The first chapter considers the situation of the Netherlands particularly, but the next three chapters at least should be of interest to all readers. Below is the Executive Summary, a section of the Contents, followed by some of the choicest excerpts from the body of the report.

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Executive summary
In 2004 the Dutch Ministry of Economic Affairs published a white paper on innovation in energy policy describing a new approach to persistent environmental problems: transition management.
Transitions are defined as processes of socio-technical evolution in which economic, institutional and technological structures develop interactively and change drastically in the long run.

Transition management prescribes the way in which society-wide and complex system innovations can be guided deliberately towards goals of sustainability. So far, one important element of transition management has been implemented: the establishment of national innovation alliances between industry, research and local government. A recent review of energy transition policy by a high-level advisory commission compliments the Ministry on its pioneering role, but suggests strengthening the international component of transition policy. This essay concerns the European dimension of transition policy.

Transition thinking uses a multi-level perspective of social change processes. At the micro-level experimentation and demonstration is fostered in niche markets to promote innovation and establish a breeding ground for commercialisation of new energy technologies. At the meso-level successful innovations gradually influence the foundations of the energy system in terms of infrastructural configuration, institutional arrangements and company behaviour until a new energy regime emerges. At the macro-level societies define their basic values and broad ambitions in terms of sustainability.

These three levels of social change processes are referred to as respectively the niche, regime and landscape level. They can be linked to geographical scales. From a European perspective the Netherlands can be viewed as a niche for experiments where variation
is stimulated and adaptive capacity is maintained, while Europe is the selection environment that ultimately determines the success of energy technologies. At the same time, it is clear that the European selection environment itself is not immune to geopolitical and socio-cultural changes at the global level. Indeed, the European energy regime will evolve in different directions dependent upon those global changes and Europe's own ambitions at the global scale.

This essay is based on the idea that the future of energy in the Netherlands will emerge as a result of anticipating on potential European energy transitions. To explore those potential European energy transitions is the purpose of this document.

Scenario analysis articulates our hopes and fears for the future. It should help in understanding the nature of the driving events and forces affecting the future and the uncertainties determining their potential impacts. Two major events would dramatically change the urgency and direction of energy innovation in Europe: the arrival of a global peak in oil production and the failure of
global climate change policies.

The first part of this essay deals with the plausibility of such driving events. On the basis of a critical look at the arguments of the oil peak doomsayers and the environmental anti-globalists it is concluded that both events are plausible and would have major consequences for energy transitions in Europe.

Accordingly, the future course of European energy transitions is described in four contrasting scenarios:
• FIREWALLED EUROPE - Oil production peaks in the period 2010-2020. No viable post-Kyoto
climate change policy emerges. The European energy sector turns back to coal and nuclear in
the next 50 years.
• FOSSIL TRADE - Oil production follows oil demand smoothly in the period 2010-2020.
No viable post-Kyoto climate change policy emerges. The European energy sector continues
business as usual in the next 50 years.
• SUSTAINABLE TRADE - Oil production peaks in the period 2010-2020. Post-Kyoto climate
policies develop effectively. The European energy sector turns to large-scale trade in renewables
in the next 50 years.
• FENCELESS EUROPE - Oil production follows oil demand smoothly in the period 2010-2020.
Post-Kyoto climate policies develop effectively. The European energy sector diversifies strongly
keeping all options open for the next 50 years.
The major part of this essay concerns the storylines for these four scenarios at the global level
of socio-political landscapes, at the European level of energy regime transitions and at the
national level for innovation systems.

As the names of the scenarios suggest the prospects for international trade in energy are considered crucial for differentiating European futures and allowing conclusions about actionable agendas for innovation.

Contrary to mainstream thinking a smooth transition to an increasingly sustainable world driven by climate change objectives and characterised by a gradual rising share of renewables is presently unlikely. In fact, an increasing part of the world economy is moving towards a FOSSIL TRADE scenario. Only strong issue linkages between climate change and poverty reduction, between trade and environment will lead to futures involving high shares of renewable energy as exemplified in the SUSTAINABLE TRADE scenario.

