Policy Mixes, Policy Interplay and Low Carbon Transitions: The Case of Passenger Transport in Finland

Policy Mixes, Policy Interplay and Low CarbonTransitions: The Case of Passenger Transport inFinland

Paula Kivimaa1,2* and Venla Virkamäki1,21Finnish Environment Institute, Helsinki, Finland

2Aalto University School of Business, Department ofManagement and International Business, Helsinki, Finland

ABSTRACTThe promotion of low-carbon transport systems is largely dependent on the interplaybetween technology, innovation, markets, people’s behaviour and policy. Various policiesjointly influence the development of transport systems, some policies implying different oreven contradictory designs for future transport systems. Policy interplay has not been muchaddressed in previous research on sustainability transitions. This article combines thetechnological innovation system (TIS) functions, within the transitions framework, with pol-icy analysis to empirically map multiple policies and their intended paths towards low-carbontransport systems. Empirically, the article provides a systematic review of Finnish national-level policies for transport and transport-related innovation. The discussion examines thecontribution of the current policy mix to sustainability transitions based on its degree ofattempt to re-design the transport system. The findings reveal that policy support is morecomprehensive regarding more energy-efficient vehicles and low-carbon fuels than basedon reduced transport demand or alternative transport modes. A holistic policy approachtowards low-carbon transitions is only achieved to a degree and innovation policy gaps areidentified. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment

Received 29 October 2012; revised 10 October 2013; accepted 10 October 2013

Keywords: transport policy; innovation policy; sustainability transitions; policy coherence; climate change mitigation

Introduction

THE TRANSPORT SECTOR IS GLOBALLY THE SECOND-LARGEST PRODUCER OF CO2 EMISSIONS. FOLLOWING A GROWING

trend, in 2009, CO2 emissions from transport represented 23% of global CO2 emissions, emissions fromthe road sub-sector being the largest in terms of volume (IEA, 2011). The International Energy Agency forecastsa continued increase in the sector’s emissions and the number of cars based on various population and economic

growth scenarios (Replogle andHughes, 2012). To achieve reductions in transport-related greenhouse gas (GHG) emis-sions, wider socio-technical system change appears imperative.

Recently, research on transport andmobility systems from the sustainability transitions perspective has increased.The literature has particularly addressed the dominance of and change pressures on automobility (see, e.g., Geels

*Correspondence to: Paula Kivimaa, Finnish Environment Institute, Helsinki, Finland. E-mail: [email protected]

Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment

Environmental Policy and GovernanceEnv. Pol. Gov. 24, 28–41 (2014)Published online 20 November 2013 in Wiley Online Library(wileyonlinelibrary.com) DOI: 10.1002/eet.1629

et al., 2012) and the development of alternative fuels (see, e.g., Hillman and Sandén, 2008). For example, Geels(2012) believes that automobility forms the dominant transport regime and sub-altern regimes (train, tram, bus,cycling) contrast this. Much of the research has so far focused on the development of technological nicheinnovations and their potential (Köhler et al., 2010), while wider outlooks on the transport system and itssurrounding regime as a whole have been rather rare. Similarly, while increasingly research is carried out ontransport policy from the perspectives of sustainability and accessibility, only ‘a small number of studies have exam-ined the transport system in depth’ (Bristow et al., 2008, p. 3433). Often, studies have addressed only one particulartechnology or policy instrument. It is this gap between policy analysis and transitions that the paper addresses. Weargue that policies are important by contributing to the future ‘design’ of the transport system, as they have beennoted to frame the viability of different technological options through strategies and more concrete policyinstruments (see, e.g., Kivimaa and Mickwitz, 2011; Scrase and Ockwell, 2010). This relates to how problems,underlying assumptions and links between issues are presented by policies (see, e.g., Scrase and Ockwell, 2010).

Our objective is to examine which elements in a national-level policy instrument mix, focused on passengertransport in Finland, hinder or support low-carbon transport system transition. More specifically, we examinehow key functions required for the build-up of different low-carbon transport-transition pathways are supportedby the current policy mix. We combine policy analysis with the functions of technological innovation systems (TISs)in a novel way to examine policies from a systemic viewpoint. Our purpose is to further develop the TIS approach byidentifying how public policies contribute to different functions, in this case in the transport sector. By examiningthrough which routes Finnish transport and innovation policies influence (and fail to influence) the transportsystem in terms of reducing emissions and inducing new path creation, we give an outline of the current statusof policies and of the needs for improvement, particularly regarding policy coherence.

This paper is organized as follows. The following section presents the theoretical starting points of the study relatedto mobility studies and sustainability transitions. The analytical framework is also presented in this section. The nextsection presents the researchmethods. The empirical study of transport-related national policies in Finland is describedand analysed in the fourth section. The fifth and sixth sections present the discussion and conclusions.

