The structure of uncertainty in future low carbon pathways

Energy Policy 52 (2013) 45–54

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Energy Policy journal homepage: www.elsevier.com/locate/enpol

The structure of uncertainty in future low carbon pathways Nick Hughes a,n, Neil Strachan b, Robert Gross c a b c

Imperial College Centre for Energy Policy and Technology, Faculty of Natural Sciences, London SW7 2AZ, United Kingdom University College London, UCL Energy Institute, 14 Upper Woburn Place, London. WC1H 0NN, United Kingdom Imperial College Centre for Energy Policy and Technology, Faculty of Natural Sciences, London SW7 2AZ, United Kingdom

H I G H L I G H T S c c c c c

Aims, uncertainties and challenges of low carbon scenarios/pathways summarized. Importance of defining actors and describing sociotechnical evolution emphasised. Categorisation of different kinds of future uncertainties explained. A framework combining actors, institutions and co-evolving systems presented. Process for strategically effective low carbon scenarios/pathways presented.

a r t i c l e i n f o

abstract

Article history: Received 30 September 2011 Accepted 15 April 2012 Available online 18 May 2012

Low carbon scenario and transition pathway analysis involves the consideration of uncertainties around future technological and social changes. This paper argues that uncertainty can be better understood, and the strategic and policy effectiveness of scenarios or pathways thereby improved, through a systematic categorisation of the different kinds of certain and uncertain elements of which the future is comprised. To achieve this, this paper makes two novel methodological contributions. First it proposes a system conceptualisation which is based on a detailed description of the dynamics of the actors and institutions relevant to the system under study, iteratively linked to a detailed representation of the technological system. Second, it argues that as a result of developing this actor-based low carbon scenarios approach it is possible to characterise future elements of the system as either predetermined, actor contingent or non-actor contingent. An outline scenario approach is presented, based on these two contributions. It emerges that the different categories of future element are associated with different types of uncertainty and each prompt different strategic policy responses. This categorisation of future elements therefore clarifies the relationship of scenario content to specific types of policy response, and thus improves the policy tractability of resulting scenarios. & 2012 Elsevier Ltd. All rights reserved.

Keywords: Scenarios Uncertainty Actors

1. Introduction Low carbon research and policy analysis entails the consideration of technological and social changes from the short- to the long-term future. The purpose of thinking in advance about the future, especially through some form of ‘scenario’ analysis, is in general to inform and improve the decisions that we take in respect of that future (Schwartz, 1991; Scearce et al., 2004; Godet, 1987). However, most statements about the future involve some level of uncertainty. Higher levels of uncertainty about the future

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Corresponding author. Tel.: þ44 020 7594 9306; fax: þ44 020 7594 9334. E-mail addresses: [email protected] (N. Hughes), [email protected] (N. Strachan), [email protected] (R. Gross). 0301-4215/$ - see front matter & 2012 Elsevier Ltd. All rights reserved. http://dx.doi.org/10.1016/j.enpol.2012.04.028

present greater challenges to our abilities to make good strategic decisions about that future. A central contention of this paper is that, whilst uncertainty about the future can never be entirely eliminated, nonetheless future uncertainty is not homogenous. Rather, any future scenario is comprised of a range of different elements, each associated with different kinds of uncertainty. Distinguishing between these different kinds of future element allows a more structured understanding of future uncertainty, which in turn better supports the use of scenarios for strategic decision making. A distinction of particular importance is of those future elements which, though currently uncertain, can nonetheless be decisively influenced by wilful actions of identifiable system actors. Key to achieving a clear delineation of these elements is a scenario process rooted in actor-dynamics, which can show how purposive actor actions can contribute to future outcomes.

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Thus this paper builds on a recommendation from an earlier review of low carbon scenarios (Hughes and Strachan, 2010), that a clearer identification of the activities of system actors within scenarios will improve their tractability for strategic policy making. This paper combines this recommendation with insights from literature on sociotechnical transitions relating to the co-evolving nature of social and technological systems, and institutional theory, to propose a novel framework for considering the effects of system actor activities within a sociotechnical system, using both qualitative and quantitative methodologies. Further, synthesising insights from a range of actor-based scenario approaches, the paper identifies different categories of future element relevant to a strategic understanding of low carbon future scenarios. These two contributions then form the basis of a suggested outline scenario process. This outline process has informed the development of pathways within the Transition Pathways project, the subject of this special issue. For a more detailed discussion of an example of applying this process, see Foxon et al. (2012), Foxon (2011). The current paper focusses on explaining the methodological underpinnings and justification of the proposed process, with reference to relevant literature. The paper is structured as follows. Section 2 provides the background to the paper by locating the aims of the Transition Pathways project in the context of the broader scenario literature. Section 3 describes limitations of the existing low carbon scenario literature in respect of actor depiction and treatment of uncertainty. Section 4 returns to the broader scenarios literature to examine the ways that future uncertainties are conceptualised and categorised in different types of approaches, finding that ‘actor-based’ scenario approaches achieve a more structured treatment of uncertainty than ‘trend based’ approaches. Section 5 refers to more recent literature on technological transitions and sociotechnical scenarios to discuss the challenges of integrating an actor based scenarios approach with important insights concerning ‘co-evolutionary’ processes in sociotechnical transitions. Section 6 brings these various insights together in the form of an outline low carbon scenario development process which describes a co-evolutionary sociotechnical system whilst retaining clarity about key actor actions, thereby achieving policy tractability and a structured treatment of uncertainty. Section 7 summarises the outputs of this paper and draws conclusions.

