Papers in Innovation Studies,
Lund University, CIRCLE - Centre for Innovation Research

Abstract: This paper is a teaching case study written for educational purposes. The case brings forward a real-life situation of an organization that is engaged in the exciting but also risky journey of implementing a green innovation at a large scale. The case is written in a way that allows students to reflect and think about the organizational and leadership challenges and opportunities involved. The teacher can activate these reflections in the context of various possible theoretical and analytical frameworks, in a number of possible different courses. The case is about Exergi, the main utility company producing district heating in Stockholm. After successfully transitioning from coal to bio-energy sources, since 2020 Exergi has embarked on a new and far more ambitious venture: Bioenergy Carbon Capture and Storage (BECCS). This technology captures CO2 emissions from biomass combustion and stores them, potentially resulting in negative emissions. BECCS plays a central role in IPCC mitigation pathways and Exergi has recognized an opportunity, but venturing into this uncharted territory presents numerous challenges. BECCS is a new and untested technology at an industrial scale, requiring substantial investments, and a market for selling carbon removal certificates (CRC) that does not exist yet. Though promising for reaching net zero targets in time, the viability of BECCS for Exergi depends on a supportive regulatory framework, cross-border cooperation, and the creation of a CRC market. To navigate these challenges, Exergi relies on creating an innovative organizational culture as well as mobilizing external stakeholders. Hence, CEO Anders Egelrud has hired individuals with entrepreneurial mindsets, and sought external expertise as well as creating strong networks and communication approach. Yet, some internal tensions have also come to the fore, due to the rapid internal dynamics. Overall, Exergi's transition from coal to BECCS reflects the commitment to sustainable practices by an incumbent, and its willingness to size new opportunities. The company's success driving this transformation forward hinges on many events coming together, both external and internal to the firm.

Keywords: climate mitigation; green transitions; eco-innovation; sustainability; capacity; dynamic capabilities; utilities; energy; incumbent; district heating; Sweden; Stockholm; carbon capture; bioenergy; biomass; leadership; net zero; climate neutrality; transformative innovation

JEL-codes: O31; O33; O38; O44; Q01; Q16; Q55; Q58

Language: English

19 pages, September 11, 2023

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