Ensuring protection and competitiveness : Characteristics of market formation for biogas

• Background and research questionPresenting possible solutions to environmental problems such as air quality, greenhouse gases, nutrient recirculation, organic waste and wastewater management, biogas is highly relevant for sustainability transitions. Besides biogas producers, the production and use of biogas engages actors from several sectors, including energy and gas distribution, waste management and wastewater treatment, agriculture, vehicles and transport.The formation of markets for biogas depends on policy interventions at different levels, from the local municipality via the national government to the EU commission. By contrast to other European countries, which tend to subsidize biogas production, the Swedish government has the intention to stimulate demand and to favor the use of purified biogas (biomethane) as a vehicle fuel. While biomethane currently has a strong position as an alternative to fossil fuels in certain niches (notably public transport buses), the Swedish biogas sector faces challenges to reach beyond these narrow market segments.Adopting a market constructivist perspective, this paper will analyze the formation of markets for biogas in Sweden. The following research question will guide the analysis: What characterizes market formation in this case and based on that, what is possible to learn about market formation in relation to sustainability transitions? TheoryMarketing scholars increasingly consider market formation as on-going processes, which a multitude of actors influence through their strategies, activities and capabilities. To understand market formation it is therefore necessary to analyze activities among a wider array of actors than merely producers and their (potential) customers.Following a constructivist perspective, the offer is a core element in market formation. The offer describes the meanings and qualifications that actors impose on the object that is for sale. These meanings and qualifications constitute boundaries between actors and goods. Different actors engage to define the object, as well as its meanings, qualifications and potential value. Without a clear view of what is being exchanged, market formation will be difficult. Market formation also includes institutions that set boundaries and rules for the market. These are neither static, nor pre-conceived; instead, they are shaped and acted upon. Actors influence institutions through dynamic and interactive processes. MethodThe paper combines quantitative and qualitative sources of data to study the Swedish biogas sector. The paper presents detailed data on production and use of biogas in Sweden 2010-2017. This quantitative data is complemented by qualitative data from interviews with representatives from key actors as well as secondary data from industry reports and other written sources. FindingsThe multitude of actors involved complicates market formation for biogas. Different meanings and qualifications are attributed to the offer. Whereas it is possible to perceive biogas as a relatively simple product – a fuel – it is also possible to perceive it as a complex system that may help solving various societal and environmental problems. Different perceptions of the offer have different implications for market formation. Depicting biogas as a complex system implies that the offer will comprise a number of different qualifications. The realization of such a complex system depends on the bonding of various actors. Once established, the bonds will protect biogas from competition. By contrast, depicting biogas as a fuel means that the value of biogas will be assessed in relation to fuel prices. Qualification will thus depend on cost competitiveness vis-a-vis other fuels.Our analysis suggests that although the contrasting perceptions of biogas cause tensions between the actors involved, the different qualifications complement each other in the market formation process. Various environmental and societal benefits makes it possible for actors argue for institutional reforms to help biogas become cost competitive, and increased competitiveness makes it attractive to establish new biogas systems.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Företagsekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Business Administration (hsv//eng)

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