2. The purpose of thinking about the future the Transition Pathways project in context The Transition Pathways project, towards which the research reported in this paper has contributed, has the aim of showing ‘how purposeful actions by actors within systems can give rise to changes in technologies, institutions and infrastructures’, in bringing about a low carbon electricity system in the UK. This aim is ‘strongly driven by the desire from policy-makers and industrial and wider stakeholders for conceptual frameworks that

enable the examination of plausible future pathways in ways that will inform current decision-making’ (Foxon et al., 2010). With these intentions, the Transition Pathways project establishes a strong connection to the intentions of practitioners within the tradition of strategic scenario planning. As Table 1 shows, there is a strong theme within the scenario tradition that speculation about the future is not justified as an activity or pastime in its own right, but should be purposefully linked to near-term decision making, with the aim of improving those decisions and thereby contributing to better future outcomes. Reviewing a broad range of past-war scenario exercises, Hughes (2009a) classifies the kinds of decision making to which scenarios can contribute as:

 Protective decision making — by being aware of possible 



future external threats, actors may be able to increase their robustness against them; Proactive decision making — by being aware of possible future opportunities, actors will be better placed to proactively seize such opportunities to improve their future prospects through their own actions; Consensus building — by being aware of how concerted action by a number of actors may lead to outcomes desirable for all, actors can create a clear case for action and a basis for building societal consensus.

The balance between these objectives in any one scenario exercise is related to the level of agency of the scenario user in the context of the system under study (Hughes, 2009a). Scenario users with a low level of influence over the system being explored by the scenario, will tend to use the scenario to inform protective decision making; scenario users with greater agency in the system tend towards proactive or consensus building objectives.

3. The low carbon scenario literature A more recent addition to the scenario literature has been the area of low carbon scenarios — scenarios which explore how a given system (such as a multi-national area, a national economy or a sector of a national economy) might look in the future if it was operating in such a way as to have significantly reduced carbon emissions. A number of these low carbon scenarios have been reviewed by Hughes and Strachan (2010). The review finds that low carbon scenarios tend to focus either on qualitative, social trend based approaches to developing futures (trend based studies), or on purely technological, engineering based views of an energy ‘system’, thermodynamically consistent with meeting specified energy demands within specified emissions constraints (modelling and technical feasibility studies). Such technologically focussed studies often operate explicitly or implicitly within a ‘backcasting’ framework (Robinson, 1982, 1988, 1990; Robinson et al., 2011; H¨ojer and Mattsson, 2000), characterised by an exogenously

Table 1 The use of scenarios — the link to near term strategy. Schwartz (1991) Scearce et al., (2004) Godet (1987) Kahn and Wiener (1967) Wack (1985b) Volkery and Ribeiro (2009)

‘Scenario planning is about making choices today with an understanding of how they might turn out.’ ‘Scenarios are designed to stretch our thinking about the opportunities and threats the future might hold, and to weigh those opportunities and threats carefully when making both short-term and long-term strategic decisions.’ ‘Despite the unknown horizons, we have to take decisions today that commit us for the futurey to create the future rather than submit to it.’ ‘Scenarios are attempts to describe in some detail a hypothetical sequence of events that could lead plausibly to the situation envisaged. By the use of a fairly extensive scenario, the analyst may be able to get a feeling for events and the branching points dependent upon critical choices.’ ‘Do they lead to action? If scenarios do not push managers to do something other than that indicated by past experience, they are nothing more than interesting speculation.’ ‘Having an impact on the design and choice of policies remains a litmus test for the relevance of scenario planning.’

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imposed emissions or energy reduction target (e.g., Anderson et al., 2005; Svenfelt et al., 2011; Gomi et al., 2011). A key contribution of the low carbon scenario literature to UK policy has been in relation to the setting and revision of long term carbon reduction targets. Strachan et al. (2009) discuss the iterative role of low carbon scenarios in this regard, focussing on energy modelling studies. They show how such studies supported an initial aspirational target of 60% CO2 reductions by 2050, as well as subsequently supporting efforts to strengthen the target to an 80% reduction across all greenhouse gases, through demonstrating the technical feasibility and economic viability of such targets. The latter target was established in UK law by the Climate Change Act 2008 (HM Stationery Office, 2008). Whilst long term targets are important to provide structure to low carbon energy policy, the mere existence of a target does not by itself guarantee the successful achievement of the objective. In the UK it is already clear that a number of much nearer-term concerns could have significant impacts upon the direction of travel for the energy system. These include, for example, public objections to particular energy technologies and energy infrastructure (Devine-Wright, 2011; Haggett, 2008; Gray et al., 2005), changes in the political climate towards the desirability of the long term low carbon transition (Guardian, 2011), and, no doubt in relation to both of these, shifting attitudes on the part of large market actors about the suitability of the UK as an investment area (BBC, 2011). These issues represent a complex web of actions and inter-actions of a variety of system actors, having critical effects on real decisions to invest or not invest in low carbon infrastructure. It is towards an understanding of these actor actions and interactions which previous low carbon scenarios have been less suited to contributing. Hughes and Strachan (2010) find that each of the scenario approaches they review has in common a description of a technological transition which is generated primarily by the external hand of the operator of the model, tool or calculator itself, through exogenously imposed emissions constraints, or other exogenous decisions about technology preference, or broad social trends. Such levers are analogously comparable to deus ex machina devices deployed in dramas to artificially engineer an unrealistic ‘happy ending’. Foxon et al. (2010) concur, finding that previous low carbon scenario work ‘does not illuminate how technological changes arise through the dynamic interactions between a range of actors with different perspectives and goals’. This paper therefore starts from the conclusion that it would be useful to produce low carbon scenarios which expand from the technologically deterministic, or purely qualitative trend-based approaches, followed in previous literature, to explore detailed technological system changes in relation to the actor actions and interactions which bring them about. It is argued that such approaches could make important contributions in terms of more clearly aligning longer term goals with nearer term policy priorities, and thus ensuring that low carbon scenarios (or pathways) live up to the aspiration commonly found in the broader scenarios literature, of using speculation about longer term futures primarily as a means to improving near term decisions. This aspiration in respect of low carbon scenarios is reflected by a broader review of public policy scenarios which finds that ‘a lot of progress needs to be madey towards getting scenario planning more fully incorporated into processes of policy design, choice and implementation’ (Volkery and Ribeiro, 2009). 3.1. The challenge of uncertainty in low carbon futures thinking Low carbon future scenarios experience particular challenges with uncertainty, as in addition to any background change within society and technological systems which might be expected to

