The literature on technological innovation systems (TIS) provides policymakers and other actors with a scheme of analysis to identify system weaknesses. In doing so, TIS analysis centres on which system weaknesses policy interventions should target to promote further development of a particular system. However, prior TIS literature has not sufficiently elaborated on what may constitute the conceptual roots of a ‘weakness’. We apply a knowledge-based perspective and propose that many—albeit not all—system weaknesses may root in four types of knowledge problems: uncertainty, complexity, equivocality, and ambiguity. Employing these as sensitizing concepts, we study system weaknesses by analysing data from a biorefinery TIS in Sweden. This analysis results in novel implications for the TIS literature and for achieving a better match between system weaknesses and the design of innovation policies.

Drop-in biofuels from forest by-products such as black liquor can help deliver deep reductions in transport greenhouse gas emissions by replacing fossil fuels in our vehicle fleet. Black liquor is produced at pulp mills that can increase their pulping capacity by upgrading some of it to drop-in biofuels but this is not well-studied. We evaluate the techno-economic and greenhouse gas performance of five drop-in biofuel pathways based on BL lignin separation with hydrotreatment or black liquor gasification with catalytic synthesis. We also assess how integrated biofuel production impacts different types of pulp mills and a petroleum refinery by using energy and material balances assembled from experimental data supplemented by expert input. Our results indicate that drop-in biofuels from black liquor part-streams can be produced for ~80 EUR2017/MWh, which puts black liquor on the same footing (or better) as comparable forest residue-based alternatives. The best pathways in both production routes have comparable costs and their principal biofuel products (petrol for black liquor gasification and diesel for lignin hydrotreatment) complement each other. All pathways surpass European Union's sustainability criteria for greenhouse gas savings from new plants. Supplementing black liquor with pyrolysis oil or electrolysis hydrogen can improve biofuel production potentials and feedstock diversity, but better economic performance does not accompany these benefits. Fossil hydrogen represents the cheaper option for lignin hydrotreatment by some margin, but greenhouse gas savings from renewable hydrogen are nearly twice as great. Research on lignin upgrading in industrial conditions is recommended for reducing the presently significant performance uncertainties. © 2020 The Authors

Pilot and demonstration plants (PDPs) perform critical tasks in the development of new sustainable technology by bridging basic knowledge generation and large-scale commercialization. Significant private and public funding has therefore been allocated to PDPs addressing climate change, pollution abatement technology and/or increased resource efficiency. After technology verification, PDPs typically struggle with evolving objectives, and reports of stalled or delayed development are common. Key problems may center on technical difficulties, but challenges of a non-technical nature are equally important, not least for the development of clean technology. This paper draws on a longitudinal case study of four PDPs used for advanced biorefinery technology development in Sweden and delineates the key managerial and organizational challenges that arise in and around such plants. By taking the actor networks around PDPs as the main unit of analysis, this paper gives a detailed description of various challenges, such as the division of responsibility for the operation and ownership of the PDPs, unclear roles and objectives, and the lack of specific competences and resources in the actor networks. One important conclusion is that improved knowledge about such challenges should increase the resilience of actor networks in and around PDPs, and also help shorten the formative phase of developing sustainable technology. © 2020 The Authors

Total Site Analysis (TSA) is a tool for quantifying energy savings targets in large industrial process clusters. Thereafter retrofit design tools can be used to identify efficient solutions in which the different process sites exchange excess energy with each other through the site utility system, thus reducing the overall need for external fuels/energy. Compared to energy efficiency investments identified for single companies, similar investments identified for clusters hold an inherent complexity; they assume joint investments and multi-party collaboration, which often constitute a barrier for implementation. Real Options Analysis (ROA) is a tool that can be used for helping managers to evaluate different investment options. However, previous research almost exclusively concerns single companies/actors and not the increased complexity of joint investments. This paper presents a novel approach, showing how ROA can be applied not only to handle uncertainties regarding market development but also reduce complexity associated with multiparty cooperation in a joint energy efficiency investments based on TSA. The approachis applied on a case study of a joint energy efficiency retrofit investment in a Swedish chemical cluster. Using ROA, the case study shows how the identified solution can divided into “investment packages” distributed over time, allowing for an initial investment by only two actors and permitting for an evaluation of both the cooperation and the market development before expanding the investment and the number of actors involved. Further, an economic assessment of the project is presented together with an analysis of the cost/ benefit of gradually expanding the investment.

