energy. This is important for extending the range as this system is the second largest electricity consumer of a BPEV. Further, the latest regenerative braking system can recover more energy. Charing time of a dedicated home charging system has been halfed from 8 to 4 hours (Handelsblatt online, 23.04.2012).119 The latest version has a lighter, more efficient motor which needs 40% less dysprosium, a rare earth metal, than its predessor (thegreencarwebsite, 20.11.2012). Nissan most likely will utilise these latest batteries in the upcoming Infiniti LE. The LE concept is based on the Leaf platform and will share many basic features. It was showcased at the 2012 New York International Motor Show and demonstrated many high-end features such as inductive charging and reduced aerodynamic drag due to improved body design (Infiniti 2012).120 Thus, Nissan employs its luxury subsidiary Infiniti to demonstrate latest technological capacities. As it can be claimed that luxury vehicles spearhead developments that later trickle down to other vehicle types, Nissan apparently seeks to use Infiniti in popularising these technologies. Nissan’s alliance partner Renault also moves straight towards BPEVs. Although Renault’s strategy cannot be discussed in detail, a brief overview should illustrate the similarities to Nissan. The French OEM was released three BPEVs in 2012 (Fluence ZE (Zero Emission), Kangoo ZE, Twizy ZE) and the Zoe in March 2013. This demonstrates that both partners
2010: 111-122). This restructuring is the main reason why some Japanese informants even regard Nissan no longer as a Japanese company. 118 The new generation battery is sometimes called lithium nickel manganese cobalt (LiNiMnCo) battery. Due to their lithium nickel manganese cobalt oxide (LiNiMnCoO2) cathode, this type is also referred to as NMC cells. Older LiIon types have litium cobalt oxide (LiCoO2) cathodes. 119 This system is not available in Austria, Denmark, Germany and Switzerland due to regulation that prohibits connecting the system to home’s electric circuit. 120 The second generation Leaf improved the (air) drag coefficient cd from 0.29 to 0.28, while the Infiniti LE achieved 0.25. According to Daimler aerodynamic specialist Teddy Woll, a reduction of 0.01 saves 0.04L/100km under European cycle testing (Auto, Motor und Sport, 18.10.2011). Studies applying US test cycle (Kobayashi et al. 2009; McCulloch et al. 2012) reach only slightly different conclusions, presumably due to different European and US test parameters.
179 heavily bet on the success of BPEVs. Renault plans to set up its own battery-production, but for the time being, it will procure batteries from AESC and LG Chem (Reuters, 15.06.2011). For the background of this study, it is worth mentioning that the French state is supporting this move, as it regards powering BPEVs with electricity from its nuclear power plants as an eco-friendly way to decrease CO2 emissions. Unlike in Germany this is a national consensus. The recent change from the conservative Sarkozy to Socialist Hollande administration was accompanied by an increase of consumer subsidies for BPEVs from € 5.000 to € 7.000 and from € 2.000 to € 4.000 for HEVs (Financial Times, 25.07.2012). This brief excursion again highlights that states follow different strategies of promoting innovative products which rest upon national interests and preferences. In 2010, collaboration between Renault-Nissan and Daimler was initiated: it centred on cooperation in small and light-duty vehicles as well as joint parts procurement for these types. However, joint development of a new small vehicle platform should also be commercialised with an all-electric, meaning BPEV, version and further, cooperation in battery- and electric vehicle components has been considered (Daimler 2010). As this rather vague formulation suggests, it is unclear if co-development in these future key components will be carried out. Thus, if this limited cooperation is going to be expanded cannot be stated. The FCEV development strategy of Nissan can be described as a mixture of all three ideal types: analyses of the patent data suggest that Nissan conducted limited R&D on FCEVs from the 1980s until the mid-1990s, before an increase occurs at the end of the decade (Yarime et al. 2008: 209f.). However, the first FCEV of the company, the 1999 R´nessa, was based on a methanol steam reformer jointly developed with Mitsubishi Kakoki Kaisha, the chemical engineering section of Mitsubishi, a LiIon battery and a PEFC stack from Ballard. With regard to the battery, it is likely that it is the result of the collaboration between Nissan and Sony. One year after the partnership with Renault was formed in 1999, Nissan announced that it would invest JPY 85 billion until 2005. It is unclear, how this development was conducted. The alliance is said to jointly develop fuel cells with UTC Power, formerly UTC Fuel Cells (Kunimi 2007: 257), a specialised fuel cell system developer. UTC Power is originally a subsidiary of the American corporation United Technology, but it collaborates with Toshiba, which invested in UTC Power. Further, there was cooperation through the firm HydrogenSource with Shell Hydrogen, but in 2004 both companies decided to dissolve this joint-venture (HydrogenSource 2004). If the description of Kunimi is correct must be doubted as UTC Power officially states that it provided fuel cells to Nissan, which the company also did for BMW and Hyundai-Kia (UTC Power 2010). This is confirmed by Nissan: the companies FCEV, the X-Trail, was powered by UTC fuel cell stacks in older versions, but the New X-Trail model of 2005 is equipped with an in-house developed stack (Nissan undated a; b). According to Nissan, this
180 stack was the first one to be independently developed by the company. So, relying on the information of the involved companies, it appears that Nissan has chosen a strategy similar to Honda. At the beginning, joint development and integration from external developed components occurred. When the R&D activities of Nissan translated into sufficient technology the company did not need to borrow components from specialised fuel cell system developers like UTC Power or Ballard anymore and consequently stopped procurement.
4.6.4 Daihatsu Daihatsu is a subsidiary of Toyota since 1998. Although the company has been labeled as the standard bearer of EV technology, Daihatsu is not very prominent among EV producers today. Rather, the manufacturer seems to concentrate on low-emission mini ICEVs while also selling HEV and BPEV versions of its mini van, the Hijet since 2002. Indeed, the official firm history (Daihatsu undated) confirms that the OEM has a long record of developing and testing EVs, making the label appropriate. Relatively high cost for EVs explain why Daihatsu is not among the leading OEMs today: its vehicles are all in the compact or mini segment, where price is a main sales criterium. Although other OEMs manufacture mini EVs, these firms are able to subsidise this business from more profitable segments. As Daihatsu lacks this option, the limitation to one model can be understood. Moreover, as the aforementioned Toyota iQ case demonstrates, even Daihatsu’s owner does not belief in a market for mini BPEVs. Hence, it cannot be expected that Daihatsu will receive any support from Toyota for going in this niche. Although Daihatsu is a relatively small firm and subsidiary of Toyota, it can conduct its own development strategy. An informant from Denso who knows both companies explained that due to Daihatsu’s specialisation in compact cars and relatively minimal overlap with Toyota products, the firms cooperate only on projects where such an overlap can be economically exploited. Further, cooperation is based on mutual agreement, not on orders from Toyota. Thus, Daihatsu may be compared to OEMs like Audi that also enjoy wide autonomy under the roof of the VW group. This may explain why Daihatsu is conducting FC R&D. In 2007, Daihatsu announced that it had developed a FC that did not require platinum in cooperation with AIST (Daihatsu 2007). As the reduction or elimination of platinum use is a major R&D topic, this news appeared to represent a breakthrough. However, such a FC must use hydrazine hydrate (N2H4H2O), which is potentially hazardous and therefore Daihatsu planned to store it in the form of safe hydrazone. Thus, while Daihatsu and AIST found a solution for the platinum problem, the use of this FC type would require a different refueling infrastructure. Therefore, it appears unlikely that this particular solution will be utilised. However, Daihatsu showed a concept based on this particular combination of platinum-free FC and hydrazine hydrate called FC ShoCase at the Tokyo Motor
181 Show 2011 and Thai Motor Show 2012. This case again highlights that there are numerous technical approaches that could potentially be applied.
4.6.5 Mitsubishi As Mitsubishi’s former partner Daimler focussed on FCEVs (see below), there seems to have been little cooperation towards joint development of BPEVs inside this particular alliance, so that its disintegration did not have significant impact on Mitsubishi´s R&D. Mitsubishi engaged a very different approach on its own. Development focussed on the i-MiEV, mini vehicles with in-wheel rotary motors, which would need less mechanical components and should be applicable to BPEVs, HEVs or ICEVs (Mitsubishi undated a). However, this innovative approach was not applied to the i-MiEV sales version121, which is sold in Japan since 2009 and was tested in various locations, e.g. Hong Kong. This commercialised BPEV version of the i-MiEV utilises LiIon batteries, developed in a joint venture called Lithium Energy Japan with GS Yuasa and a permanent magnet motor (Mitsubishi undated b). The case of Mitsubishi is interesting as the original concept concentrated on developing an energy efficient motor design that would be applicable for all vehicle types. Thus the idea was not to develop a powerful yet durable battery or fuel cell, but to construct a vehicle body and motor, which would need little energy, regardless if supplied by an ICE, a battery or a fuel cell. Nevertheless, the commercialisation as a “normal” BPEV suggests that this idea needs further development efforts before it is market-ready. In 2011, Mitsubishi released BPEV versions of its mini van and truck, dubbed Minicab MiEV, which are using batteries from Toshiba. According to news reports, the OEM sought a second Japanese battery supplier (Reuters, 21.01.2011). Concrete reasons for diversifying its battery suppliers are unknown. The open mini truck is mainly designed as a delivery vehicle while the van is directed at city dwellers with transport needs, e.g. at the Tokyo Motor Show 2011, the van was styled as a practical transport option for the musical equipment of rock bands. Since 2013, Mitsubishi also sells a PHEV version of its Outlander SUV. Drivetrain components for this vehicle have been derived from the i-MiEV and the LiIon batteries are supplied by Lithium Energy Japan. Although HEV can be described as the stepping stone towards BPEV, the Mitsubishi case illustrates even more clearly than the Honda’s approach that there is no linear model for EV subtype development. Mitsubishi Motors started relatively late with R&D on FCEVs. During the development process, there existed cooperation within the Mitsubishi keiretsu network, namely with Mitsubishi Heavy Industries (MHI) on FC system and reformer and with Mitsubishi Electric on electric
121 PSA Group sells the i-MiEV under the labels Citroen C Zero and Peugeot iOn. Mitsubishi produces the i-MiEV and both rebadged versions in its Mizushima plant in Okayama Prefecture.
182 motors and electric control systems (Weider et al. 2004: 52). When DaimlerChrysler acquired a large percentage of Mitsubishi Motors, the companies cooperated in FCEV development. Mitsubishi’s FCEV concept car Space Liner and the Mitsubishi FCV prototype both used DaimlerChrysler’s FC system making it unclear how much joined development actually existed. At least from the outside, it looks like Mitsubishi Motors simply used the more advanced DaimlerChrysler system. The same observation can be made for the few FCEVs that Chrysler presented, so that it would be more accurate to state that Daimler supplied its two partners during the “World Inc.”122 era. Mitsubishi Motors ended its R&D on FCEVs in 2006 in order to focus on other alternatives (Yarime et.al 2008: 213). As pointed out before, Mitsubishi Motors also does not cooperate through the FCCJ. The case of Mitsubishi is also important with regard to the aspect of learning and technology transfer or application. Mitsubishi Motors terminated efforts towards FCEV development, although MHI is among the leading companies in commercial and industrial applications of PEFCs (JETRO 2006: 5). It is necessary to qualify this position, because according to measurements, only 5 units were sold in 2005, but high growth potential was estimated.123 Nevertheless, the fact that one part of Mitsubishi group could start selling PEFCs for power generation, while another section of this keiretsu stops R&D on PEFCs for automobile use questions transferability of knowledge in the field of fuel cells. As it seems, knowledge transfer is difficult, even inside a company group like Mitsubishi. About the possible causes can only be speculated: application or miniaturisation of power-generation equipment towards automobile utilisation might be an issue. Also, the problem could be that transferability might be limited due to very distinct requirements of the specific end-use. Industrial units must perform less complex tasks than automobile ones, which are more subject to environmental effects like temperature or vibration and have to rapidly adjust their power output – due to acceleration and braking – while operating. Therefore, construction of transportation fuel cells might actually only gain limited expertise from insights into stationary applications. However, the main reason appears to be limited resources. According to Mitsubishi Motors President Masuko Osamu, his company lacks the financial and human resources to engage multi-pronged R&D on EVs (Nikkei Weekly, 13.04.2009). Thus, apart from the technical differences in FC applications that make know-how transfer complicated, this statement underlines that Mitsubishi was only able to present various prototypes with the support from its former partner Daimler. Therefore, it can be concluded that
122 This term was often used by then DaimlerChryler CEO Jürgen Schrempp to describe the vision of a globally active and dominating automobile OEM under Daimler’s leadership. 123 Newer data from MHI are not available. The author contacted JETRO and inquired if they conducted a follow-up study. JETRO replied that they received many similar requests, but did not conduct a follow-up study. In 2012, MHI and Hitachi agreed to merge their thermal power generation divisions, which include fuel cells (MHI 2012).
183 Mitsubishi concentrated its limited resources on BPEV development after this partnership ended. The latest release of the Outlander PHEV suggests that the OEM is now modifying its BPEV technology to produce different, but related EV subtypes.
4.6.6 Mazda In the case of Mazda, there appears to have been a higher degree of cooperation between the partners namely the larger Ford and the smaller Mazda. Mazda started its activities concerning fuel cells in 1991, but its first FCEV (Demio FC-EV) was presented in 1997. The car used a PEFC stack developed in-house and ultracapacitors to assist acceleration. Having conducted R&D on FCEVs on its own earlier, since Ford acquired a controlling interest in 1997, Mazda is linked to the alliance surrounding Ballard (see below). The new Demio version from 1999 was equipped with an improved FC stack, which is said to be the result of inter-alliance cooperation (Weider et al. 2004: 67). The 2001 Mazda Premacy FC-EV used a Ballard FC stack and an electric motor from Ecostar124. It was developed in cooperation with Ford’s TH!NK subsidiary, a specialised EV sub-brand. Mazda’s first HEV, the Demio e-4WD released in 2002, utilised a hybrid system to improve trajection via 4-wheel-drive, not for reducing fuel consumption. In 2008, the Tribute became available as an HEV. The Tribute was assembled in the USA and it employed the same hybrid system that was used in the Ford Escape and Mercury Mariner, thus being developed by Ford. All models were assembled in Ford’s assembly plant in Claycomo, Missouri. After only two years, production of the HEV variant was halted, while its siblings were produced until 2012. If this is related to the sell of Mazda shares during the financial crisis or low demand is unclear. This business relationship seems to have been weakened as Ford sold about 20% of its shares in 2008, apparently because the company suddenly needed capital to withstand the financial crisis. Although Ford sold a substantial amount of shares, with 14.9% it remained the single-largest shareholder of Mazda in 2010. Ford further reduced its shares to presently 2.1% (Mazda 2013). It is unclear how divestment is going to affect collaboration between these car producers, including Mazda´s access to fuel cell technology through Ford. Parallel to these activities that seemingly relied on Ford’s support, Mazda explored a rather unique approach towards alternative vehicles: instead of FCEVs or BPEVs, the company wants to use hydrogen to fuel its ICEs. This idea is partly pursued by BMW (see: 4.6.10), but the recent deal between the German OEM and Toyota leaves Mazda as the only car-maker that favours hydrogen-ICEs. Mazda seems to believe that its Wankel engines125 possess superior capabilities for this task than the standard Otto engines (Nieuwenhuis 2009: 142). The very first concept car (HR-X) based on this idea was presented at the 1991 Tokyo Motor Show. Its
124 Ecostar is a joint-venture by the Ballard alliance members, which is focused on electric drives. 125 Mazda is the only mass producer using Wankel engines in a larger number of models. While conventional Otto engines are based on reciprocating pistons, Wankel engines utilise a rotary piston.