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take place over decadal time periods, the goal of decarbonisation is in itself an additional driver of significant technological and behavioural change in low carbon scenarios. Most low carbon scenario studies, perhaps mindful of the ‘perils of long range energy forecasting’ exposed by Smil (2000), present their results with careful caveats to the effect that they are not predictions or forecasts (Ault et al., 2008), nor are they even ‘expected to happen as stated’ (OST-DTI, 2001). All aspects of such scenarios appear equally uncertain. Technologically focussed energy system scenarios have an equally pervasive view of future uncertainty, however they can to a certain extent sideline the question of uncertainty by treating a vast range of conditions of political, social and technological change as ‘off-model’ assumptions which drive and justify the implementation of different levels within available quantitative parameters (e.g., Strachan et al., 2007; Skea et al., 2010). The reasons why such causative conditions might come about in the first place are external to the analysis. An extensive and cautious view of uncertainty may of course be regarded as highly prudent. However, it is also legitimate to ask what strategic benefit can be derived from a view of the future which regards every aspect of it as equally unknowable — what basis can decision makers take to affect their planning from a view of the future without even relative levels of uncertainty? The following section refers to earlier scenario literature to argue that the clear identification of system actors can in itself be a key means of managing the inherent uncertainty involved in low carbon futures thinking.

4. The treatment of uncertainty in the wider scenario literature Scenarios have been applied in a range of business, military and public policy contexts (Bradfield et al., 2005). Several authors have proposed typologies of the scenario literature (e.g., Huss and Honton, 1987; van Notten et al., 2003; Bradfield et al., 2005; ¨ Borjeson et al., 2006; Bishop et al., 2007), however the lack of emergence of a single definitive typology testifies to the ongoing diversity of the literature — indeed the perceived lack of methodological coherence is an issue of frustration for many in the field (Marien, 2002; Hines, 2003). One of the most interesting methodological debates concerns whether scenarios are intended to highlight the ‘possible’ the ¨ ‘probable’, or the ‘preferable’ (Borjeson et al., 2006; Amara, 1981). Some practitioners argue that probabilistic assessments of future outcomes are vital to a coherent and strategic view of the future (Godet and Roubelat, 1996; Godet, 2000), whilst others maintain that probability becomes viewed as prediction and closes down perceptions of what is possible, and thus is antithetical to the scenario approach (Wilson, 2000). Other practitioners however emphasise the role of scenarios in assisting in the attaining of desirable futures, emphasising that the likelihood of any future scenario occurring is at least partly dictated by choices of present actors (Masse´, 1966; de Jouvenel, 1967; le Roux et al., 1992). In general, ‘trend based’ approaches, which often use the ‘2  2’ matrix to organise scenarios (e.g., Berkhout et al., 1999; OST-DTI, 2001), present themed alternative futures which deliberately avoid probabilistic ranking, or description of more or less likely scenario elements. On the other hand, Hughes (2009a) finds that scenarios which perceive future system outcomes as resulting from interactions of actors, are more likely to produce a ranked view of uncertainty — with some aspects of future scenarios emerging as more certain than others. A small number of such actor-based scenarios are briefly reviewed in this section. The scenarios developed by Shell just prior to the 1972 oil shocks (Wack, 1985a; 1985b), are characterised by a high degree