Theoretical Starting Points and the Analytical Framework

Literature on Policies and Low-Carbon Mobility Systems

Issues related to demand-side management, technology procurement and a combination of policy measures havebeen identified as key in previous research on low-carbon transport policy (e.g. Banister, 2008; Bristow et al.,2008; Santos et al., 2010; Schwanen et al., 2011; Vieira et al., 2007). In addition, the literature has paid attentionto the ‘routes’ through which GHG emission reductions can be achieved. Nykvist and Whitmarsh (2008) haverecognized three routes to a more sustainable mobility system, mobility referring to the physical movement ofpeople and goods by any mode of transport (see, e.g., Banister, 2008)1: technological change, modal shift andreduced travel demand. Technological change incorporates changed vehicle technologies, fuels or motive power(Monni and Raes, 2008) and ICT applications. Modal shift in turn implies, in terms of GHG emissions, changefrom private to collective transport. ICT and the information society may support reduced travel demand throughnew practices, such as tele-shopping and tele-working (see, e.g., Geels, 2012). In contrast, Monni and Raes(2008) have identified four categories through which policies influence GHG emissions from transport: amountof transport (passenger kilometres), mode of transport (occupancy rate of vehicles), vehicle efficiency (fuel needed)and fuel efficiency (CO2 emissions from fuels). We have used these categories below to illustrate different low-carbon pathways in the personal transport system.2 While a given policy instrument may address one or many of

1Accessibility is an important part of mobility, including the service level and pricing of transport modes and the time to reach the destination.Traditionally transport policy has met the need for accessibility by providing more road capacity. (Banister, 2008; Goodwin, 1999)2The personal transport system is ‘the conglomerate of material and immaterial elements – people, means of transport, fuels, roads and otherfixed infrastructures, agencies, laws and rules, prices, norms and values, and so on – that collectively produce the movements of persons andfreight though space and time, as well as such externalities as GHG emissions’ (Schwanen et al., 2011, p. 994).

29Policy Mixes, Policy Interplay and Low Carbon Transitions

Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment Env. Pol. Gov. 24, 28–41 (2014)DOI: 10.1002/eet

these categories, transport policy, at least in Nordic countries and the UK, has remained focused on thetechnological efficiency of vehicles (see, e.g., Upham et al., 2013). Yet, a radical transformation in the transportsystem is required to meet stringent climate targets and is likely to require policies for changing the amount ormode of transport as well as vehicle efficiency. Similarly, many studies have merely covered individual technologies,such as electric vehicles or biofuels (e.g. Hillman and Sandén, 2008; Köhler et al., 2010; Orsato et al., 2012). Thisconnects more broadly to the continued dominance of one of the two competing streams of argument surroundingtransport politics and research (Goodwin, 1999): the acceptance of the growth of car use and providing road capacityto accommodate it over the control and moderation of car use.

Due to transport systems being complex and interlinked, demand-side management, broadening the scope oftraditional transport planning, has recently been emphasized (see, e.g., Bristow et al., 2008; Schwanen et al., 2011).Measures relating to demand-side management have been described as those ‘to encourage modal shift combinedwith strategies to make the best use of the released space so that there is a net reduction’ (Banister, 2008, p. 75),thus linking to user needs and land use planning. A variety of measures, such as pricing, supply of public transportservices, car sharing and tele-working, and the improvement of cycling and walking facilities, have beenidentified to influence user behaviour; while longer-term, more strategic land use planning is expected by reducingtravel distances and making travel more reliable to trigger some shift towards more sustainable transport modes(Bristow et al., 2008; Goodwin, 1999; Schwanen et al., 2011).

Key issues here are policy integration and coherence (see, e.g., Howlett and Rayner, 2007; Jordan and Lenchow,2010; Nilsson et al., 2012).3 Our particular focus concerns how the mix of existing policies as a whole is co-ordinatedto influence transitions. Some related discussion can be detected in transport policy literature: many authors arguethat a combination of measures is required to achieve long-term reduction in GHG emissions (Bristow et al., 2008;Santos et al., 2010; Schwanen et al., 2011; Vieira et al., 2007). It is also noted that policy instruments might producedifferent results when used together, ranging from synergies and co-benefits to counter-effects (Kaufmann et al.,2008; Santos et al., 2010). Yet, it has been observed that practices largely remain sectoral, as witnessed by thepursuit of motorway construction projects, the development of high-speed rail links or segregated public transportcorridors in France (Kaufmann et al., 2008). In contrast, Tuominen and Alhqvist (2010, p. 120) have noted a shift intransport policy from individual planning of roads, railways and waterways towards ‘the development of a complextechnological system largely depending on ICT and applications’. As innovations are typically influenced bysynergistic effects of many policies (see, e.g., Kivimaa, 2008), Oltra and Saint Jean (2009) argue that environmentalpolicies should be coordinated with research and innovation policy (Oltra and Saint Jean, 2009), followingsimilar calls made earlier in other sectors (e.g. Kivimaa and Mickwitz, 2006). Thus, we adopt a systemic approachto examining the climate-based transport and innovation policy instrument mix in Finland.

Socio-technical Transitions and Policy

Transitions literature addressing change towards more sustainable socio-technical systems emphasizes co-evolutionand multi-dimensional interactions between industry, technology, markets, policy, culture and civil society (see, e.g.,Geels, 2012; Grin et al., 2010). For instance, the multi-level perspective (MLP), a common approach in transitionsresearch, highlights that transitions require interplay between three different levels: the landscape (exogenouscontext), regime (deep structure of the socio-technical system) and niche (innovation and experimentation) levels(Geels, 2004; Grin et al., 2010). Niches are considered as spaces for radical path-breaking innovations, such asalternative technologies, practices, structures and actor-constellations deviating from dominant socio-technicalsystems. Novel practices and technologies are crucial in the process for systemic change and their emergence canbe facilitated by protective spaces, provided by, for instance, R&D laboratories, subsidized demonstration projects,small market niches and policy-facilitated preliminary markets (Geels, 2011; Ulmanen et al., 2009). Regimes, incontrast, are the deep structure, those dominant practices, technologies, infrastructure, rules, beliefs and practicesthat form around the existing system (Geels, 2004). Regimes are often characterized by path dependence and lock-in (Unruh, 2000) and the locus of regime-specific policies (see, e.g., Berkhout et al., 2004). The transport regime3Policy integration refers to the adoption of specific policy goals (such as climate change mitigation) in the policy goals, instruments and processesof other policy domains or across sectors (Jordan and Lenchow, 2010; Kivimaa and Mickwitz, 2006). Policy coherence means the consistency ofpolicy goals and instruments and the reduction of conflicts within and between policy domains (May et al., 2006; Nilsson et al., 2012).

