Climate progress risks being scuttled by severe gaps in global clean energy innovation

The world's aggregate performance across key indicators of clean energy innovation points to "a global lack of urgency" that, without an immediate surge in effort by countries working with the private sector, will see chances for mitigating the worst impacts of climate change slip away, the author of a new report on the topic said Jan. 13.

To put it bluntly, the health of the global clean energy innovation system is "not good," Hoyu Chong, a senior policy analyst at the Information Technology and Innovation Foundation, said during a virtual event hosted by the public policy think tank.

The global energy innovation system, she explained, applies a systems thinking approach to the innovation pipeline from scientific discovery to full-scale adoption and includes a broad array of functions that need to be performed for energy innovation to proceed as quickly as possible.

Components of the system – knowledge development and diffusion, the entrepreneurial ecosystem, trade, market readiness and technology adoption, and national public policies – work interdependently so if one component fails, the rest of the system fails, she said.

"Overall, knowledge development and diffusion have delivered a mediocre performance," as evidenced through public research, development and demonstration investments rising just 29% since 2015, the year the Paris climate agreement was adopted, and the number of high-value clean energy technology patents filed largely remaining flat, Chong said. And indicators for market readiness and national policies adoption over that same timeframe "all performed terribly."

She pointed to nominal clean energy technology export growth of 8% compared with GDP growth of 13%; clean energy consumption growing 22% but failing to outpace total energy consumption growth as "fossil fuel consumption unfortunately also grew with little signs of abatement in the new future;" and a vast majority of effective carbon rates below the benchmark of Eur60.

'Bright spot'

The entrepreneurial ecosystem presents "the only bright spot in the whole system," Chong said, as early-stage venture capital investments were up 165% from 2015 and successful clean energy company exits through private equity deals, mergers and acquisitions or initial public offerings rose steadily for an overall 51% jump over 2015.

But even there, she noted signs for concern.

Transportation, including electric drivetrains and autonomous vehicle technologies, dominated VC investments in clean tech. Of the nearly $20 billion rise in investments compared with 2015, "$18.7 billion of that surge have funneled into transportation technologies," she said.

That means all other clean tech verticals saw just a $1 billion increase collectively, she said, with those funds spread across advanced materials, carbon capture, energy storage, energy efficiency, hydrogen and fuel cells, smart grid, geothermal, hydro and marine power, nuclear, solar and wind.

Chong said that electric vehicle companies Lucid and Rivian "immediately attaining higher valuations" than legacy automobile manufacturers like Ford before any mature, commercialized products hit the market "may suggest a faulty market, and we could be looking at a potential bust should the EV market consolidate."

New initiatives

However, "it is not all doom and gloom," Chong assured, as she flagged some promising developments to come out of last year's UN Climate Change Conference in Glasgow, Scotland.

Those included initiatives targeting hard-to-abate sectors but thus far those efforts have "lacked the support that they need to succeed," she said.

"The EV transition is a success story, but now that success must be emulated across a wide range of other technologies," Chong said. "Together, the world must mobilize public sector funding and private sector finance in order to accelerate innovation and to deliver the promises made at Glasgow."

The US, as part of its efforts to rejuvenate global innovation, has launched the Net Zero World initiative to "harness the power and the technical expertise of" the Department of Energy's national laboratories and "drive energy sector decarbonization around the world," Julie Cerqueira, principal deputy assistant secretary for DOE's Office of International Affairs, said at the ITIF event.

Cerqueira said the program aims to aid partner countries with developing and implementing technological roadmaps and investment strategies for spurring innovation in the power sector as well as hard-to-abate sectors like industry and transportation.

Argentina, Chile, Egypt, Indonesia, Nigeria and Ukraine have already joined the effort and DOE hopes that the program will expand to bring more countries into the fold.

"We haven't asked countries to themselves commit to getting to net zero by 2050," Cerqueira said.

Instead, the idea is to work with strategically important partners – major emitters, regional influencers and countries truly committed to decarbonizing their energy systems at an accelerated pace – to identify "what are some of the gaps that we together can fill with them to make sure that we're all working in a concerted effort towards these shared goals and outcomes," she said. "And I think that's going to help us actually be more successful perhaps than other programs have been in the past, and is something that is transformational and very different from some of these previous approaches."

Cerqueira added that Energy Secretary Jennifer Granholm has put an emphasis on "seeing results and making sure that we're actually driving progress." That means "creating those roadmaps with our partners ... but then taking that next step and focusing on implementation."