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of certainty about some aspects of the future. Shell’s head of scenario planning, Wack describes how the team categorised future elements according to the degree of uncertainty associated with them (Wack, 1985a). Specifically, he separated ‘pre-determined’ from ‘uncertain’ elements. It was the strength of conclusions surrounding the ‘pre-determined’ elements which gave the scenarios their particular urgency — that based on current actor motivations an oil shock was inevitable. Wack’s ability to identify the ‘pre-determined’ elements depended on assessments of the motivations of the actors involved, and critically upon the assumption that these motivations were fixed. In particular, he assumed oil producing companies to be profit maximising and to act in their own national interest. The outcomes of such motivations were concluded intuitively — ‘if we were Iranian, we would behave the same way’ (Wack, 1985a). The Shell process explored the implications of fixed actor motivations using largely qualitative discussion and role-playing techniques. A similar actor-focussed perspective underlies the approach developed by Michel Godet for business sector scenarios, though more formal, mathematical and matrix based methods are deployed to explore the possible interactions between system actors (Godet, 1987; Godet and Roubelat, 1996). Godet’s probabilistic presentation of outcomes is ultimately possible due to a similar fundamental assumption about the motivations of actors: ‘over time, people show disturbing similarities in their behaviour, which leads them to react, when faced with comparable situations, in an almost identical way, viz predictably.’ (Godet, 1987). Another important actor-based scenario process was undertaken in post-apartheid South Africa (le Roux et al., 1992). Though, similarly to the Shell process, using qualitative discussions around actor motivations, a key difference was that these discussions were conducted not by a closed scenarios team, but with the participation of representatives of the key actor groups themselves. Four different scenarios were developed, each representing the outcomes of different sets of actor choices. It was shown that ‘the future is not fixed but can be shaped by the decisions and actions of individuals, organisations and institutions’ (le Roux et al., 1992). In other words a key difference to the above two approaches was in the perception that actor motivations are not fixed but can evolve — in particular that once actors perceive the potential significance of actions they themselves could take, they may be inspired to act differently, in pursuit of a commonly shared goal. In this case a probabilistic ranking of the scenarios would not in fact be appropriate. Each scenario is contingent upon a different set of actor actions arising from different actor motivations, not from the assumption that all actors’ behaviour is predictable. This latter process suggests that a refinement can be made to Wack’s two-fold categorisation of future elements as ‘pre-determined’ or ‘uncertain’. Wack’s pre-determined elements include those which result from actor motivations regarded as fixed. If we allow a world in which actor motivations could change and evolve, it is important to also allow a category of future elements which are contingent upon alternative future choices of system actors. These remain uncertain as actors are still at present free to choose between different options; however this kind of actor contingent uncertainty is importantly different from future elements which lie beyond the control of system actors, or whose causes are so complex as to be not easily associated with any particular system actor. In his extended discussion of futures thinking, de Jouvenel (1967) draws an important distinction between ‘dominating’ and ‘masterable’ elements of the future, where ‘the masterable future is what I can make other than it now presents itself’, but notes that whether an element is masterable or dominating depends on the agency of the actor from whose perspective the future is

viewed. This distinction is important in establishing which actors within the system have agency to bring about aspects of the future — some actors may have greater agency than others. It is also possible to imagine elements of the future which could impact upon a given system, but over which no internal system actor has agency or influence. Berkhout et al. (2004) in their typology of transitions pay particular attention to emphasise that dynamics within a system can be driven both by internal as well as external elements, and the notion of the ‘landscape’, or external context to the sociotechnical regime, is crucial to the multi-level perspective and the sociotechnical scenario approaches which have developed from it (e.g., Rip and Kemp, 1996; Kemp et al., 1998; Geels, 2002; Hofman and Elzen, 2010). Indeed, as identified ¨ by Borjeson et al., 2006, some scenarios, particularly those employed in business environments, focus entirely on external factors ‘beyond the control of the relevant actors’. Thus, even when a future scenario taken as a whole may appear profoundly uncertain, uncertainty is rarely entirely homogenous. The future scenario can be divided into different kinds of future element, each associated with different levels of uncertainty. Bringing together the different categorisations of Wack and de Jouvenel, alongside distinctions between internal and external, or regime and landscape dynamics, suggests three broad kinds of future element:

 Pre-determined elements: including developments regarded as inevitable due to fixed actor motivations

 Actor contingent elements: developments which are within 

the power of system actors to change or bring about, if they so choose Non-actor contingent elements: developments which are possible, but uncertain, and beyond the control of system actors to influence

The three elements suggest different responses from system actors and scenario users, which can be related to the three aims of scenario building defined by Hughes (2009a). Pre-determined elements are certain to be part of any future, therefore plans must simply be built around these; non-actor contingent elements are not certain, but their occurrence or otherwise cannot be controlled by system actors, and must be prepared for. Thus these two types of element would prompt the need for protective decision making on the part of scenario users. Actor contingent elements can be affected by conscious choices of system actors and thus suggest the potential for proactive decision making to positively influence the future, or where the outcome is dependent on concerted action of multiple system actors, suggest the need for consensus building, if that outcome is to be achieved. The categorisation of future elements in this way is important to enable policy relevant insight to emerge from scenarios, which cannot be achieved by scenarios which have a homogenous view of future uncertainty. Critically, from a policy perspective there is an important difference between a future element which remains profoundly or scientifically uncertain, and therefore beyond the agency of any identifiable actor to purposefully influence; and one which is within the potential of system actors to influence, and therefore remains uncertain only because a decision to act has not yet been taken. The latter may suggest important potential roles for certain system actors in actually creating greater certainty about the future, through the actions they can commit to take. In such a case, as de Jouvenel again writes, ‘the future is known not through the guesswork of the mind, but through social efforts, more or less conscious, to cast ’’jetties’’ out from an established order and into the uncertainty ahead. The network of reciprocal commitments traps the future and moderates its mobility. All this tends to reduce uncertainty.’ (de Jouvenel, 1967).

