Science and technology policy instruments for eco-innovation Daniel Kupka

transcript

SCIENCE AND TECHNOLOGY POLICY INSTRUMENTS FOR ECO-INNOVATION

Directorate for Science, Technology and Industry

Daniel Kupka

28 May 2013, Geneva

WorkshopStandardization and the International Transfer of Sustainable Technologies

WHY GREEN GROWTH

The need for green

2010 :USD 77 trillion

2020: USD 115 trillion

2050: 305 trillion

2030: USD 164 trillion

Source: OECD (2012), Environmental Outlook to 2050

By 2050:

Population: +2.2 billionEnergy: +80%GHG emissions: 50%Biodiversity: -10%Water demand: 55%

Risks in not going green: bottlenecks

And also:• Pressure on natural capital• Biodiversity loss• Pressures on natural capital • Biodiversity loss

Energy and Food Price indices

100.00

120.00

140.00

160.00

180.00

200.00

Source: Worldbank

Annual price indices, 2005=100, deflated

Energy

• Water scarcity • Systemic risks (e.g. climate change) • Pollution and human health

Challenges are so big that we can’t afford expensive solutions – we are up against time and inertia so need (lots of) innovation

The need for green innovation

More than just technological Innovation!

Source: OECD

WHAT ROLE FOR POLICY IN DRIVING GREEN INNOVATION?

• Market forces provide insufficient incentives for the development and diffusion of green innovations

Potential Explanations• Market failure explanations

– Information Problems (e.g. Lack of information, asymmetric information)

– Energy Market Failures (e.g. dominant patterns , externalities)

– Innovation Market failures (e.g. R&D spillovers)– Capital Market failures (e.g. liquidity constraints)

• Behavioural failures (e.g. resistance to adapt technologies)

Can the market not solve the problem?

OECD’s Green Growth Strategy

Source: OECD (2011), Towards Green Growth

TOOLS FOR DELIVERING ON GREEN INNOVATION

• Getting framework conditions right for innovation - “a rising tide lifts all boats” – macroeconomic policy, competition policy, openness to

international trade and investment, fiscal policy, etc.– General innovative capacity and market conditions are often

the most important determinants • Getting prices right – “price or market-based-

environmental policies” – e.g. carbon pricing or cap and trade systems

Tools for delivering on green innovation

Getting prices “right” is important…

Swedish NOx tax Patents increased; emission intensities declined; Marginal Abatement Costs fell

Swiss VOC tax Firms were quite innovative and found many solutions involving changes in organisational and production practices that did not result in patenting of technologies

Graph based on: Hoglund-Isaksson (2005) cited in OECD (2011) Taxation, Innovation and the Environment; based on observations from 55 plants in the energy sectors over the period 1992-1996

• Sometimes difficult to target environmental ‘bad’ directly and excessive administrative costs

• Range of other ‘non-environmental’ market and system failures;

• Inertia in the market can favour incumbent firms, technologies and systems

…but not sufficient

• Getting framework conditions right - “a rising tide lifts all boats” – macroeconomic policy, competition policy, openness to

international trade and investment, fiscal policy, etc.– General innovative capacity and market conditions are often

the most important determinants • Getting prices right – “price or market-based-

environmental policies” – e.g. carbon pricing or cap and trade systems

• “Dedicated” Science, Technology and Innovation (STI) Policies

Tools for delivering on green innovation

SCIENCE, TECHNOLOGY AND INNOVATION (STI) POLICIES

FOR GREEN INNOVATION

• National and ministerial priorities and strategies serve to catalyse efforts around common goals and visions

• Few take whole government approach on green innovation: mainly environmental or energy ministries or specific agencies– Five-Year-Plan for Green Growth (Korea), Clean Energy Future

Plan (Australia), Ambition Ecotech 2012 (France), Cleantech Masterplan and Energy Strategy 2050 (Switzerland)

• Expressed through quantitate objectives, sectoral and science initiatives and various STI policy instruments– Supply-side policies: generate new knowledge – Demand side-policies: creating market opportunities