30 P. Kivimaa and V. Virkamäki


can be seen as the ‘deep structure’ that comprises the stability of the socio-technical system through various lock-inmechanisms, such as existing road and fuel infrastructure, coordinated networks of organizations, educationalsystems, rules and regulations, and shared beliefs and intangible rules (Geels, 2004, 2012; Unruh, 2000).Landscape is the exogenous context of the regime, including spatial structures, political ideologies, societal values,beliefs and macro-economic trends, which influence niche and regime dynamics (Geels, 2012). In this article, theMLP sets the background for the discussion, while the policy analysis is focused on the intersection between regimeand niche levels, TIS functions reflecting processes to support niche development. In the discussion, we considerthe value of a TIS-based analysis in the context of broader transitions thinking and the MLP for directing attentionto areas of policy (in)coherence.

Transition studies addressing policy have largely focused on the kinds of policy needed for transitions, forexample through Transitions Management (Rotmans et al., 2001; Nill and Kemp, 2009) or on illustrating howselected policies have supported new niche formation (e.g. Ulmanen et al., 2009). The role of policies in stimulatingtransitions have been described, for example, through enhancing pressure on regimes, or even regimedestabilization; through economic instruments or regulation; by stimulating the emergence of niche innovationsand by making possible the upscaling of niches in support of transitions (see, e.g., Geels and Kemp, 2012;Smith and Raven, 2012). Broader policies creating adaptive capacity for regime transitions have also been arguedto be important (Smith et al., 2005), while sometimes policies have been connected to the political settings at thelandscape level (Berkhout et al., 2004). Empirical analyses of existing policy frameworks or instrument mixesfrom a transition perspective have been rare. This is important, because incoherent policies and policy frameworks,by sending confusing or conflicting messages to policy target groups, may reduce the effectiveness of policies(see, e.g., Howlett and Rayner, 2007).

Analytical Framework

We argue that, to achieve environmentally sustainable transport system transition, not only transport policies butalso innovation policies need to be modified. A sustainable transition of the transport system is uncertain and,therefore, policies focused on new path creation – at least on a general, if not technology specific, level – are needed.While several works in the literature on path creation exist (e.g. Garud and Karnøe, 2001; Ulmanen et al., 2009),here a focus on the TIS approach is chosen, because it has been described as one of four major lines of enquiryin sustainability transitions research, because its analyses have been specifically developed to inform policymaking(Markard et al., 2012) and because it provides a detailed enough categorization of innovation-inducing processes thatpolicies aiming for transition can potentially address.4 We recognize that the purpose of TIS functions is not thatpublic policies are created for each function, but we believe that it can be utilized in policy analysis, too. Thepotential drawback of the approach is that it does not pay sufficient attention to influences outside the system(Markard and Truffer, 2008) and has so far generally been used to promote specific technologies.

A TIS has been defined as a social network constituted by actors and institutions, which is constructed around aspecific technology (Suurs and Hekkert, 2009). The components of an innovation system are the actors, networksand institutions contributing to the overall function of developing, diffusing and utilizing new products (goods andservices) and processes (Bergek et al., 2008). ‘TISs do not only contain components exclusively dedicated to thetechnology in focus, but all components that influence the innovation process for that technology’ (Bergek et al.,2008, p. 409). The approach has been developed to analyse system performance and the factors affecting thatperformance (Suurs et al., 2010).

The build-up, or breakdown, of innovation system structures can be conceptualized in terms of key activities, orsystem functions (Bergek et al., 2008; Suurs and Hekkert, 2009). The TIS literature identifies seven systemfunctions, with some differences between the Dutch and Swedish ‘schools’. We have chosen the categorizationdeveloped by Bergek et al. (2008), but have developed its interpretation using thoughts from both schools. Bergeket al. (2008) argue that the TIS functions complement the previous innovation system approaches to innovationpolicy by providing a process focus. Table 1 presents the analytical framework and our interpretation of how policies

4An alternative categorization of processes crucial for niche creation and development, i.e. ‘niche internal processes’, by Strategic NicheManagement was perceived as too loose from the perspective of categorizing a whole mix of policies.



fall under each of the TIS functions. Our interpretation has been influenced by previous literature on TIS and itscritical analyses (cf. Bergek et al., 2008; Markard and Truffer, 2008; Smith et al., 2005; Suurs et al., 2010).

Research Method

We apply the analytical framework to a comprehensive review of Finnish policy instruments that influence thepersonal transport system and its innovation. A climate change mitigation perspective is taken; i.e., the transitionpotential towards a low-carbon transport system is explored. The initial list of policy instruments was gathered fromrelevant policy documents listed later in this article, the Finlex legislation database and the government budgetproposal. In the analysis, only those instruments that were directly linked to the transport sector and that fall underthe jurisdiction of the government were included. We, thus, excluded regional and municipal policy instrumentsthat influence the formation of transport systems locally (cf. Monni and Raes, 2008). The policy instruments weresummarized in MS Excel (Meyer and Avery, 2009) noting responsible government agencies and motivationsbehind the instruments.