184 successor (HR-X2) was presented in 1993 and tested for one year (1994) on Nippon Steel premises, before being tested on public roads from 1995-97 (Weider et al. 2004: 67). At the Tokyo Motor Show 2003, the firm showcased the RX-8 Hydrogen RE, a bivalent126 version of the RX-8 sports car, meaning that it could operate with hydrogen and gasoline alike. In 2005, the Premacy Hydrogen RE Hybrid was released, a hybrid that combines a bivalent Wankel engine with a NiMH battery. In 2007, Mazda released the second generation that combined an improved engine with a LiIon battery, which doubled the range from 100 to 200km. The company started leasing the latest version to a company and state agencies close to its headquarters in Hiroshima in 2009 (Mazda undated). In the same year, the OEM delivered three of these vehicles for testing to the Norwegian HyNor demonstration project. Although the company is active in both, FCEV and hydrogen ICE, Mazda seems to regard hydrogen-ICE technology as a stepping stone on the way towards FCEVs and possibly an option which is able to rival FCEVs altogether. Despite its rather unique approach towards alternative vehicles, Mazda struck a deal with Toyota in 2010 (Mazda 2010): Mazda obtained access to the Toyota Hybrid System under license and intends to combine it with its latest generation of ICEs, which are called Skyactive. While further information is not available, there are two possible explanations. Firstly, it is possible that licensing Toyota’s hybrid system is cheaper than the production cost for the in-house developed one. Secondly, hydrogen-HEVs face the problem that there are few hydrogen filling stations. Thus, these vehicles are hardly operable for private customers. From 2012, Mazda started leasing around 100 Demio BPEVs in Japan’s Chūgoku region127, which encompasses prefectures close to Mazda headquarters (Mazda 2012). According to the OEM, the LiIon batteries used are based on consumer electronics, such as laptop computers (Matsui et al. 2012: 125-129). This indicates that instead of developing specific traction batteries, Mazda devised its own battery management system which allows the use of much cheaper, fully industrialised portable cells. Hence, it can be concluded that the limited financial resources and the downscaled alliance with Ford led the relatively small OEM come up with a different concept than most of its competitors.128 Mazda’s EV development combines its idiosyncratic technologies such as hydrogen-ICE and Skyactive engines with technology from partners such as Ford and Toyota. As Mitusbishi, Mazda appears too limited in size to engage development of all subtypes on its own. Nevertheless, Mazda is capable to devising its original, somewhat unconventional solutions.
126 This means that the motor can utilise both, hydrogen and gasoline. Hence, Mazda’s hydrogen ICEV also had a gasoline tank to ensure greater range. 127 Chūgoku is constituted by Hiroshima, Shimane, Okayama, Yamaguchi and Tottori prefectures. 128 US start-up Tesla used a similar approach with the same 18650 battery type for its first model, the Roadster.
185 4.6.7 Suzuki Unlike other smaller OEMs, Suzuki employed an incremental strategy towards commercialisation. After testing several BPEV prototypes in the 1980s, Suzuki was the first smaller car-maker that followed larger competitors’ lead towards HEVs. Between 2003 and 2005, it sold a HEV version of the mini car Twin. While the general sales performance of the so-called kei-cars was successful and Suzuki reported that it defended the position as the leading producer in this segment between 2003 and 2005 (Suzuki 2004: 5; 2005: 5; 2006: 5), no detailed data are available how many HEV versions Suzuki actually sold. However, the OEM ended production of the Twin after 2005. Subsequently, the OEM did not have any EV in its product range. Suzuki cooperated with US manufacturer GM in FCEV development since 2001. This joint effort continues despite the GM sale of Suzuki stock in November 2008 (Suzuki 2009: 27), like in the Ford-Mazda case, caused by the financial crisis. One result of the partnership is the Suzuki MR Wagon FCV, which was released 2005 and employed a modified FC system originally developed for GM’s HydroGen 3 van (Eberle/von Helmolt 2010: 695). According to Suzuki’s the company continues development of FCEVs. Since 2010, its SX4 FCV participates in JHFC (Suzuki 2010: 27). Suzuki is also developing fuel cell- and battery-powered scooters (Suzuki 2009: 27; 2013: 15), thereby applying these technologies to one of its key products, motorcycles. Regarding FC technology, Suzuki is mainly using technology developed by its partner, but due to the mainly small size of their vehicles and motorcycles, the Japanese OEM has to decrease the required space of the components. Hence, although the partnership is driving down development cost, Suzuki still has to engage in the adjustment, meaning incremental development of FC components provided by GM. Although Suzuki strengthened its ties to Volkswagen in 2009 supposedly to compensate the decreased role of GM as a strategic partner, this partnership already proofed to be confrontational and rather unproductive. It appears that both companies had fundamentally different expectations of how their partnership would work and there are no signs of technology transfer between these two OEMs. Therefore, it is currently unclear if Suzuki still has access to GM technology or if it gained sufficient experience to become independent from external technology. The same applies for other EV subtypes: it is unclear if Suzuki is capable to develop EVs independently. Although it showcased a Swift PHEV version at the Tokyo Motor Show in 2009 and Nikkei Shinbun reported in 2011 that it should be available from 2013, commercialisation is unclear as Suzuki has never verified this news and so far no official decision has been made. Thus, while prototypes suggest continued development, it is uncertain how successful this process is. Hence, at the moment it cannot be judged if Suzuki is capable to develop and sell
186 EVs at a viable price independently or not.
4.6.8 Subaru The automobile producing section of Fuji Heavy Industries, Subaru, has a long history of having larger OEMs as strategic shareholders. Stemming form the aforementioned concentration efforts by MITI during the Sato administration, Nissan held 20% of Subaru shares from 1968. When Nissan entered into the Renault alliance, Subaru shares were sold to GM in 1999. In 2005, GM sold 8.7% to Toyota and later sold all its shares. Since 2008, Toyota increased its share to 16.5% and both manufacturers cooperate in several fields. Unlike the larger Japanese OEMs, Subaru did not start with HEV production, but directly went for BPEV, meaning that it applied a revolutionary strategy. Efforts concentrated on creating a compact BPEV and the first prototype dubbed R1e was tested jointly with TEPCO and the prefectural government of Kanagawa in 2006 and 2007 respectively. Although the R1e never entered serial production, its system was refined and delivered the blueprint for the Stella EV, which was released in 2009 (Subaru undated) . Just recently, Subaru announced a HEV version of the XV compact SUV and the OEM claims that it features an in-house developed hybrid system customised for Subaru’s characteristic boxer engines (Subaru 2013). While Subaru does not provide more information, it appears that it chose a parallel design, so that possible cooperation with Toyota appears unlikely. However, Subaru demonstrates that despite an initially revolutionary approach, OEMs may later use their know-how to branch out into other subtypes.
4.6.9 Daimler Turning to German OEMs, the picture is different. Daimler has the strongest record in FCEV development of all German car-makers and is also regarded as the pioneering company globally. The company began R&D on hydrogen-ICEs in 1974 and intensified its efforts after the second oil crisis in 1980. Prime reason for the efforts made by Daimler was the expectation that stricter local air pollution regulation would be implemented after initial legislation made the catalytic converter compulsory. Research results were embodied in 5 Mercedes 280 TE which used a hydrogen-gasoline mixture and 5 Mercedes Transporter 310 that used pure hydrogen (Weider et al. 2004: 37). Those 10 cars were tested under realistic conditions by the municipal administration as well as taxis, emergency and patient transport ambulance in a demonstration project from 1984-88 that was located in Berlin. After initial R&D on hydrogen-ICEs, Daimler engaged fuel cell related development since 1993. It is necessary to point out that there was already some experience with fuel cells as Daimler subsidiaries Dornier and MBB dealt with the technology for spaceflight projects. It has been claimed that Daimler started utilising this expertise after the European “Hermes” spacecraft
187 project was cancelled and the development team was looking for other applications within the company (Budde et al. 2012: 1077). This suggests that FCEV development was not the result of company planning, but rather a by-product of Daimler’s aeronautics subsidiaries and their R&D efforts. Moreover, only the failure of the original plans let to the investigation if this technology could be used for automobiles. This again illustrates that innovative activity might originate in the absence of planning. However, as already highlighted in the case of the Mitsubishi keiretsu, it is unclear how much knowledge is actually transferable from stationary to automobile applications. Apparently, Daimler seems to have been more successful in developing FCEVs than Mitsubishi Motors, but it is not clear if the company was more capable to transfer knowledge than its Japanese competitor, or if it simply invested more into the development process. Further, Daimler cooperated with experts from the German electronics company AEG, which was partly acquired by Daimler and transformed into nowadays DASA, in electrical motor and power electronics development. Also, Daimler cooperated from the beginning with the Canadian fuel cell specialist Ballard. First result of Daimler’s fuel cell R&D was the so-called NECAR I129, which is said to have attracted so much internal attention that the OEM started to concentrate its EV development efforts on FCEVs (Budde et al. 2012: 1078): The following prototype NECAR II was regarded as an even bigger step forward, because the engineers managed to minimise the FC system. In 1997, a major change happened: the internal status of the project shifted from ‘basic’ research to ‘development project’. This means that the technology was regarded as sufficient to now aim for commercialisation, thus moving from development of technology to integration of this technology in marketable products. Such confidence in the company’s ability to commercialise FCEVs was openly communicated: In 1999, when the NECAR IV was presented, Daimler(Chrysler) CEO Jürgen Schrempp stated that the development of FCEVs was over, price reduction was the remaining issue and that its company would bring down the cost of FCEVs to that of ICEVs by 2004 (Weider et al. 2004: 36). However, in 2002, it became clear that this aim was unrealistic and commercialisation was re-scheduled for 2010. When Germany initiated its own demonstration program for hydrogen-based vehicles in 2004, CEP in Berlin, Daimler became the major participant.130 Irrespective with earlier problems with keeping the schedule, Daimler seems to have had sufficient confidence in its early concentration on FCEVs: the company had announced to begin serial production in 2015, but then declared its intention to start in 2014. Announced plan was to begin production to manufacture 200 FCEVs annually to become ready for serial production by
129 This is wordplay: the acronym officially stands for New Electric Car, but it also references to the river Neckar, which is floating through the city of Stuttgart, the location of Daimler headquarters. 130 Daimler participates with 90 (B-Class) F-Cells, while other partners like Ford (3), Honda (2), Toyota (5) and VW (4+ 2 Audi) test significantly smaller numbers (CEP undated).
188 2014. The first model available as a FCEV will be the (B-class) F-Cell, which will be later followed by C and E-class. Since Daimler has tested the F-Cell extensively, it appears that the company is going to utilise the experience gained for beginning commercialisation. However, this plan was again delayed. In 2013, Daimler initiated cooperation with Nissan and Ford in the development of a common FC stack and system to launch affordable FCEVs by 2017 (Daimler 2013). Further, the final F-Cell price has not been decided. The three partners explicitly state that they want to signal policy makers and suppliers to encourage investment in hydrogen infrastructure and FC technology. According to press reports, the agreement is aiming at 100.000 units, which are equally distributed among the partners and the delay is accepted by Daimler to enable further cost reductions (Manager Magazin online, 28.01.2013). Aforementioned model policy will remain intact. Daimler appears to be convinced that its plan can be realised, because it teamed up with German technical gas supplier Linde to build 20 publically accessible hydrogen refilling stations across Germany, which will require an estimated joint investment of € 20 million. To illustrate the magnitude of this initiative, following numbers must be considered: currently, there are only 30 hydrogen refilling stations in Germany and only 10 are open to the public. Hence, the initiative of Linde and Daimler alone will increase the number of public stations by 200%. Although this number is insufficient for nation-wide coverage, it could be enough to set up model-regions or to provide north-south and east-west corridors along German highways. Another aspect is the notable preference of FCEVs over hybrids or BPEVs. The reason behind this seems to be the strong conceptual engineering approach (Berndt/Metzner 2004: 43): this means that it was easier for Daimler to accept the idea that oil and internal combustion would be replaced by hydrogen and FC stack in the future as a completely new automobile concept than deciding to develop hybrids which represent a compromise between combustion-based and electric mobility. This dislike for technological and engineering compromising can explain why there was much more internal support for FCEV development than for hybrids, which were regarded as a second best solution. Moreover, Daimler’s specialisation into heavier luxury cars also made FCEVs more attractive than hybrids. That this view persists is reflected by the aforementioned statement of CEO Zetsche. Although the case of Daimler is characterised by many announced introduction dates and subsequent delays, there is a clear strategy towards FCEV development since the early 1990s. One can state that Daimler’s proactive, sometimes overoptimistic, pursuit of FCEV introduction and alliance creation acted as the ignition that started the global competition towards this type. Considerable sums have been invested: head of market development Klaus Bonhoff131 stated
131 Bonhoff’s career is particularly interesting as it shows how interrelated science, industry and politics can be: after becoming an engineer, he worked at FZJ, went on to work for DaimlerChrysler, where he
189 that around € 500 million, sometimes even the double, were invested per year (HZwei, 04/06: 7). No other OEM has displayed such a clear preference for FCEVs as the future of automobile transport. The latest alliance with Nissan and Ford suggests that there are two main issues for commercialisation. First, there is still no sufficient infrastructure, which posses a typical chicken-egg-dilemma. Second, the price of a FCEV still appears to be at such a high level that OEMs and suppliers need high economies of scale to commence economically feasible production. As Daimler has primarily focussed on FCEV development, HEV and BPEV R&D and models are rather rare. While the first BPEV prototype of the Daimler group released in 2007, the Smart Fortwo ED (Electric Drive), was based on technology of UK’s Zytek, the OEM shortly afterwards teamed up with another partner. Like Toyota, Daimler has bought itself into US Tesla Motors to get access to the technology, in particular electric powertrain components and battery packs, of the start-up. Interest in Tesla is reflected by the fact that Daimler Vice President E-Drive and Future Mobility Herbert Kohler sits on Tesla’s board of directors. The second generation Smart Fortwo ED, used Tesla battery packs, but the latest third generation utilises batteries from Daimler’s joint venture with German Evonik Industries called Deutsche Accumotive. According to news reports that rely on information from Smart chief brand manager Annette Winkler, the Smart Fortwo ED is the first BPEV or HEV in Germany that is primarily acquired by private customers, not fleet operators (auto motor & sport, 23.03.2013). Daimler released a parallel HEV version of its flagship model, the S400 Hybrid. Its LiIon battery has been jointly developed by Continental and Johnson Controls-Saft Advanced Battery Solutions, a joint venture between US supplier Johnson Controls and French battery producer Saft (Green Car Congress, 11.06.2009). Daimler’s latest announcements at the New York International Auto Show 2013 contained the B-class ED. Key components such as the LiIon battery, e-machine and powertrain are borrowed from the Tesla Model S (SZ online, 30.03.2013).132 It is noteworthy that the B-class ED will be released in 2014 in the USA, while availability in the European market is not yet scheduled. Similarly, Daimler recently launched a dedicated BPEV brand named Denza with its joint-venture partner BYD in China. BYD is a battery producer who entered automobile manufacturing in order to develop BPEVs since 2003 (Spiegel online, 14.03.2010). Both partners announced that Denza models will be available from 2014. The BPEV is based on an older B-class platform, but it stands to reason that Daimler chose this particular platform as it was used in former prototypes. This step is due to pressure
already became involoved in an advising council for CEP, and then became spokesperson of NOW’s management board. 132 Similar to the Tesla Roadster and Mazda Demio BPEV, the Model S uses commercial cells that are usually used in laptop computers. Battery cells are produced by Panasonic, which again underlines the importance East-Asian electro-chemistry firms.
