Overcoming inertia: insights from evolutionary economics into improved energy and climate policy

The mainstream view in economics has been a key factor in designing climate policies. Given that the controversy over the "efficiency paradox" has shown that mainstream economics is not neutral in the way it deals with climate change, the purpose of this paper is to investigate what insights could come out of analysing this crucial issue through an alternative economic framework. The choice of an evolutionary line of thought is then quite straightforward. It stems from both its departure from the perfect rationality hypothesis and its shift of focus towards a better understanding of innovation, system change and economic dynamics. All together this renders evolutionary economics a suitable complementary framework for designing climate policies and for managing the needed transition towards a low carbon economy. Most notably, the evolutionary framework allows us to depict the presence of two sources of inertia (i.e at the levels of individuals through "habits" and at the level of socio-technical systems) that mutually reinforce each other in a path-dependent manner. Accordingly, decision-makers should design measures (e.g. commitment strategies, niche management, etc.) that specifically target those change-resisting factors as they tend to reduce the efficiency of traditional instruments.