Each instrument was placed in a matrix providing categories for emission reduction pathways (based on Monniand Raes, 2008) across the TIS functions. The interpretation of which policies fall under which TIS functions andemission reduction pathways were made by the authors, following descriptions in Table 1. The authors’ assessmentwas tested by using investigator triangulation. Nine independent investigators were asked to place policyinstruments on a blank table categorized as Table 2 (see later). The four received responses were used toconfirm/invalidate prior interpretations and ‘meet the dependability requirements, i.e. that under the samecircumstances, the same interpretation would occur’ (Decrop, 1999, p. 159).

We used five interviews, taking place in 2012–2013, as a source for details on innovation policies concerningtransport in Finland. Those interviewed represented the main organizations involved in transport and innovationpolicies: the Ministry of Transport and Communications, the Ministry of Economy and the Employment, the Finn-ish Transport Agency, the Finnish Transport Safety Agency and Tekes, the Finnish Funding Agency for Technologyand Innovation. Interviews were used to emphasize certain aspects found in the empirics.

Policies Influencing the Personal Transport System in Finland

Background to the Finnish Case

Similarly to elsewhere in the EU, the transport sector accounts for circa 20% of GHG emissions in Finland, mostlyderived from inland passenger transport and passenger cars (Statistics Finland, 2012). Finns travel annually a totalof 74 billion passenger kilometres, equalling 41 km per person per day, 89% of these kilometres by inland passengertransport (Council of State, 2012a).

Policymaking influencing transport falls under five ministries: Transport and Communications, Environment,Finance, Employment and the Economy, and Education and Culture. The Ministry of Transport andCommunications is largely responsible for transport systems and networks, the transport of people and goods,traffic safety and issues relating to the environment. The Ministry of Employment and the Economy is in chargeof competitiveness and vehicle-related energy issues, the Ministry of Finance of taxation, the Ministry of theEnvironment of regulation of transport fuels and the Ministry of Education and Culture of training of professionalheavy-duty vehicle drivers.

Transport policy is also developed and implemented by agencies that fall under the Ministry of Transport andCommunications. A rather significant administrative reform took place in 2010, when previously separatedagencies for aviation, rail, road and marine transport were merged into a new transport infrastructure agency calledthe Finnish Transport Agency, responsible for maintaining and developing the standard of service, and the Finnish



Transport Safety Agency. In innovation policy, Tekes, the Finnish Funding Agency for Technology and Innovation,is a significant actor, funding R&D projects carried out by companies and research institutions.

Municipalities are also important policymakers, having a fairly independent role in land-use and regionaltransport planning.

Key National Policies Related to Reduction of GHG Emissions from Passenger Transport

Transport policy is formulated in several government strategy papers, setting a basis for the policy instruments inuse. The latest government programme, drafted by each new government and laying out a four-year plan for thegovernment term, states as the main goal of Finnish transport policy ‘to secure smooth and safe mobility inaccordance with the needs of the economy and the inhabitants of Finland, along with measures to reducetransport-related emissions and promote sustainable development’ (Council of State, 2011, p. 83). The programmeis linked to the government budget proposal (Council of State, 2012a), which, in 2012, included 1973 million Euros,to be used for transport infrastructure, transport-related government services and subsidies for the transport sector.The operating expenses of the Ministry of Transport and Communications and its agencies are partly included inthis sum. Unlike previous governments, the present government made a decision to allocate more funding on railprojects than on roads.

The sectoral transport policy strategies include the Transport Policy Report 2012–2022 to the parliament(Council of State, 2012b), the Climate Policy Programme 2009–2020 of the Ministry of Transport andCommunications (MINTC, 2009) and several sub-strategies, including the Strategy for Walking and Cycling, theStrategy for Intelligent Transport, and the Government Decision on Energy Efficiency Measures. In the latestTransport Policy Report, a change towards a more systematic view is quite clear compared with the previous reportfrom 2008, as it aims to reduce passenger kilometres and direct traffic towards more sustainable transport modes inaddition to renewing the vehicle fleet and developing sustainable fuel options. Also, the Climate Policy Programmeaims at a switch from conventional planning towards a more integrated transport system design. To meet thestrategic aims, the government uses a variety of policy instruments, described as follows.

System function Description (Jacobsson and Bergek, 2011;Suurs et al., 2010)

Type of policy relatedto the function

Knowledgedevelopmentand diffusion

Knowledge base and networks;how the knowledge is developed,combined and diffused.

R&D funding schemes, educational policies,informational instruments.

Influence on thedirection of search

Incentives and pressures fororganizations to enter a field, inc.visions, expectations and demand.

Targets set in strategies, regulations,tax incentives, foresight exercises.

Entrepreneurialexperimentation

Testing of new technologies, applicationsand markets in such a way that newentrepreneurship and diversification forms.

Policies stimulating new entrepreneurshipand diversification of existing firms,e.g. funding for demonstration projects.

Market formation Factors driving new market formation,e.g. changes in customer or institutionaldemands and prices.

Regulation-induced niche markets,tax exemptions, market-basedpolicy instruments, public procurement,demand-side management, town planning.

Legitimation Social acceptance and compliance withinstitutions and society.

Problem and justification framing in policiescreating legitimacy, public participation.

Resourcemobilization

Financial and human factors andcomplementary assets as inputsfor development.

Subsidies, educational policies,secondment of expertise.

