ICPP 2019
Transformative innovation policy for a sustainable mobility transition: missions orchallenges?
Fred Steward, Midori Aoyagi, Ritsuko Ozaki
Transformative innovation policy has been identified as an emerging policy paradigm whichseeks to directly promote innovation pathways that address contemporary societalchallenges. This contrasts with preferences for policies limited to indirect framework
conditions ('innovation systems') to facilitate economic competitiveness. The emergence ofperspectives on transformative innovation policy reveals a contrast between approaches
which emphasise a techno-science driven perspective and those which favour a sociotechnical system framing (Diercks, Larsen & Steward 2019).
The former is often termed 'mission-oriented' innovation policy, a concept originallyformulated from a partly critical viewpoint (Ergas 1987) but which has recently been revived
in positive terms as a policy aspiration (Mazzucato 2017). Although this new advocacy of'mission oriented' innovation policy seeks to embrace social innovation, its roots are locatedin an evolutionary economics (neo-Schumpeterian) approach to the dynamics of innovation
which envisages long term transformation as characterised by fundamental techno-scientificbreakthroughs, driven by R&D developments.
In contrast a 'challenge-led' perspective on transformative innovation policy is framed interms of the reconfiguration of socio-technical systems defined as the provision of key enduses such as shelter, comfort, mobility, communication, and food. (Schot & Steinmuller2018). Attention to such fundamental transitions in socio-technical systems draws on
relational sociology (including STS) which seeks explanation through interpretive meso-levelprocesses shaped through new societal challenges such as sustainability or social inclusion.
(Steward 2012)
Both 'mission-oriented' and 'challenge-led' approaches subscribe to the need fortransformative criteria of societal directionality and a broader remit for innovation policy.
However they focus on different types of strategic actions, key actors, and favoured modes
of innovation. This is expressed through different policy narratives. Examples of 'mission
oriented' narratives emphasise lead technologies: 'the intelligent economy' (KPMG), the'bioeconomy' (EU) and the 'nano-society' (Berger). They tend to focus on science andbusiness actors and an R&D mode of innovation. Examples of 'challenge-led' narratives
instead highlight normative system attributes: 'sustainable consumption and production'(UNEP), 'the circular economy' (EU), 'the low carbon society' (SETA). They often give more
attention to broader knowledge and public actors and a demand led mode of innovation.
The balance between these contrasting narratives and networks is critical to the future ofinnovation policy.

The domain of sustainable mobility is a particularly striking example of these contrasting
approaches. Mission oriented perspectives are accompanied by narratives of newtechnologies of electrification, the autonomous vehicle and the hydrogen fuel cell; withnetworks of manufacturers and physical infrastructure providers. Challenge oriented
approaches express narratives of new systems of inter-modality, mobility as a service,intelligent and integrated mobility; with networks of transport operators, local authorities
and information providers.
This is the focus of our empirical research on urban transitions in Japan and its implications
for innovation policy. (Aoyagi et al 2016). Through documentary and interview research we
map out the sociotechnical networks of actors and actions to explore the discourses oftransformation and their policy implications.
Japan is of particular interest from an innovation policy perspective because of its
exemplary status in the emergence of the ‘innovation systems’ approach which became theprevalent innovation policy paradigm from the late 1980s. While many countries were seen
to be skewed toward either top-down government or bottom-up business approaches,Japan was seen to offer a virtuous combination of the two (Ergas 1987). Chris Freeman
defined it has the ‘most effective’ innovation policy of the late 20 th century which was best
suited to shape long term shifts of technoeconomic paradigm. (Freeman 1988) Thisdistinction was considered to arise from a combination of a national strategic capability forexpert led technology foresight along with an interactive innovation management style oflarge business organisations. This combination was facilitated by a collaborative mode ofbusiness/state governance and a shared ‘systemic’ cognitive style of business andgovernment leaders. This Japanese innovation system which underpinned the globalsuccess of the manufacturing sectors of vehicles and electronic consumer goods was also
seen to express a deeper longer term transformative potential.
A critical response to recent proposals for a new transformative innovation policy framing
has come from prominent members of the ‘innovation system’ school of policy experts.
(Fagerberg 2018, Lundvall 2019). They argue that the innovation system perspective
remains a robust and effective framework for innovation policy which is fully adequate toaddress emerging global challenges of climate change and environmental sustainability. Thisimplies that there is no need for a fundamental systemic reconceptualisation from thetechnoeconomic to the sociotechnical. One of the goals of our research is to assess thedegree to which this may or may not be the case.
We focus on two mobility transition pathways which have received recent policy attention
in Japan – hydrogen based fuel cell vehicles, and mobility as a service.