190 from the Chinese government to create so-called “New Electric Vehicle” subbrands. This again suggests that OEMs are reacting to regulative pressure and brand image considerations. At the same time, it appears that Daimler is pursuing a strategy that relies on Tesla Motors to compensate technological weaknesses and simultaneously seeks to overcome these by developing generic technology through in-house R&D and joint ventures. Summing up, it can be stated that Daimler has the strongest focus to FCEV development of all competitors. This priority led to a weaker profile in BPEV technology. Hybrids were completely neglected and only introduced when Daimler experienced market demand, especially from the USA. It appears that Daimler’s coping strategy is allying with producers such as BYD and Tesla that appear to have strengths in battery and electric drivetrain technology, operate in an important global market outside Europe but have no experience in vehicle production. Thus, besides technology exchange, these partnerships offer access to key markets. A noteworthy detail is that after the first miniaturisation efforts bore fruit, Daimler initially used the A-class to develop EV prototypes. Then, the focus shifted to the B-class, on which most EV models, except Smart Fortwo and S-class hybrid versions, produced in mini series and scheduled for commercialisation are based on. This suggests that the original idea was to produce subcompact city EVs, but apparently, this concept only survived in the Smart and Daimler shifted its focus to compact van (B-class) and high-end luxury (S-class) segment. Daimler was relatively quick to develop and fully commercialise the Smart (5 year after the first prototype or 3 after its partnership with Tesla) and S400 Hybrid (2 year after teaming up with Tesla), which suggests that the company either has a well functioning R&D department or allied with competent partners.
4.6.10 BMW Similar to Daimler, BMW started its activities on hydrogen-ICEs due to local air pollution regulation, but four years later in 1978. The first prototype was unveiled one year later: It resulted from BMW’s cooperation with DLR. It has been highlighted that three characteristics of this first prototype can be found in all following generations of BMW’s hydrogen ICEs (Weider et al. 2004: 27): First, liquified hydrogen was used and second, stored in a cryogenic tank. Third, a bivalent ICE was used for propulsion. This fact highlights two aspects: First, BMW can be described as an engine-focussed car-maker (Berndt/Metzner 2004: 43f.). Consequently, the company chose a strategy that fitted its expertise and identity. Second, this continuity is a good example for the incremental development trajectory of firms. Building on the original design and characteristics of the first prototype, BMW steadily improved the components that constitute their hydrogen ICEVs. BMW continued its R&D on hydrogen ICEs and tested those vehicles, mostly in demonstration projects like the aforementioned SWB in its
191 home state Bavaria (Weider et al. 2003: 10). As described earlier, BMW engaged in BPEV development in the 1980s and was optimistic enough to aim for commercialisation in the 1990s. Thus, the OEM initially developed FCEVs and BPEVs in parallel. However, it appears that the Rügen project largely was a nail in the coffin for BPEV R&D and hydrogen-ICEs became the OEMs main option for non-fossil fuel propulsion systems. Interestingly, the initial hydrogen strategy resembles Mazda’s approach, as both firms concentrated on hydrogen-ICEs. Fuel cells were only secondary for BMW: in its fifth generation hydrogen-ICEV (750hL), which was showcased in 1999, a PEFC supplied by UTC Fuel Cells, was used as an auxiliary power unit (APU). It replaced the conventional battery, hence was not used for propulsion but for powering internal systems. In 2001, BMW unveiled the 745h, which also utilised a PEFC-APU and Mini Cooper Hydrogen, which was the first model that used a monovalent hydrogen-ICE, hence only used hydrogen. In 1999, BMW had agreed with Renault and US supplier Delphi to develop a SOFC-APU to replace normal car-batteries. Although initial results were presented in 2001 and 2003 (BMW 2003), the current status is unclear. “BMW perhaps dropped out SOFC APU development […]. Nonetheless, BMW could likely reconsider the use of SOFC APUs for its passenger cars if viable SOFCs are developed.” (Hikosaka Behling 2013: 326) While other OEMs participated in various demonstration projects with FCEVs, BMW continued to put forward its hydrogen ICEVs: 15 750hL prototypes were first showcased at the EXPO 2000 in Hanover and then send to twelve publicity events133 dubbed the Clean Energy World Tour. BMW also participates in CEP in Berlin. In 2008, the OEM supplied 21 Hydrogen 7 and 2 Mini E to the climate summit in Poznan, Poland (HZwei 01/2009: 26). At that time, BMW had reportedly aborted its FC R&D programs and instead planed to concentrate efforts on HEV, PHEV and BPEV development as the firm believed that FCEV development is too expensive and was not going to result in marketable products (Auto Bild online, 08.12.2009). 2010 marks a visible break: BMW withdrew its hydrogen-ICEs from CEP and the OEM announced that for the time being there would be no more demonstrations. CEO Norbert Reithofer stated that new prototypes would only be developed after progress had been achieved in cryogenic tanks (Handelsblatt online, 04.01.2010). Until today, no news about this subject are available and either BMW continous to work on the tank or it has given up its plans for towards hydrogen-ICEs altogether. This second option would partly explain the latest business decisions: Recently, BMW seems to
133 Destinations in 2001: Dubai, Brussels, Milan, Tōkyō, Los Angels and Berlin. Sacramento, London, Stockholm, Montreal, Johannesburg and Singapore were visited in the following year. BMW presented the technology at well known locations. In Japan, the cars were photographed in front of Kyōto’s Kinkaku-ji to symbolise the eco-friendliness of the cars as a contribution to the Kyōto Protocol.
192 have changed its view on FC technology fundamentally. As R&D in this field has been largely neglected, it was clear that a partner was needed. In 2012, BMW and GM discussed cooperation terms, but BMW ended these talks and instead enter into negotiations with Toyota (Spiegel online, 28.06.2012). Results were announced in January 2013: both OEMs would cooperate in the development of FC stacks and system, light-weight construction, the development of lithium-air batteries and jointly develop a platform for a mid-sized sports vehicle (BMW 2013). While the official statement stresses the joint nature of the developments, it is rather clear that the car-makers exchange specific know-how: Toyota is providing the bulk of expertise on FCEVs and advanced batteries, while BMW is sharing its knowledge on light-weight construction and sports car design. Similar to FCEVs, BMW also made a dramatic shift towards BPEVs. It created the subbrand “BMW i” for its EVs. Two different models have been announced: i3 should be a compact BPEV, while the i8 is a sporty parallel PHEV that is supposed to translate BMW’s brand image into electric drives. Both vehicle bodies will be made from carbon. In case of the i3 which is going to be released in autumn 2013 in Germany, only the basic frame (called drive module) which also holds the battery pack will consist of aluminium, the rest of the body (called life module) will be glued together from pre-shaped carbon parts. BMW is the first OEM to switch body production from steel and aluminium to even lighter carbon in serial assembly. While the technology is feasible, the issue is economic viability: 1kg of carbon currently costs 10 to 15 times more than 1kg of steel. Know-how is mainly coming from SGL Group134, a company specialising in carbon products. SGL and BMW founded the joint venture SGL Automotive Carbon Fibers to manufacture BMW i EVs. The joint venture opened a carbon factory at Lake Moses (USA), which is completely hydro-energy powered to underline the ecological character of the cars. As carbon fiber production requires temperatures of 1400°C, this step appears necessary to be credible as an eco-friendly car. Reduced weight should compensate the still high weight of traction batteries and increase the effective range which according to BMW will be between 130 and 200km, depending on terrain and driving style. Investments into production facilities and acquisition of SGL Group stock indeed suggest that BMW is determined to make this strategy work. Moreover, the OEM offers the i3 base version at € 35.000 in Europe and $US 41.350 in the USA, which is relatively low. Therefore, it can be
134 In 2011, one of BMW’s shareholders (12%), Susanne Klatten, increased her shares of SGL Group to 27.27%. In 2013, she became chairwoman of SGL’s advisory board. Klatten, her mother and brother, who all belong to the Quandt family, jointly own 46.7% of BMW shares. Further, BMW owns 15.72% of SGL. Thus, through a combination of direct and indirect ownership, Klatten ensured BMW’s access to a possible future key technology. The move was seen as a reaction to the prior acquisition of 8.18% of SGL shares by VW (FAZ, 19.05.2011). Another 10% are owned by Voith, a supplier which cooperates closely with Audi.
193 concluded that BMW rather intends to sell a high volume at low profitibility than few units at higher profitibility. However, it is noteworthy that BMW also offers a version with an ICEV motor and small gasoline tank to enable maximum 340km range, which effectively means that there is also an i3 REEV version to address “range axiety”. The REEV version will cost € 40.000, which is much closer to competitors such as the Opel Ampera. Therefore, it is possible that BMW offers a relatively low base price for the BPEV but expects consumers to opt for the safety of the REEV version. Be there as it may, as BMW did not release detailed data on development cost, only vague estimates of several billion Euro exist (HAZ, 03.08.2013), which means that the BMW i brand will take a long time to reach the breakeven. It remains to be seen if other OEMs are going to follow BMW’s example. It will probably depend on the performance of the i brand. Addressing skeptics of this unique strategy at the annual shareholders meeting, BMW CEO Norbert Reithofer stated: “Every branch needs someone who leads the way.” (SZ online, 14.05.2013) Noteworthy are the locations BMW chose for the official presentation of the i3: the BPEV was simultaneously presented in London, New York and Beijing, not as usual at BMW headquarters in Munich. This can be interpreted as a sign that the OEM sees the German EV market as problematic or expectations that foreign markets will be more important for success than its home market. In China, BMW faces the same pressure as Daimler and reacted in a similar fashion: it founded the brand Zinoro together with its partner Brilliance. A prototype was recently showcased at the 2013 Shanghai Motor Show and production is scheduled to start in 2014. Therefore, it must be concluded that BMW broke the initial path-dependence of its approaches and changed course. Regarding FCEVs, its partnership with Toyota is central to the new strategy as BMW has neglected research in this subtype for a long time. Regarding BPEVs and PHEVs, BMW combines its expertise with that of SGL Carbon to develop a radically new EV concept. Also, the partnership with Toyota could provide access to advanced battery technology for future battery-based models. While the carbon strategy appears risky, management appears to have the full support of the majority shareholders, the Quandt family. This should allow pursuing a long-range strategy towards EV commercialisation and explains why the OEM chose a strategy built on carbon vehicle bodies.
4.6.11 Opel GM subsidiary Opel was the first German OEM to start selling an EV that was affordable for regular consumers. As aforementioned, Opel participated in the Rügen project during the 1990s to test early prototypes. Regarding strategy, the commercialised model indicates an incremental approach: the serial Ampera REEV is technicaly identical with the GM Volt. Both vehicles
194 were primarily developed at Opel’s R&D headquarters in Rüsselsheim. 135 Despite its contribution, it appears that Opel’s strategy is heavily influenced by GM. However, the car-maker, which is in deep financial troubles, appears to be unsatisfied with the economic results and therefore intends to scale down EV related activities. In an interview, Opel Chairman Steve Girsky stated: “With Ampera and Volt, we hold a third of the HEV market – but what is it good for if not even 10.000 cars per year can be sold in Europe. GM almost has three new PHEVs ready for serial production, but considering the number of units that [our] sales [department] is confident in achieving, they would end up in the red. We are ready, unfortunately the market is not.” (SZ online, 13.04.2013; author’s translation) Indeed, as a brand focussed on the European market, Opel has two difficulties in regard to selling the Ampera. First, the European market is shrinking due to the debt crisis that makes consumers delay or refrain from big investments. Second, with a sales price of € 45.900, the sedan is more expansive than comparable ICEVs. Although not all European countries are giving as little consumer support as Germany, the price seems to be too unattractive for customers. Therefore, Opel lowered the price to € 38.300 in September 2013, which is a 16.5% reduction. This step highlights Opel’s problem in commercialising EVs: initially, these vehicles will have to be cross-financed from regular sales. As Opel is already recording deficits, internal subsidisation is not viable. However, delaying EV commercialisation could further undermine Opel’s image, leaving brand managers being caught between a rock and a hard place. Regarding FCEVs, Opel is closely integrated with its mother company. Since GM founded its Global Alternative Propulsion Center in 1998, Opel’s R&D facility in Mainz-Kastel is one of three sites responsible for FCEV development. Concrete tasks are system development, FC system integration into a vehicle and vehicle testing (Weider et al. 2004: 72). Thus, it appears that while GM handles continuing basic R&D, Opel is mainly charged with applying group internal technology. It released the HydroGen prototype in 2007. Its main component, the FC stack has been developed by GM. GM clearly uses its global network to demonstrate technology. Opel’s HydroGen is identical with the Chevrolet Equinox that GM uses to demonstrate FCEV technology in other countries. As GM follows a globally integrated strategy, Opel cannot develop an independent strategy. Thus, there is a sharp difference between Opel and Suzuki: while the German subsidiary is fully integrated into GM stragety, Suzuki’s cooperation was based on mutual agreement. Further, the integrated approach obscures how much Opel is
135 The Rüsselsheim R&D centre is developing small car platforms for the whole GM group. The GM case is noteworthy since it partly contradicts and verifies earlier findings about globalised R&D. GM assigns R&D facilities outside of the USA global development and design tasks: besides Rüsselsheim, GM’s Torino facility is the global development centre for Diesel engines. Thus, GM internationalises its R&D activities, but mainly in triad countries.
195 contributing to GM’s development. While it is clear that the contribution to the Ampera was substantial, information on FCEV development is opaque.