This paper investigates the transformation challenges related to incumbent industries caused by technology development and industry convergence in the transition to a bioeconomy in the context of Swedish biorefinery development. It involves the emergence of new value chains and several incumbent industries such as the pulp and paper industry, the oil refinery sector, the chemical process industry, and the heat and power sector. In 2019, Sweden had Europe's largest share of biofuels in the transport sector, roughly 20% on an energy basis, and this share has increased by around 300% during the last decade. At the same time, domestic production has stalled, and even though Sweden has beneficial conditions for biofuel production, the share of biofuel that is imported or based on imported feedstock has recently ranged between 85% and 90%. We discuss three transformation challenges: (i) inertia and lack of absorptive capacity creating lock-in effects at the organizational level; (ii) weak and inefficient actor networks at the industry level; and (iii) contradictory policy instrument mixes and lack of coordination at the government level. The findings underscore the need for policy integration and alignment across various policy domains, and an increased focus on policy mixes that can stimulate the emergence of more disruptive innovations and value chains. There is also a need for industrial initiatives, such as improving absorptive capacity and strengthening actor networks, to help build the value chains needed to realize a sustainable bioeconomy.

Despite the key role of actor networks in progressing new sustainable technologies, there is a shortage of conceptual knowledge on how policy can help strengthen collaborative practices in such networks. The objective of this paper is to analyze the roles of such policies – so-called network management – throughout the entire technological development processes. The analysis draws on the public management and sustainability transitions literatures, and discusses how various network characteristics could affect the development of sustainable technologies, including how different categories of network management strategies could be deployed to influence actor collaborations. The paper's main contribution is an analytical framework that addresses the changing roles of network management at the interface between various phases of the technological development process, illustrated with the empirical case of advanced biorefinery technology development in Sweden. Furthermore, the analysis also addresses some challenges that policy makers are likely to encounter when pursuing network management strategies, and identifies a number of negative consequences of ignoring such instruments in the innovation policy mix. The latter include inefficient actor role-taking, the emergence of small, ineffective and competing actor networks in similar technological fields, and a shortage of interpretative knowledge.

Uncertain and unstable policy support has often been claimed to be a major cause of the slower than expected deployment of technologies for production of advanced biofuels. We investigate the economic rationale of this claim by applying a real options framework incorporating uncertainties regarding energy prices, investment costs, and prevalence of policy support, in terms of an economic support per produced unit of biofuel depending on the greenhouse gas (GHG) mitigation potential. Six industrially relevant forest-based technologies for production of drop-in biofuels were evaluated. The technologies were integrated with a pulp mill and an oil refinery and are at different stages of their technical development. The results show that there is a limited economic rationale behind the claim that policy uncertainties are a major source for the stalled deployment of forest-based biorefinery technologies. Only technologies that require very high policy support to become economically viable, with associated low likeliness of investment, showed any significant sensitivity to the policy uncertainty. The results show that the stalled deployment is mainly related to the uncertainties regarding investment costs and future energy prices — and not related to the specific policy uncertainty. The results show that the stalled deployment is mainly related to the uncertainties regarding investment costs and future energy prices. This results in technologies with lower sensitivity with respect to these uncertainties have a larger chance of becoming commercially relevant investment options. The findings show that reduced policy uncertainty will neither lead to earlier investments nor improve the commercial viability of emerging biorefinery technologies. Literature citing policy uncertainty as the main hindrance for commercial deployment cannot do so from an economic perspective without simultaneously investigating the impacts from investment cost and market price uncertainties. Additionally we find that if policy support is intended to promote investment in technologies with high GHG performance, it must be directed specifically to these technologies, otherwise, it is more beneficial to invest in technologies with more favourable conditions for investment and operational costs, but lower GHG performance. © 2022 The Authors

In the endeavour to reduce CO2 emissions from the transport sector, biofuels from forest industry by-products are key. The adaptation of forest-based biorefinery technologies has so far been low which can partly be attributed to uncertainties in the form of policy instability, market prices, and technology costs. These uncertainties in combination with technology learning, which can be expected to reduce future investment costs, could make it favourable to postpone an investment decision. When applying real options theory, it is recognised that there is an opportunity cost associated with the decision to invest, since the option to wait for more favourable market conditions to occur is forfeited. In traditional discounted cash flow analysis, the impact of uncertainty and the value of reducing it (e.g. by waiting), is usually not taken into consideration. This paper uses a real options framework that incorporates the option to postpone an investment to reduce market uncertainties and wait for technology learning to occur. The focus is to investigate how the usage of an investment decision rule based on real options analysis affects technology choice, the economic performance, and when in time it is favourable to invest in pulp mill integrated biofuel production, compared with using a decision rule based on traditional discounted cash flow analysis. As an illustrative case study we examine a pulp mill which has the option, but not the obligation, to invest in either of two different biofuel production technologies that both use the pulp mill by-product black liquor as feedstock: (1) black liquor gasification followed by fuel synthesis, and (2) membrane separation of lignin followed by hydrodeoxygenation. With the usage of the real options framework and the inclusion of the uncertainties regarding future market prices and investment costs, the decision to invest is made later, compared with using traditional cash flow analysis. The usage of real options also reduces the likeliness of a net loss occurring if an investment is made, as well as increases the expected economic returns, showing the added economic value of flexibility in the face of uncertain future conditions. .