I) and scaled to the levels of development



A transition towards a progressively more sustainable future, with
decreasing greenhouse gas emissions and the recovery of environmental
degradation, requires a different economy, namely more environmentally friendly
production, processes and technologies and a different concept of welfare,
associated with new criteria through which firms can evaluate the added value
they produce as a function of the whole wealth and not just the flow of
revenues and the number of accumulated machines and infrastructures. The vector
of this absolutely needed transformation is the low-carbon economy which, although
declined according to different sectoral meanings and scaled to the levels of
development of various nations and their vocations, gathers all the effort
currently ongoing in the world towards sustainable development.
Notwithstanding, the low-carbon economy involves a new vision of problems and
dynamics of development, new cultures, different skills and training methods
and that is what makes the transition very intricate. Indeed,  this transition determines the formation of
new sectors (low-carbon sectors), new types of job (green jobs) and new
technologies (green technologies).

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Accordingly, the technical and economic feasibility of this challenge will
depend not only on the real conviction for the cause but also on the different
development perspectives, public policies and risks that will take place on the
road of change. This will require a structural transformation of society, a new
consciousness, a revolutionary order.


Liberal and coordinated economies, as we know them from the theory, will
not be able to move towards a low-carbon path if traditional industries do not reinvent
themselves through new ways of organizing or through new forms of innovation
that lead to products that are less energetic in their use; even if this
innovation is triggered by considerations of cost or competitiveness rather
than genuine environmental concerns. However, without environmental interests
and without an adequate vision of their future, no one would be able to remain
for long on a coherent transition path towards a different and sustainable type
of economy. It is, indeed, in terms of long-term perspectives that the
political-institutional context assumes an important function. Hence, a
transition with deep meanings, which goes far beyond the narrow energy and
economic boundaries, leads to ethical and social contexts.

Basically, the
possible success in the long-term will require continuous innovation, new
skills, different collaborations, investments with uncertain returns and a
change in what are today’s market values.

In recent years, many have been the temporal hypotheses linked to scenarios
of a transition of this magnitude. One of these is represented by the
interesting study by Benjamin K. Sovacool (2016) entitled “How long will it
take? Conceptualizing the temporal dynamics of energy transitions”, according
to which the new energy and economic revolution can be completed within a
fraction of the time that was necessary for previous revolutions. However, he
asserts, in order to get there “it would take an interdisciplinary
collaboration, a multi-scale effort”. He argues that the transition towards a
low-carbon economy may be different than the past transitions given resource
scarcity, the threat of climate change and the greatly improved technological
knowledge and innovation which could greatly accelerate the global change for a
cleaner economic future.

It is with these premises that innovation, financing and the
political-institutional context. have been identified as main drivers of a
low-carbon transition. In the next sections, they will be analyzed in relation
to LMEs and CMEs settings, as defined by the literature, to examine whether
there is a chance for the emergence of a low-carbon economy in these two models
of capitalism.





According to Aldo Bonomi’s holistic view (2015), “Low-carbon economy means
reasoning around the ways in which the model of capitalist development
incorporates the sense of ‘limit’ (environmental, social, productive), as a new
principle of accumulation, making it the engine of a new cycle. It appears as a
paradigm 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 the
limit, identified as the new principle of accumulation, offers a new
interpretation to the low-carbon economy, whose efficient achievement is only
possible 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 process
that not only represents the transition from a traditional economy to a greener
one but it presupposes a radical change in the structure, culture and practices
that characterize the society. It is a transversal challenge as well as an
opportunity of growth for countries. Indeed, the adjective ‘radical’ becomes a
necessary requirement, since the low-carbon economy is a constantly moving
construction site in which the traditional economy is transformed, bringing
with it a profound change in the structure of society and in its culture.
Therefore, innovations seems to be the first driving factor for the development
of a low-carbon economy and, in this context, we talk about the so-called
‘eco-innovations’. Indeed, a decarbonized economy can only be achieved through
the development and implementation of those eco-innovations; ie. those types of
innovation which take into account not only the economic profile, but also the
social and environmental dimensions as essential components of sustainable
development. The objective of an eco-innovation is properly that of a radical
change towards new production and consumption systems based on a sustainable
supply and use of resources and a reduction/elimination of emissions and
consequent impacts, which gradually leads to the absolute decoupling between
growth, use of resources and impacts on ecosystems. That implies that
incremental improvements alone are not sufficient for the purpose in this
circumstance. However, the path towards sustainability requires the shift from
incremental innovations to radical innovations that have broad systemic effects
and persist as the only approach to solve environmental problems.

Therefore, it
can be deduced that the low-carbon transition emphasizes the difference between
incremental and radical innovation, where the latter seems to be more relevant;
even better if accompanied by a risk-taking attitude which is essential to
produce radically innovative strategies.

