This post is by Nick Molho, executive director at Aldersgate Group
Taking on the challenge of achieving net zero emissions by 2050 – as recently set out by the UK government – requires deep cuts in emissions in sectors where decarbonisation is a complex challenge, such as heating, transport, the cement and steel industries, aviation, and food.
This calls for much faster innovation than the often more than 40 year cycles usually delivered by markets.
The Aldersgate Group commissioned research from Vivid Economics and the UK Energy Research Centre (UKERC) into what is needed to achieve this, based on successful examples of rapid innovation. These included the global roll out of ATMs, establishing the steel industry in South Korea, the development of wind turbines in the UK and Denmark and the introduction of gas and central heating networks in the UK.
The vast majority of technologies required to achieve net zero emissions already exist in varying degrees of maturity. Innovation in this context refers to fast deployment rather than the invention of brand new ideas. Our review provided six useful insights for the work of the Green Innovation Policy Commission (GIPC):
1. Clear policy direction is essential to guide investment decisions in the high capital cost infrastructure and new business models required to achieve net zero emissions. In keeping with the Paris Agreement, governments around the world should adopt net zero emissions targets as soon as possible to provide policy clarity to business.
2. Urgently trialling new technologies such as hydrogen and carbon capture and storage (CCS) at scale is essential to fast innovation.
In many countries, government-backed innovation funding and programmes tend to be too small, too fragmented and regularly subject to change. This is mainly driven by a fear of failure, namely that unsuccessful trials will be seen as a waste of public money. However, this fails to recognise that successful and unsuccessful trials have equally important lessons for good policy making, something which governments and the ecosystem that surrounds them (business, NGOs, media) must appreciate. The bold approach taken by the South Korean government to create a world-leading steel industry from scratch in the 1970s is a good precedent to follow in terms of scale and ambition. (The GIPC will explore how the UK could accelerate this type of innovation at a panel debate later this month.)
3. History shows that co-ordinating institutions are critical to rolling out complex infrastructure and accelerating consumer take-up.
In the late 1960s and early 1970s, the Gas Council in the UK played a vital role in co-ordinating new bulk gas supplies from the North Sea, developing a new nationwide gas network and converting over one million households a year to gas boilers and central heating. In the UK and Denmark, government institutions encouraged knowledge sharing between businesses, which accelerated the development of more efficient wind turbines. Looking ahead, co-ordinating institutions will be essential to the deployment of the complex infrastructure required to scale up hydrogen, CCS and zero emissions transport.
4. Accelerating innovation requires linking up green and digital developments.
One of the reasons ATMs and cash cards went from early stage development to global commercialisation within 22 years was that the invention of first generation cash dispensers coincided with the development of computerised systems. This enabled customers to access their accounts from multiple locations rather than at a single bank branch, dramatically increasing convenience. Policy should aim to link innovation in areas such as energy efficiency, low carbon heating and clean transport with new digital services such as mobile phone apps and connected devices to help improve consumer convenience and access.
5. Successful policy can’t work in isolation and need to work hand in hand with policies to accelerate the commercialisation of new technologies, once they move beyond the early development stage. The combination of binding targets and market delivery policies in the renewable energy (EU Renewables Directive and UK feed-in tariffs) and waste sectors (EU Waste Directive and UK Landfill Tax) are good precedents of how to accelerate the roll-out of new technologies and services, cut their cost and grow supply chains. Similar incentives are needed to create markets in areas such as CCS and ultra-low carbon building materials.
6. Innovation is just as much about developing new technologies as it is about industrial strategy.
Targeted innovation policies should focus on technologies that have the greatest potential to slash carbon emissions, maximise knowledge sharing between businesses and sectors and build on existing areas of industrial strength. By mapping the innovation system across UK sectors and regions, the GIPC will be helping to identify and diagnose bottlenecks around commercialisation and highlight where policy change is needed.
Achieving net zero emissions by the middle of this century is a major economic and social endeavour. A comprehensive and ambitious innovation policy – stretching from early stage development to full commercialisation – is essential to take it on.