4.6.12 Volkswagen VW’s EV approach must be characterised as cautious and incremental. As the participation in various German and European R&D programs and projects shows the car manufacturer continuously engaged development but VW always remained rather careful about predicting the future. VW’s first HEV available for the general customer was the Touareg Hybrid SUV. As mentioned earlier, the price made it rather unaffordable for average customers. Therefore, VW’s enterance to the EV market was largely symbolic. Exactly the same conclusion must be reached for Porsche’s Cayenne S Hybrid, the Touareg’s sister model build on the same platform. In March 2013, VW launched the Jetta Hybrid. It is the first model that is directed as the mass market. However, there are different versions for the US and European market: the US version is lower priced ($US 24.995) and with less extras then the European one (€ 30.000). This pricing policy is mainly due to the fact that the Jetta Hybrid has to compete against models like the Prius in the USA, which have a considerably higher sales volume of EVs than Europe. In Europe, the price is identical to that of the Jetta with the most powerful Diesel engine. As European producers have invested considerable sums in Diesel technology and marketed it as eco-friendly due to lower fuel consumption, VW seems to leave it to consumers to decide which technology they regard as less polluting. Latest announcements of several VW brands suggest a twofold approach towards PHEVs and BPEVs. The OEM announced that it will produce a mini-series of 50 XL1 PHEVs (Handelsblatt online, 22.02.2013). This two-seater should run on less than one liter Diesel per 100km. Although this release is a highly symbolic step, it can be regarded as a sort of trailblazer. VW will launch the BPEV version of the Up this autumn at the price of € 26.900. As the base version of the Up costs € 10.000, the price shows that VW still has high production cost for this technology. VW intends to launch a BPEV version of the Golf this year and a PHEV in 2014. Audi has announced plans to put an A3 e-tron PHEV on the market in the same year (Handelsblatt online, 20.02.2013). As both, Golf and A3 are based on the same new platform, called MQB136, this embodies the first approach: VW group plans to first standardise electric drive-relevant parts and components for this particular platform and then use economies of scale to release affordable PHEVs or BPEVs. According to VW, MQB allows decreasing production cost by 30%, which suggests that VW group companies will be able to offer competitive prices for MQB-based EVs. Moreover, under the current circumstances, VW has the financial muscle
136 The acronym stands for German “Modularer Querbaukasten”, which may be translated as “modular tranverse (engine) building set (or matrix)”.
196 to cross-subidise EV commercialisation until profitable economies of scale have been reached. Porsche plans to release the 918 Spyder and Panamera as PHEVs. Apparently, this represents the second approach: As Porsche vehicles are already luxury items, customers are willing to pay a high price for the product anyway. Therefore, it is unproblematic to charge premium prices. Moreover, the Porsche brand can demonstrate that it is not just about powerful gas-guzzling (sports-)cars. Of course, the first approach is much more important for the economic success of the VW group, but luxury brands like Porsche contribute to the overall image. Given the prevailing public skepticism about EVs in Germany, cars like the 918 Spyder are symbols for the pure fun of driving. Although this model is unfit to represent eco-counciousness, it may be more important to signal the public that EVs are fun to drive than to pander to consumers’ eco-friendlyness. Taken together, all these initiatives suggest that VW is about to enter the stage of beginning PHEV and BPEV commercialisation. Regarding the current policy in Germany, it should be noted that the initiative seems not to rely on national support. Seemingly, MQB allows VW group to realise significant cost reductions, which the company is utilising for increasing the quality of its products.137 Hence, it can be stated that VW group is more confident in its technological driven platform and brand strategy than in state subsidies. Therefore, it appears that the car-maker is more relying on its firm-internal technological innovativeness than on German state institutions. However, as aforementioned, it could be possible that the administration follows the council of NPE experts by introducing consumer subsidies from 2014. Regarding FCEVs, VW can be described as the most cautious German car-maker. In comparison to competitiors, VW began R&D on FCEV technology relatively late. The company headed an EU R&D program called CAPRI138, which lasted from 1996 to 2000. Total budget was estimated at around € 4 million, from which € 2 million were covered by the EU (Weider et al. 2004: 124). Collaboraters intended to create a prototype based on VW’s Bora sedan: It allegedly utilised a Ballard FC, which was fed through a methanol reformer. However, if this project was finalised is unclear, as the result was never presented to the public. Instead, VW presented its first FCEV in 2000. The Bora HyMotion prototype operated on liquefied hydrogen for a FC stack from UTC. As this car is quite different from the one investigated in the EU project, it could be stated that insights gained from this project led VW to follow a different development path. VW participated with this car at the California Fuel Cell Partnership
137 Although VW communicated the 30% cost reduction, it also stated that these savings will not result in lowered consumer prices. Instead of reducing the price, VW introduces technologies that until this point have been largely confind to the luxury segment. Thus, VW seeks to gain customers by increasing quality, not by reducing prices. 138 Acronym stands for “Car Autothermal Process Reactor Initiative”. Partners were Volvo, British special chemical firm Johnson Matthey (which produces catalysts for emission control) and Dutch research institute ECN.
197 (CaFCP). In 2002, VW presented the Bora HyPower, which was jointly developed with Switzerland’s Paul-Scherer-Institute. This prototype used a FC stack developed by the institute and the Swiss Federal Institute of Technolgy, better known as ETH Zürich, and co-financed by the Swiss Energy Agency. In 2004, VW participated with its latest prototype, the Touran HyMotion in the CaFCP Road Rallye. In the same year, VW subsidiary Audi showcased the A2H2, a FC hybrid that was powered by a PEFC stack and a NiMH battery. R&D on this particular concept was sponsored by the state of Bavaria (sum unspecified, see: AutoBild, 09.05.2005) and BMWA with € 2.4 million (Weider et al. 2004: 126). In 2008, VW and the Chinese Tongji University presented the Passat Lingyu, which utilised a FC stack developed by Tongji researchers. A total of 16 prototypes have been build and demonstrated at the Beijing Olympcis before being shipped to the USA to participate in CaFCP. According to CaFCP, these prototypes were tested for several months and were available at publicity events (CaFCP, 02.02.2013). Since 2009, VW participates with 2 Tiguan HyMotion, 2 Caddy Maxi HyMotion and 2 Audi Q5 HFC at the CEP demonstration project in Berlin (CEP undated). Similar to BMW, VW had announced that it would stop FCEV R&D and concentrate on developing other EV types in 2008, but restarted it in late 2010. Despite this series of prototypes and demonstration vehicles, VW has always remained rather sceptical about FCEVs. Especially in comparison to Daimler, VW always avoided announcing serial production dates and vaguely stated that marketable cars would be available from 2020 at the earliest. VW’s internet presence (VW undated) clearly identifies FCEVs as a long-term project: “Indeed, VW is convinced that there will remain coexistence of internal combustion engine and electric mobility for the next decades. Therefore, within the framework of its fuel strategy, [VW] advances fuel cells, pure electro-mobility [BPEVs], hybrid technology as well as sustainable fabricated bio-fuels, e.g. SunFuel139.” (author’s translation) In the past, then-CEO and today’s head of the supervisory board Ferdinand Piëch and his successor as CEO Bernd Pischetsrieder both clearly stated that VW would give priority to bio-fuels and less polluting ICEs (Weider et al. 2004: 126). Therefore, VW’s strategy must be categorised as clearly prefering incremental improvement of ICE technology, paired with a fuel strategy that aims to replace fossil with biomass-based fuels. Like BPEVs, FCEVs are part of VW’s R&D portfolio, but these alternatives have a rather low profile. However, comparing EV subtypes, it appears that while VW is now actively engaging (P)HEV and BPEV
139 This is the label VW uses for second generation bio-fuels, which are produced in biomass-to-liquid (BtL) procedures. Differing from first generation bio-fuels, these fuels can be produced from organic waste such as wood waste. VW, Daimler and Shell supported a project of German Choren Industries, which was supposed to demonstrate the feasibility of the process on industrial scale. However, Choren Industries became insolvent in 2011 and the future of second generation biofuels is unclear. It appears that more R&D is needed before this production method can be applied commercially.
198 commercialisation, FCEVs are still in a pre-commercial stage.
4.6.13 Development strategy patterns analysis Summing up, the most noticeable aspect is that there are no national patterns for EV subtype development and incremental or revolutionary approaches (Tab. 7).
EV subtypes Approach Primary Secondary Tertiary BMW BPEV + PHEV Hydrogen-ICE FCEV Revolutionary Daimler FCEV BPEV (Smart) HEV Revolutionary Opel REEV FCEV Dual (Incremental) VW PHEV + BPEV FCEV Incremental Daihatsu HEV (+ BPEV) FCEV Incremental Honda HEV FCEV BPEV Incremental Nissan BPEV FCEV HEV Revolutionary Mazda Hydrogen-ICE HEV FCEV Dual (Revolutionary) Mitsubishi BPEV PHEV Revolutionary Subaru BPEV PHEV Revolutionary Suzuki HEV FCEV + PHEV Incremental Toyota HEV + PHEV FCEV BPEV Incremental Tab. 7 German and Japanese OEMs EV development approaches
This is a clear indicator that states may influence the direction of search, but not the actual technologic solutions. Differences can partly be explained by the economic conditions of the OEMs. While the financially strong automobile manufacturers conduct R&D on all EV types, the less wealthy competitors rely on technology transfer inside alliances. The reason is purely economic and not subject to political factors. The smaller Japanese producers are all situated within alliance frameworks. While larger OEMs are active in developing several EV subtypes in parallel, smaller competitors lack the financial backbone to bear the burden of highly diversified R&D agendas. Therefore, smaller manufacturers often have a smaller range of models and concentrate their R&D efforts on one particular subtype and subsequently branch out to a second one. It is noteworthy that no smaller company engaged FCEVs themselves140 and that most instead opted for BPEV development. In the case of subsidiary firms like Daihatsu or Hino, there is simply no need to duplicate efforts of
140 Mazda’s hydrogen-ICEs may be regarded as a minor exception.
199 the parent company, because the technology can be transferred internally from parent to its subsidiaries or co-developed. R&D is costly and therefore, smaller, independent companies are simply unable to afford necessary resources to engage development on their own. In comparison to German OEMs, it must be clearly stated that while manufacturers like Daimler or BMW are relatively small in size, their status as luxury car producers generates larger profits, which in turn could be invested in R&D. Thus, entering into alliances and joint-ventures to develop FC technology may be the only realistic option for smaller car producers to get access to key technologies like FC stacks. However, many less well off OEMs nevertheless followed a revolutionary strategy. This is most likely due to the fact that larger competitors like Toyota and Honda had already established a lead in HEV technology. Thus, instead of trying to challenge this position, OEMs rather engaged the future types. The economic argument also explains Nissan’s revolutionary approach. As described, Daimler and BMW favoured revolutionary approaches due their engineering philosophies. VW’s model strategy appears somewhat dual, but labeling it as incremental is appropriate against the historic development. Second, the HEV subtypes also indicate that each company adopted technologies it deemed appropriate (Tab. 8).
Produced HEV type (1st release date) BMW Parallel (2009) Daimler Parallel (2009) Opel Series (2011) VW Parallel (2010) Daihatsu Parallel (2002) Honda Parallel (1999) Mazda Series (hydrogen-HEV) (2002); Fourthcoming: Series-parallel (Toyota License ) Mitsubishi Series-parallel (2013) Nissan Initially: Parallel (2000); Later: Series-parallel (Toyota License) (2002); Fourthcoming: Parallel Subaru Parallel (2013) Suzuki Parallel (2003) Toyota Series-parallel (1997) Tab. 8 OEMs’ HEV type development strategy
Noteworthy is that except for Opel (and GM) and Mazda, no OEM opted for series hybrids. Mazda has seemingly abandoned its original approach and licensed Toyota’s system. The bulk of car-makers produces model that utilise a parallel design. Most likely explanation for this
200 phenomenon is rooted in technology (Chan 2002: 260): while series hydrids are the simplest design, they suffer from generally lower efficieny than other types and that electric machine and generator must be designed for maximum capacity, because they do not support each other. In contrast, because engine and electric machine can propulse the car in parallel, they can be smaller in size and are more efficient. The only drawback is that parallel design are more complex than series ones. Interestingly, the most complex and costly Toyota system proofed to be the most successful. However, this is a technologic choice made by firms without policy interference. Another aspect should be discussed: a noticeable increase in patent applications by Japanese OEMs occurs from the 1990s onward (Yarime et al. 2008: 196f.). This fact and the results of the demonstration project on Rügen, indicate that the EV issue was taken more seriously by the Japanese automobile industry than their German counterpart. In Japan, the increase corresponds with intensified and more comprehensive support by the government, but also with CARB´s ZEV Mandate and increasing oil prices. These external shocks followed by promptly support measures of the state appear to have convinced OEMs to regard EVs as a future key technology. Strong regulative influence on R&D activity can be observed in Nissan and Honda. Only after the ZEV Mandate was amended in 1996, subsequently awarding partial credits to HEVs, both companies intensified research on this particular type (ibid: 207). This separates these OEMs from Toyota, which appeared determined to commercialise HEVs even before this amendment. It has to be underlined again that the Californian regulation did not encompass German OEMs, which explains why they were investigating BPEVs less intensive. Also, the finding that BPEVs were not significantly contributing to the reduction of CO2 due to the then heavily coal-based energy mix, gave German manufacturers little reason to investigate this technology. The Japanese state as well as the industry realised that the batteries were the central BPEV component and therefore, development of advanced batteries was a top priority. The government tried to induce development via LIBES, but companies preferred another approach: major manufacturers allied with companies from the electro-chemical industry to develop advanced batteries that fit their specific needs. Toyota and Honda both cooperated with Matsushita in developing NiMH-batteries. These batteries were integrated into the first HEVs, the Prius and the Insight, the companies marketed. A third aspect that stands out is related to FC stack development. Basically, there are two options for companies with regard to FC development (Tab. 9).
201 2004 (Weider et al.) 2013 BMW (Hydrogen-ICE + FC-APU) (1+) 2 (Toyota) Daimler (1+) 3 1+2 (Ford+Nissan) Opel (1+) 2 (GM) (1+) 2 (GM) VW 1+3 1 Daihatsu n.a. 1 Honda 1+3 1 Nissan 1+2+3 1+2 (Daimler+Ford) Mazda 1+2 (Ford) (+ Hydrogen-ICE) 1 (+2) Unclear effect of Ford’s reduced holdings Mitsubishi (1+) 2 (Daimler) R&D suspended Subaru No R&D No R&D Suzuki 1+2 (GM) 1+2 (GM) Toyota 1 1 Tab. 9 FC stack development strategies Development ideal-types: 1. In-house; 2. OEM cooperation; 3. Procurement from specialised FC system developers (Ballard/UTC Fuel Cells)
As the table shows, the first is to rely on in-house development, maybe combined with integration of externally developed components at the beginning of the process. All Japanese producers, except Mitsubishi, engage this development strategy. Further, it is clear that all OEMs move into the direction of developing an in-house capability. To a certain degree, Mazda follows this path with the use of hydrogen fuel for ICEVs, but it is also linked to the following approach. The second option is to include specialised system developers, e.g. the alliance between Daimler, Ford and Ballard: in 1997, Daimler, Ford and Ballard announced to cooperate. It is critical to point out that the idea was to share technology and expertise, but to develop FC stacks individually (Los Angeles Times, 16.12.1997). In 2008, this alliance founded a joint-venture called Automotive Fuel Cell Corporation (AFCC), which is based in Vancouver, Canada.141 Differing from 1997, the aim is now to develop FC stacks jointly for all partners. Daimler holds 50.1% of AFCC shares, Ford 30% and Ballard 19.9%. With the formation of AFCC, Ballard transferred its automotive division to the new company (Daimler 2007), so since then Ballard Power Systems is engaged in stationary applications. This step can be explained as OEM’s interest in controlling a central technology of future automobiles. Being dependent on a supplier for crucial components indeed appears to be too risky. As fuel cells are as central to FCEVs as engines are to ICEVs, it cannot be surprising that OEMs seek to control technology
141 Daimler’s merger with Chrysler was dissolved in 2007. According to Ballard’s website, Chrysler is not among its strategic partners and not included into the alliance’s formed joint-venture AFCC.