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5. Conceptualising an actor-based system for low carbon scenarios The previous section identified significant advantages to an actor-based scenario approach, in particular that it facilitates the categorisation of future elements by levels of uncertainty and relation to actor choices, and as a result provides clearer information to scenario users regarding the appropriateness of proactive, protective or consensus building strategies with respect to each possible element of the scenario future. While Hughes and Strachan (2010), and Foxon et al. (2010) criticise the lack of actor specification in low carbon scenarios, nonetheless it is clear that for scenarios which aim to explore questions of how to reduce carbon emissions from energy and other services, a detailed depiction of technologies, fuels and emissions remains of critical importance. It becomes clear that in order to maximise the usefulness and policy tractability of low carbon scenarios, the description of the system they are considering must encompass both actor motivations actions and dynamics, and the technological systems in which these actor dynamics take place. This conclusion is further supported by insights from the technological transitions literature which through examining past case studies shows the co-evolutionary dynamics between societal and technological systems (Rip and Kemp, 1996; Kemp et al., 1998; Geels, 2002). Technologies and technological systems are evidently not autonomously self-assembling — they are the result of sequences of actor decisions. However, the influence is two way — technological systems once constructed can constrain and influence subsequent actor behaviour. Thus, technological systems ‘are both socially constructed and society shaping’ (Hughes, 1987). It is therefore important for the overall plausibility of low carbon scenarios as descriptions of possible sequences of future events, that they should account for and represent something of this interaction. An important contribution was made in this regard by Elzen, Hofman and others through their concept of sociotechnical scenarios (Elzen et al., 2002; Hofman et al., 2004; Elzen and Hofman, 2007; Hofman and Elzen, 2010). Hofman and Elzen (2010) argue that sociotechnical scenarios should show how ‘transition paths may unfold in a process of interaction between a range of actors and the rules they act upon’, and should also ‘describe the co-evolution of technology and its societal embedding (a continuous action-reaction dynamic of technical and societal change)’ (Hofman and Elzen, 2010). Their approach describes plausible pathways for the evolution of technological systems alongside actors and institutions, rooted in the ‘multi-level perspective’ (Geels, 2002) of niches, regime and landscape. The scenarios are constructed around a three-fold taxonomy of transition pathways defined by Geels and Schot (2007). This taxonomy provides the basic underlying structure of each scenario. A potential disadvantage of this is the sense that it is this predetermined structure which is defining the content of each scenario, rather than an open exploration of actor motivations and dynamics. Further, according to their narratives each of the scenarios is dependent on the fulfilment of a number of very contrasting elements, including internal actor decisions, but also external (EUlevel) conditions, and technological developments (such as the availability of hydrogen and CCS technologies). The analysis does not draw out which of these various elements can be directly influenced by specific system actors, and which cannot. This makes it difficult to draw specific policy insight from the scenarios. Drawing on the insights from the broader scenario tradition summarised in Section 4, this paper aims to continue Hofman and Elzen (2010)’s successful exploration of ‘co-evolutionary’ sociotechnical dynamics within a scenario context, but, for the reasons argued above, to propose an approach which is based on a clearer

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depiction of the motivation, roles and actions of specific system actors, and to draw clearer distinctions between elements of future scenarios which are potentially within the control of system actors, and those elements outside of their control. It then proposes that this detailed depiction of system actors should be ‘soft-linked’ to an appropriate technological system model, so that the implications of actor decisions upon the technological system, as well as the implications of technological system developments upon subsequent actor decisions, can be clearly represented. 5.1. Representing the web of actors and institutions In institutional theory, an actor can be an individual, or a coherent conglomeration of individuals, such as a firm — however, whether defined at individual or organizational level, a key feature of actors is that they have strategies, and make choices (Jackson, 2010). The accumulated effect of various actor choices in respect of their strategies is to create a web of interrelated demands and reciprocal expectations between a constellation of actors. These are the institutions, or ‘sets of rules, decision making procedures, and programs that define social practices, assign roles to the participants in these practices, and guide interactions among the occupants of individual roles’ — that is, the ‘rules of the game’ which govern interactions between actors (Young, 2002). Fig. 1 represents a constellation of actors which could pertain to a system under study with relevance to a low carbon scenario process. Fig. 1 shows the broad actor types whose actions would affect developments within a low carbon scenario, as market actors, civil society actors and government actors. It shows the relations and reciprocal demands and pressures which could operate between these actor types in the context of an energy system. The actor types are the same as those found within the ‘action space’ developed elsewhere in the Transition Pathways project (Foxon et al. (2012), this volume). The action space provides a means of considering shifts between the ‘logics’ of different system actors, in order to provide structure for generating pathway narratives. Fig. 1 also emphasizes that such shifts occur as the net result of the actions of all actors within the system. That is, they occur both as a result of proactive actions of actors whose ‘logic’ is being upheld or enforced, but also as a result of the passiveness, agreement or coercion of the other actor types. In each case, the relative agency of each actor type is additionally a critical factor affecting the outcome. As Godet writes, ‘the actual

Fig. 1. Example of actor interactions and networks of influence (adapted from Hughes (2009b)).

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future will be the outcome of the interplay between the various protagonists in a given situation and their respective intentions’ (Godet, 1987). However, ‘certain actors are ’more equal’ than others. From this we may conclude that although several futures are possible, the one which actually transpires will arise out of the conflict of unequal human forces, tempered by the ’inequalities’’ (Godet, 1987). This dynamic is explored within the Transition Pathways project in terms of how succesfully different types of actor can ‘enrol’ the others into their ‘logic’, or ‘view of the world’ (Foxon et al. (2012), this volume). In other words, overall system outcomes can be thought of as a net result arising from all activities within a web of actors and institutions. The institutional expression of the collective or aggregated actions and motivations of all actors in society is a function both of the motivations of the various actors, and the relative agency of the actors that hold them, or, the degree of power that any one actor has to realise his/her/its priorities. As such, actors can be ‘rule takers’ but also ‘rule makers’, for ‘institutional rules must be ‘enacted’ by actors, but institutions themselves are produced and reproduced through these actions’ (Jackson, 2010). A network in which these rules of the game are no longer challenged, can be thought of as operating under conditions of ‘institutional lock-in’ (Unruh, 2000). Alternatively, actors may continue to disagree over and question the appropriate ‘rules of the game’ (Young, 2002), and to continue to be ‘rule makers’, as a result of which new sets of rules may continue to emerge. 5.2. Interactions between actors, institutions and the technological system The net result of these actor interactions could in some cases include new investments in technological infrastructure which can be measured in terms of altered means of producing energy in the system, resulting in changes in overall carbon emissions. However, drawing on Hughes (1987) insight that technological systems ‘are both socially constructed and society shaping’, it is important to consider also the reciprocal effects of altered technological systems upon subsequent actor motivations and decisions. Table 2 shows some examples of this two-way relationship from historical and prospective UK electricity system transitions. Fig. 2 schematically represents a co-evolutionary model of socio-technical change through this two-way interaction, but one in which the motivations of and actions of actors remain identified (Table 2).

