The Political Economy of Energy Transitions “Case studies of natural gas and offshore wind in the Netherlands and the United Kingdom” Student: Steven Blom (s4261690) Project: Master thesis Public Administration Program: Comparative Public Administration (COMPASS) University: Radboud University, Nijmegen, the Netherlands Faculty: Nijmegen School of Management Thesis supervisor Tutors: Dr. J. (Johan) De Kruijf Prof. dr. S. (Sandra) van Thiel Research assignment Client: Dr.ir. R.P.J.M. (Rob) Raven Position: Professor Institutions and Societal Transitions Department: Innovation studies department of Utrecht University Former position: Industrial Engineering & Innovation Sciences - Eindhoven University of Technology [TU/e] th Date: August 11 , 2015 1 Table of contents Abbreviations & acronyms ..................................................................................................................... 5 Prologue .................................................................................................................................................. 6 1. Introduction ........................................................................................................................................ 7 1.1 Introduction ................................................................................................................................... 7 1.2 Chapter’s structure ........................................................................................................................ 7 1.3 Problem description ...................................................................................................................... 8 1.4 Research objective ........................................................................................................................ 9 1.5 Research question ......................................................................................................................... 9 1.6 Social relevance ............................................................................................................................. 9 1.7 Scientific relevance ...................................................................................................................... 10 1.8 Preview on the theory and methods ........................................................................................... 10 1.9 Report Structure and reading guide ............................................................................................ 10 2. Theory ............................................................................................................................................... 11 2.1 Theory chosen and rationale ....................................................................................................... 11 2.2 Chapter’s structure ...................................................................................................................... 11 2.3 Defining the concept of Political Economy ................................................................................. 11 2.4 Analysis of the Political Economy ................................................................................................ 12 2.5 Policy- and decision-making models ........................................................................................... 12 2.6 Cost-price relevant subjects ........................................................................................................ 13 2.7 Research approach ...................................................................................................................... 18 2.8 Research Design .......................................................................................................................... 18 2.8.1. Research model ................................................................................................................... 18 2.8.2 Diagnostic framework .......................................................................................................... 18 3. Methodology ..................................................................................................................................... 20 3.1 Introduction ................................................................................................................................. 20 3.2 Operationalization ....................................................................................................................... 20 4. Political economy analysis of Natural Gas ....................................................................................... 22 4.1 Introduction ................................................................................................................................. 22 4.2 The Netherlands and natural gas ................................................................................................ 22 4.2.1 Stage 1a: Historic analysis: pre 2003 .................................................................................... 22 4.2.2 Stage 1b: Basic analysis: since 2003 ..................................................................................... 23 4.2.3 Stage 2a: Defining the sector ............................................................................................... 24 4.2.4 Stage 2b: Government involvement in the gas sector ......................................................... 25 2 4.2.5 Stage 2c: Government taxation on fossil fuels extraction ................................................... 27 2.4.6 Interim conclusion: Natural gas in the Netherlands ............................................................ 28 4.3 The United Kingdom and natural gas .......................................................................................... 28 4.3.1 Stage1a: Historic analysis: pre 2003 ..................................................................................... 28 4.3.2 Stage 1b: Basic analysis: since 2003 ..................................................................................... 28 4.3.3 Stage 2a: Defining the sector ............................................................................................... 29 4.3.4 Stage 2b: Government involvement in the gas sector ......................................................... 30 4.3.5 Stage 2c: Government taxation on fossil fuels extraction ................................................... 31 4.3.6 Interim conclusion: Natural gas in the United Kingdom ...................................................... 31 4.4 Stage 3: Country comparison: Natural gas .................................................................................. 32 4.4.1 Comparison State’s ownership in natural gas sector ........................................................... 32 4.4.2 Energy mix for electricity generation ................................................................................... 33 4.4.2 Gas and oil production ......................................................................................................... 36 4.4.3 Government revenues from fossil fuels extraction .............................................................. 38 4.5 Conclusion: Natural gas comparison ........................................................................................... 39 5. Political economy analysis of offshore wind ................................................................................... 41 5.1 Introduction ................................................................................................................................. 41 5.2 The Netherlands and offshore wind ............................................................................................ 44 5.2.1 Stage 1a: Historic analysis: pre 2003 .................................................................................... 44 5.2.2 Stage 1b: Basic analysis: since 2003 ..................................................................................... 44 5.2.3 Stage 2a: Defining the sector ............................................................................................... 45 5.2.4 Stage 2b: Government involvement in the offshore wind industry ..................................... 46 5.2.5 Stage 2c: Government support mechanisms for offshore wind .......................................... 47 5.2.6 Interim conclusion: Offshore wind in the Netherlands ........................................................ 49 5.3 The United Kingdom and offshore wind ..................................................................................... 50 5.3.1 Stage 1a: Historic analysis: pre 2003 .................................................................................... 50 5.3.2 Stage 1b: Basic analysis: since 2003 ..................................................................................... 50 5.3.3 Stage 2a: Defining the sector ............................................................................................... 51 5.3.4 Stage 2b: Government involvement in the offshore wind industry ..................................... 51 5.3.5 Stage 2c: Government support mechanisms for offshore wind .......................................... 52 5.3.6 Interim conclusion: Offshore wind in the United Kingdom ................................................. 56 5.4 Stage 3: Country comparison: Offshore wind ............................................................................. 56 5.4.1 Comparison: Subsidy mechanisms ......................................................................................