Moreover, energy policy makers often act as if they believe in a FENCELESS EUROPE scenario, while in reality they might as well end up unexpectedly in a FIREWALLED EUROPE scenario. The roles that Dutch companies can play on the European level differ fundamentally between
these four scenarios. Making robust strategic choices for energy innovation policies in such
contrasting scenarios is the challenge for strategic niche management in the Netherlands. In
order to do so wisely, the Netherlands must follow the adagio “think globally, act locally”.

It must not only consider European ambitions on the global scale, but it must also attempt to close the gap between technological innovations and profit opportunities at the local level. Alliances with regional economic interests are crucial in this respect. Given that the Netherlands is already acting as an energy gateway for Europe it has an excellent starting position. However, the future is likely to bring structural changes in energy value chains and only adequate innovation in different parts of those energy value chains can lead to success.

The final chapter contains four artist impressions of Dutch physical landscapes on the regional level that could potentially result from the four metaphorical landscapes described in the scenarios.
The scripts for development of these physical landscapes concern specific technological
innovations compatible with each of the four scenarios. These visionary examples demonstrate
the concrete results of choosing for specific Dutch niches in the energy value chain including
specific types of institutional innovation.

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From the Contents:
2. The future of global energy markets
2.1 "When will oil peak?": that's the question 18
2.2 Fundamental differences in visions on future resource availabilities 20
2.3 Synopsis of doomsayers arguments 22
2.4 Why the doomsayers are right 25
3. The future of global climate change policies
3.1 "Is globalisation the solution or the problem? ": that's the question 28
3.2 Fundamental differences in visions on future climate change policies 30
3.3 Synopsis of anti-globalist arguments 32
3.4 Why the anti-globalists are right
4. Four European energy transition scenarios
4.1 Why not use existing story lines? 36
4.2 Transition features of ECN scenarios 39
4.3 Four global socio-political landscapes 42
4.4 Energy story line in FIREWALLED EUROPE 45
4.5 Energy storyline in FOSSIL TRADE 47
4.6 Energy storyline in SUSTAINABLE TRADE 48
4.7 Energy storyline in FENCELESS EUROPE 49
4.8 Impacts on national innovation systems 50
5. Implications for innovation strategies
5.1 Finding a robust portfolio of technologies 54
5.2 Contributing to European ambitions while serving regional economic interests 56
6. Dutch innovation niches: four exemplary visions
6.1 From metaphorical to physical landscapes 61
6.2 FIREWALLED EUROPE - nuclear cogeneration on Texel 63
6.3 FOSSIL TRADE - coal refineries on the third Maasvlakte 65
6.4 SUSTAINABLE TRADE - biomass production in the Zijpe estuary 67
6.5 FENCELESS EUROPE - Amsterdam as hydrogen gateway 69

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Excerpts

2.4 Why the doomsayers are right
Question marks regarding conventional wisdom on resource availability justified
The arguments summarised above are not intended to demonstrate the unreliable nature of the
IEA experts or the unsubstantiated views of oil economists. They are intended to demonstrate
that there are major uncertainties regarding the feasibility of keeping oil supplies in line with
continuing increases in oil demand. They support the hypothesis that an oil peak somewhere in
the period 2010-2020 is far from impossible. While there are many events that could postpone an oil peak to after the year 2020, there are equally many events that could lead to an oil peak before the year 2020.

In addition, the arrival of an oil peak will not mark the end of the oil era. It will only start a search for alternatives that is not any longer or not only motivated by climate change policies but strongly spurred by market forces. Those alternatives include early and forceful decisions about unconventional oil resources, which may indeed lead to new and higher peaks in oil production in the period after 2020. But ultimately, this course is likely to lead to far higher and more volatile prices for hydrocarbons in the medium term than would otherwise be the case.

Energy transition scenarios must articulate hopes and fears in a balanced way
Of course, it is not so simple to decide who is right in the sense of being able to predict an
oil peak accurately. Fortunately, in terms of designing appropriate energy R,D&D strategies
there is no need to decide about the most probable future. What matters most is to include
a probable range of plausible futures.

In this respect it seems increasingly clear, that the pessimists are right in the sense that an oil peak in the near future is indeed plausible and that it would be useful to consider the possible consequences for global energy markets and the resulting drive for system innovations.

