I) and scaled to the levels of development

I)             A TRANSITION TO A LOW-CARBONECONOMY    A transition towards a progressively more sustainable future, withdecreasing greenhouse gas emissions and the recovery of environmentaldegradation, requires a different economy, namely more environmentally friendlyproduction, processes and technologies and a different concept of welfare,associated with new criteria through which firms can evaluate the added valuethey produce as a function of the whole wealth and not just the flow ofrevenues and the number of accumulated machines and infrastructures. The vectorof this absolutely needed transformation is the low-carbon economy which, althoughdeclined according to different sectoral meanings and scaled to the levels ofdevelopment of various nations and their vocations, gathers all the effortcurrently ongoing in the world towards sustainable development.Notwithstanding, the low-carbon economy involves a new vision of problems anddynamics of development, new cultures, different skills and training methodsand that is what makes the transition very intricate. Indeed,  this transition determines the formation ofnew sectors (low-carbon sectors), new types of job (green jobs) and newtechnologies (green technologies).Accordingly, the technical and economic feasibility of this challenge willdepend not only on the real conviction for the cause but also on the differentdevelopment perspectives, public policies and risks that will take place on theroad of change.

This will require a structural transformation of society, a newconsciousness, a revolutionary order.  Liberal and coordinated economies, as we know them from the theory, willnot be able to move towards a low-carbon path if traditional industries do not reinventthemselves through new ways of organizing or through new forms of innovationthat lead to products that are less energetic in their use; even if thisinnovation is triggered by considerations of cost or competitiveness ratherthan genuine environmental concerns. However, without environmental interestsand without an adequate vision of their future, no one would be able to remainfor long on a coherent transition path towards a different and sustainable typeof economy. It is, indeed, in terms of long-term perspectives that thepolitical-institutional context assumes an important function. Hence, atransition with deep meanings, which goes far beyond the narrow energy andeconomic boundaries, leads to ethical and social contexts.

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Basically, thepossible success in the long-term will require continuous innovation, newskills, different collaborations, investments with uncertain returns and achange in what are today’s market values. In recent years, many have been the temporal hypotheses linked to scenariosof a transition of this magnitude. One of these is represented by theinteresting study by Benjamin K. Sovacool (2016) entitled “How long will ittake? Conceptualizing the temporal dynamics of energy transitions”, accordingto which the new energy and economic revolution can be completed within afraction of the time that was necessary for previous revolutions. However, heasserts, in order to get there “it would take an interdisciplinarycollaboration, a multi-scale effort”. He argues that the transition towards alow-carbon economy may be different than the past transitions given resourcescarcity, the threat of climate change and the greatly improved technologicalknowledge and innovation which could greatly accelerate the global change for acleaner economic future.It is with these premises that innovation, financing and thepolitical-institutional context.

have been identified as main drivers of alow-carbon transition. In the next sections, they will be analyzed in relationto LMEs and CMEs settings, as defined by the literature, to examine whetherthere is a chance for the emergence of a low-carbon economy in these two modelsof capitalism.  II)           Innovation According to Aldo Bonomi’s holistic view (2015), “Low-carbon economy meansreasoning around the ways in which the model of capitalist developmentincorporates the sense of ‘limit’ (environmental, social, productive), as a newprinciple of accumulation, making it the engine of a new cycle. It appears as aparadigm that invests productive processes, products, regulatory policies,lifestyles, artistic representations, (re)use of the territory, smart cities,smart lands”, (Il Sole 24 Ore, 30th of April 2014). The sense of thelimit, identified as the new principle of accumulation, offers a newinterpretation to the low-carbon economy, whose efficient achievement is onlypossible by modifying in depth not only the production processes and products,but also the organization of the industrial and territorial supply chains.In fact, the transition towards a low-carbon economy is a complex processthat not only represents the transition from a traditional economy to a greenerone but it presupposes a radical change in the structure, culture and practicesthat characterize the society. It is a transversal challenge as well as anopportunity of growth for countries.

Indeed, the adjective ‘radical’ becomes anecessary requirement, since the low-carbon economy is a constantly movingconstruction site in which the traditional economy is transformed, bringingwith it a profound change in the structure of society and in its culture.Therefore, innovations seems to be the first driving factor for the developmentof a low-carbon economy and, in this context, we talk about the so-called’eco-innovations’. Indeed, a decarbonized economy can only be achieved throughthe development and implementation of those eco-innovations; ie. those types ofinnovation which take into account not only the economic profile, but also thesocial and environmental dimensions as essential components of sustainabledevelopment. The objective of an eco-innovation is properly that of a radicalchange towards new production and consumption systems based on a sustainablesupply and use of resources and a reduction/elimination of emissions andconsequent impacts, which gradually leads to the absolute decoupling betweengrowth, use of resources and impacts on ecosystems. That implies thatincremental improvements alone are not sufficient for the purpose in thiscircumstance. However, the path towards sustainability requires the shift fromincremental innovations to radical innovations that have broad systemic effectsand persist as the only approach to solve environmental problems.Therefore, itcan be deduced that the low-carbon transition emphasizes the difference betweenincremental and radical innovation, where the latter seems to be more relevant;even better if accompanied by a risk-taking attitude which is essential toproduce radically innovative strategies.