5.3. Choosing tools to represent actor, institutional and technological system dynamics Thus far the discussion in this section has focussed on presenting a theoretical understanding of actors, institutions and their relationship to technological systems. Some words may also be said about the practicalities of representing these dynamics in a scenarios process. We do not propose that there is one specific tool that could achieve this. Rather we emphasise the utility of combining insights from contrasting tools for the representation of the different aspects of the system. The left hand side of Fig. 2 shows the web of actors and institutions described in Fig. 1 and Section 5.1. The impact of changing dynamics, or different ‘rules of the game’ must be read across in terms of their implications for technologies, to the right hand side of Fig. 2, which represents a technical system. The effects of changes to the technical system must then be read back in terms of their implications for subsequent actor decisions. Clearly contrasting methodologies will be required to represent each side of the system. The choice of which tools to apply within this framework will depend on the precise question being considered (e.g., considering electricity vs transport vs. whole energy systems), as well as the capabilities and available tools of the scenario builders themselves. Approaches to representing the actor-institution system could include cross-impact matrices (Helmer, 1972; Godet, 1987), agent based models (An, 2011), or more intuitive techniques (Wack, 1985a; le Roux et al., 1992). Approaches to representing the technical system could draw on energy system models (Strachan et al., 2007), electricity market models (Foley et al., 2010), power flow or other network models (Gerber et al., 2012; Strbac et al., 2010) building sector models (Johnston et al., 2005), or numerous other models of technical systems as appropriate. Clearly, in low carbon scenarios it would be important that the technical model could quantify carbon emissions arising from the system. What is equally important is the ability to ‘soft link’ insights from the actor based tool or approach to the technical system model. The integration and feedback of insights between contrasting tools will be one of the key methodological challenges of representing the system in this way. Nonetheless, such integration is unavoidable in such a cross-disciplinary area as low carbon policy, and indeed cross-disciplinary approaches have been consistently argued as being a key area of added value within scenario techniques (Wack, 1985b; B¨orjeson et al., 2006; van Notten et al., 2003).

6. Process for constructing low carbon scenarios under uncertainty Section 5 developed a view of a co-evolving sociotechnical system, but one which retains clarity about the role that specific wilful actions of system actors can play in contributing to the generation of ‘action-reaction’ dynamics of sociotechnical change (Hofman and Elzen, 2010). The following section describes an outline scenario process which draws on the actor based system conceptualisation developed in Section 5, and the three-fold categorisation of future scenario elements developed in Section 4. The process aims to produce scenarios which develop clear links between future outcomes and near term decisions of system actors, which are therefore able to produce clearer policy recommendations and achieve a more constructive view of future uncertainty. 6.1. Define the focal question

Fig. 2. Co-evolving, actor based model of sociotechnical change.

Low carbon scenarios can involve consideration of multiple complex and interrelated systems, each of which produce greenhouse gases and are therefore of relevance to questions of decarbonisation

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Table 2 Reciprocal effects between actor-institutional systems and technological systems: Historical and prospective examples. Initial actor action Historical examples (see Hannah, 1979) 1892: Electrical Lighting act allows municipalities to break up streets for cable laying 1900–1925: Disputes between municipalities and private actors, lack of coordination 1926: Creation of Central Electricity Board and decision to build high voltage network Prospective examples Government actors take strategic decision to promote investment in North Sea offshore grid Policies strongly promote decentralized generation

Effect on technological system

Effect of technological change on subsequent actor decisions

Potential for more extensive local distribution networks Increasingly fragmented system, with low load factors High capacity network availability and aggregation of previously fragmented demands

Municipalities and entrepreneurs see increased opportunities to promote and sell electricity Political actors increasingly sympathetic to merits of central coordination Market actors motivated to invest in higher capital, larger, but more efficient plant

High capacity network available with demand aggregated from several countries Significant uptake of DG presents technical challenges to distribution networks

Market actors given greater motivation to make large scale offshore renewable investments Opportunities for innovative distribution network companies, or IT firms developing technologies to facilitate smart grids

