The twin digital and green transition: paradigm shift or tech fix?

Abstract

The concept of the twin transition promotes leveraging synergies between the digital and sustainability transitions. This paper takes an innovation economic perspective on this twin transition and examines the development of digital green technologies for and the adoption by firms in carbon-intensive sectors. It reveals how entrepreneurial activity and the innovation system culminated in cost-economic, organizational, and technical lock-ins in carbon-intensive systems. Moreover, it shows that, to reduce CO2 emissions, firms favor (digital) green 'tech fixes' to increase efficiency or save energy (e.g., by adding data collection and process control) over pursuing a 'paradigm shift' toward a decarbonized production system (e.g., by changing feedstock or chemical agent, electrification). Recognizing that deep decarbonization may not possible in the necessary time window, digital green tech plays an indispensable, transitory role. Consequently, innovation (system) policy thus has to promote both entrepreneurship for digital green tech in anticipation of the transition and governance of a sector-transcending, transformative innovation system for deep decarbonization.