Innovation for climate change mitigation:

a study of energy R&D, its uncertain

effectiveness and Spillovers

Elena Verdolini

Fondazione Eni Enrico Mattei (FEEM)

Washington, 12/02/2010

Principal Investigator: Valentina Bosetti

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MAIN PURPOSE

Improving modeling of innovation in Integrated

Assessment models, accounting for the crucial

fact that innovation is an uncertain process

1. Understanding the role of R&D on innovation and

diffusion of technologies in the energy sector:

• Expert Elicitation

• Empirical Analysis

2. Normative analysis through modeling

The ICARUS Project - Goals

Expert Judgement Elicitation: Challenges

Probability

of success

Technical

maturity/current

state of efficiency

Evolution of costs

conditional on R&D

scenarios

Knowledge transfer

dynamics

(Global) Market

diffusion

i.e. patented technologies?

Role of R&D

programs to

overcome the

barriers

Penetration

rates and

diffusion

ceiling

Expert Judgement Elicitation: Our contribution

1. Widen the geographical focus of the analysis

Focus on EU (compare with US)

Experts from different background (private, academia

and institutions)

2. Different stages of the innovation process:

Innovation

Knowledge spillovers and technology transfer

Non-technical barriers to deployment

3. Dual methodological approach

elicited both cost estimates and probabilities of

reaching a breakthrough

Overcome over/under-confidence biases and analyze

how the question format influences experts’ responses

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Expert Judgement Elicitation: Technologies

Biofuels for transportation

Storage for transportation (EDV)

Solar technologies (PV and CSP)

Nuclear (with Harvard)

Bioenergy

CCS (with University of Massachusetts)

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Expert Judgement Elicitation: Expert pools

solar

batteries

biofuels

academia

institutional

private

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Expert Judgement Elicitation: Expert pools

EE: CSP and PV Technologies

Technical maturity and role of R&D funding Cry = Crystalline Silicon

Thi = Thin Film

Con = Concentrating PV

Org = Organic PV

TG = Third Generation PV

CSP = Concentrated Solar Power

Solar technologies still need a significant amount of

R&D

EE: CSP and PV Technologies – Probability of breakthrough

We are in a real innovation race:

probability of breakthrough is high in 3 major innovating

countries.

EE: CSP and PV Technologies – Barriers to diffusion 1/2

Overcoming technical barriers will not be enough to

guarantee diffusion of (solar) technologies

EE: CSP and PV Technologies – Diffusion ceiling

Academia Institution Private

Sector

Policy makers in solar technologies are more

optimistic than private and academia experts

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1. Data Collection

• Patent database: extend empirics to fast developing and developing

countries

• Survey of top innovators: lack of R&D Data

• Selected case studies: gain overview of particular barriers to

innovation and diffusion, and dynamics of private/public energy/non-

energy R&D

2. Empirical Methods

• Strengthen results with more refined empirical estimation methods:

control for selection bias, treatment-effect estimation

• Enlarge the geographical focus of the analysis. Tackle issue of

diffusion dynamics not only to developed, but to developing

countries.

Empirical Analysis – Overview of research

1. Fundamental role of (private and public) R&D

2. Knowledge spillovers/ Intended technology transfer

Very relevant for middle and less innovating countries

3. Historical energy technology portfolio development

Long-lived capital stocks, lock-in effects, security concerns

4. Role of IPR regimes, specific environmental and

technology policies in fostering innovation and

diffusion

Should environmental policy be coupled with technology

policy aimed at supporting the development and

deployment of eco-friendly technologies?

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Empirical Analysis – Some Contributions - Relevance

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Empirical Analysis: Patent Database Technologies

Traditional Fossil for Electricity Production

Fossil Efficient-Technologies for Electricity Production

Renewables: Hydro, Wind, Solar (PV and CSP),

Geothermal, Tide and Wave, Biomass

Nuclear

CCS

Water and Air Pollution Control

Selected Alternative Transportation

Selected Demand Side

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Empirical Analysis – Fossil Efficient Technologies (El)

National and Foreign Patents by Application Authority

TOP Innovators are USA, JAP, GER

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Patent counts by innovation country and application authority

Empirical Analysis – Fossil Efficient Technologies (El)

Importance of technology diffusion and transfer: while innovation

in non OECD is low, these market are still interesting outlets

for technology, which comes from OECD countries

www.icarus-project.org