(IPCC, 2007). A tractable scenario process inevitably involves drawing boundaries around subsets of the many interrelated systems which could pertain to the question at a global level. The focal question for a low carbon scenario process should therefore address the specific challenges for which the scenario process is intended to provide insights, which may include a carbon emissions reduction target for a given (and perhaps narrowly defined) system. Thus, the precise definition of the focal question helps to determine the necessary scope of the system to be studied, and the actors who must be considered within that system. 6.2. Define and describe the current system The scope of the system should be sufficiently wide to include aspects which are significant to answering the focal question. In particular, clearly defining the scope of the technological system to be included in the study is relevant when comparing scenario outcomes against externally set emissions reduction targets. However, the system scope will also be affected by practical considerations of the tools and resources available, and how these relate to a trade-off between internal scenario complexity and external uncertainty. Greater system scope entails greater complexity for consideration within scenarios — a larger technological system, and a larger number of actors affected by it; smaller system scope entails a less complex system but a larger number of external factors affecting the outcome. System scope must also be defined in terms of the actors who make up that system, their current motivations for acting, their agency and their networks of influence in respect of other actors. This highlights iterative actor interactions which lock in particular sets of relationships (of the kind summarised in Fig. 1). Having defined both the technological scope and the actor-institutional scope of the system, this initial process should also identify linkages between them, i.e., which actors might affect technological systems through investment, and at which points systems can constrain actor actions. These will be the ‘soft-linking’ points between the models or tools used to describe the actor-institution system, and those used to describe the technological system (Fig. 2). 6.3. Identify pre-determined and actor contingent elements within the system Following the scoping of the current system, it is subsequently possible to identify pre-determined and actor contingent elements, which could influence its evolution into the future. 6.3.1. Pre-determined elements Drawing on Wack (1985a; 1985b) a key starting point for future scenarios should be to explore the possibility that some aspects of the

future may be already pre-determined. A detailed scoping of the current system may reveal elements which are ‘locked-in’ for certain periods of time. These are pre-determined elements and should as such be included as part of each individual scenario which is explored within a given process, for the relevant time period. In low carbon scenarios key candidates for these are the technologies and technological infrastructures which have already been invested in and which have lifetimes which extend into the scenario period. As with Wack’s original ‘pre-determined elements’ (Wack, 1985a), it is possible in low carbon scenarios that as well as long lived infrastructure investments providing pre-determined elements, assumptions of fixed actor motivations could also be seen as delivering pre-determined elements at least within relatively near term periods of the scenario horizon. However, over longer term time frames, the low carbon transition must as a prerequisite involve changes in actor motivations — be they investment practices of firms, governmental attitudes towards regulation, public acceptance and behavioural change in respect of energy services and technologies. Low carbon scenarios must also therefore explore the effects of changing actor motivations, as shall be discussed in the next section.

6.3.2. Actor-contingent elements The scoping of the current system should also however identify potentially mobile elements — elements which are not yet decided but contingent upon actor decisions yet to be taken, and actor motivations which could conceivably shift over time. An actor contingent element should be considered as occurring as a result of two stages: first the motivation of the actor which inspires him/her/it to act; and second the actual effect of that action within the system, acknowledging that no single actor has complete control over that system. Rather the actual impact of the actions of any actor is dependent on their agency in relation to the other actors in the system. ‘Trend based’ scenarios have in general been creative about hypothesising major shifts in actor motivation: the 2  2 axis provides a means for hypothesising major attitudinal shifts. However, such scenarios promote such attitudinal shifts immediately to a society-wide end point state for each scenario, without rigorously exploring how attitudinal shifts which originate amongst one set of actors would transmit to the rest of society, and the resistance that these ideas could encounter along the way. Within an actor-based scenario process, a wide range of actor motivation shifts may legitimately be freely hypothesised; the key thing is that in each case society-wide implications cannot be immediately assumed, but must rather be tested against the constraints of the existing social and technical systems. Another important distinction to make in relation to actor motivations is that there is a difference between an actor changing

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behaviour as a result of an internal motivation shift, and one doing so in response to the altered behaviour of another actor in the system. The former might be called a prime mover, the latter a secondary mover. For example, in a case where the government increases the rate of financial support available for a certain class of renewable technology, as a result of which a company increases its deployment plans for that technology, the government is a prime mover, the company a secondary mover. 6.4. Describe possible system evolution paths and points of fulcrum/ branching points The characterisation of the current system undertaken above describes a dynamic process of interactions between various kinds of actors, with different motivations and levels of agency and influence (Fig. 1), which results in the construction and maintenance of energy technologies and infrastructures — all of which in combination provides a description of the operation of the current sociotechnical system (Fig. 2). It is now possible to generate alternative scenarios which describe the evolution of this system based on contrasting assumptions about the fixed or mobile nature of the motivations of key system actors. As de Jouvenel writes, ’what is important is to find points of fulcrum on which we can exert pressure, thereby deflecting the course of events in one direction rather than another’ (de Jouvenel, 1967). These ‘points of fulcrum’, in our system description must correspond to changes in motivations and resulting actions of key system actors. Thus, these ‘points of fulcrum’ — or as described by Kahn and Weiner (1967) ‘branching points dependent upon critical choices’ — create actor contingent scenarios leading towards alternative systems, as illustrated in Fig. 3. Clearly, in a low carbon scenario a technical assessment of the emissions associated with the technological system is a key input to assessing how successful a scenario has been in relation to this normative objective. However, these emissions levels are not pre-set end points. Rather, each new system development must be shown to result from an action that is consistent with the agency of the actor who carries it out, within the constraints of the socio-technical system. — not exogenously imposed upon the system. This approach which begins from the current system and explores its potential to evolve prospectively, within realistic constraints of actor agency, is in contrast to ‘backcasting’ approaches which set a desired goal as a deterministic end point (Hughes and Strachan, 2010).