202 similar to the way they protect engine technology today. Thus, after initially relying on close cooperation with Ballard in the automotive fuel cell development process, Daimler and Ford in the end decided to acquire control over this key supplier, which was a main carrier of FCEV technology. Hence, while companies like Honda or Toyota decided relatively early to develop fuel cells internally, Daimler and Ford engaged in cooperation with the specialised supplier Ballard and later vertically integrated its automobile section. Another motive of alliance formation is commercial interest: one idea behind AFCC’s formation is to license technology to other OEMs (Budde et al. 2012: 1078). This idea is only going to bear fruit if FCEVs are going to prove superior to other EVs and reach a higher market share than other technical solutions. In this case, AFCC could license its technology to companies, which have favoured other approaches and do not posses sufficient know-how to construct FCEVs independently. This is interesting against the background of the newly initiated cooperation of Daimler, Ford and Nissan. At the moment, it is unclear how the development of a common FC stack is going to influence technologic development and if the partners (AFCC and Nissan) are becoming mutually dependent. A third, but arguably risky option is abandoning fuel cell development and the possibility to use hydrogen as an internal combustion engine fuel altogether like Mitsubishi. An important detail for initially pursuing cooperation and later switching to in-house development might lie in the nature of Ballard’s technological competence: Ballard’s key success was discovering that the use of an experimental lower electrical resistance polymer membrane developed by Dow Chemical improved fuel cells’ power output by 400% (Hall/Kerr 2003: 466). This means that Ballard did not invent improved material, it simply found that applying an invention from another company improved fuel cells, hence a good example for innovation through recombination. This however means that Ballard did not have exclusive expertise and IPRs in relation to polymer membrane production, so that it was possible for OEMs to procure the membrane from Dow directly. This may explain why OEMs did not become dependent on Ballard and why they decided to develop FC stacks in-house. Fourth, regarding general development strategies, one observation should be emphasised: taken together with the Toyota-Denso relationship, Nissan´s battery procurement from Toyota-Matsushita shows that the new technologies partially overcome the keiretsu divisions in Japanese automobile industry, because companies seem to fear that their business rivals reach a breakthrough before they do. Thus limited cooperation appears necessary to ensure competitiveness. Another related aspect is that intra-industry cooperation, whether in Japan or with international partners, appears to continue. Further, Nissan’s various partners in traction battery development highlight that Japanese companies not necessarily favour long-term relations over cooperation for a limited time. Further, Japanese car producers regularly enter cooperation with electro-chemical companies like Matsushita or specialised auto-battery
203 producers like GS Yuasa. Supply relations highlight the dominant position of East-Asian battery producers (Fig. 7).
OEM Battery joint-venture Partner Toyota (60%) Panasonic EV Energy Panasonic (40%) Nissan (51%) Automotive Energy Supply NEC (42%) Renault NEC Tokin (7%) Fujitsu LG Chem Mitsubishi Motors (15%) Lithium Energy Japan Mitsubishi (34%) GS Yuasa (51% each) Honda (49%) Blue Energy GM Hitachi Vehicle Energy Hitachi* (100%) Fiat SB LiMotive** Bosch (50%) BMW Samsung SDI (50%) Tesla Motors*** Daimler (90%) Deutsche Accumotive**** Evonik (10%) (49.9%) LiTec (50.1%) e-Wolf VW VW (in-house) Sanyō***** Black lines: Ownership (numbers in brackets indicate share); Red lines: Battery supply * Hitachi Ltd., Hitachi Maxell & Shin-Kobe Electric Machinery ** Joint-venture was dissolved in late 2012. Both companies have access to acquired patents (ca. 3000). *** Uses Panasonic consumer cells **** Deutsche Accumotive appears to be aiming at the development of future battery types. LiTec is active in production of automotive, industrial and stationary LiIon batteries. ***** Sanyō is a fully-owned subsidiary of Panasonic since 2009 Fig. 7 Automotive battery alliances and supply relations (as of 2013)
All in all, the wide diversity of producer strategies demonstrates that there is not a single way to develop EVs. The choices underline that companies have a high degree of independence and there is a tendancy to implement strategies that are compatible with firms existing capabilities and economic condition. Thus, it can be stated that there is a high degree of firm-specific technological path-dependence. Moreover, the case of VW suggests that companies not only pursue product innovation: implementation of MQB and the announced release of MQB-based EVs rather embody a combination of product and process innovation to catch-up to leading
204 competitors. Last, but not least, firms like Tesla or BYD show that a – however gradual and drawn-out – paradigmatic shift opens opportunities for new competitors. However, the facts that Tesla needed ten years before it could become profitable (Tesla Motors, 08.05.2013) and the recent bankruptcies of dedicated EV producers Fisker and Coda highlight that competing in the established automobile industry requires considerable staying power. This also highlights the role of competition in innovation: all OEMs know that oil reserves are limited and becoming scarcer. In order to be prepared, alternatives have to be developed. However, companies have different strategies for managing this shift. Approaches vary not only between technological solutions explored in this study, but also CNG and biomass-based fuels. Uncertainty and competition are intertwined: applying pure business logic, manufacturers should like to end efforts on EVs altogether or concentrate on the particular solution they have most confidence in. However, the large number of possible technological solutions prevents them from doing so as they are afraid that they might back the wrong horse. Hence, OEMs must be active in a number of options to be prepared for the future.
205 5 Electric vehicle innovation policy regimes
Before taking a closer look at the national innovation systems and policy regimes in Japan and Germany, it appears useful to explore the impact of differing system configurations. To arrive at a meaningful comparison, it is useful to compare the same point in time to reduce the impact of competition between OEMs or their respective countries. Relating EV development to the respective national innovation systems leads to the conclusion that technologic development is highly contextual, i.e. influenced by national framework conditions such as the nature of used policy tools or collaboration between different industries. As OEMs are embedded into conditions set by policies and general technological standards, their development trajectories are influenced by this embeddedness. Considering the Toyota Prius and Audi A4 duo, which were developed in the same point in time, namely 1997, illustrates the encompassing meaning of embeddedness (Tab. 10).
Audi A4 duo Toyota Prius EV type PHEV HEV Engine (bio-)Diesel ICE Gasoline ICE Hybrid type Parallel Series-parallel Car type Stationwagon Compact sedan Variants Several conventional Dedicated HEV Battery Pb-gel NiMH Electric range 50km 2km Price DM 60.000 JPY 2.150.000 ($US 34.400) ($US 17.000) Price gap DM 5.000 JPY 444.000 Subsidy - JPY 210.000 Tab. 10 Properties of Audi A4 duo and Toyota Prius (Source: author’s investigation)
How can the different properties be related to embeddeness? First, Audi developed a PHEV and Toyota a HEV. This may be related to the fact that cars could be safely charged from a standard socket outlet (230 V) in Germany, but not from a Japanese one (100 V). Even today, Japanese OEMs suppy specialised charging equipement for their PHEV and BPEV customers. Basically, the Japanese grid requires them to supply these installations, because charging from a standard socket could result in cable fires. Thus, from Audi’s perspective there was no reason not to offer a PHEV, while Toyota would have needed to develop and offer additional charging installations for any other type but HEVs.
206 Second, while the A4 duo utilised Diesel and could use bio-Diesel, the Prius used a gasoline engine. As described, Diesel was politically supported via various incentives in Germany and
Europe as energy-efficient and low CO2 emitting, while no such support existed in Japan. Thus, for Audi it was a logic step to deploy a Diesel PHEV and it was just as logical for Toyota to develop a gasoline HEV. Third, as aforementioned, Japanese OEMs could use advanced batteries like the NiMH type because they had a strong and innovative domestic electro-chemical industry as its partner. The German industry regarded NiMH as experimental and therefore did not consider using it. Fourth, in both countries, the price gap between conventional ICEVs and HEVs was high. However, the Japanese government supported nearly 50% of the incremental price while the German government did not grant support. From the perspective of the German administration, this step was not sensible because the Rügen project had shown that environmental benefits were only local and overall negative for BPEVs just a year earlier. Thus, it made no sense to support PHEVs against the background of the contemporary electricity mix. Moreover, OEMs send very different signals to the government: while Toyota developed a dedicated HEV model, the A4 duo was only a variant among others. Hence, Toyota demonstrated commitment while Audi treated its PHEV as a variant among others. This does not make the A4 duo less technologically revolutionary, but a dedicated model clearly attracts more attention. Therefore it can be stated that these two EVs appear highly embedded into national polices, related incentive structures and fundamental technical conditions. It is also a good example to highlight the interconnections between past decisions and policies. When the basic configurations of the Japanese and German grids were made, EVs were not developed. However, as explained above, this fundamental decision seemingly affected the subsequent EV configuration. Similarly, the Japanese decision to further nuclear energy as a reaction to the oil shocks made EVs low emission vehicles. The different German reaction to the same problem made EVs environmentally unattractive. However, the energy policies of the Schröder administration changed the electricity mix in such a way that it is today environmentally sensible to support EVs. These examples demonstrate that political decisions and technology indeed have a dynamic relationship. They also highlight that the respective political decisions to grant or deny support were logic under the contemporary conditions.
207 5.1 Japanese electric vehicle innovation policy regime
Although MITI launched a R&D program for BPEVs in 1971, it can be claimed that the attention of Japanese officials and industry towards BPEV development was initiated by an external shock, namely the first oil crisis of 1973. Energy efficiency and what today is called sustainable development was already discussed among scientists and MITI also addressed the problem with an own ecological research group prior to the crisis. However, the crisis set the issue on the political agenda as Japan´s strong dependency on Middle Eastern oil became apparent. Industries and citizens alike were suddenly realising the problem as they experienced shortage and rising prices, so state officials were now forced to deal with the issue. Turning to policy formulation, it is first necessary to identify the members of the concerned policy subsystem. The state actors are made up by politicians and officials from the bureaucracy. No names can be provided, but nevertheless, it is possible to specify their function. Bureaucrats from the ministries with legal administrative power and interest in the issue must definitely be included. As the various programs indicate, MITI took the most active role, even before the oil crisis increased attention to BPEVs as a future, less resource intensive demanding mode of transportation. METI adopted an approach that supported private company R&D investment and a rather limited role of state institutions in the research process. This is in line with the concept, which ascribes the role of future-orientated planning through “visions” to METI, but leaves the transformation into marketable products and services to Japanese industry. Guiding and inducing desired development of private firms is preferred over direct state action and it also should be noted that METI usually stands at the side of industry when conflict with other government agencies occurs. Other members from the bureaucratic apparatus were also involved, but to a lesser degree: being in charge of vehicle inspections and safety, MLIT also has close relations to the automobile companies as well as with industry associations. Further, MLIT cooperates with intermediaries or special interest organisations, e.g. the Institute for Traffic Accident Research and Data Analysis (INTARDA) or the Organisation for the Promotion of Low Emission Vehicles (LEVO). However, MLIT plays a complementary role, acting in cooperation with other agencies on the EV topic. ME naturally supports vehicles with low or zero emissions, but because of its formerly lower status, it does not command administrative powers and funds similar to other agencies. However, ME was the only ministry that tried to challenge METI’s role through its own R&D program in the 1990s. The result seems to verify that ME could not promote EVs on its own. The politicians active in the subsystem are those LDP Diet members with interest in the economic and industrial development, transportation or the automobile industry, the mentioned zoku giin.
