Inducing Technological Development
There is growing recognition that effective climate policy must enhance the research, development, commercialization and deployment of new, very-low-carbon energy technologies, within and across national borders. Examples are geological and biological sequestration, hydrogen and electric vehicles, and intermittent renewable energy sources. The G8 meeting in Heiligendamm stated that: “Technology is a key to mastering climate change as well as enhancing energy security. We have urgently to develop, deploy and foster the use of sustainable, less carbon intensive, clean energy and climate-friendly technologies in all areas of energy production and use. We have to develop and create supportive market conditions for accelerating commercialization of new less carbon intensive, clean-energy and climate-friendly technologies. Furthermore, to ensure sustainable investment decisions worldwide, we need an expanded approach to collaboratively accelerate the widespread adoption of clean-energy and climate-friendly technologies in emerging and developing economies". The Gleneagles Communiqué called for further action to: “...accelerate deployment of cleaner technologies, particularly lower-emitting technologies...work with developing countries to enhance private investment and transfer of technologies..." It is also recognized that “technology pull" alone through carbon pricing (a la cap & trade or some other pricing mechanism) is unlikely to be sufficient. A complementary “technology push" policy is needed. Policies that might work well at enhancing R&D would be ineffective at accelerating commercialization, and might be inappropriate for deployment and international diffusion. A technology push is also required for technologies for adaptation: agricultural practices, prophylaxis and delivery for vector-bone diseases, protection for coastal ecosystems and settlements, improved prediction and early warning capacity, etc. Even more challenging, technology push must induce infrastructural transformations across major sectors of the economy: the power sector, transportation, agriculture, urban development. Not much investigation has been devoted to integrating policies supporting long-term technology development and infrastructural transformation into a climate regime. Research is therefore needed that will bring forth a new generation of policies to enhance and accelerate technological progress. Important questions include: - How can policies to promote climate-related RD&D be designed and implemented? Such policies will likely combine standards - announced years in advance - with publicly funded R&D programs. These programs could encompass bilateral agreements, regional programs or international agreements.
- How can individual steps in the technology development process (i.e., R&D, commercialization, deployment, and diffusion) be individually targeted? What market incentives can effectively induce action at each step?
- What types of technology policy can explore diverse portfolios of technologies, yet avoid the type of “political capture" that can plague some approaches, whereby technology-specific constituencies are created?
- What policy approaches can help surmount the high barriers associated with “chicken-and-egg" type problems, where discrete market transactions are incapable of providing a path from one infrastructural mode to another?
- How can technology-based climate policy collaboration be combined with other climate policy components, foremost cap-and-trade types of policies, and into being part of an international climate regime?
- Are there metrics so that technology and infrastructural investments can be compared in the context of a climate regime? Can measures such as learning curves and progress ratios provide a useful estimate of returns from technology investments?
- One option to compare R&D efforts and other technology investments is a metric based on emission reduction. Thus, can such a metric lead to a “conversion rate" for technology efforts, so their contribution towards meeting emission reduction commitments can be assessed? (Options include 30-50 year reduction target commitment periods, and coordinated international research collaboration.)
Relevant technology reviews are Grubler et al., 1999, and Sanden and Azar, 2005. In terms of induced technology (ITC) some references are Goulder, 2004, Grubler et al., 2002, and in terms of analyses of key issues such as lock-in and path dependency there is Unruh, 2002. References on techniques for translating R&D investment into cost reductions, and ultimately, emissions reductions are Goulder and Schneider, 1997 and 1999, Schock et al., 1999, and Grubler et al., 1999. New technologies are developed to fit into a specific application, being an economic sector, production process or consumption context. Thus it is important to carry out studies of technological innovations of specific sectors of the economy, such as transport and energy-intensive industries, confer tasks 3.4 and 3.5.
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