Development ofpositive externalities

Benefits to others ‘free of charge’. Policies promoting more responsiblecorporate practices.

Table 1. Analytical framework using TIS for policy analysis



System

functio

nTran

sportdeman

d(passeng

erkm

)Transportm

ode

(vehiclekm

perpassengerkm

)Fu

elefficien

cyof

vehicles

(CO

2km

�1 )

Carbo

nconten

tof

fuel

Know

ledg

edevelopm

ent

anddiffu

sion

Supp

ort(+1):S

ustainable

commun

ities

prog

ramme

Maybe(?):Su

staina

ble

commun

ities

prog

ramme*

Supp

ort(+2):E

VEprog

ramme,

CO

2-labelsforcars

Supp

ort(+2):B

iorefine

prog

ramme,

energy

subsidiesfordemon

stratio

n*

Maybe(?):Tran

sEco

prog

ramme*

Maybe(?):Tran

sEco

prog

ramme*

Influenceon

the

directionof

search

Supp

ort(+1):F

ueltaxation

Supp

ort(+1):F

ueltaxation

Supp

ort(+4):F

ueltaxation,

CO

2lim

itsforvehicles,

caran

dvehicletaxatio

n,en

ergy-efficien

cyagreem

ents

with

publictran

sport

Supp

ort(+3):R

egulationon

the

emission

conten

tof

fuels,

biofuelsdistrib

utionob

ligation,

fueltaxatio

n*

Barrier(�

1):T

axdeductions

forcommutingcostsand

work-baseddriving

Barrier(�

1):T

axdeductions


work-baseddriving

Entrep

rene

urial

expe

rimen

tatio

nMaybe(?):Pu

blic

tran

sportlicen

sing

Supp

ort(+2):E

VEprog

ramme,

Tran

sEco

prog

ramme

Supp

ort(+3):B

iorefine

prog

ramme,

energy

subsidiesfordemon

stratio

n,Tran

sEco

prog

ramme

Marketform

ation

Maybe(?):Fu

eltaxatio

n,land

uselegislation*,

land

use,

housingan

dtran

sportagreem

ents

betweenstate

andmun

icipalities

*

Maybe(?):Fu

eltaxatio

n,land

uselegislation*,

land

use,

housingan

dtran

sportagreem

ents

betweenstate

andmun

icipalities

* ,pu

blictran

sportlicen

cing

*

Supp

ort(+3):C

O2-basedcar

andvehicletaxatio

n,en

ergy-efficien

cyrequ

iremen

tsin

publicprocurem

ent

Supp

ort(+2):C

O2-based

fueltaxatio

n,biofuel

distrib

utionob

ligation

Barrier(�

1):T

axdeductions


work-baseddriving

Barrier(�

1):T

axdeductions


work-baseddriving

Maybe(?):En

ergy-efficien

cyagreem

ents

with

publictran

sport*

Legitim

ization

Supp

ort(+1):M

obility

man

agem

entcreatin

gsupp

ort

forredu

cing

passen

gerkm

*

Maybe(?):Strong

justificatio

nsforvehicletaxbasedon

clim

ate

chan

gean

dtrafficsafety

Maybe(?):Strong

justificatio

nsforhigh

erdistrib

utionob

ligation

basedon

domestic

prod

uctio

nRe

source

mob

ilizatio

nSu

pport(+1):L

anduse,

housingan

dtran

sport

agreem

ents

betweenstate

andmun

icipalities

Barrier(�

2):L

ackof

natio

nal

innovatio

nfunding

formun

icipalities,

mileageallowance

Supp

ort(+3):Increasing

publicspen

ding

onrail,

subsidiesforpu

blictran

sport,

land

-use,h

ousing

and

tran

sportagreem

ents

betweenstatean

dmun

icipalities,sup

port

forpu

blictran

sport

Supp

ort(+1):E

VEprog

ramme

Supp

ort(+2):B

iorefine

-prog

ramme,

energy

subsidies

Develop

men

tof

positiveexternalities

Maybe(?):Mob

ility

man

agem

entMaybe(?):Eco-driving

instructions

Table2.

Illustrationof

existin

gpo

liciesfordiffe

rent

emission

redu

ctionpa

thssystem

functio

ns*A

dded

basedon

theinvestigator

triang

ulation.



Regulation Affecting Fuel and Vehicle Emissions, Transport Modes and Transport DemandNational regulation promoting climate change mitigation concerns fuel and vehicle emissions, including theimplementation of the EU Directives on public procurement and on transport biofuels. In 2011, based on the EUDirective 2009/33/EC, Act 1509/2011 on taking into account energy and environmental effects in the publicprocurement of vehicles was issued. Regarding fuel emissions, following EU Directive 2009/28/EC on thepromotion of the use of energy from renewable sources, Finland implemented several policies specificallysupporting the development of biofuels. The biofuels distribution obligation (Act 1420/2010) requires that the shareof biofuels in transport petrol and diesel consumption shall be 20% by 2020. Finland has decided to pursue ahigher share of transport biofuels than required by the EU, based on a double counting rule.5 The higher share isjustified in Government Bill 197/2012 on the basis of seeking the most cost-efficient technologies and creatingdomestic markets. Vehicle emissions in Finland are influenced by EU car manufacturers being obliged to ensurethat their new car fleets do not emit more than an average of 130 g CO2 per kilometre by 2015 and 95 g by 2020.

