Does the government’s innovation strategy draw the right lessons from COVID?

This post is by Will McDowall, associate professor in eco-innovation at UCL’s Energy Institute and Institute for Sustainable Resources.

Climate change is the single biggest transformative challenge of our time, but you wouldn’t know it from reading the government’s Innovation Strategy, published in July. Despite its repeated name checking of ‘net zero’, the strategy is a missed opportunity for zero carbon innovation.

Covid isn’t a template for everything
Covid has shown that rapid technological progress can be achieved when there is a strong alignment of the state and private sector to deliver technology outcomes, and the innovation strategy draws some useful lessons from this. The government rightly highlights the importance of taking portfolio ‘bets’, ie funding a range of promising technologies and accepting that, inevitably, some public spending on innovation will be on projects subsequently seen as ‘failures’. And the strategy correctly emphasises the importance of public procurement in driving innovation, something that UCL, Green Alliance and others have called for in the field of green innovation for some time. 

But Covid cannot teach us everything. This is partly because responding to the climate crisis involves much longer timescales than the vaccine programme. It is not a one off project, but an industrial and economic reorganisation requiring sustained action over decades. Innovation for net zero needs more durable institutions and policies than those that worked so effectively for vaccine delivery.

Responding to climate change is also different in scope. The vaccination programme accelerated the development and testing of a science-based technological solution. But many solutions to climate change require people to change their lifestyles, or new business models and infrastructure. This means innovation support must be aligned with a wider policy framework for market transformation: regulation, taxation, direct spending and infrastructure.

What should innovation strategy that takes net zero seriously include?
First, the government needs a broader view of the ‘missions’. Some problems, like vaccine development, need science-based solutions that fit within existing infrastructure, institutions and patterns of consumer behaviour. But many emerging solutions required for a net zero carbon economy do not fit neatly into these existing systems: they must be accompanied by new regulatory frameworks, new infrastructure and policies to stimulate demand. Often, policies that create the markets for cleaner goods and services are as important as R&D policies in enabling cost reductions. A serious innovation strategy for net zero would grapple with this, while also supporting R&D.

Second, the government needs to increase the scale and breadth of its net zero innovation programme. The current programme is increasing the UK’s historically low levels of R&D on energy, but there is further to go. Importantly, it needs to be broadened beyond energy, to include areas like sustainable foods and soil carbon research.

Oil and gas innovation support has to stop now
Third, it’s time to remove innovation support from fossil fuel extraction. Incredibly, the UK still provides millions each year in innovation support to oil and gas companies, through the R&D tax credit system. Most of that money is spent on technologies that make it cheaper and easier to extract fossil fuels. It is time to make fossil fuel extraction R&D ineligible for R&D tax credit support.

While the vaccine programme demonstrates the power and speed of a concerted science and technology push, it does not provide all the elements of a blueprint for net zero innovation. But there are other lessons from Covid. The pandemic has taught us the costs of failing to take early action. It has also taught us what the government can do when it believes that there really is a crisis: it can be assertive, bold and willing to drive forward progress with all the tools at its disposal. It is that spirit of the vaccine development that we need to capture for this huge challenge that will define our future.

Image: Kwasi Kwarteng SoS BEIS visits Siemens Gamesa Renewable Energy

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