208 The societal members come first and foremost from the car manufacturers, but also from the electro-chemical industry. As batteries are the centre of a BPEV, which influences other components, they are also important for HEVs if only to a lesser extent. Battery development is a key problem for both types and so, the expertise from the electro-chemical industry needs to be incorporated. It should be pointed out that there was no national environmental organisation in Japan for most of the time investigated by this study that could influence political decisions. The absence of a social interest group like that left the policy subsystem filled with representatives from business and the Japanese state. Regarding the actual process, it could be said that formulation partially preceded agenda-setting and decision-making followed formulated options in this particular case. The ecological research group drew up plans and policy suggestions before the oil crisis put the topic on the map. Thus, at least to a certain degree, there were already some options for more efficient energy utilisation formulated. The timely response in form of the Sunshine Program should be attributed to this fact. However, it is necessary to point out that BPEV development was only one way to reduce dependency among various options. Steps taken suggest that BPEVs were regarded as a long-term target, not a solution with immediate effect. The government-industry R&D program of 1971 was a first move to start the development of a new technological option. Large-scale projects like the initial BPEV R&D program employed the logic of inducing private sector activity. The role of the state agencies was limited to organisation, coordination and (full) funding, while actual R&D was conducted by selected companies. Also, it should be realised that with the end of the initial large-scale car and bus projects, state-funding on BPEVs became more limited to the market expansion program. It seems that R&D and the following subsidisation of BPEVs were thought to provide enough incentives for the private sector. The market expansion program only started in 1976 and was not included in the Sunshine Program just as little as the later Moonlight Project. Those research programs were the core of the Japanese reaction to the energy crisis and they focused on nuclear and solar energy. BPEV development seems to have been judged as a less important source of possible energy saving measures. It appears that the first applied tools, monetary incentives in form of the 1971 government-sponsored R&D program together with the bus trial and market expansion program of 1976, had a limited influence on the R&D activities of the Japanese automobile industry. Analysis of EV patent data from the Japanese Patent Office show that first applications were filed during the mid-1970s, but that their number was small and remained limited through the 1980s (Yarime et al. 2008: 196f.).142 It appears that these programs did not induce intensive
142 Yarime and his colleagues point out that the analysis and their figures are based on the time patents got published and applications of the patents were made 18 months earlier, which reflects the period from
209 interest by Japanese manufacturers in BPEV-development. Notable exceptions are Daihatsu, labelled the standard-bearer of electro-mobility, and Suzuki143, another producer specialised in small cars, vans, and well known for its motorcycles. Both companies continued development processes, while other producers basically froze their R&D activity (ibid). Also, it appears that technological development did not immediately translate into new products as the Toyota hybrid exemplifies: although it was invented and applied in racing cars as early as 1977, this progress was not introduced to the market and mass production for about 20 years. This underlines the argument that innovation is more than just technical progress, but also the diffusion of a product into the market (Metcalfe/Georgiou 1997: 5-10). The implementation of innovation policies towards the development of BPEVs and HEVs can be divided into two phases. The first stretches from the mid-1970s until the early 1990s, when the second phase starts. The first phase is characterised by two policy instruments: rather limited, but nevertheless influential state funded research, e.g. on flywheels and the market expansion program. With regard to the style of implementation, directed subsidisation fits this policy: both tools can be classified as subsidies, the former for development and the latter for diffusion. The constraints must be regarded as low: the issue was not publicly debated nor was there pressure or demand to spur EV development. Also, it can be claimed that the policy subsystem of this era only consisted of bureaucrats and the Japanese car industry, while politicians or environmental interests groups did not play any significant role. Failure was therefore not likely to result in pressure on the government or the manufacturers. The nature of the policy target should be regarded as broad. It could be argued that the development of a single technology is a narrow target, but for the following reasons the author argues the opposite: by the time the decisions for R&D and purchasing subsidies were made, there was no clear development trajectory. Although prototypes existed, developing an EV capable of competing against the standard ICEVs was a project with many unanswered questions: many technological components had to be combined. OEMs needed to develop electric motors and drivetrains to replace mechanic ones as well as to power their systems from a battery instead of an ICE. Also, the historic development showed that there was also the question, which battery type could be applied. With regard to unsupported HEVs, it was unclear which of possible options – series or parallel – was to be applied for future mass production.144 Later, as the development proved to be slower than filing until a patent is granted by the Japanese Patent Office. 143 Although not directly related to the main topic, it should be pointed out that both companies are successful in the field of so-called kei-cars (kei jidōsha). This segment is the only one with growing sales in Japan, while standard and small cars registrations stagnate or decrease (JAMA 2009: 4). 144 As it turned out, Toyota’s fusion into the series-parallel type proved most successful, but this was a development of the 1990s. “Tradiontionally, HEVs were classified into two basic types – series and parallel. Recently, with the introduction of some HEVs offering the features of both the series and the parallel hybrids, the classification has been extended to three kinds – series, parallel, and series-parallel.” (Chan, 2002: 259)
210 expected, there was also the option to avoid direct competition against more powerful ICEVs by promoting BPEVs as commuter cars. Given this bulk of uncertainty, stating that HEV or BPEV development is a narrow target is shaped by today´s experience that HEVs have entered mass production and more detailed plans for BPEV development exist. Portraying the situation of the mid-1970s as having a clear idea about the future EV development is anachronistic. Therefore, as the first phase is characterised by low constraints and rather broad policy target, the style of implementation can be described as directed subsidisation. The second phase that started at the beginning of the 1990s is marked by a more comprehensive approach: while continuing unit subsidisation, the research projects included more topics deemed critical for a breakthrough in BPEV development, e.g. battery and infrastructure development. However, implementation only varied slightly. Constraints have increased through the increasing oil price, the perceived danger from Californian regulation and new awareness of ecological problems, but overall remained low. Also, the aim of policy was not altered. Although BPEV technology got more attention and support, directed subsidisation implementation remained firmly in place. The treasure-based tools were still at the heart of policy, but LIBES, the ECO-Station and Eco-vehicle projects exemplify that there was more emphasis on cooperation between firms and industries. This more comprehensive approach is promoting the recognition of new technological solutions to energy and environmental problems, but still it mainly focuses on providing funds. It is important to stress that at that time, the Japanese government only supported BPEV development, not HEVs (Pohl 2012: 168). The rather active role the EA appears to have played in bringing together different companies as well as its aim of developing a market-ready product through the Eco-vehicle project is very different from usual Japanese industrial or technology policy. Moreover, the intention of EA indicates that the subsystem seems to have extended or that it became more contested. It must be pointed out that the activity of EA appears at the same year the LDP suffered the loss of power, which would explain the introduction of new ideas and actors to the subsystem, which in the end increases tensions and constraints. However, another alternative could be that the rather slow progress of “classical” industrial innovation policy led the government to the conclusion that a different approach could be utilised. Then, the Eco-vehicle program could be regarded as a new tool or a policy experiment. From this perspective, a new approach was simply tested without causing any major change of the general technology innovation policy. As this experimental approach failed to perform significantly more successful than established forms of administrative guidance, it seems to have been terminated. The aim of developing a marketable product is absent in later R&D projects in the automobile sector, programs rather seek to improve or develop specific components deemed critical to boost overall performance. At least for both case studies explored in this paper, no similar program was carried out afterwards, so
211 that this policy experiment must be regarded as failed. Also in the second period,145 the cases of the CEV and ACE programs are highlighting a connection between phases of the policy cycle. As pointed out before, ACE had to be suddenly altered when MITI and NEDO became aware of the Prius release. Thus, formulation and decision-making were already completed and implementation was imminent. Therefore, the quickly applied changes show two things: first, Japanese state capacity must be described as high, because other technology options could readily be identified and replaced HEVs. Second, this resembles adaptive innovation policy-making as information could be processed in two ways. Not only was the ACE program altered without going through another cycle, but further, CEV aimed at HEV diffusion. Although the state never actively supported this subtype, MITI understood the potential and therefore granted subsidies to support commercialisation. Thus, with regard to ACE, it could be stated that implementation was adapted due to novel information. Further, knowledge about the commercialisation started a new cycle, which resulted in an extended subsidisation program. However, the logic of support and basic instruments remained unchanged. Opposite to the Eco-vehicle program, broadened subsidisation followed already existing procedures and therefore was quickly formulated, decided and implemented. Hence, the particular case represents instrument tinkering, optimising adjustment and directed subsidisation. However, this may also be connected to the chosen instrument: using a limited treasure-based distributive policy tool in a subsystem that is quite stable and not subject to much public concern and therefore unconstrained is unlikely to meet a lot of resistance. This issue also is related to the evaluation phase of the policy cycle. The change towards more comprehensive EV support, now also including infrastructure build-up, extended subidisation as well as stronger state-sponsored and promoted research on critical components is remarkable. The question arises, why this shift occurred. Among the three basic types of evaluation outcomes, two are identifiable in the development of BPEVs: the first type is continuation, the second on alteration. Continuation is embodied in the market expansion program that was never abandoned. Even despite slow progress, the decision-makers prolonged the program several times. There are two possible reasons, why the originally timely limited programs were not terminated: firstly, although progress was slow and the cars were not able to penetrate the consumer market, companies like Daihatsu kept researching and developing BPEVs, because the program practically created a niche market with guaranteed support by the state. Therefore, the program worked as an incentive for interested companies to engage in development of a
145 The time after the commercial release of the Prius and Insight may also be regarded as a third phase. However, as the policy instruments were only altered and not fundamentally changed, the author holds that commercialisation is not a new phase of policy-making. Thus, the release is important from a historic point of view, but less significant policy-wise.
212 possible future technology and product. Secondly, as stated before, the fact that only produced vehicles were subsidised resulted in comparatively small expenditure for BPEV support. The rationale of the Japanese R&D policy is said to aim at exactly this effect: limited state funds should induce private firm investment and research activity. So, if one does not follow the official wording, but interprets the market expansion program as an incentive or quasi niche market for OEMs the program fulfilled its mission of continued attention by producers towards EVs. Alteration seems to have taken place at the beginning of the 1990s. Possible triggers towards this broadened approach are the resurfacing issue of energy security or shortage and the perceived pressure from the important market of California. Those challenges forced the automobile industry to intensify their EV development efforts. At the same time, Japanese politicians and bureaucrats must also consider these issues since the companies represent one of its domestic key industries. Both, the state and industry subsystem members, were therefore forced to find methods that would speed up the slow progress in BPEV development that occurred until then. Consequently, the alteration of the former subsidisation and limited R&D funding took place. Support for key components such as more powerful and durable batteries and installation of necessary infrastructure were more costly, but necessary if firms wanted to meet the ZEV Mandate. The approach seems to follow the logic that the former practice of largely treasure-based instruments worked satisfactory and that more funds would translate into accelerated technological progress. This means that the alteration took the form of expansion into related, complementary subject areas to achieve a technological breakthrough. Another kind of alteration must also be observed: the administrative reforms carried out since 2001. Of course, this reorganisation did not aim at any specific policy subsystem, but at general structures and processes. However, these major changes affect the national innovation system and are tangent to R&D projects. Although the overall approach of inducing private sector activity in targeted areas is continued, cooperation between IAAs, universities and companies is promoted. In order to achieve the objective several procedural changes – agencification, adoption of the Bayh-Dole provision, TLOs, etc. – have been made. It appears that the Japanese state tries to remain the practice of centrally identifying key technologies, while minimising the micromanagement of R&D performers by granting greater operational freedom and fostering collaboration as well as competition. The question of learning or evaluation style is rather complicated. Undoubtedly, the capacity of the Japanese bureaucratic apparatus is high in comparison to other states. Identifying the role of state and societal – here largely industry-based – actors is difficult. The close informal relations between politicians, bureaucrats and private enterprises are quite opaque. As pointed out before, their interests in BPEV development were very similar and it is therefore hard to prescribe
213 dominance over the subsystem to one side. It can be argued that the state initiated and dominated the subsystem at the beginning of the 1970s and that societal actors gradually became more influential and replaced the state as the dominant side at the beginning of the 1990s, when automobile producers increased their efforts and demonstrated more interest. However, this must be qualified as the leading role of the state did not cause any dedicated attempts of private firms to achieve a technological breakthrough. This step only occurred when external shocks – especially the fear of losing the main export market – forced the companies to innovate. Further, Toyota and Honda decided independently that BPEVs were not technically and economically feasible and therefore developed HEVs. The latest move to support standardisation of charging stations rather shows that now that PHEV- and BPEV-technology is reaching the commercialisation stage, Japanese industry and government act in concert. Consequently, the evaluation style must be said to be between instrumental and social learning or that both occurred at the same time, caused by the external shocks of Californian legal requirements and increasing oil prices due to the Second Gulf War. This could also be put different: instrumental learning by CARB can be said to be the single-most influential factor. Then, the state of California is the dominant actor, because the Japanese automobile manufacturers reacted to the legislation. This case illustrates that a national innovation system is embedded into an international context. Furthermore, in this case, the international dimension of the policy universe seems to have been more influential than Japanese state actors and societal members’ business decisions have been shaped by Californian legislation. Indeed, it could be said that the automobile policy subsystem was already international, due to OEMs’ global operations, company alliances and the outstanding importance of the triad markets.146 It should be highlighted that this is an exception to the norm, which may be explained by the global yet oligopoly structure of the car industry. Firms sell their automobiles worldwide in fierce competition, so that they cannot risk losing an important market if they want to ensure their future presence in the market and survival. Under these conditions, complying with regulation in a key export market is just as critical for firms than with domestic legislation. Thus, if all state actors from the triad – Europe, Japan and the USA – form the state dimension of the policy subsystem, the state dominated and it is a case of instrumental learning. If one rejects this view and emphasises the national structure of an innovation system and subsystem, then it is a case of societal learning, because Japanese companies intensified R&D activity, while politicians and bureaucrats incrementally broadened their subsidisation approach. While it is possible to arrive at this conclusion, state influence must be clarified. The
146 Under present conditions one must include emerging markets such as China or India as being equally important.
214 development strategies of the OEMs demonstrate that states can only influence the direction of search, not technological details. Each company seems to have chosen a development path that fits their respective technologic and economic situation. When Californian regulation basically demanded BPEV development, firms experimented and drew their own conclusions how to proceed. Decisions show that OEMs used their existing know-how as a reference point from where they moved towards EV development. Further, it is possible to state that even companies with a revolutionary approach made incremental development steps. Thus, it could be stated that the perceived pressure added a new dimension to the possible trajectories and OEMs incorporated it by altering their development paths. This makes the investigated cases fine examples of path-dependence. The case studies also highlight that national and technological or sectoral innovation systems are intertwined. Here, it appears appropriate to state that national systems can induce activity in these systems, which then determine specific solutions in competition. Thus, very different factors contributed to the diffusion of HEV technology. There was obviously strong leadership of the Toyota presidents and other leading managers that pushed towards commercialisation. The last minute altering of ACE underlines that Japanese bureaucrats and politicians do not steer industry development. Individual companies, especially vast MNCs like car manufacturers are capable to protect their plans, act independently and follow an own agenda. Despite this, policy also should be attributed its share: continued governmental support towards BPEVs greatly helped HEV development. So, although R&D efforts aimed at a breakthrough of BPEV technology, these measures actually supported HEVs. As both types share many components like electric machine, power electronics, NiMH- or LiIon-batteries and control equipment, HEVs profited from the knowledge gained in BPEV development. Hence, it can be stated that HEVs are an unintended outcome of continued Japanese BPEV support and Californian regulation. Adapting the research scheme and including HEVs into the CEV program must be regarded as positive impulses. Earlier studies pointed out that HEVs only accounted for 1% of newly registered passenger cars in Japan (Åhman 2006: 440), but this has completely changed, because the Prius was the national top-selling car since 2009 (Tab. 1). Against the theoretical background, this illustrates one role of the Japanese state in the national innovation system: government supports the diffusion of inventions deemed important. Hence, while industry determines which products it will put on the market, government may greatly help the success of individual products. In comparison to Germany, the active support of (H)EV diffusion via consumer subsidies is one major difference that explains why there are more EVs on Japanese roads than on German ones. Another aspect that helped the introduction of HEVs is the development of electric drivetrains,
215 control equipment, power electronics and battery technology. As aforementioned, the LIBES project supported development efforts towards advanced batteries that began replacing the old lead/acid battery technology. As already mentioned earlier, the research on flywheels also could have helped HEV breakthrough as the concept of flywheels is utilised in what is called regenerative braking. This crucial point must be stressed: BPEV and HEV development depends on more than just advanced battery technology. Although batteries are central, electric machines, power and control electronics are almost equally important. Electric machines and control equipment are essential parts that form the electric drivetrain, which transforms or delivers the power of the motor to the wheels. As discussed, Japanese car producers have developed these technologies in-house or in cooperation with their suppliers (Patchell 1999: 1010). That manufacturers set out to develop these components in-house demonstrates the fundamental importance of these devices in shifting towards EVs. Despite their relevance for EVs, development of the mentioned parts was not funded through governmental R&D projects (Åhman 2004: 15). Thus, although the Japanese approach towards developing EV types was broad, not all necessary components were supported. Another factor that most likely enabled the success of HEVs is the fact that those automobiles do not need a new fuelling infrastructure, which means that the car industry did not need to wait with commercialisation until a sufficient number of recharging stations was installed or to worry about the question of how to provide an infrastructure like that. Also, consumers did not need to change their behaviour, as their vehicles still needed refuelling at a petrol station while the battery was being charged through the combustion engine or regenerative braking. This means that car companies could introduce HEVs without consensus-building with other branches, namely the oil and electricity industry. The way FCEV development occurred on the Japanese government agenda appears quite similar to the case of BPEV and HEV technology. Like the energy production application of fuel cells, the idea of transport utilisation was discussed in Delphi foresight surveys. However, hydrogen-based mobility was only vaguely discussed at the beginning of the 1990s and as the most suitable type, PEFC, was a new invention, other factors contributed to raise attention of this technology. Like other alternatives, FCEVs became more interesting against the background of increasing oil prices. CARB´s ZEV-Mandate must be ascribed a significantly lesser influence than in the BPEV and HEV case, as FCEV development clearly was a long-term option, but not considered as a possible compliance option by any manufacturer. Thus, the appearance of FCEVs on the innovation agenda should be regarded as caused by a combination of factors. Increasing energy prices provided the main cause for politicians and industry to consider alternatives. This search was partially directed by scientific expertise and advice.