Legislation concerning bus and coach transport and land use exists in general, but it is not significant from theperspective of climate change mitigation. Act 869/2009 sets official norms for basic service quality of publictransport across the country and quality and normative targets for public transport in major urban areas and fortraffic between them. Local authorities and municipalities, autonomous in their funding policies, are key actorsin achieving these objectives. The Land Use and Building Act (32/1999), complemented by National Land UseGuidelines, sets a general framework for land use and spatial planning and for the coordination of land use andtransport planning. These are not tight and, although the legislative goals are good, in practice, the level of nationalcontrol is relatively small (MINTC, 2009).

Taxation Affecting Fuel and Vehicle Emissions and Transport DemandAn emission-based car tax (Act 5/2009) and an emission-based vehicle tax (Act 1327/2009) were introduced in2009, with aims to support the EU GHG-emission reduction target and traffic safety through the renewal of thevehicle fleet (Government Bill 56/2011). Certain vehicles were initially exempted from vehicle tax but, from 2013,taxed at a lower rate. All low-carbon vehicles have a lower tax-level at present.

Fuel taxation is a key policy instrument to potentially influence both passenger kilometres and fuel GHGemissions, following a government incentive to direct more taxation to use of vehicles than their purchase, whileit is principally carried out for fiscal reasons. Fuel taxation is a part of general energy taxation that was changedas of January 2011 (Act 1399/2010) to include energy and CO2 components. The new CO2 component is basedon a life-cycle approach to emissions, rather than on combustion gas emissions only. The level of the tax was raisedin 2012 (Act 1443/2011).

Tax subsidies on commuting have been argued to increase transport demand by favouring passenger carsover other transport modes: mileage allowance6 and commuting cost reduction7 (Ristimäki and Oinonen,unpublished results). The National Audit Office of Finland has stated that the tax value of commuting costreductions (lost by the government) is higher than the total climate funding of the government (NAOF, 2011).The Ministry of Finance has proposed lower allowances, so that, for example, in 2013 the allowance would reducefrom 45 cents to 43 cents per kilometre (MiF, 2012).

Subsidies Affecting Fuel Emissions, Transport Modes and Transport DemandPublic transport is mainly supported by subsidies. The government purchases a certain number of train, bus andcoach transport services to ensure country-wide services with a budget allocation of 60 million Euros for 2013,although public transport in more remote areas does not necessarily reduce CO2 emissions (NAOF, 2011). Subsidiessupporting public transport in municipalities and cities amount to over 20 million Euros in 2013, linking to arequirement for the municipalities to develop public transport in the long term.

5Article 21, Directive 2009/28/EC states ‘The contribution made by biofuels produced from wastes, residues, non-food cellulosic material, andligno-cellulosic material shall be considered to be twice that made by other biofuels’.6Mileage allowance may be paid for the use of an employee’s own vehicle for work-based travel at rates announced by the Tax Administration.7If a person’s travel expenses exceed €600 in a year, (s)he is entitled to deduct up to €7000 in taxation per year.



The government has reserved 150 million Euros, in 2011–2013, for demonstration of biofuel production facilities.The subsidies are allocated under the energy sub-items of the budget. The government is also expecting at least twoprojects to receive EU funding for biofuel demonstration plants (MiF, 2012).

Informational Instruments and Voluntary Agreements Affecting Fuel and Vehicle Emissions, Transport Modes andTransport DemandSome informational measures to promote sustainable transport and low-carbon vehicles are based on EU directives,such as the energy labelling of vehicles (EC/94/1999), while others are nationally initiated. The latter includecompulsory eco-driving lessons for heavy-vehicle drivers, integration of eco-driving instructions in driving schoolsand energy-efficiency agreements with public transport. The current energy-efficiency agreement with publictransport, 2008–2016, aims for 9% improvement by 2016 and continuous improvement and monitoring of energyconsumption (Government Bill 111/2009).

The government set up a Land Use and Transport Planning Forum in 2008 to promote the coordination of thetransport system (MINTC, 2009). This has been followed up by Letters of Intent for Land Use, Housing andTransport, with a purpose to reconcile the needs of land use and transport in a more coherent and comprehensivemanner, that the Ministry of the Environment and the Ministry of Transport and Communications have alreadysigned with Tampere, Oulu and Turku City Regions. The government has also reserved funding to the signatoriesof the letters of intent.

Mobility management is a rather new concept in Finland, for the enhancement of which a national network hasbeen set up, while it largely falls under the jurisdiction of municipalities. Only a few towns have adopted policies tosupport pedestrianization, restrict car use and parking, and promote park and ride schemes. The government’spossibilities are mainly informative, for example, to invite employers to support cycling, walking and publictransport instead of passenger vehicles. The government has allocated 700 000 Euros for mobility managementfor 2013. The mobility management projects funded by the government have mainly dealt with communication,marketing and mobility planning (Motiva, 2013).

New transport means, such as car-sharing and different ICT applications, exist in Finland to some extent, but arenot effectively supported by national policies. Applications to offer better, more holistic and real-time informationon public transport are all regional. The national system for travel planning is not considered reliable andinformation is not available for all possible routes. There are also several websites offering car-pooling and car-sharing, but the business has not taken off well and the government has no supportive policies.

Innovation Policy for Transport

Two key innovation policy strategies, the National Innovation Strategy (2008) and the Goals of the InnovationDepartment (MEE, 2011), do not mention transport. The only innovation policy strategy addressing transport isthe Research and Innovation Policy Guidelines for 2011–2015 (RIC, 2010), mentioning transport only twice inthe context of public procurement and biofuels. Thus, it appears that there is no official transport innovation policyin Finland.

