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WEF white paper executive summary

Executive summary

Energy consumption and production activities contribute two-thirds of global greenhouse gas (GHG) emissions. As such, energy also has the greatest potential to help slow GHG-driven climate change, by accelerating the pace of innovation and large-scale deployment of sustainable energy technologies.

However, according to the International Energy Agency, only solar photovoltaic (PV) panels, onshore wind turbines, energy storage and electric vehicles are sufficiently mature and commercially competitive to be regarded as serious contenders in meeting climate objectives. The urgency of climate change actually requires a much wider toolkit of sustainable energy solutions that are mature enough for large-scale deployment.

This interim white paper from the World Economic Forum's initiative Partnering to Accelerate Sustainable Energy Innovation identifies the key enablers of the innovation process and proposes some ideas to achieve step-changes in the pace of sustainable energy innovation. The insights in this white paper have been gathered from Forum constituents in over 30 interviews with diverse groups of experts, literature reviews, collaboration with Mission Innovation, and a series of multi-stakeholder dialogues.

The need for innovation

Investment in clean energy R&D is low and has been flat over the past few years. A real step-change in funding must involve both governments and the private sector. Public investment in sustainable energy R&D needs to increase its effectiveness and governments need to strength green energy policies. However, the private sector -- including energy companies, venture capitalists (VCs) and private equity firms -- is reluctant to invest in clean energy due to high risk, low return, and a long lead time to maturity in deep-tech energy solutions.

The right approach

The sustainable energy innovation challenge requires a systematic and multi-stakeholder approach to help bring a broader set of new technologies to technical and commercial maturity.

This includes a variety of perspectives and disciplines such as innovation systems, transition studies, environmental and ecological economics and policies, and an enabling framework that aids productive interaction between system components. Governments and the private sector must improve complementary efforts and seize opportunities to cooperate in areas that can benefit from public-private collaboration and which neither governments nor businesses can solve on their own.

Aligning catalysts

Regulatory policies, public-funding programs and innovation alliances are key catalysts necessary to accelerate the pace of innovation. Based on the review of positive examples from across different countries, the following success factors can be considered as catalysts for effective change:

  • The regulatory framework should align several instruments that reinforce the positive effects in advancing innovation in sustainable energy, including incentives for early adopters, de-risking mechanisms for investors, and compelling rationales to end-consumers for accelerated adoption.
  • Public funding programs need to take a systemic approach in promoting innovation across the energy value chain and focus more on market deployment by creating opportunities for follow-on financing from the private sector. Moreover, long-term and mission programs along the lines of the Japanese hydrogen program and the Danish wind energy program are more likely to offer systemic breakthroughs as well as a competitive edge to countries in specific technology areas.
  • Alliances for sustainable energy innovation need to be more focused on impact and should have a well-defined purpose and focus. There is a strong case for alliances to embrace a diverse membership across different industries and geographies, and to develop access to key decision-makers in the public and private sectors in order to be more effective.

These catalysts serve to create an enabling environment to foster innovation. Specific actions, however, must result from collaboration among the people who form the core of the innovation process - the inventors, entrepreneurs, corporations, investors, policy-makers and consumers.

Step-changes for innovation

This white paper also offers several forward-looking, bold ideas designed to help achieve step-changes in the innovation process:

  • Use an institutional approach to energy innovation to better connect isolated groups of experts and plug the gaps that prevent faster conversion of basic research to commercially feasible projects.
  • Provide better support for capital-intensive innovation areas and encourage collaboration in the pre-competitive stages of innovation by pooling R&D investment from countries, companies and philanthropists.
  • Develop instruments for co-investment of public R&D grants with venture capitalists to better target grant recipients, lower administration requirements of grant applications, create collaborations between public and private capital sources, and enable better timing of grant availability. 
  • Co-design technology roadmaps across the public and private sector, and across borders, to improve credibility, speed up commercialization and bridge the technical and financial 'valleys of death' that plague innovation.
  • Redesign and mainstream public procurement strategies so they are forward-looking, focus on outcomes rather than specific technologies, and offer 'demand-side assistance' to early-stage innovations in areas where technology solutions do not exist.
  • Improve transparency on public R&D expenditure for sustainable energy innovation, employing existing multilateral frameworks to facilitate better data sharing between countries, and address underserved innovation areas.

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