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An Unintended Consequence of a Sustainability Directive : Causal Understanding of a Biofuel Market Reform Through Eclectic Theorization

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Title: An Unintended Consequence of a Sustainability Directive : Causal Understanding of a Biofuel Market Reform Through Eclectic Theorization
Author(s): Vuolle, Vesa
Contributor: University of Helsinki, Faculty of Social Sciences
Degree program: Master's Programme in Global Politics and Communication
Specialisation: Global and Political Economy
Language: English
Acceptance year: 2020
Market reforms in the European Union (EU) are cramped between two connected, albeit divergent forces. First, policies are contested in the multilateral EU-sphere, and later refined and adjusted in heterogeneous national implementations. Neste, an industrial company, gained a monopolistic market position to a certain renewable diesel fuel in the aftermath of the EU’s Renewable Energy Directive 2 (RED II) implementation in Finland. This research aims to find out what led to this outcome. For the examination of these phenomena, this paper draws on the literature of market organization, policy implementation, and evolutionary economics, which offer us insights into market reforming in an era of marketization and climate change adaption. Also, in the course of the research text, the politically contentious nature of biofuels is unwrapped. This research aims at extending the understanding of unintended consequences of multiscalar sustainable regulations. This thesis applies an outcome explaining variant of a causal method called process tracing, which seeks to answer the question “what led to the outcome Y”. Through relevant causal process observations, this research is built into a context-specific and multifactor study. The data used here consists of secondary sources, including parliamentary reports, and the results of a stakeholder hearing that was organized around the directive implementation in Finland in 2018. Throughout the research, relevant counterfactual conditional questions are presented in light of the causal process. Asking these if-questions highlights the deliberative and political nature of the instalment of the RED II. The analysis shows that Finland’s commitment to the United Nations Paris Climate Agreement goals through the RED II is the likeliest cause for the resulting monopoly. However, we cannot fully exclude the 
Finnish parliament’s implicit motivation for monopoly-creation, but it is unlikely. The research also considers Neste’s successful entrepreneurial innovation activity as a contributing, although not an explaining factor. The study concludes that the outcome in question was an unintended, but not inevitable consequence of a sustainability directive implementation.
Keyword(s): Unintended consequences directive implementation market organization experimentalist governance strategic niche management meta-organizations evolutionary economics monopoly Neste Finland the EU HVO PFAD Renewable Energy Directive 2

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