changes in motivations of key actors. However, it is still possible and important to compare scenarios in terms of how challenging they appear to be to bring about. Such a comparison can be qualitatively accessed by considering the number and type of altered actor motivations and actions upon which the scenarios are predicated. For any particular actor action or motivation — which is critical to a branching point — it can be asked how great a change in its behaviour this would represent from that which it exhibits in the current system. For example, Suurs et al. (2004) develop an approach whereby the actors who would be involved in the transition are interviewed, and a measure of their ‘willingness to participate’ is assessed. Another important question is the number of simultaneous actor changes which would be required to effect a certain branching point. A branching point which can be brought about by the action of a single prime mover might be considered less challenging to bring about than one requiring consensus between multiple actors. Thus, a less challenging actor contingent scenario would be characterised by a smaller number of prime mover actions, representing a lesser degree of change from their current motivations, than a more challenging one. A further key consideration should be that of costs, at what point of the transition and by which actors they are experienced. 6.6. Assess actor contingent scenarios against non-actor contingent elements Thus far, the process has considered only the dynamics which can be brought about by wilful actions of internal system actors. However, as noted in section 4, the effects that events and developments external to a given system can have upon that system are also significant and cannot reasonably be ignored or discounted. This paper has therefore developed the category of non-actor contingent elements to include those which can be less directly attributed to wilful actions of actors within the system under study, but that nonetheless could have a significant effect on the evolution of the system. This could be because they are clearly external to the system; however the category could also include events which cannot be attributed to purposeful actions of any particular actor, internal or external to the system. Examples of such ‘non-actor contingent’ elements could therefore include:

6.5. Assess challenges of actor contingent scenarios

 Global events and dynamics such as resource price spikes,

As discussed above, comparing scenarios through probabilistic ranking is not appropriate where they are based on hypothesised

 Political events, conflicts, diplomatic crises  Growth in intensity of climate change impacts  Unplanned or unexpected technological failure or breakthrough

Fig. 3. Schematic representation of ’branching point’ scenarios approach.

economic growth or downturn

The clear separation within the scenario structure of actor contingent and non-actor contingent developments is proposed due to the increased clarity of policy recommendations which will result. As noted in Section 4, actor contingent elements suggest opportunities for proactive decision making or consensus building, non-actor contingent elements require a more protective policy mode. As non-actor contingent events are not intrinsically connected to the actor dynamics described by the scenarios, they are not inherently connected with one scenario or another. It follows that the effect of a non-actor contingent event should be considered across all scenarios. Selection of the most important or significant non-actor contingent events may be required. Whereas considering the probability of the actor contingent scenarios would not be appropriate, as they are contingent upon acts of human free will, probability may be a useful

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additional test for considering the importance of non-actor contingent events. For example an actor contingent scenario may be found to be plausible and to have several beneficial characteristics, though it is vulnerable to a particular non-actor contingent event. However if this event has a low probability it might be felt that the other beneficial aspects of this scenario could justify this risk. In this way scenarios can be compared both in terms of potentially ’controllable’ (actor contingent) events, and ’uncontrollable’ (non-actor contingent) events whose potential impact is balanced against their probability.

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social developments in a multi-actor environment with existing characteristics, ambiguous boundaries, long time scales and external pressures. Characterising and assessing uncertainties in such futures thinking is a key element to make scenarios/pathways tractable and informative for policy making. This is critically true for low carbon scenarios/pathways where extreme external pressures and potential socio-technical lock-in will only be successfully addressed with the concerted and conscious efforts by many societal actors within the system under study. Following a structured process on uncertainty will assist analysts in efforts to ‘create the future rather than submit to it’ (Godet, 1987).

7. Conclusions The clearer definition of the activities of system actors in low carbon scenarios has in a previous paper been argued to be useful for increasing their policy tractability (Hughes and Strachan, 2010). The current paper shows that actor based approaches are more specifically useful in assisting a constructive view of future uncertainty, in particular because there is an important difference between something which is uncertain because it lies beyond the control of system actors, and something which is uncertain because system actors have not yet decided upon their strategies in respect of it. In support of this argument, this paper has offered two new methodological contributions. First, the paper offers a system conceptualisation which draws on insights on co-evolutionary processes from the technological transitions literature, but also emphasises the role of actor choices via institutional theory and actor-based scenario literature, and considers the actor-institution web as having an iterative relationship with the technical network. Second, the paper identifies a categorisation of future elements by synthesising insights from scenario literature, and other conceptualisations of technological transitions such as the multi-level perspective, and applies this categorisation in the context of low carbon scenarios. The paper argues that distinguishing between pre-determined, actor contingent and nonactor contingent elements, will assist with policy tractability and management of uncertainty. On the basis of these contributions the paper then presents an outline scenario process. The proposed process may be summarised as:

 Define the focal question  Define and describe the current system  Identify pre-determined and actor contingent elements within the system

 Describe possible system evolution paths and points of fulcrum/branching points

 Assess challenges of actor contingent scenarios  Assess actor contingent scenarios against non-actor contingent events The differentiation of actor contingent elements and their effects within the sociotechnical system, from pre-determined and non actor contingent elements, helps to demonstrate in greater detail the sequence of actions and events by which the present system is transformed into a future one, and the role of purposive actions of specific system actors. This powerful sequential aspect is captured in the use of the term ‘pathway’ — which may indeed be preferred to the more traditional term ‘scenario’ for this reason. A detailed example of such a ‘transition pathway’ — for the possible evolution of a low carbon electricity sector in the UK — is discussed in detail in subsequent chapters of this Special Issue (Foxon et al. (2012), this volume). Low carbon scenario and transition pathway analysis inevitably involves making conjectures about pervasive technical and

Acknowledgements The authors would like to thank Dr. Tim Foxon, Professor Peter Pearson, and participants in an E.ON/EPSRC Transition Pathways project workshop, held at King’s College London in July 2009, for their comments on earlier drafts of this paper.

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