Dynamic Capabilities: How to Achieve Net Zero Emissions
This blog follows up on the event ‘Public sector capabilities for net zero missions’, a panel from the IIPP Forum 2024. You can watch the recording of the event above.
As a policymaker aiming to achieve net zero emissions, what skills should you have? Should you focus on technical capacity, like mastering carbon capture and storage feasibility studies or decarbonization pathway modelling? Or is it more important to develop dynamic capabilities, such as developing sense-making skills, the capacity to coordinate internal functions and units, or learning by doing? Or, instead, you might be worried about institutional arrangements, such as resource allocation, laws and regulations.
Spoiler alert: you need all of them.
Institutional conditions are critical to shaping a direction. And technical capacity is a necessary, yet not sufficient condition for governments to tackle grand challenges, if you don’t have the dynamic capabilities in place.
As Iacopo Gronchi, PhD candidate at IIPP put it in his opening remarks, “If government was seen as a car, dynamic capabilities could be the sparks that ignite the engine and make governments tick or fail to tick.” In simpler terms, these capabilities are the secret sauce enabling public sector organizations to adapt their resources, processes, and skills to an ever-changing strategic environment.
But, how are these dynamic capabilities operating in real contexts? To answer this question, the recent panel and workshop “Public sector capabilities for net zero emissions” brought together experts and practitioners to delve into these critical skills.
Four case explorations
After a plenary session, the audience was split into four groups: each of them would deep dive into a specific experience policy implementation, and discuss how a specific set of skills was applied to drive success.
1. How to forge a vision for agricultural transition in Denmark
The AgriFoodTure mission is one of four missions established by the Danish government under its green research strategy to address climate change and promote eco-friendly agriculture and food production. It is government-funded but operates as an independent partnership with a board of directors with representation from different sectors. This mission aims to position Denmark as a leader in innovative and disruptive solutions that enable the green transition of the agri-food system.
When discussing sense-making, building a roadmap was critical to align visions and expectations. This was developed through a participatory process involving broad consultation and agreement among around 300 experts in the field. It outlines the necessary steps and milestones required to achieve the targets for 2030 and 2050, helping to backtrack and identify what needs to happen at different stages.
However, in the daily operations of the partnership, embracing doubt, ambiguity and even failure is key, according to Anette Engelund-Friis, Director for the AgriFoodTure partnership. In her own words: “We need to be able to learn from our failures and successes and continually adapt new strategies accordingly.” In other words, the adaptive learning capacity constitutes a key component of the program’s success.
2. Breaking government silos in the Netherlands for the energy transition
In the Netherlands, achieving carbon neutrality by 2050 is one of the four national missions. The mission-driven top-sector innovation policy, established in 2011, integrates diverse approaches to attain this goal. This policy addresses various sectors and aims to break down government silos, fostering collaboration across different areas.
However, coordinating a national and long-term objective while also scoring short-term goals is a significant challenge. Marjolein van Splunder, Senior Policy Advisor in Energy Innovation at The Dutch Ministry of Economic Affairs, emphasized that a key insight is the need to break down large-scale goals into tangible, manageable projects. For instance, the development of efficient water-source heat pumps illustrates how specific innovations can make the broader mission more accessible and actionable. This approach not only demystifies the overarching objectives but also provides clear, achievable steps toward carbon neutrality.
In her role, Ms van Splunder is responsible for translating the Dutch CO2 net-zero missions into annual programming specifically for energy-innovation funding. Additionally, she oversees the governance of the net-zero mission through various forums that bring together government institutions, businesses, and the scientific community to achieve these ambitions.
Reflecting on the implementation process, Marjolein highlighted their annual cycle of reviewing progress and setting new goals. This cyclical process ensures continuous adaptation and responsiveness to emerging challenges and opportunities: “Every year we look back and we look forward at what innovations came about last year that are progressing the energy transition”.
This systematic approach not only keeps the mission on track but also fosters a dynamic environment where new ideas and technologies can be quickly integrated into the broader strategy.
3. Managing diverse portfolios in Ireland
Ireland’s strategy for achieving net zero emissions is deeply rooted in its robust challenge-based funding programs managed by Science Foundation Ireland (SFI). These programs are integral to the country’s national innovation strategy, Impact 2030, and are supported by the European Commission’s National Recovery and Resilience Facility.
Since launching its first challenge program in 2018, SFI has rapidly expanded its portfolio. The National Challenge Fund, a significant component of this strategy, includes 11 active challenges, with five directly aligned to the green transition. These challenges span various sectors and involve multidisciplinary teams working on innovative solutions.
The structured approach of SFI’s challenge-based funding involves several key elements:
- Stakeholder Engagement: The initial phases focus on engaging with stakeholders to understand the problem deeply before developing solutions.
- Transdisciplinary Research: Encouraging collaboration across different disciplines to address complex challenges effectively.
- Skills Development: Providing training in areas like design thinking, theory of change, and evidence-based entrepreneurship to equip teams with the necessary tools for innovation.
4. Reshaping the State in France
First announced in October 2021 by Emmanuel Macron, France 2030 is a 54 billion investment plan aimed at fostering long-term economic growth, industrialization, and technological innovation. Promoting sustainable practices and reducing greenhouse gas emissions to address climate change is one of the main objectives of this plan.
This plan isn’t just a set of goals; it’s a blueprint for nationwide decarbonization. Sectorial initiatives alone would fall short of such an ambitious task. On the contrary, the objective was to reshape the State. Therefore, the plan had the challenge of embedding these missions across government structures and processes traditionally focused on areas like transport, health, and education, where missions such as climate transition would not typically be a priority.
As Mathieu Brandibat, Coordinator of the national strategies at the General Secretariat for Investment (SGPI), described it: “Why would we need a plan? Ministries already have their roadmaps. The idea was that if you created a plan that was fundamentally interministerial, led by a small team — like ours, with just 60 people — it would require to be connected to every ministry and define specific governance structures to effectively interact with each one of them.”
Another institutional mechanism that was introduced was the need for interministerial budget agreements. After 10 years of such arrangements (considering the plan that preceded the current plan) “there has been a real cultural shift”, Mr Brandibat said.
Introducing the Dynamic Capabilities Index
While the experiences covered in the workshops were significantly different, they all shared common characteristics:
- Policies and institutional arrangements were designed with a whole-of-government approach, granting autonomy and resources to agencies for effective action.
- Agencies could reshape organisational routines, enabling innovation and new ways of doing things.
- Leaders and teams that possessed the skills and competencies to learn and adapt in response to an evolving environment.
This last element is what we’ve defined as dynamic capabilities.
But how are governments performing in this regard? The truth is, we don’t really know. There is a gap in comparing how different governments perform, highlighting their strengths and weaknesses.
To address this, under the leadership of Mariana Mazzucato and Rainer Kattel, and with the support of Bloomberg Philanthropies, IIPP is building the Dynamic Capabilities Index. This tool is designed to assess and enhance the problem-solving abilities of governments.
By leveraging this index, particularly focused on cities, governments will be able to refine their problem-solving skills, drive better governance, deliver improved public services, tackle societal challenges, and guarantee a better quality of life for their citizens.
