How Transitions Work

Achieving 1.5°C requires transforming the global energy system at unprecedented speed and scale. Truly transformational change requires rapid and simultaneous change at multiple levels, including social, technological, economic, and political domains. The Systems Change Lab at the World Resources Institute has described a pathway for responding to the climate crisis that entails 50 shifts in global systems ranging from sectoral transformations and resource stewardship to cross-cutting shifts in governance, transparency, and equity.

While some experts have expressed skepticism about the possibility of a fast transition to a low-carbon economy, there is increasing evidence today that such a transition is possible and economically beneficial. Indeed, case studies show that rapid transitions are already occurring in some sectors such as solar, green hydrogen, and electric mobility and in certain geographies.

Not only are new clean energy technologies rapidly advancing in competitiveness against conventional alternatives, but geopolitical forces and market disruptions are now tipping the scale even more toward non-fossil fuel alternatives. Making this transition a reality depends not just on national governments, but on the companies, banks, civil society organizations, and ordinary citizens that are willing to take active roles in driving changes in the systems that they influence. Key actors in the energy system can be more effective in unlocking rapid change when they understand the patterns that characterize that change and the most effective ways to intervene at various stages.

Here we offer a general framework that describes the stages of market transition that follow an S-curve pattern of market diffusion. We identify the key actors at each stage of the transition and the actions they can take that are most likely to advance change. We also provide case studies of ambition loops (collaborations that create positive system feedbacks to accelerate market transformation) that have played a role in energy system transitions.

Big transitions are comprised of many smaller ones. By breaking down the aggregate picture of the transformation to a zero-carbon economy, we can analyze and track the progress of transitions and consider how these changes might cascade to drive whole-system transformation.

The Systems Change Lab concludes that all 50 transitions need to occur at a faster pace and larger scale in order to meet global climate goals, but the alignment of stakeholders during COP and rise in commitments have set the stage for rapid large-scale system transformations.

Transitions can seem complex due to the sheer amount of change and investment required, from replacing infrastructure to shifting markets and passing new policies. Applied systems thinking and the science on transitions can help us acknowledge these complexities, understand the patterns behind them, and provide us with needed guidance to forge a path forward.

Everett Rogers set the stage for analyzing system transformation in the 1960s with the diffusion of innovations theory, which outlines how innovations diffuse through markets and societies following an S-curve. Frank Geels outlined a more detailed framework in his multi-level perspective, and other recent examples include Changing the Game by Lucas Simons and Andre Nijhof, and work on mission-oriented innovation systems by Marianna Mazzucato and Marko Hekkert et al. These fundamental frameworks and variations have been applied in reports, including in The Paris Effect, State of Climate Action, and Accelerating the Low Carbon Transition, and are featured in the 2022 IPCC report.

Underpinning these frameworks is a systems-thinking philosophy. Individuals, corporations, governments, and other actors make decisions and behave based on a multitude of incentives, including not only financial realities (and beliefs), but also access to information and resources, public pressure, regulatory frameworks, infrastructure, norms and culture, personal beliefs, and more. The behavior of all these actors collectively results in a complex system with interdependent incentives. Transitions are the process of how these incentives and dynamics change over time and solutions scale.

In the general framework below we describe how transitions unfold through five distinct stages, signaling tipping points and changing market dynamics and relationships. At each stage we outline appropriate stakeholder strategies, motivations, and resources to further transitions. This pattern is based on the frameworks outlined above and supplemented by our own work on ambition loops and tipping points. We have applied these in our retrospective case studies and forward-looking study on green hydrogen.

• Solution Search: This first phase is one of experimentation and learning to define problems, market opportunities, and available solutions. It starts with an event, disaster, or scientific discovery that generates attention or other momentum and is typically initiated by those with the capacity to experiment and learn, such as pioneering researchers, entrepreneurs with a new innovation, or activists raising awareness of an identified problem. Progress can be stimulated by research funding, public awareness campaigns, commitment and target-setting campaigns, and collaborations that link problems with solutions. The phase is successfully completed when one or more actors are ready to invest in pilots of specific solutions.
• Proof of Concept: This phase is characterized by new market dynamics, where increasing amounts of capital are directed to the development of pilots, prototypes, and demonstrations in real-world settings. These are primarily developed by spin-offs from pioneering researchers or entrepreneurs, or collaborations between civil society and corporations. Progress can be financially supported by philanthropic capital, early private investors, larger corporations looking to reinvent themselves, and government investment or incentives. Access to appropriate infrastructure, supporting regulations, and government roadmaps can facilitate further learning. The phase is complete when the solution is proven to be technically feasible and is ready to be adopted in commercial settings.
• Early Adopters: This phase is distinguished by an emerging consensus on one or more winning solutions, which encourages frontrunner companies to invest in the replication tools for the solutions and capture first-mover advantages in increasingly competitive niche markets. Positive feedback results from scaling the solution, lowering costs, and improving performance as initial customer growth starts to build. Progress is driven by frontrunner coalitions that can help accelerate change through shared learning and value chain development projects, as well as instruments such as voluntary standards, procurement policies, subsidies, and regulations to enable a level playing field. The phase reaches completion when a niche market is established and a stand-alone business case begins to emerge.
• System Integration: This phase occurs when policies and incentives are no longer needed to make the business case, and the niche market starts to widen. Progress is driven by investments directed toward the development of enabling infrastructure and complementary technologies, and economies of scale drive costs down even further. Consensus building to ensure a critical mass becomes important, with clear incentives for all stakeholders involved. This may include regulatory bodies and incumbents. Additional financial or policy incentives may be required for incumbents who struggle to reorient toward the new market (e.g., due to stranded assets) and to support worker transitions.
• Market Expansion: In this final phase, there are new cultural conventions and views of normality regarding the solution. The focus shifts to the institutionalization of the solution, for example setting and enforcing standards to ensure compliance, or support for declining industries. The groundwork and subsequent effects of the transition help inform similar transitions in other sectors and geographies.

Successful system transitions are driven by interventions that increase the participation and actions of stakeholders in the direction of accelerating the adoption of the new solution. These positive feedback loops, or ambition loops, are created from multiple actors collaborating, applying lessons learned, and using innovative technologies and approaches. The interventions are most effective when they are synchronized with stages of a transition by addressing the stage of technological advancement, responding to societal and economic realities, and taking advantage of high-leverage intervention points.

Gaps remain on how to drive ambition loops most effectively. We are developing a series of case studies to understand the factors that both create successful feedback loops and make them fail. These stories inspire, inform, and illustrate how to set up successful initiatives, programs, and policies that drive systems change.