Germany drastically expanded renewable energy sources and improved energy efficiency; yet, paradoxically, emission levels remain virtually unchanged (Pahle, 2010; Pearce & Evans, 2016). The paper extends Murray Horn’s (1995) transaction cost approach with path dependency and institutional logic elements (Acemoglu & Robinson, 2012; Pierson, 2000; North, 1996). Applied to Germany, the framework offers an understanding of Germany’s lengthy coal phase-out and seemingly contradictory latest climate policy. Preference and price changes induced by the European Union’s push for liberalisation and public opinion changed the coal industry’s characteristic transaction cost mix. In contrast, strong lobby groups, an extensive system of coal subsidies and increasing returns of an early nuclear phase-out exerted a strong pull for the status quo. Managing these competing pressures, the government sustained a declining and harmful industry for decades past its socially- and economically efficient lifespan. A shifting balance of these pressures eventually enabled innovative climate policy, albeit non- transformational and within established strategies. The framework provides an understanding of the divergences between the passed 2020 ‘Climate Exit Law’ and the Coal Commission’s recommendations. The analysis fosters our understanding of how even climate policy-leading, prosperous nations struggle to undergo institutional change in an environment of dynamic, competing and sustained tensions.
How to Cite:
Euler, C., 2021. Capacity for innovative change: Governing competing pressures in energy delivery. The Public Sphere: Journal of Public Policy, 9(1).