science and technology policy instruments for eco-innovation daniel kupka
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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
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00
Food
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
Supply-side technology and innovation policies
• 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.
Supply-side technology and innovation policies
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
Implications for STI policy
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
Implications for STI policy
• 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
THANK YOU