The Global Energy Innovation System is NOT Thriving

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The Global Energy Innovation System is NOT Thriving

In a very sobering report from Hoyu Chong of Information Technology & Innovation Foundation (ITIF) published on 10th January 2022, it is highlighted how the global energy innovation system is in poor health.

In this report, it is pointed out there are weaknesses across most indicators and the need is to rectify these by most nations.

The key takeaways:

-The world needs a healthy energy innovation system to realize future decarbonization commitments. Every part of the system is interdependent and must work together for the system to thrive. There has been little progress since the 2015 Paris Agreement.
-The global energy innovation system stands in a weak condition, as evidenced by key indicators of knowledge development and diffusion, entrepreneurial ecosystem, trade, market readiness and technology adoption, and national public policies.
-The only bright spot is the entrepreneurial ecosystem, where early-stage venture capital investments have made a roaring comeback, up 165 per cent since 2015.
-Public research, development, and demonstration (RD&D) investments have only risen modestly since 2015 (+29 per cent), while the number of high-value patents has gone sideways (+0.2 per cent).
-Trade and national policies performed even worse. Nominal clean energy technology exports (+8 per cent) have trailed behind global GDP (+13 per cent), while the vast majority of effective carbon rates are below the benchmark of EUR60.
-Clean energy consumption is increasing (+23.6 exajoules in the 2010s), but fossil fuel consumption rose even more quickly (+52.6 exajoules) with no sign of abatement in the near future.
-World leaders launched a “Breakthrough Agenda” in Glasgow to spur the development and deployment of climate-tech solutions. Now nations must work with the private sector to produce that surge of innovation or the chance to reach climate goals will slip away.

The health of the global energy innovation system is anaemic, far from the robust condition the world needs it to be in.

Drawing from the findings in the Information Technology and Innovation Foundation’s (ITIF’s) 2021 Global Energy Innovation Index (GEII), this report evaluates the system across seven indicators:3

  • Public investment in clean energy research, development, and demonstration (RD&D)
  • High-value patents for clean energy technologies (CETs)
  • Early-stage venture capital (VC) investments
  • Successful clean energy company exits
  • CET exports
  • Clean energy consumption
  • Effective carbon rates (ECRs)

These indicators track many of the global energy innovation system’s essential functions. These functions operate interdependently and must all be working well for the system to thrive. While clean energy innovation is seen by a growing number of policymakers as a key element of the response to climate change, many others still focus exclusively on deploying existing solutions. Until that change and a deep and widespread commitment to a more robust innovation system emerge, progress will be slower than it should and could be.

This report examines the world’s aggregate performance across these seven indicators, discusses the gaps in each indicator, and concludes with steps national governments and the private sector are taking to close these gaps.

The conclusions

“Time is running short. It is time for activists, non-governmental organizations, thought leaders, and policymakers to cease the narrative that we already have all the technologies we need and only lack the will to force people and companies to use them.

Even if we did have all the technologies we need (which we don’t) widespread global adoption is not possible with further price declines—and that requires more innovation.

If national governments, in collaboration with the private sector, fail to close the innovation gap by rejuvenating the global energy innovation system, climate goals that today are within reach, albeit barely, will quickly slip away.

About the Author

Hoyu Chong is a senior policy analyst for clean energy innovation at the Information Technology and Innovation Foundation.

About ITIF

The Information Technology and Innovation Foundation (ITIF) is an independent, nonprofit, nonpartisan research and educational institute focusing on the intersection of technological innovation and public policy.

Recognized by its peers in the think tank community as the global center of excellence for science and technology policy, ITIF’s mission is to formulate and promote policy solutions that accelerate innovation and boost productivity to spur growth, opportunity, and progress.

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