There are two particular technologies addressed by some innovation policy instruments. The Electric VehicleSystems Programme (2011–2015, 80 million Euros), funded by Tekes, aims to find new actors, develop cooperationand knowledge, and create new business models, services and demonstration projects related to electric vehiclesystems.8 The Biorefine Programme (2007–2012, 250 million Euros), also funded by Tekes, aimed to developnew technologies, products and services related to biomass, expand know-how and cooperation, activate SMEs onniche products and markets and commercialize new technologies. Biomass-based fuels for transport were a partic-ular topic of the programme’s first call. In addition, two general R&D programmes on sustainable communities andtransport exist. The Sustainable Community Programme by Tekes does not include particular transport-related aimsbut rather a general aim of improving community energy-efficiency. It has funded a few transport-related projects.The TransEco Programme, initiated by VTT Technical Research Centre and funded by Tekes and the Ministries of

8An interviewee stated that ‘in principle, the objective of the EVE programme is not to electrify Finland’s transport. It is quite good if it does elec-trify. It certainly helps Finnish companies, but we aim to the world [markets], that’s where the business comes from’.



Transport and Communications, of Employment and Economy and of Finance, aims to develop technology reducingroad transport energy use and emissions. It particularly engages in electric vehicle and biofuel development (www.transeco.fi). It is not a top-down directed policy instrument like the other programmes, but rather a niche-building at-tempt that has managed to engage governmental organizations.

Findings and Discussion

In this section, we come back to the analytical framework based on the TIS functions (Table 1) and the four differentpathways to reduce GHG emissions from transport (cf. Monni and Raes, 2008). Moreover, we point out insightsthat a TIS-based analysis of policy in the broader context of transitions, specifically the MLP, offers for policycoherence.

Based on system functions, there is a clear difference in policies supporting low-carbon development in vehiclesand fuels as opposed to transport demand and modal selection (Table 2). This is in line with earlier research on thetechnology dominance of transport policy and research (see, e.g., Goodwin, 1999; Schwanen et al., 2011). Policyinstrument examples giving clear support for five or six system functions can be found for pathways focused onvehicle and fuel improvements. In contrast, policy instruments supporting transport demand reduction and modalchange through entrepreneurial experimentation and market formation are largely missing, and support is weaker inmany other functions. In terms of number of policy instruments, resource mobilization is the most significant formodal change towards public transport. Yet, the magnitude of innovation funding is largest for vehicle and fueltechnology development.9

In our results, at least in terms of instrument coverage (instrument effectiveness being another matter),sufficient niche support exists for innovations reducing vehicle and fuel emissions, supportive policy instrumentscovering nearly all TIS functions. While support for electric vehicles is slightly stronger in terms of influence overdirection of search and market formation, biofuels receive more attention from instruments targeting entrepreneurialexperimentation and resource mobilization. On the national level, demand-side management is the least addressedtransport system dimension from the climate perspective. Only a few demand-side management measuresmentioned in transport policy literature (see earlier in this article) have been adopted in Finland, and for exampleroad pricing is absent. Lack of significant instruments related to knowledge development, entrepreneurialexperimentation andmarket formation points out particular policy gaps, in which the innovation policy domain wouldhave a role to play. Lack of support for knowledge development and entrepreneurial experimentation alreadyinfluences the early stages of niche formation by slowing down the creation of new networks and learning, whilenon-existent policy-induced markets may hinder niche diffusion.

The results point towards the importance of multi-regime interaction (cf. Raven and Verbong 2007; Konrad et al.,2008) between transport and other regimes. Stronger support for electric vehicles and biofuels than for modalchange or reduced demand can partly be explained by the connection of the former two to powerful establishedregimes, electric vehicles to the electricity regime and biofuels in Finland to the forest industry regime. For example,the declining forest industry regime has paid increasing attention to bio-based energy in attempts to find newbusiness opportunities in other regimes (see, e.g., Kivimaa, 2008). Low-carbon vehicle and fuel niches are alsomuch influenced by landscape changes in the form of EU policymaking. In turn, modal selection and demandniches are hindered by regime-level policies supporting the dominance of car use by tax deductions for work-relateddriving. Moving from competition between sub-altern transport regimes to searches for symbiosis (cf. Raven andVerbong, 2007), for example through integrated mobility management, might benefit the up-scaling of multiplelow-carbon niches.

While calls made in previous transport policy research reflect a need for synergistic measures addressing thewhole transport system, rather than just road transport (e.g. Kaufmann et al., 2008), our analysis demonstrated thata holistic policy approach in transport policy is only achieved to a degree, particularly through a more systemic viewin the Transport Policy Report from 2012 compared with an earlier report, and the administrative reform of the

9The development of positive externalities was blank or ‘maybe’ for all pathways.



http://www.transeco.fi

http://www.transeco.fi

Ministry of Transport and Communications. Innovation policy influencing transport is still largely focused onvehicle technology and fuels rather than the transport system as a whole. Coherent policy mixes can be observedin relation to selected technology-specific niches rather than the system as a whole: partly due to the fact thatmunicipalities have a stronger role in demand and modal selection, making these niches multi-level governanceand coherence issues. The empirics also showed that Finnish innovation policy paid little attention to transport ingeneral, pointing to a lack of policy integration (cf. Kivimaa and Mickwitz, 2006). Similarly, while the developmentof electric-vehicle-related innovations has received some innovation policy support, so far transport policies increasingthe willingness of consumers to buy electric vehicles have been lacking, indicating a mismatch of supply and use-oriented policies. The change in the framing of strategies may, however, create new directions for policy; leadingto more systemic policy mixes in the future.