For the purpose of this study we are referring to the period up to 2020 rather than any one particular year. The doomsayers are right in the sense that scenarios with limited availability of oil and sharply rising prices deserve serious attention in terms of the consequences for European energy transitions and related energy
R,D&D strategies.

Conventional scenarios seem to focus exclusively on the articulation of hopes (continuing lack of resource constraints), but they should also focus on the articulation of fears (early arrival of resource constraints).

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3.1 “Is globalisation the solution or the problem?“ : that's the question
Profits, people and planet
Globalisation can be defined in many ways. In a narrow sense, it refers implicitly to just the
economic sphere. The core phenomenon of globalisation at the economic level is the increasing interconnectedness of the world economy in terms of the volume of international trade and finance, the related role of multinational corporations and the rule of market forces. But in a wider sense it may incorporate many non-economic aspects that have to do with developments in the environmental and social sphere.

When it comes to globalisation and energy transitions, three aspects of globalisation are of importance: economic (world energy markets, the profit dimension, energy availability), environmental (climate change, the planet dimension, energy acceptability) and social (poverty alleviation, the people dimension, energy accessibility). Sustainable energy transitions are supposed to benefit goals in each of these three different dimensions.
Because energy is a dominant force in world markets, the prime cause of climate change, and an effective means of reducing poverty, energy transitions and sustainable globalisation are closely linked.

Markets are good servants, but bad masters
The anti-globalisation movement is an amalgam of activists ranging widely across the political
spectrum and representing widely divergent advocacy groups. The thread that binds them
together is the assumption that economic globalisation in its present form is detrimental for many worthwhile goals outside the immediate realm of profits. This assumption not only concerns the actual results of globalisation, but also the process of globalisation itself. In other words, regardless of the economic benefits attained, if they have been reached through undemocratic means (read markets, companies and profits), this is in itself a reason for opposition and worry.

The democratic deficit will automatically impair true progress. While the champions of globalisation point at its actual economic benefits for a large number of the previously poor, the opponents are keen to focus on how those achievements have led to the empowerment and enrichment of the few (through rampant market forces) and the disenfranchisement and marginalisation of the many (through deepening poverty barriers and degrading global environmental quality). They often perceive market forces as an acceptable means to reach limited goals, but ultimately as a malfunctioning master of beneficial change in the domains of environment and poverty. When profits and markets run the process of globalisation its ultimate results are bound to disappoint. Markets may be good servants, but they are bad masters.

According to the anti-globalists global governance should be fundamentally restructured or abandoned altogether for regional autonomy.
The present course of globalisation makes it part of the problem, rather than part of the solution.

Success of economic globalisation tied to energy transitions
Notwithstanding the critical views of the anti-globalisation movement, most economists will point out that the existence of efficiently functioning global energy markets certainly contributed immensely to the success of economic globalisation in the past twenty years. This observation refers not only to the unlimited supply of transportation fuels for the explosive growth of the worldwide flows of materials and products.

It also concerns the role of energy as an engine of growth. This role involves not only the unconstrained supply of primary energy sources, but also pertains to the much wider domain of energy equipment across the full spectrum of the energy chain from extraction to end-use.
The energy sector has provided enormous opportunities for foreign direct investment and technology transfer, ultimately contributing to sustained economic growth in many countries worldwide.

Moreover, changes in the energy sector have involved more than just a surge in investment and
capacity expansion. In many countries, the structure of the sector in terms of governance and jurisdiction has changed dramatically in the wake of worldwide liberalisation tendencies. There has been a true energy transition involving not only technological innovation but also institutional change and new actors. Of course, the track record is decidedly mixed in the sense that with hindsight many energy projects and reforms leave much to be desired, but the grand picture is one of vast improvements when compared with past performance. According to this perception of reality, the present course of globalisation makes it part of the solution rather than part of the problem.

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3.4 Why the anti-globalists are right
Question marks regarding the beneficial aspects of globalisation justified
The future of climate change is intricately linked with the future of globalisation. The antiglobalists are right in the sense that problems of environmental degradation, in particular climate change, will not disappear automatically as economic globalisation progresses. Indeed they may well worsen. Contrary to the hopes of at least some anti-globalists however, this does not mean
that we could or should end globalisation altogether. Globalisation will continue in one form or another.