Hydrogen based fuel cell vehicles
Diffusion of fuel cell car has been long discussed since mid 1990’, as this new energy car is ahope for post-carbon transportation system after fossil fuels. This new energy technology
has been long time listed in, for example, climate change mitigation national plan in some ofthe ANEX I countries, as fuel cell vehicle or co-generation system which use hydrogen as its
base energy. Japan has been investigated in this technology, and household fuel cell called“Ene-Farm” (Panasonic) has been sold more than 100,000 sets in Japan since2008(Panasonic 23 March 2017 news release). As for this hydrogen, US and Germany isleading this field in technological development, but for the implementation, Japan goesahead in terms of household usage (Ene-Farm: co-generation system for hot water andelectricity, by hydrogen) and energy cell vehicles(Toyota and Honda).
Japan is the one of the leading countries for diffusion of Fuel Cell vehicles as well, with Mirai
from Toyota and Clarity from Honda. Those two models are currently the only commerciallyavailable cars in the world. There are many challenges for fuel cell cars to be widely sold infuture: 1) infrastructure: fuel cell vehicles need “Hydrogen station” for hydrogen supply in acertain density. 2)Price: the prices of them are over JPY10,000,000 even with governmentalsubsidize, Japanese consumer have to pay around JPY7,000,000. This is almost double pricecompare to their supposed competitive brands.3) Risk perception by the public. Japanesepublic watched the Hydrogen explosion on the television when March 2011 earthquake washappened. When people heard the word” Hydrogen”, people often asked “is it safe? Is thatexplosible?” 4) Regulation for industry gas: Hydrogen has been used for manufacturing
purpose for years. Hydrogen is regulated by the assumption for this. So, regulation systemdoes not fit “fuel cell” system. Regulation for gas stand does not fit for fuel cell car. It
assumes gasoline, or other conventional gas supply. Adjusting regulation system is achallenge as well.
The ministry of the Economy, Trade and Industry (METI) encourages related industries andsectors (e.g. vehicles, energy suppliers, gas suppliers as well as academia and localgovernments) to invest in relevant technologies and infrastructures to meet their goals of“the Strategic Roadmap for Hydrogen and Fuel Cells”, which was first launched in June 2014
and revised in March 2016. The plan has three-step achievement plans, with the target
years of mid-2020s (Phase 1), late 2020s (Phase 2), and around 2040s (Phase 3). This plan
focuses not only vehicles, but also stationary fuel cells for heating and hot water supply forhomes (Ene-Farm is one of those systems). The METI model utilizes hydrogen supply
systems based on fossil fuel, such as natural gas and gases from byproducts of energy supply
and industrial processes. But it is clear that the volume by those supply is not enough for thediffusion of fuel cell vehicles.
The Ministry of the Environment (MOE), on the other hand, promotes and subsidizes“renewable energy based” hydrogen supply system and fuel cell vehicles. MOE focuses onhydrogen supply systems with renewable energy. For fuel cell vehicles, Honda developed abio- or solar energy-based hydrogen supply system called HSH (Honda Smart Hydrogen
Station). This is compact and efficient and is less expensive compared to conventionalhydrogen refueling stations, and currently this is the only system that can supply hydrogendirectly from renewable energy sources. MOE subsidized this HSH in the initial(experimental) stage.
On local government level, the different departments and sections supports those METI andMOE systems. For METI system, the science and technology section or industry sections arein charge of hydrogen systems at the local level, while the environmental sections are often
promoting MOE models. They both have their own networks for information exchange andpolicy cooperation the local level. In particular, METI utilizes their own local branches: forexample, METI-Kanto Division, who is in charge of Tokyo metropolitan area and its
surrounding prefectures, encourages local medium- and small-sized manufactures to join
the local network for fuel cell vehicle parts manufacturing research and development. They
hold research meetings, seminars, and other activities, which are designed to acceleratehydrogen R&D in the area
In October 2017 Honda made an announcement that they will build 100 stations by 2020.
Honda building additional 100 stations is significant, as the current target in METI’s strategicplan is to build 160 stations by 2020, and currently 78 stations are operational with 15 underconstruction. This Honda’s strategies are included the aforementioned revised Strategic
Plan of March 2016. Honda’s HSH technology makes this target feasible.
In December 2017 eleven companies including vehicle sector (Honda, Toyota, Nissan), andinfrastructure sector (hydrogen suppliers such as Iwatani, Japan Air Liquid) and financial
sectors (Development Bank of Japan) announced that they established a new company
whose aim is to build and manage hydrogen stations all over Japan in March 2018(Newsrelease 12 Dec 2017). This is clearly influenced by the Paris agreement, and following
announcement of China, France, Germany and other countries’ abolishing fossil fuel vehicleby 2040. This demonstrates the determination of the Japanese government to makehydrogen businesses successful.
