The the policy maker will be able to

The prospect of a potential low-carbon scenario can be finally deduced from the behavior of the most important players in the political-institutional structures of the two models.

 

In fact, the success of such an economy, subject to the constraint of burdensome barriers, such as the global competitiveness on production costs, is also conditioned by the need for major transformations, both in the political asset management and planning of the common good and in the cultural models that guide individual customs. In these areas, efforts are being made to envisage the evolution of the economy, aimed at understanding the inhibitory feedbacks, induced by consolidated individual behaviors, which hinder the action of technical decision-making apparatus.

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Innovation and development of technologies are key elements of the transition towards a low-carbon economy and further its progress, but they need a solid socio-political context which will support them.

Indeed, the low-carbon transformation is not automatic. It’s a choice. The choices made by governments and those involved in the development have a huge impact on the transition. In order to get to a low-carbon economy model, which could also be social and economic sustainable, policies must be inclusive. An integrated and long-term oriented approach is in fact needed for the low-carbon economy sustainability of the future. That is why, in this last section, will be analyzed the importance of a long-term perspective, planning and key economic-political actors.

 

In order to ensure the transition, the adopted policy measures will be more effective as they will be integrated into a medium-long term vision, consistent with the objectives set. Within a long-term vision, the policy maker will be able to better evaluate the opportunity to adopt ambitious measures to guide the evolution of the transition (for example incentive / disincentive plans or plans for the phasing out of certain technologies) capable of anticipating and amplifying the range of benefits that can be activated for the economy itself and the society. At the same time, the coordination and homogeneity of policies is necessary, not just sufficient. This would be possible by providing the appropriate tools and coordinating different actors for the development and implementation of policies that are innovative and consistent with the evolution of the transition schemes.

The political and social alignment is also a very important condition for investors. In fact, investors are leaning towards a visibility on the future. They want to identify countries’ targets, how they can contribute and how they can benefit from investments in a low-carbon economy. Therefore, investors require stability of policies and clarity on the visibility of the final target.

 

Drawing from the VoC framework, from a political-institutional organization point of view, Coordinated Market Economies seem to have a comparative advantage since they meet the coordination requirements, necessary to implement a low-carbon economy. Indeed, according to Soskice and Hall (2001), in coordinated market contexts, companies rely heavily on relationships that are not market-based to coordinate their efforts with other socio-economic and political actors. While, in liberal market economies, companies coordinate their activities on the basis of hierarchies and factors architectures typical of a competitive market. Of course, the strong dependence on the market, of liberal economies, partly contrasts the vision of stability that guarantees the transition. However, according to Geels (2002), drawing from the ‘Appreciative theory’ of transition, (Nelson and Winter, 1982), a structure with little hierarchy can be problematic for policymakers who have set priorities on environmental issues. Indeed, hierarchies are useful for the pursuit of imminent political priorities.

 

Furthermore, LMEs and CMEs also differ in terms of electoral politics. Specifically, liberal market economies tend to depoliticize social policies, such as the energy/climate policy, instead of seeking a clear political agreement. This represents a more sustainable process under transition pressures. While, coordinated market economies are mostly characterized by multi-party systems accompanied by institutions aimed at information exchange, behavior monitoring and bad behavior sanctioning, such as trade unions. This implies that in CMEs, where trade unions and coalitions have a remarkable influence on government’s choices, in order to protect interests of the heavy industry workers, the decision-making process is longer and complex.

Indeed, these coalitions could obstacle such a shift towards this new economic paradigm, since at least at the beginning of the transition, this would mean the loss of thousands of jobs related to economies based on heavy industry, as for definition it is that of CMEs. Therefore, the apparent strength of cooperation in coordinated economies can actually turn in an obstacle in this context. However, a low-carbon economy could benefit from the absence of a fragmented context of interests and the presence of hierarchies pushing for a shift, encountering in LMEs a more favourable environment.