It does mean instead, that efforts to get international climate policies of the ground may be doomed. In fact, there are presently just as many reasons to doubt an effective follow-up to the Kyoto Protocol as there are reasons to expect its extension into a next period of binding commitments.

Furthermore, derailment of international climate change policies is not an isolated event. It would be indicative of a world in which political and social conditions would become
prevalent that are not generally perceived positively in the democratic west (note the CIA
scenarios). With respect to energy choices in Europe, such conditions would involve not just
abandoning greenhouse gas emission reduction as the prime mover in shaping future European
energy regimes, it would also involve a sharp twist towards goals of energy availability and
security instead of energy acceptability in terms of global environmental impacts.

Energy transition scenarios must articulate hopes in a pro-active way
If we accept that climate change policies and globalisation are so intricately linked as the antiglobalists assert, it is perhaps wise to also address their concerns about the inequities of international trade and the role of multinationals. International trade should become a key theme for the dialogue on solving global climate change.

Moreover, multinational companies are the key players, that determine the course of globalisation in general and the potential for success or failure of an international climate change regime in particular. European policy makers ought to take note of this message of the anti-globalists and reconsider their policy preferences in the light of on-going discussions about trade and environment.

In fact, this is already happening, witness the fact that Russia was persuaded by the EU to sign the Kyoto treaty in exchange for support in joining the WTO. Energy policy makers should pay more attention to the wider benefits and dangers of international trade and how the benefits can be improved and the dangers diminished when dealing with sustainable energy futures. Sustainable energy scenarios must be explicit in this respect and articulate the hopes for an economically affordable and socially acceptable energy future in a pro-active way. Moreover, such scenarios should include an explicit vision on the possible role and position of today's energy multinationals in developing sustainable trade.

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6.2 FIREWALLED EUROPE - nuclear cogeneration on Texel
Nuclear dreams: the multipurpose High Temperature Reactor
The High Temperature Reactor (HTR) is an innovative design for generating nuclear energy in an inherently safe, small-scale and affordable way. With inherently safe we refer to the fact that core meltdowns are impossible because in the event of cooling failures natural convection processes take over and allow for sufficient cooling to prevent disasters. With small-scale we refer to the possibility of modular design at relatively low capacities of some tens of Megawatts. With affordable we refer to the fact, that the process design is relatively straightforward and allows modular fabrication for multiple purposes. ...

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6.3 FOSSIL TRADE - coal refineries on the third Maasvlakte
Coal dreams -A smart and clean carbochemical industry
The coal industry is generally viewed as dumb and dirty. There are no technological reasons why
the coal industry cannot become smart and clean. In fact, the Netherlands was a premature
European frontrunner in this field when constructing the coal gasification plant at Buggenum.
It could regain its prominent position, when the prospects for coal-based manufacturing of
chemical building blocks improve in a fossil fuel dominated world. The increasingly threatened
role of Rotterdam in an Asian oriented global economy may ultimately lead to aggressive
development of innovative industrial infrastructure.

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6.4 SUSTAINABLE TRADE - biomass production in the Zijpe estuary
Biomass dreams - from seed-potatoes to salt-water plant seeds
The rise of biomass trade to limit greenhouse house gas emissions will reverse the trend of
CO2-concentration in the atmosphere. Nevertheless, sea levels will continue to rise for decades.
In response, The Netherlands may turn to natural processes of land accretion instead of artificial
containment with dikes and waterworks. In this framework, the Hondsbossche Zeewering, a
large defensive structure built to protect a vulnerable former estuary, may be demolished in part allowing the sea to regain territory. Land is built up slowly before and behind the old sea dike.
At the same time, the Netherlands is increasingly turning to imported biomass as feedstock for energy and materials. While originally intended as a nature reserve, the Zijpe estuary suffers from massive blooms of salt-water plants as a result of nutrient run-off from nearby bulb growers.
It is decided to harvest the plants for local energy generation, but this is only the first step in a chain of events, finally leading to the establishment of several agro-industrial enterprises devoted to the production of high value-added, bio-engineered salt-water plants for seed export purposes to delta areas around the world. The new strains allow the clean production of biofuels while at
the same time maximising silt capture by modified root and stem structures. ...