STI Policy priorities and strategies for green innovation

• Funding and management of “green” research at the level of research institutions

Supply-side technology and innovation policies

Public spending on energy and environmental R&D has not kept pace

Source: OECD R&D database

… but green innovation draws on a broad range of research

• Funding and management of “green” research at the level of research institutions

• Public support for business R&D– “targeted” R&D support policies (e.g. US: R&D tax

incentives for energy)– Support to SMEs and entrepreneurship (e.g. adjusted to

green: US DOE’s SBIR)– Pizes as incentives for private R&D (e.g. H-prizes)

• Supply of risk capital

• Skills and infrastructures (e.g. European Energy research alliance)

• Networks and partnerships– Support to Clusters (e.g. Finnish Clean Tech Cluster) – Support to Strategic Public-Private Partnerships (e.g.

Germany’s Electric Mobility Platform)• Intellectual property regimes

– Lower application fees, prioritised and expedited examination

– Green Fast Track examination systems in Canada, US, UK, Japan, Brazil, etc.

In fostering markets, in particular in areas where price-based measures (e.g. carbon taxes) are ineffective or insufficient

• Public procurement of innovation (e.g. performance-based Green Public Procurement)

• Regulation (i.e “command-control and market-based regl. and standards)

• Standards (limited role for governments)

• Consumer policies (e.g. Green Guides)

• Adaption and deployment policies (e.g. fiscal and financial incentives for green vehicles, demonstration projects, feed-in tariffs)– Potential conflict with WTO rules– Cost-effective?

Beyond technology-push: Innovation policies for diffusing green technologies

• Coordination and harmonisation of priorities and research agendas

• Co-operative R&D in international networks and funding commitments

• International exchange of scientific and technical information• Closer to market: setting global standards

For developing countries• The role of adaptive R&D and int. technology transfer to fit

technologies to local conditions – Disembodied technology transfer ->education and training– Embodied technology transfer -> funding to cover costs of adaption

(development assistance)

STI policy at the international dimension

STI POLICY IMPLICATIONS AND CHALLENGES

• Direct STI policy is necessary, but not sufficient– Providing a mix of incentives that induce solutions from

‘close-to-market’ up to ‘breakthrough’

Implications for STI policy

The Need for a Mix of Policies:The relative impact of different policies

Note: For ease of interpretation elasticities have been normalised such that effect of R&D=1.Unfilled bars indicate no statistical significance at 5% level.Source: OECD (2011) Invention and Transfer of Environmental Technologies.

• Direct STI policy is necessary, but not sufficient– Providing a mix of incentives that induce solutions from

‘close-to-market’ up to ‘breakthrough’• Providing policy predictability in conditions of

imperfect and changing information

Clear Policy signals help

Source: Haščič, I. et al. (2010), “Climate Policy and Technological Innovation andTransfer: An Overview of Trends and Recent Empirical Results”, OECD EnvironmentWorking Papers, No. 30 http://dx.doi.org/10.1787/5km33bnggcd0-en

• Direct STI policy is necessary, but not sufficient– Providing a mix of incentives and policies that induce

solutions from ‘close-to-market’ up to ‘breakthrough’• Providing policy predictability in conditions of

imperfect and changing information• Breakthroughs emerge increasingly from multi- and

interdisciplinary research• Apollo- or Manhattan-like projects can suppress

innovation• The effectiveness of depends on strong science-

industry collaborations

• STI Governance• Directing technological change onto a green

trajectory without being “unduly” prescriptive

Challenges for Policy-makers

Source: IEA (2010), Energy Technology Perspectives

• STI Governance• Directing technological change onto a green

trajectory without being “unduly” prescriptive • Building international cooperative solutions for

environmental problems which stretch widely across space and time

For further information:

www.oecd.org/greengrowth or

daniel.kupka@oecd.org

THANK YOU

Science and technology policy instruments for eco-innovation Daniel Kupka

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