In the light of the empirical findings, several points in the intersection between policy coherence (cf. May et al., 2006;Nilsson et al., 2012) and transitions can be made.

1. Policy coherence from a transitions perspective may imply not only the absence of contradictory policies but alsosupport for the variety of processes (such as TIS functions) behind niche formation – complementing the recentactor-based view on policy coherence (see, e.g., Hommels et al., 2013). In other words, policy coherence fortransitions requires policy mixes supporting several processes behind new niche formation coupled with theidentification and removal of policies hindering transitions (e.g. those excessively favouring the existing fossil-fuel-based passenger vehicle system).

2. Established regimes not only for transport but for energy and industry, i.e. multi-regime interaction, may offerexplanations for why policies are more coherent surrounding some new niches than others. The up-scaling ofthose niches not supported by multi-regime interaction (e.g. reducing transport demand or low-carbon modalselection) might benefit from more active acknowledgement of synergies between climate, health and land usepolicies – simultaneously reducing actors’ endogenous commitment to existing regimes.

3. Policy coherence for transitions needs to be coupled with policy integration (e.g. between low-carbon transport andinnovation policies) and coherence between different levels of governance also with respect to innovation policy.

We found the TIS framework useful for an analysis of multiple policies operating at a given point in time,making it possible to identify policy gaps regarding some functions and pointing out areas where more innovationpolicy attention is needed to complement transport policy. Entrepreneurial experimentation, in particular, appears acrucial area for niche formation, while we do not have sufficient knowledge on what kinds of new instruments couldpotentially support it (licencing may be important). We had difficulties in identifying policies related to legitimizationand positive externalities at an instrument level. The latter raises a question of what kinds of policy instrument – thetopic of this study – particularly aim for the creation of positive externalities, while many instruments are likely toresult in some. For example, policies aiming to reduce CO2 emissions though increased public transport may resultin reduced congestion in the process, even when not intending to do so. Perhaps the search for improved policycoherence could be seen in best cases to result in positive externalities. The use of investigator triangulation showedthat some TIS functions allow more interpretation than others in terms of policy: knowledge development and diffusionand entrepreneurial experimentation receiving most coherent placing of policies and influence over direction of searchbeing the contrary. Importantly, TIS-function-based analysis can reveal hindering or contradictory policies, forexample, in the form of taxation (for market formation) or licencing (for entrepreneurial experimentation).

We noticed that the levels of MLP offer explanations on the appearance or lack of policy support under TISfunctions and both together offer insights on policy coherence, a topic so far discussed mostly as part of policydevelopment rather than transitions. It should be noted that, in future research, the dynamics of policies withsocio-technical developments need to be taken into account.

Conclusions and Policy Recommendations

We have presented an analysis of how a range of policies may potentially influence low-carbon transitions in thetransport system through signals that policies in combination send to actors. By elaborating the framework of



system functions in the TIS approach, policy gaps in the Finnish transport and innovation policies were identified,particularly relating to knowledge development, entrepreneurial experimentation and market formation,addressing innovation to reduce transport demand and support alternative transport modes. The study revealedthat the existing policy mix in Finland has only to some degree adopted a system-level approach, while thetransport system has changed only partially and is in its early stages. Private car use is still the main method oftransport, while public transport in large cities has gained some new passengers. The existing mix of policieswas fairly coherent towards selected niche-level pathways – addressing low-carbon vehicles and fuels – supportingthe continued dominance of private car use. However, the current policy framework was not coherent towardsachieving low-carbon system-level change.

The article connected the idea of policy coherence to transitions by identifying a further determinant fortransition-related policy coherence, i.e. support for several niche-formation supporting functions, and by creatinga link between multi-regime interaction and policy coherence. The connection of policy coherence and integrationto transitions merits further investigation. Empirically, further research taking account the strength of differentpolicy instruments, their implementation effectiveness and multi-scale analysis is needed to explore what policychanges would best support transitions. The latter is particularly important in the context of transport, where citiesand municipalities hold a large share of policy development. Based on the study some policy recommendations canbe made.

• Innovation policy should at the strategy level acknowledge issues related to low-carbon transport and supportalternative low-carbon transport niches. In particular, policy instruments in support of knowledge developmentand diffusion and entrepreneurial experimentation are needed for innovations reducing transport demand andpromoting low-carbon modal selection.

• A stronger coupling between supply and use policies to support low-carbon transport innovation should be made.Market formation for niche innovation requires a better integration of innovation aims into transport policies.

• The facilitation of low-carbon transport system transitions requires the identification and removal of policiessending conflicting messages, and of improving coherence between national and regional policies. In designingnew transport policies or innovation policies for transport, a scoping exercise, such as the one in this study, shouldbe carried out to improve policy coherence.

• The regional dimension should be better acknowledged in innovation policymaking, for example by taking onboard regional-municipal actors in innovation policy planning and making better use of land-use planning andother regional-municipal policies in promoting innovation.

• New services and applications could be supported by adapting policies from other countries, as many countriesare looking for ways to reduce transport emissions.

Acknowledgements

The work was supported by Tekes, the Finnish Funding Agency for Technology and Innovation. Paul Upham provided valuablecomments. It was first presented at the Annual Meeting of the Society for Social Studies of Science (4S), October 2012,Copenhagen.

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