Energy innovation depends on aligning near-term catalysts - regulatory policies, public R&D funding programs, innovation alliances and mission programs - to help ensure that the components of the innovation system are well-established and interact productively to yield better outcomes.
The credibility of the sustainable energy innovation regulatory policy framework is fundamental due to the often long lifetimes of capital stocks, high investments required at every stage of the innovation chain, and the long duration needed for innovation to move from basic research to market deployment.
In many ways, the regulatory policy framework is the most important catalyst to accelerating sustainable energy innovation by incentivizing investments. However, it needs to be credible because investments are highly sensitive to perceptions regarding the credibility of future policy commitments. Credible policy frameworks need to be stable enough to encourage investor certainty, reduce business risk and lower interest rates.
At the same time, in a fast-changing global energy environment, a regulatory framework must be flexible to support the development of new technologies that hold the greatest potential,
>> Enlarge infographic (PDF 400 KB)
Public funding for energy R&D can play a critical role in complementing funding from the private sector or acting as seed money to encourage larger private investments. Organized and involved public funding programs are necessary to support sustainable energy R&D where market forces - even when supported by regulatory policy framework - cannot deliver all of the investments needed.
Public funding includes grants, government support in equity, debt financing (loans, guarantees and risk-sharing mechanisms), public procurement (direct public support for business R&D), innovation prizes and other instruments.
Innovation alliances can play an important role in accelerating energy innovation, and their potential is far from fully exploited.
While regulatory policies are most critical, innovation alliances also serve an important, mutually beneficial purpose. Innovation alliances can be public, private or involve combinations of types of stakeholders. Joint ventures between two or more companies to develop specific technologies can obviously play an important role in innovation, although they are not usually included in the scope of what is meant by innovation alliances. Success factors in innovation alliances include membership, involvement of key decision-makers and impact orientation.
Mission programs can generate breakthroughs in various technology fields by bringing technologies closer to market maturity, demonstrating viability, lowering costs and convincing customers and investors. These programs can be particularly useful in areas that require large investments, deep technology developments, sustained efforts and system innovation and deployment.