Law and Innovation in the Energy Sector

Climate change policies call for a radical technological shift in the energy sector. The huge costs of greenhouse gas emissions abatement can be scaled down only if the development of low-carbon technologies will take place at an accelerated pace. But such progress has to confront with a large number of market failures and other kinds of barriers. Drawing on the studies which highlight the systemic nature of innovation, this paper argues that a radical technological change needs an institutional change of the same import. National legal cultures severely constrain the opportunities for big overhauls of the existing institutional context. Hence, the programs aimed at fighting global warming will be ineffective if they do not take into account the systemic interdependencies between innovation policies and the supporting institutions. European and American experiences in promoting renewable energy and green building are compared to provide examples of institutional successes and failures. The creation of a new regulatory body (the Office for Innovation and Climate Change) with the task of overcoming institutional inertia and build a co-evolutionary path for low-carbon technologies and institutions is advocated