Innovation in the energy sector: advancing or frustrating climate policy goals?

Dr Matthew Hannon, Imperial College London

Aidan Rhodes, Imperial College London

Matthew Hannon, Imperial College London

The energy sector is well known for the relatively modest level of resource that it devotes to research and development (R&D). However, the incremental pace of energy innovation has speeded up in the last decade as measured by public sector R&D budgets, deployment of alternative technologies and novel institutional arrangements. While much of this effort has been targeted at technologies that promise to reduce carbon emissions, there have also been major innovations that extend the fossil fuel resource base and reduce the cost of extraction. The last decade’s developments can be seen in terms of a challenge to the existing energy paradigm being met by a renewed innovative response focused on conventional fuels and technologies, echoing major, decades-long shifts that have occurred in the past.

This paper aims to articulate more clearly the overall pattern of developments drawing on empirical evidence relating to the public sector R&D portfolio, private sector activity and evolving institutional arrangements in a number of jurisdictions. It draws on recent developments in the theory and practice of measuring energy innovation inputs, throughout and outputs and empirical evidence on public and private sector R&D activity.

The paper will draw attention to the growing level of activity in energy innovation, as measured by level of activity and deployment of new technologies, this being driven by the ‘pull’ from public policies and market opportunities and a ‘push’ from scientific advances in ICT, materials science and the biosciences. It will also highlight the changing shape of energy R&D portfolios and the balance between public and private sector actvities.

A central conclusion is that there is a tension between the drive, on the part of public bodies, to transform energy systems, mainly motivated by the need to combat global climate change, and more self-motivated private sector activity which serves to reinforce and extend existing patterns of energy provision. The paper addresses, but not answer definitively, the key question as to whether technological change is enabling or frustrating ambitious carbon goals, and on what timescales.

The work is being extended as part of a UK Research Council-funded project, The effectiveness of energy innovation systems, which will compare innovation processes in selected jurisdictions in Europe, North America and East Asia. The work is based on the premise that innovation systems now transcend national boundaries and bring together public and private sector actors.

Reference: Skea, J. (2014). The renaissance of energy innovation, Energy and Environmental Science Vol 7 (21)

Keywords: climate change; climate change mitigation; innovation; R&D; technological change