The emergence of Japan as a leading player in FCV introduction in the last 5 years posessome interesting questions for interpretation. Much of the research within the transitions
community concluded that the rise in attention to FCVs during the 2000s could be regarded
as hype from a sociology of expectations perspective and that a disappointment downswing
was evident in the early 2010s. (Bakker & Budde 2012). The Japanese decision by METI toestablish a Council for a Strategy for Hydrogen and Fuel Cells In December 2013 was acountercyclical move which can best be explained as a high level political response to theaftermath of the Fukushima disaster of 2011.
What distinguished this policy intervention is that it foregrounded broad economic andenergy security concerns, and placed climate change and sustainability goals as a phased
secondary features of this strategy. A shift to a hydrogen economy was defined primarily as
the introduction of a new energy vector which could open up access to new sources of fossil
fuels. Partnership with leading industrial gas companies was a key feature of this andenabled the promotion of an ambitious infrastructure programme of hydrogen refuellingstations. At the same time policy intervention was designed to enable the market entry ofFCVs by leading Japanese companies, Toyota and Honda. The membership of the Strategic
Council directly represented these actors in the creation of a detailed roadmap for ahydrogen transition.
In many ways this mode of policy making sits comfortably as a mission-oriented policy
within the classic Japanese innovation systems approach – an expert driven systemicroadmap with close collaboration between government and key industrial business players.
This favoured selective incumbents from the car industry, industrial gas suppliers, and theeconomic departments of government. Although it did not prioritise sustainability and theproduction of hydrogen from renewables, interesting it was seen as an opportunity by theenvironmental and climate change institutions of government to promote a moresustainable path in collaboration with business and local government players. So it can beseen as an illustration of the flexibility of the traditional innovation policy approach toaddress new challenges. However it is evident that the type of change envisaged isprimarily concerned with ‘hard’ physical infrastructure, and although radical intechnological terms has low demands for significant changes in lifestyle.
Mobility as a service
In striking contrast with the high profile promotion of the Hydrogen Economy strategy is acluster of much more recent lower key policy engagements with a challenge-led mobility
services perspective. The first of these was an interim report produced by a METI created‘Study Group on New Mobility Services Enabled by IoT and AI’ in 2018. This accompanied
the broad high level Future investment strategy from the Cabinet office in 2018 entitled:
Transformation to "Society 5.0" and "Data Driven Society". Wide ranging in scope thisincludes a section on a next generation mobility system enabled by IT which is a very
different perspective from the energy led transition of hydrogen based FCVs. In 2019 afurther report was produced under the auspices of the Ministry of Land, Infrastructure,Transport and Tourism ‘the Urban and regional new mobility services round-table’. These
policy interventions are far less clearly linked with incumbent business interests and more
influenced by policy analysts from an urban planning perspective.
They suggest that Japan has lagged behind developments in this area especially in thepromotion of new mobility integrator roles both in the private sphere of the new generationof internet platform businesses and in the public sphere of place based mobility systemcoordinators. Incumbent businesses have been partially successful in introducing elementsof a new mobility as a service system. The railway company JR East has introduced the Suica
travel payment smartcard, while Toyota has developed a range of pioneering micromobility
products. Yet the fragmented business base of existing mobility services is seen to present
great difficulties for Japan to play a leading role in this area of transformative innovation.

Interestingly these policy reviews reveal a lack of confidence in the ability of the prevailingJapanese innovation system approach to rise to this challenge. They include extensive
references to European strengths in civic led system innovation, US strengths in new
business start ups and the need for changes in the university based knowledge system.
It is notable that Mobility as a Service requires significant changes in soft infrastructures
through regulatory transformation of the traditional boundaries between mobility spaces ofroad and pavement use. It also implies radical changes in lifestyle toward a more sharing
mode of transport provision and use.

Discussion
Our research shows a tension between the role of these two perspectives in the policies forsustainable mobility innovation in Japan. The policy mix for sustainable mobility transitions
has contrasting emphases on mission and challenge oriented approaches. Documentary andinterview research on narratives and networks shows the variety and viability of‘sustainable mobility’ and ‘hydrogen society’ transition pathways. It suggests that although
the traditional innovation policy approach in Japan may be able to address some mission
oriented elements in this transition it is limited in its capacity to deal with the challenge led
demands of system change.

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