Combining this feature to the VoC framework, Soskice and Hall (2001)differentiate the two models of capitalism based on the innovation sectorwhich, in a low-carbon perspective, is identified as one of the predominantfactors in the determination of a comparative advantage.In line with itsnature, the radical innovation concerns a shift in the technological regime ofan economy and leads to changes in the enabling technologies. This type ofinnovation is competence-destroying (Casper, 2010) and needs some kind ofderegulation. Deregulation is usually particular characteristic of liberaleconomies that exploit it as a method to improve their level of coordination (Schmidtand Thatcher, 2013) . In accordance with the VoC framework (2001), LMEs areknown to be pioneers in areas where innovations are more important and wherefirms’ mergers and acquisitions are widespread and necessary practices. Theseare also sectors in which the taking of a business risk plays a more decisiverole in favor of producing innovative strategies that can attract the attentionof the market.In contrast,while CMEs enjoy organizational models based on large companies and structurednetworks with policies specifically aimed at supporting innovation, howeverthey are specialized in sectors in which the incremental innovation is morediffuse. Thus, in the case of coordinated market economies, innovation isusually continue, aimed at introducing improvements to existing processes andservices, without fundamentally changing the underlying key technologies(Dicken, 2003).

In fact, it mainly takes place in traditional industrial fields,such as machinery and chemical sectors, which are in opposition to the rise ofa greener economy.In conclusion, the innovation is a prerogative for the emergence of alow-carbon economy which requires a total disruption of production processesand the introduction of both radically innovative products and radicallyinnovative strategies. Therefore, starting from this assumption and integratingthe VoC framework, a low-carbon economy seems to find more chances to flourishin liberal economies rather than in coordinated ones, which are distant from aradical innovation model; an indispensable feature of this transition.   III)         Financing The process of innovation needs the involvement of many subjects. In orderto achieve the transition to a low-carbon economic system, scientific andtechnological research play a crucial role. That is why the previous analysisallows us a connection to the need of financing for R and training.

Thelow-carbon economy requires technological innovations that are guaranteed notonly by ambitious policies but also by investments, which have a key functionto accelerate the development of technologies, reduce costs and facilitate theimplementation on a large scale. Moreover, the new technologies are those thatwill have to challenge the old economic system; a transformation of thismagnitude cannot consider to be obtained without a constant search fordevelopment and innovation by both public and private entities. Indeed, financingfor R offers a very important contribution that is not only of vitalimportance in this sector, but it also offers a chance for an action planfocused on long-term objectives. The development of low-carbon technologies isalso clearly connected to the lack of infrastructure, a key problem in theenergy sector. It can be argued that low-carbon technologies are the bestresponse to this deficit, especially from a sustainability and equityperspective. In the world of energy infrastructures, there is a strong need torenew and innovate a ‘park’ plants in full maturity, adapting the offer to theever increasing level of energy demand in the world, mainly coming from a lifeexpectancy in sharp growth in the coming decades. The energy infrastructuresand sectors essentially need massive amounts of liquidity moving towards them. Hence,investments can profoundly influence climate change.

Throughout the process oftransition to a low-carbon economy, major investments are needed: an Accentureresearch1estimates a requirement of 2.9 trillion euros to finance development androll-out in five key sectors in Europe in the coming years.Various studieshave highlighted the existence of positive correlations between the amount ofresources that Venture Capital (VC) funds have to support innovation projectsand the growth of the innovation technology rate in a given country (Helmannand Puri 2002; Kortum and Lerner 1998; Kaplan and Stromberg 2000). The VC isseen as an instrument particularly suited to the financing of the innovation,since it is an instrument that, due to its characteristics, has a highadaptability. . Indeed, the presence of Venture Capitals is known to establisha beneficial circle which produces and spreads the innovation. In particular,the Venture Capital funds can contribute to specific managerial or sectorknowledge and can also provide for reputational capital, useful to attractmanagerial/scientific talents.

 Observing the Varieties of Capitalism framework (2001) and the structure offunding of LMEs and CMEs’ financing, the availability of investments andtherefore access to credit shapes the transition of the two models ofcapitalism. Historically, in LMEs financing needs are mainly met through the raising ofcapital on the stock market. Indeed, these economies are characterized by astrong presence of private non-institutional investors who invest personalcapital (Venture Capital) or specialized financial intermediaries. While, CMEs’credit system characterized by a much less developed stock market and thelong-term financing needs mainly met by banks, drastically reduces thepossibility of developing risky innovation, which instead have to rely more onfirms’ internal capital.Therefore,institutions such as Venture Capitals, which are more helpful for theadvancement of low-carbon innovation, have their biggest diffusion in LMEs thanin CMEs, making liberal market economies more predisposed to the financing ofradical innovation which are risky by their nature. However,in order to speed up the development of low-carbon economy financial andeconomic sectors, clear public policies on the target to be achieved, areneeded.

This leads us to the last section of our analysis based on thepolitical-institutional context behind countries1 Accenture,Carbon Capital – Financing the Low Carbon economy, in collaboration withBarclays