216 The implementation of the New Sunshine Program allows drawing some conclusions. As described, PEFCs as a FCEV development option were a relatively new idea. Consequently, projects on PEFC applications were included into the New Sunshine Program. However, automobile applications received limited attention while residential use attracted more research activity. Further, excluding FCEVs from the Clean Energy Vehicles Introduction Program underlines that this technology was not considered as market-ready, rather a long-term option.147 New Sunshine Program´s subsection, the WE-NET project, addressed the necessary construction of hydrogen supply infrastructure. However, in line with the uncertainties coupled to this novel FC type, measures were limited. With regard to policy evaluation and learning, policy on FCEV development mirrors the BPEV and HEV case. It can be stated that learning originated from those examples. The adaptation of a more comprehensive approach towards those types, which included infrastructure and enabling technologies right from the beginning of the 1990s, was also applied to the FCEV concept. No direct proof such as a statement of a decision-maker or bureaucratic personal for policy learning can be presented here, but the utilisation of indirect evidence is possible: PEFC R&D was carried out under the New Sunshine Program, which is a result of a learning process. This R&D program integrated three already existing energy R&D projects in order to achieve more efficiency (through possible spill-over effects) and comprehensiveness (Watanabe 1995: 258). Arguably, against the background of these goals, linking together formerly separated R&D on new energy technology (Sunshine Program), energy conservation technology (Moonlight Project) and environmental technology (Global Environment Technology Project) is the result of learning. The alteration towards this approach coincided with PEFC invention and the idea that fuel cells could also be used for transportation and mobile applications. Further, the need for hydrogen infrastructure was and is not limited to automobile use, but for all possible applications. It should be pointed out that the multiple applications of fuel cells have elevated the awareness for necessary hydrogen infrastructure, so that FCEVs are not the sole cause for its build-up. Thus, adopting a comprehensive approach stemmed from learning that new energy options should be coupled together instead of explored in an isolated manner plus the simultaneously occurring shift towards supporting infrastructure for BPEVs. Although a holistic approach like that characterises state policy towards FCEVs from the beginning, intensified support is visible since 1999. A new round of agenda-setting must be related to the foundation of the Fuel Cell Commercialisation Strategy Study Group in 1999. As the author could obtain information from a member of this shingikai, it can be stated that the
147 It is noteworthy that a diffusion goal was already defined and FCEVs were included as supported vehicles. However, the fact that only the concrete amount of subsidies for BPEVs and HEVs are reported and FCEVs are not mentioned suggests that FCEVs were only supported via direct government procurement or testing.
217 description of Maeda that ANRE’s Director General acted independently from MITI is not correct.148 As the information supports the views of Avadikyan and Harayama as well as Ishitani and Baba, the case resembles mobilisation as the state set the impulse of foundation. As pointed out before, the state not only created a forum for discussion but largely predetermined its recommendations. In the end, it must be concluded that the state created the study group and through the appointments also heavily influenced policy formulation. This underlines that agenda-setting and policy formulation may be more or less integrated stages. Formulation actually took place outside the study group and the creation of FCCJ happened after finishing the report. Thus, new actors were only integrated after basic policy recommendations were formulated at the discretion of MITI. This highlights another aspect: although the shingikai was embedded into the subsystem, it was expected to rubber stamp MITI policy proposals. With regard to the decision-making stage it should be noted that external industry lobby groups seem to have not drawn up rivalling policy proposals. Further, informantion obtained from a member suggests there was no considerable debate inside the study group while “deliberating”. Under these circumstances, the composition of this body appears meaningless. Discussion was reportly not open to new ideas. Hence, it can be stated that formulation took the form of policy tinkering because MITI effectively hindered the entrance of new members and ideas. Contradictionally, MITI subsequently opened the subsystem for new members with the creation of FCCJ. With regard to decision-making, it again should be highlighted that the legal authority rested with MITI. Based on the informant, it can be stated that MITI did stay in control of decision-making. Absence of rivalling policy proposals demonstrates that decision-making may not even require different, competing proposals, but simply be a question of approval or denial. Therefore, it could be stated that decision-making was only a formality and that the shingikai was a facede that simulated societal influence and free deliberation. From this perspective, one aspect is particularly crucial: the policy literature has broadly acknowledged that Members of Parliament, especially in parliamentary systems, tend to be insignificant actors in the policy process and highlighted the role of bureaucrats. This case seems to verify this generalisation as the informant claimed that politicians did not try to influence the group. In this environment, constraints must be regarded as low: there was no broad public interest in this topic. Within the inescapable inherent uncertainties of innovation policy, there was no considerable lack of information or understanding of fuel cell technology. The subsystem was not very complex and the study group resembles this to a large extent. Non-industry actors were experts from NEDO, academia and a journalist. There were no members from other agencies,
148 Had Maeda been right and ANRE´s Director General had initiated this group without any consultation with its supervising ministry, the large number of societal actors in this shingikai plus the low involvement of the general public would represent inside initiation.
218 environmental or social NGOs involved. The number of involved individuals and institutions was low and the discussion was mainly structured by technical and scientific experts. Speaking with May, these were “policies without publics”. Therefore, decision-making must be described as a rational search. Implementation again mirrors the BPEV/HEV case. The target was broad as the complexity of FCEV development and the parallel pursued aim of energy supply systems plus infrastructure build up were interlinked. Constraints were low, because of little public concern, and immediate economic or environmental necessity of fuel cell technology. Hence, implementation delivered directed subsidisation towards R&D activities. Regarding infrastructure build-up, a mixture of subsidisation and directed provision can be identified: although private companies construct and operate hydrogen refuelling stations, the costs are entirely covered by the state. This particular form of public-private interaction must be attributed to the specific case: despite the quite narrow objective, a wide variety of possible hydrogen sources existed, but without any certain knowledge about technical feasibility or economic viability. As there was no technical standard, the state left construction and testing to private industry, but provided the needed funds to gain the necessary experience and data to identify viable solutions for future installation of hydrogen infrastructure. The comprehensive approach towards fuel cell technology in general and FCEVs in particular was caused by policy learning from BPEV and HEV development. But was there any new learning from the evaluation process of this policy approach? The only recent change is the stronger emphasis on industry-academia collaboration, which can be found in the latest NEDO projects. However, it appears that this shift is caused by general learning in innovation policy and not limited to fuel cell technology. The redefinition of the role of national universities and the reforms made all aim at stronger cooperation between the academic and industrial sector. Thus, learning on the central national level, embodied by CSTP´s call for increasing collaboration, seems to have trickled down to specialised subsystems. Again, the composition of CSTP and the reportedly cooperative internal discussions between state and societal actors make it hard to determine if this process should be described as social or instrumental learning. Reported consensus-orientation suggests that such a clear distinction cannot be drawn as actors from both sides are interested in cooperation. Here, it is only possible to state what is learned and by whom, but not how or why learning occurred.
5.2 German electric vehicle innovation policy regime
Regarding BPEV and HEV development in Germany, it is also possible to identify two main phases, but the time sequence is different from Japan. The first extends from the 1970s to the
219 mid 2000s and the second follows from thereon. The first phase is characterised by low priority R&D and dominance of industry actors. State actors only acted when industry asked for assistance and support was largely symbolic. Even the ZEV-Mandate had a much lesser impact on German car-makers than in case of Japan. Aforementioned key market argument must be considered to posses much explanatory power: the fact that all German OEMs were unaffected by this particular regulation is one major factor that separates them from their Japanese competitors. While most Japanese and German OEMs conducted low-scale BPEV R&D before CARB’s mandate, the reaction of the latter was less committed, because they were not directly affected. Rügen project largely verified the already existing view that BPEVs were not yet ready for commercialisation and would not yield any ecological benefits (in Germany). Moreover, the European car industry wanted to concentrate on Diesel technology and convinced the EU that this was a suitable method to decrease CO2 emissions. Although other European markets gave stronger incentives for Diesel cars than Germany, lower taxation of Diesel fuel promoted the use of these cars to a certain degree. Thus, from the industry perspective, there was a viable alternative to BPEVs or HEVs. Despite the release of the Audi A4 duo, the continuation of a rather sceptic approach towards BPEVs and HEVs is visible. It might even be stated that the commercial failure of this model reinforced skepticism. While it is not possible to state which actor dominated the subsystem, both state and societal members apparently drew the same lessons. If one combines the Rügen trial with the EU-ACEA agreement, it appears to be a case of social learning, because in light of obvious administrative capacity, the societal members directed European governments on a path towards Diesel vehicles. The second phase seems to have started in the mid-2000s as the BMBF study group report suggests. However, it appears that only after OEMs agreed to this accessment, policy was altered. As aforementioned, the very notion of activist industrial policy is quite uncommon for German federal policies. With the initiation of NPE, the alternation becomes visible. Considering available information, NPE was largely created in response to bottom-up industry demands. As the nature of public involvement in the various activities is high and the debate has been initiated from societal business actors, the creation of NPE should be labeled as outside initiation. Similar to agenda-setting, the state behaves rather reactive in formulation. Deliberation is mainly driven forward by industry and scientific experts, not by political or bureaucratic actors. Although BMVBS undersecretary of state Bomba is an exception, state actors appear mostly passive. This is contradictory to the general support that all parties have expressed and the occasional speeches government officials give. Apparently, the administration lets industry and academia develop recommendations and then opts for or against concrete policy proposals. As NPE includes actors like environmental NGOs and is charged with the task to formulate policies
220 to achive the 1 million EV aim, it must be stated that new ideas and actors entered into the subsystem. Therefore, policy formulation occurs in the form of policy renewal. Looking at decision-making, it must again be highlighted that the Merkel administration has so far resisted implemention of NPEs call for consumer subsidies. Moreover, other recommendations were embraced but are not yet transformed into legislation. On the other hand, recommendations such as those regarding education have quickly been approved and implemented. Thus, it appears that while sector-specific decisions, especially if they are co-determined by industry and unions, are easily adopted proposals that are essentially political are much slower transformed into policy. Subsystem complexity is clearly high as many new members have entered with the creation of NPE. Judging the severity of constraints is more complex: differing from the Japanese case, it might no longer be appropriate to identify constraints as low. Main differences are time and competition. As Japanese OEMs and other competitors are clearly ahead concerning EVs, the stakes for German decision-makers are higher than for their Japanese counterparts in 1997, because German manufacturers are trying to catch up. However, constraints should still be judged as low, because there will be no imidiate effect following the decision. Even if one frames the 1 million unit goal as a self-imposed constraint, it is rather unlikely that the current administration will still be in office when this aim should be reached. Moreover, the societal members have no effective way of threatening the administration to adopt their recommendations. Thus, decision-making takes the form of optimising adjustment. As implementation is so far mainly announced and partly set in motion, a first look at the policy tools appears useful. Steps initiated to reform education are largely organisational as new contents and university chairs are set up. Announced equal treatment of EVs and ICEVs is mainly an adjustment of existing treasure-based tools. A major extension in form of consumer subsidies is so far not planned. Although technology development is clearer than 10 or 15 years ago, the policy aim is still broad and for aforementioned reasons the severity of constraints on the state is relatively low. Thus, it appears that support will take the form of directed subsidisation. Finally, regarding learning, dominance of the societal subsystem members combined with strong administrative capacity results in societal learning. Against the background of adopted language and model releases, it appears that German OEMs perceive pressure to address (P)HEVs and BPEVs. Japanese success in commercialising these vehicles, the limited possibilities to meet expected future emission standards without EVs as well as the positive image of EVs all increase the pressure to catch-up. In contrast, politicians do all support the aim in general, but there is currently strong reluctance to support sales via subsidies. Regarding FCEVs, agenda-setting appears to be dominated by industry representatives.
221 Although the government supported R&D from 1978, the demonstration projects in the 1980s can be traced back to lobbying from prominent industrialists. They chose to enlist the support of Länder politicians to lobby for federal support. This kind of bottom-up process in a field with little to none public involvement must be labeled inside initiation. Similar to Japan, the close relation between agenda-setting and formulation has consequences in the 1980s. Regarding the policy process, it must be called intransparent. While it is possible to trace NIP back to the BMWA working group, it is unclear if a certain group dominated the deliberation process. However, it can be observed that industry stackholders and scientific experts are involved in the policy process from an early planning stage. If one compares the recommendations of this working group to the actual program, it appears that the administration followed them by and large. Moreover, the actual NIP projects suggest that all potential future using and producing industries are supported in their respective field. Although transportation related projects receive more than half of total funding, and in this field FCEVs receive the most support, NIP overall appears balanced. Hence, it can at least be concluded that no group was excluded from support. Further, given the importance of the automotive industry for the German economy, it cannot be surprising that it is a main recepient of R&D support. Moreover, it must be kept in mind that the program is generally operating on a cost sharing basis. Thus, industry must invest as much as the state. New actors did not enter deliberation and it is not possible to determine if new ideas could enter. Thus, policy formulation apparently took the form of program reform or instrument tinkering. When the policy was adjusted in the 1990s towards less hydrogen infrastructure and more specific FC R&D there are also no signs of new actors. Because the ideas of PEFCs and reducing the overambitious infrastructure plans are new this phase must be labeled as program reform. During the deliberations of BMWA’s SKW there are also few signs that new members entered the subsystem. The subsystem itself must be regarded as uncomplex, because representation was rather narrowed to federal and regional state actors, industry and scientists. As in Japan, non-business NGOs were excluded. Again the shift towards demonstration can be interpreted as a new idea and hence it is again a case of program reform. For the same reasons mentioned for the Japanese case, decision-making inside the policy subsystem was subject to low constraints. As decribed for the formulation stage, the subsystem was not complex. Hence, decision-making falls under the category of rational search. Regarding implementation, the same logic employed for the Japanese case applies: the severity of constraints for the state must be called low because no direct negative effects would result from taking a different decision. The nature of the policy target must be called broad, because various FC types, methods of hydrogen production and storage had to be explored. Hence, the method of directed subsidisation was utilised enable (systematic) exploration. Just like in Japan, learning is the most intransparent stage. It can be stated what and and for
222 what reasons was learned, but it cannot be stated who is dominating this learning process. Again, it is either social or instrumental learning, or a mixed form. As innovation policy in both countries is subject to intense interaction between state and societal actors, it is not possible to make clear distinctions. Moreover, both countries adopted policies that do not favour a particular EV subtype. Here, it is useful to integrate Freyssenet’s (2011) observations on different national CO2 reduction strategies. While other countries display clear preferences for bio-fuels, natural gas, PHEVs or BPEVs, Japan and Germany are the only countries without a clear strategy. This open approach largely prevents societal and state actors to take opposing positions. If support is given to all alternatives, hence undiscriminating, there is little reason for confrontation. While Freyssenet does not indicate a reason for this open-ended approach, the author thinks that the strong export-oriented economies and globally active OEMs are possible explanations.
