Energy innovation to tackle climate change: why, what and how?

by Matthew Hannon

This blog is taken from one produced for the Our Common Future Under Climate Change 2015 blog series

Between November 30th and 11th December 2015 government representatives from across the globe will meet in Paris for the 21st Conference of the Parties (COP) to discuss the world's future under climate change. Discussions will primarily centre around what degree of climate change the global community is prepared to live with and crucially how it will deliver on this target, with energy innovation taking centre stage.

Why do we need energy innovation to tackle climate change?

Whilst energy consumption accounts for approximately 80% of global CO2 emissions there is a growing consensus that the current suite of affordable energy technologies are not sufficient to constrain global temperature within a 2 or even 3 degree rise. Consequently energy technology innovation is considered critical to mitigating against catastrophic climate change, whether this be driving down the costs of existing immature sustainable energy technologies to ensure they are competitive with traditional fossil fuel based technologies or accelerating the development of new, 'step-change' technologies that could enable us to satisfy our energy needs in a radically different and more sustainable way. This therefore raises pressing questions about: what types of energy innovation should we be focusing our efforts on; and how we can deliver this innovation in a cost-effective and timely fashion? We explore these questions in this blog as well as during the parallel session 3315 - Energy Innovation for Climate Change: systems approaches and societal responses, which took place on 10th July 2015 as part of the Our Common Future Under Climate Change conference in Paris, the largest forum for the scientific community to come together ahead of the 21st UNFCCC Conference of the Parties (COP21).

What are the priorities for energy innovation?

It is expected that in order to meet our climate change goals energy innovation efforts will need to be both concentrated and far reaching. Firstly, a complementary suite of baseline and intermittent renewable energy technologies will be critical to achieving our climate change targets. However, we should not ignore the potential for reducing emissions via efficiency improvements to fossil fuel technologies, primarily in the medium term (2015-2030) as we perform the difficult transition to renewable energy technology ubiquity. Examples include the introduction of combined cycle gas turbines for electricity generation, combi condensing gas boilers and highly efficient internal combustion engine vehicles. It may also be possible to couple fossil fuel energy supply infrastructure with decarbonising technological innovations, such as linking coal fired power plants with carbon capture and storage.

Secondly, energy technology innovation support has recently centred upon supply-side technologies (e.g. offshore wind, solar PV), shifting focus away demand-side technology innovation. Without balancing these efforts much of the abatement achieved through decarbonising our energy supply could be quickly undone through wasteful end-use technologies and consumption behaviours situated towards the end of the energy supply chain. Heat consumption presents a particularly important focus in this regard considering it accounts for approximately 80% of energy consumption in our homes, with major innovation opportunities existing across: fossil fuel based conversion technologies (e.g. micro CHP); new renewable energy systems (e.g. heat pumps, fuel cells); electricity/thermal storage and building thermal performance.

Thirdly, whilst energy technology innovation will be essential, on its own it is unlikely to deliver on our climate targets. Instead it should be coupled with non-technological innovation, such as business model innovation. This is because technological innovations on their own are unlikely to achieve market dominance but instead need to be 'packaged' within an innovative business model that presents a compelling value proposition to consumers that they will struggle to turn down. Two good low-carbon examples include Solar City's solar PV leasing scheme in the U.S. and Autolib's electric car self-service rental scheme in Paris. History also indicates that technologies require a supportive market selection environment, normally characterised by government policy. The problem is that most prevailing governance frameworks have evolved with fossil fuel based energy systems in mind. Policy innovation has already made an important impact on low-carbon technology deployment internationally, not least through the Feed-in-Tariff schemes for low-carbon electricity generation in Europe that saw a rapid deployment of solar PV recently.

How can we accelerate energy innovation?

So how can we generate the most 'bang for our buck' from our public and private sector funded energy innovation initiatives. Lessons include:

• Being patient. Energy technology innovation takes a very long time, often many decades, so funders should avoid scrapping support schemes prematurely
• Striking a balance between innovation collaboration and competition. Collaboration is key in early stage R&D, whilst competition more important during demonstration and deployment.
• Centrally coordinating the innovation funding landscape to avoid schemes that duplicate funding elsewhere and/or directly oppose existing support schemes
• Transferring knowledge not only across countries but between sectors. Often similar innovation challenges have been faced in a different time and place
• Avoiding locking out 'game changing' technologies by directing the majority of support towards incremental innovation. There's often a temptation to focus on improving existing technologies due to both increasing returns and certainty regarding performance at the expense of developing disruptive technologies,

In summary energy innovation is critical to constraining catastrophic global temperature rise and should be at the forefront of negotiators minds in Paris. It is essential that innovation efforts span the energy supply chain, focus on both fossil fuel and renewable energy technologies, and stimulate non-technological innovation. To maximise the impact of our innovation support we must look to history to learn from our mistakes and ensure that best practice support approaches are employed that embrace patience, collaboration, competition, coordination and an appetite for both incremental and disruptive innovations. Energy innovation capable of tackling climate change will not simply happen on its own accord and will instead require both a concerted effort and a clear vision at a global level. Paris presents the perfect platform to galvanise international action towards this goal.