Combining this feature to the VoC framework, Soskice and Hall (2001)
differentiate the two models of capitalism based on the innovation sector
which, in a low-carbon perspective, is identified as one of the predominant
factors in the determination of a comparative advantage.

In line with its
nature, the radical innovation concerns a shift in the technological regime of
an economy and leads to changes in the enabling technologies. This type of
innovation is competence-destroying (Casper, 2010) and needs some kind of
deregulation. Deregulation is usually particular characteristic of liberal
economies that exploit it as a method to improve their level of coordination (Schmidt
and Thatcher, 2013) . In accordance with the VoC framework (2001), LMEs are
known to be pioneers in areas where innovations are more important and where
firms’ mergers and acquisitions are widespread and necessary practices. These
are also sectors in which the taking of a business risk plays a more decisive
role in favor of producing innovative strategies that can attract the attention
of the market.

In contrast,
while CMEs enjoy organizational models based on large companies and structured
networks with policies specifically aimed at supporting innovation, however
they are specialized in sectors in which the incremental innovation is more
diffuse. Thus, in the case of coordinated market economies, innovation is
usually continue, aimed at introducing improvements to existing processes and
services, 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 of
a greener economy.

In conclusion, the innovation is a prerogative for the emergence of a
low-carbon economy which requires a total disruption of production processes
and the introduction of both radically innovative products and radically
innovative strategies. Therefore, starting from this assumption and integrating
the VoC framework, a low-carbon economy seems to find more chances to flourish
in liberal economies rather than in coordinated ones, which are distant from a
radical innovation model; an indispensable feature of this transition.





The process of innovation needs the involvement of many subjects. In order
to achieve the transition to a low-carbon economic system, scientific and
technological research play a crucial role. That is why the previous analysis
allows us a connection to the need of financing for R and training. The
low-carbon economy requires technological innovations that are guaranteed not
only by ambitious policies but also by investments, which have a key function
to accelerate the development of technologies, reduce costs and facilitate the
implementation on a large scale. Moreover, the new technologies are those that
will have to challenge the old economic system; a transformation of this
magnitude cannot consider to be obtained without a constant search for
development and innovation by both public and private entities. Indeed, financing
for R offers a very important contribution that is not only of vital
importance in this sector, but it also offers a chance for an action plan
focused on long-term objectives. The development of low-carbon technologies is
also clearly connected to the lack of infrastructure, a key problem in the
energy sector. It can be argued that low-carbon technologies are the best
response to this deficit, especially from a sustainability and equity
perspective. In the world of energy infrastructures, there is a strong need to
renew and innovate a ‘park’ plants in full maturity, adapting the offer to the
ever increasing level of energy demand in the world, mainly coming from a life
expectancy in sharp growth in the coming decades. The energy infrastructures
and sectors essentially need massive amounts of liquidity moving towards them. Hence,
investments can profoundly influence climate change. Throughout the process of
transition to a low-carbon economy, major investments are needed: an Accenture
estimates a requirement of 2.9 trillion euros to finance development and
roll-out in five key sectors in Europe in the coming years.

Various studies
have highlighted the existence of positive correlations between the amount of
resources that Venture Capital (VC) funds have to support innovation projects
and the growth of the innovation technology rate in a given country (Helmann
and Puri 2002; Kortum and Lerner 1998; Kaplan and Stromberg 2000). The VC is
seen as an instrument particularly suited to the financing of the innovation,
since it is an instrument that, due to its characteristics, has a high
adaptability. . Indeed, the presence of Venture Capitals is known to establish
a beneficial circle which produces and spreads the innovation. In particular,
the Venture Capital funds can contribute to specific managerial or sector
knowledge and can also provide for reputational capital, useful to attract
managerial/scientific talents.


Observing the Varieties of Capitalism framework (2001) and the structure of
funding of LMEs and CMEs’ financing, the availability of investments and
therefore access to credit shapes the transition of the two models of

Historically, in LMEs financing needs are mainly met through the raising of
capital on the stock market. Indeed, these economies are characterized by a
strong presence of private non-institutional investors who invest personal
capital (Venture Capital) or specialized financial intermediaries. While, CMEs’
credit system characterized by a much less developed stock market and the
long-term financing needs mainly met by banks, drastically reduces the
possibility of developing risky innovation, which instead have to rely more on
firms’ internal capital.

institutions such as Venture Capitals, which are more helpful for the
advancement of low-carbon innovation, have their biggest diffusion in LMEs than
in CMEs, making liberal market economies more predisposed to the financing of
radical innovation which are risky by their nature.

in order to speed up the development of low-carbon economy financial and
economic sectors, clear public policies on the target to be achieved, are
needed. This leads us to the last section of our analysis based on the
political-institutional context behind countries

1 Accenture,
Carbon Capital – Financing the Low Carbon economy, in collaboration with