223 Conclusion
In order to combine the insights of both case studies and to reach some conclusions about Japanese and German innovation policy and innovation systems, what can be stated about dominant processes and contents addressed by public policies? How can technological outcomes be related to systems? Briefly summing up the results from the policy cycle perspective, both countries share a great number of characteristics. First, there is a strong tendency of bottom-up policy agenda-setting and policy formulation. Although a case of top-down influence could be documented for Japan (a shingikai that is only created to rubber stamp bureaucratic policy proposals), there are also examples of bottom-up formulation. In Germany, the federal government largely refrains from sectoral intervention, but regional states (Länder) tend to promote certain (innovative) industries as regional economic policy. Second, both countries use similar modes of decision-making and implementation. It appears that these similarities are mainly related to the fact that the investigated cases are in the same policy field. As innovation policy tends to be rather uncontroversial, technical, and rather unpredictable outcomes, this explains why different political systems apply similar problem solving strategies in policy-making. For the same reason, both countries apply similar policy tools for implementation. However, there are features that are characteristic for only one nation. For Japan, the following features stand out: first, innovation policy is closely related to industrial policy. Innovation policy is largely the domain of METI and its subsidiary agencies, which are closely cooperating with Japanese industries. Other ministries play a substantially lesser role. MEXT is preoccupied with the education system and national universities. Although performing an important function, namely the education of scientists and a qualified labour force, MEXT and the universities are not dominant in innovation policy. As the investigated cases show, other ministries like ME or MLIT may be involved, but they are not able or willing to challenge METI´s position. Second, innovation policy seems to follow established patterns of METI´s policy approach. The practice of targeting key sectors to ensure future competitiveness is still firmly in place. Regarding this practice, it must be clearly stated that targeting largely works by developing visions and providing incentives, not through directing industries. However, as the fuel cell case has shown, METI and industries both can be influential actors. As the shingikai case reveals, METI seeks to dominate policy-making and at the same time the numerous examples of adjusted policies demonstrate that industry can successfully achieve modifications. One important qualification must be stressed: policy adjustments were mostly related to OEM
224 capability to demonstrate to METI that their original plans and assumptions were wrong. Thus, it might be generalised that METI still maintains the ability to dominate (initial) policy-making and that OEMs must be able to demonstrate technical alternatives’ feasibility to achieve policy adjustment. This also highlights that the bulk of actual development rests with companies. Although the state seeks to influence the development, it appears that automotive OEMs are only following the general direction and develop technologic solutions at their own discretion. With regard to the EV case, it should be pointed out that it falls into the crossroads of economic, energy and environmental policies, the former two being firmly under METI`s jurisdiction. Hence, other case studies, e.g. from the S&T Basic Plan priority field of life sciences, which is strongly related to the authority of MHLW, might find METI´s influence on innovation policies less dominant. Third, despite this continuity, some incremental changes are visible: inter-ministerial cooperation is fostered since administrative reform in 2001 through institutions like CSTP. Concerning CSTP, it must again be highlighted that formerly existing bureaucratic dominance is decreasing and deliberation is becoming more inclusive through an increased voice of academia. In parallel, collaboration between industries and universities is increasingly facilitated. This trend toward more cooperation and qualitative aspects of the Japanese innovation system seems to continue, since the latest development goals of CSTP emphasise further need for reform in these fields. Nevertheless, these changes are gradual and seem to confirm that regimes prevail over a long period of time and only allow a limited degree of change. Fourth, the cases suggest that in this particular field, policy-making is dominated by the bureaucracy and industry. Signs of LDP involvement are completely absent. It appears that politicians rely on the bureaucrats to deal with industry and draft policy. If one relates this case to Schwartz’s research on shingikai, which found that the LDP intervenes in fields that affect important constituencies such as rice farmers, but refrains from interference in technical issues such as stock market regulation, it appears that innovation policy is too technical and not promising political returns. Thus, instead of an “iron triangle” there are only two players in this policy subsystem. As mentioned, academia becomes more integrated into deliberations, but the shingikai case suggests that while influential in determining the general direction through CSTP, academics are rather used as neutral facede in deliberations of concrete policies than actually participating in developing policy proposals. In Germany, the characteristics are quite different. First, innovation policy is still fairly separated from economic policy. The ordoliberal non-interventionist policies are responsible for the low degree of sectoral management attempts by the federal ministries. The Länder, often induced by local companies, did partly fill the gap by bottom-up lobbying for certain projects. Only recently it is becoming increasingly linked to economic policy. The described transfer of
225 bureaux concerned with strategic innovation sectors from BMFT to BMWi suggests that the Merkel administration intends to stronger utilise R&D and science to foster economic performance. In the European context of the Lisbon Strategy, such closer interaction is consequential to the innovation-led economic growth model. However, as it is not uncommon to alter the composition of ministries or their jurisdiction, it is possible that future administrations will again change the current set-up. Second, BMWi is not as influential as METI. It appears that BMVBS is much stronger involved in important projects than MLIT. While BMVBS and BMWi appear equally strong engaged in battery-powered types, BMVBS seems more active in hydrogen and FCEVs. Two possible explanations for the strength should be put forward: first, there is the factor of personnel. It appears that BMVBS staff is actively promoting EVs. BMVBS Secretary of State Bomba and Section Chief Parker stand out as two actors who are wholeheartedly working to support EVs. Second, there is the financial aspect. BMVBS is at an almost equal footing if funding of the explored technology is considered. These two factors might explain why BMVBS is rather a partner for BMWi than a subordinate. Further, the role of BMBF deserves attention. While the present role is marginal in comparison to BMWi and BMVBS, it must be kept in mind that the early support, especially of FC technology, almost entirely came from BMBF and its predecessors. Therefore, it must be concluded that ministries assume different roles in the development process of a technology. BMBF seems to bear much of the initial cost of R&D. When technology comes closer to commercialisation, BMBF’s is replaced by other ministries such as BMVBS and BMWi. Thus, it appears that BMBF is largely confined to basic R&D and other line ministries assume dominating positions if technologies that fall under their jurisdiction reach the pre-commercial stage. This pattern is obviously different from Japan. While a single ministry seems to cover the whole development of a technology in Japan, ministerial oversight over a technology in Germany appears related to the development status. As mentioned for Japan, it is possible that other technologies display different patterns of cooperation and influence. Third, reluctance to grant consumer subsidies differentiates Germany from Japan. While Germany concentrates on pre-commercial stages of innovation, Japan supports industries along the whole innovation process. It might even be stated that Japan invests similar amounts into development and diffusion. As systematic data are not accessible it is nevertheless noteworthy that the whole Sunshine Program had a budget of JPY 440 billion and the eco-car subsidy totaled JPY 370 billion. This may be related to the shared and phased oversight of technologies. Japanese agencies might be more dedicated in supporting technologies they have nurtured for a long time than German ministries which inherite technologies from BMBF. However, the ordoliberal tendency to avoid interference through sector-specific policies should not be
226 underestimated. Also, the current crisis in the Euro-area the related austerity orientation in Europe must be considered. As the Merkel administration pressures other member-states to implement austerity programs in order to stabilise and lower their accumulated public debt, Germany must take the same steps to stay politically credible. Therefore, a stimulus program might simply be anathema to the current austerity policy in Europe. Finally, which factors may explain the differnt development trajectories in Japanese and German EV development? From the innovation system perspective, the different level of EV develoment can be explained as an outcome of OEMs’ embeddedness in different innovation systems, exposure to external pressure, support through other industries, and differing product specialisations. First, it appears crucial to stress the impact of Californian regulation. Pressure to innovate was clearly stronger for Japanese OEMs and induced the intensification for formerly low intensity research. While it induced some R&D activity in Germany, the absence of pressure made it possible to concentrate on other technologies. Second, Japanese OEMs profited from the strong domestic electro-chemical industry that was capable of supplying advanced batteries. Here, it appears that national boundaries are still meaningful as companies from the same country seemingly cooperate more easily than with international partners. This also highlights the interdependence of technological development. Third, while Japanese government support was on a relatively low level for a long time, it was never abandoned. This was a strong signal for some OEMs to continue EV research. German government support – especially towards battery-based types – was less stable. Fourth, as most Japanese OEMs had specialised in more compact cars than German competitors, they enjoyed a benefit in EV development. As heavier cars require more powerful and in turn heavier batteries, German OEMs such as Daimler and BMW had technical reasons to reject battery EVs and favoured the more expensive and distant fuel cell EV type. Fifth, German producers has an alternative development option. In the context of the EU, European states and the European automobile industry agreed to support Diesel technology as it was regard as a low CO2 emitting technology. This means that EU countries tax Diesel fuel lower than gasoline which combined with the higher volumetric energy content of Diesel makes it attractive for consumers. Hence, German OEMs invested much more in Diesel technology than in EVs. Sixth, when German producer Audi released an EV at the same time as the Prius, both governments adopted completely different policies: while Japan initiated consumer subsidy programs to support diffusion, the German government did not act.
227 Seventh, there is a simple but logical explanation for this behaviour. While Japan’s electricity mix made it sensible to utilise EVs as a emission reduction tool, the German coal heavy (56% in 1996) electricity mix would not led to lower emissions. Thus, the embeddedness into a certain technological feature made explains different policies. Eighth, all OEMs display a high degree of path-dependence in technological development. This means that while policy can influence the direction of search, it cannot determine concrete technical solutions. Taken together these reasons explain the currently advanced know-how and sales performance of Japanese OEMs in comparison to German ones. Due to external pressure on Japanese car producers, differing patterns of technologic specialisation and vehicle design, the Japanese OEMs had more pressure and incentives to follow the trajectory of EV development than their German counterparts. Absence of external regulative pressure and the politically supported alternative technology trajectory of Diesel engine technology explain why German OEMs were more reluctant towards EVs, especially HEVs. Weighting the factors against each other is difficult as they are highly interrelated. From the author’s perspective, especially the combination of Californian pressure and battery availability is crucial because the latter actually enabled Japanese OEMs to conform with the former while German competitors did not have this option. If only one of the above factors would have been absent, e.g. no European pro-Diesel policies, different electricity mixes or ZEV mandate extension to German OEMs might have produced very different development trajectories. Therefore, this study confirms findings that actual innovation processes are highly context- and system dependent.
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269 Appendix I. Structural change in advisory bodies
Fig. 8 CST (1959-2000)
Fig. 9 CSTP (2001- present)
270 II. shingikai questionnaire(ᑂ㆟ࣥࢣ࣮ࢺ)
㸯㸬 ⇞ᩱ㟁ụᐇ⏝ᡓ␎◊✲ࡣᙜึࡣ᠓ㄯ࡛ࠊࡑࡢᚋᑂ㆟ྡ⛠ኚ᭦ࡋࡲࡋࡓ 㸽 ࡣ࠸ ࠸࠸࠼ 㸰㸬 ఱᗘ⇞ᩱ㟁ụᐇ⏝ᡓ␎ᑂ㆟ࡣ㛤ദࡉࢀࡲࡋࡓ㸽 ẖ㐌 㸯᭶㸯ᅇ ࢘ 㸰ࣨ᭶㸯ᅇ ࢚ 㸱᭶㸯ᅇ ࢜ ࡑࡢ㸦 㸧 㸱㸬 㛤ദࡉࢀࡿᖺຊ㟁ụᐇ⏝ᡓ␎◊✲ࡢࢸ࣮࣐ࡣఱ࡛ࡍ㸽 ⣧⢋ᢏ⾡ⓗ࡞ၥ㢟 ⤒῭ⓗ࡞ၥ㢟 ࢘ ᢏ⾡ࡢ♫ⓗࣥࣃࢡࢺࡢၥ㢟 ࢚ ࡑࡢ㸦 㸧 㸲㸬 ⇞ᩱ㟁ụᐇ⏝ᡓ␎◊✲࡛ࡣ࠸࡞ࡿሗᇶ࡙࠸࡚ㄽ㆟ࡋࡲࡋࡓ㸽 ᨻᗓࡸᐁࡽཷࡅࡓሗᇶ࡙࠸࡚ㄽ㆟ࡋࡓ ᴗࡽཷࡅࡓሗᇶ࡙࠸࡚ㄽ㆟ࡋࡓ ࢘ ጤဨࡢ࣓ࣥࣂ࣮ࡢ⊂⮬◊✲ᇶ࡙࠸࡚ㄽ㆟ࡋࡓ ࢚ ࡑࡢ㸦 㸧 㸳㸬 ⇞ᩱ㟁ụᐇ⏝ᡓ␎◊✲ࡢ୰࡛ࡣ≉ᐃࡢࢢ࣮ࣝࣉࡀㄽ㆟ࢆ࣮ࣜࢻࡋࡲࡋࡓ㸽 ᨻᗓ࣭ᐁ௦⾲ࡀ࣮ࣜࢻࡋࡓ ᴗࡢ௦⾲ࡀ࣮ࣜࢻࡋࡓ ࢘ ⛉Ꮫ⪅ࡢ௦⾲ࡀ࣮ࣜࢻࡋࡓ ࢚ ≉ࡑ࠺ࡋࡓࢢ࣮ࣝࣉࡣ࡞ࡗࡓ 㸴㸬 ඪᨻᐙࡀ⇞ᩱ㟁ụᐇ⏝ᡓ␎◊✲ࡢㄽ㆟ᙳ㡪ࢆ࠼ࡲࡋࡓ㸽 ຠᯝⓗᙳ㡪ࢆ࠼ࡓ ຠᯝⓗ࡛ࡣ࡞࠸ࡀࠊᙳ㡪ࢆ࠼ࡓ ࢘ ᙳ㡪ࢆ࠼࡚ࡣ࠸࡞࠸ 㸵㸬 ⇞ᩱ㟁ụᐇ⏝ᡓ␎◊✲ࡢࡶࡗࡶ㔜せ࡞┠ⓗࡣఱ࡛ࡍ㸽 ᨻᗓࡸᐁࡀ‽ഛࡋࡓᨻ⟇ࢆᢎㄆࡍࡿ ᨻᗓࡸᐁពぢࢆල⏦ࡍࡿ ࢘ ᚋࡢᡓ␎ᨻ⟇ࢆ⪃࠼ࡿ
271 ࢚ ࡑࡢ㸦㸧 㸶㸬 ⇞ᩱ㟁ụᐇ⏝ᡓ␎◊✲⇞ᩱ㟁ụᐇ⏝᥎㐍༠㆟ࡣࢇ࡞㛵ಀ࠶ࡾࡲࡍ 㸽 ⇞ᩱ㟁ụᐇ⏝ᡓ␎◊✲⇞ᩱ㟁ụᐇ⏝᥎㐍༠㆟ࡢ࣓ࣥࣂ࣮ࡣ㔜࡞ࡗ࡚࠸ ࡿ ⇞ᩱ㟁ụᐇ⏝ᡓ␎◊✲⇞ᩱ㟁ụᐇ⏝᥎㐍༠㆟ࡣ⊂❧ࡋࠊ┦ሗࢆ ࡍࡿ ࢘ ୧⤌⧊ࡣ⊂❧ࡋ࡚࠸࡚㛵ಀࡣ࡞࠸ ࢚ ࡑࡢ㸦㸧 㸷㸬࠶࡞ࡓࡣ࠸࡞ࡿ⤒⦋࡛ᙜヱ◊✲ࡢጤဨ࡞ࡗࡓࡢ࡛ࡍ㸽
ࡑࡢࠊࡈពぢࡀ࠶ࢀࡤ⮬⏤᭩࠸࡚ࡃࡔࡉ࠸ࠋ
272