By Lewis Milford
Lewis Milford is president and founder of Clean Energy Group and the Clean Energy States Alliance, two nonprofit organizations that work with state, federal, and international organizations to accelerate the commercialization and deployment of clean energy technologies.
Global demand for energy is projected to more than double by 2050 and to more than triple by the end of the century. At the same time, annual global emissions must decline more than 80 percent from current levels to stabilize carbon concentrations at a safe level. Even with significant energy efficiency improvements, the world in 2050 still will consume between 30 and 40 terawatts (tw) of energy — more than half of which must be carbon neutral(not increasing the amount of carbon being released into the atmosphere)to achieve the necessary reduction. Today, less than 2.5 tw of global energy consumption is carbon neutral. By 2050, we must develop and deploy on the order of 20 tw of new carbon-free energy — this is an eight-fold increase.
To put this starkly, we must in 50 years develop a carbon-free energy infrastructure larger than our entire existing energy infrastructure — all the power plants, vehicles, industries, and buildings on the planet today. To meet this massive challenge, we must not only accelerate deployment of existing technologies but also radically speed up technological breakthroughs.
An Unprecedented Innovation Challenge
Breakthroughs in the cost, performance, and scalability of climate technologies are necessary. The reason is simple — existing climate technologies at current costs and performance cannot meet the demand for carbon-neutral energy. Meeting a challenge of this scope requires innovation in every phase of technology development, from basic research and development to commercialization and dissemination.
A 2007 study found that existing carbon-neutral energy sources could only supply 10 to 13 tw of power by 2100 — less than half that needed to stabilize carbon dioxide, even at an unacceptable level of 550 parts per million (ppm) atmospheric concentration. Breakthroughs in new as well as existing energy technologies and sources will be required for stabilization at 550 ppm, and even more to reach 450 ppm, the level many scientists deem necessary.
Most experts agree that climate change recovery requires not only government-driven emissions caps but also aggressive innovation in climate technology. Accelerating innovation requires an internationally coordinated product research and development system to manage, coordinate, and speed innovation through global partnerships among private, government, academic, and non-profit organizations.
One such strategy is distributed innovation (DI), a modern collaborative method that channels dispersed and multi-sector expertise in alternative energy or product development into common efforts. DI is a welldocumented approach to product development in corporate and public-goods sectors. It should be used to shape climate technology strategies and institutions. It is cheaper, virtual, and collaborative. It would encourage new public and private partnerships. Most important, it would bring vitality, insight, and new solutions to the most difficult technology turnover challenge the planet has ever faced. Wasting time on the old solutions makes little sense when more modern and effective forms of international collaborative innovation are waiting to be used.
Accurately Distributing the Expertise
How do we bring expertise that is widely distributed around the world to bear on developing specific products to meet either worldwide or local climate-change challenges? Existing global institutions such as the World Bank or the International Energy Agency have important missions, but shaping conditions to advance technology innovation challenges is not among them. A new institutional framework is needed at the international level. Whether part of an existing institution or as a new body, an “international climate innovation facility” would orchestrate innovation by “choreographing” and coordinating the actions of different types of experts across the globe.
A new facility would support innovative low-carbon solutions by overcoming legal, economic, and other obstacles along the value chain — the range of activities required to bring a product from conception through production to market. The facility also would solve intellectual property rights (IPR) problems and develop new finance and business models. The facility could be modeled after the Global Fund to Fight AIDS, Malaria, and Tuberculosis, an existing “public goods” institution linked to but independent of the United Nations and other agencies. The facility even could be virtual, removing the need for a new “brick-and-mortar” center.
The facility would employ the bottom-up, collaborative DI approach that has solved complex problems in private and public arenas. Some key characteristics:
• DI employs modern information technologies to link people of diverse expertise in different institutions and countries to work collaboratively on specific product development and deployment projects.
• DI connects specialists based in different sectors, including governments, private corporations, non-profit organizations, and finance entities, as well as technologists and academic researchers.
• DI accelerates deployment of specific technologies.
Distributed innovation increases the speed and depth of knowledge dissemination beyond what is possible in conventional information-sharing and institution-linking networks. DI uses “innovation platforms” and other new “matchmaking infrastructure” tools that potentially can enable tens of thousands of people who otherwise never could have collaborated to review challenges and propose solutions. Contributors could be rewarded with financial incentives for “solution providers,” cash awards for technological solutions, or a negotiated value for intellectual property rights.
A DI approach would spur new international partnerships among governments, institutions, and individuals in developed and developing countries by building early linkages among all relevant actors (e.g., academic researchers, national laboratories, government agencies, private companies, financiers, utilities, installers, state deployment funds, and others). The partners would work together in the research, development, and financing processes. The result would be new, innovative, and synergistic cross-functional teams that bring opportunities to investors, funding for innovators, and solutions for consumers.
This decentralized bottom-up approach would improve global climate technology research and development policy by:
• supporting the acceleration of breakthrough clean energy technologies and the scale-up of existing technologies by focusing on all elements of the value chain from lab to market;
• being product-focused — rapidly driving upstream research to downstream deployment within defined timeframes;
• addressing the whole technology value chain by filling in the gaps that block effective accelerated deployment;
• producing a replicable model for a broad suite of low-carbon technologies that could benefit from distributed innovation.
With this approach, a true portfolio of technology options can emerge, with initiatives maturing on different time scales — from short-term solutions to reduce emissions almost immediately, to mid-range commercial opportunities in the next five to 10 years, to longer-term energy innovations not yet imagined.
Coordinating key players from the funding and finance communities early in the research and development process would assure more efficient use of public and private funding. Investment capital could more easily shift from individual, “siloed” research projects toward specific product-focused projects. DI tools create incentives for private capital to finance technology earlier.
Current Obstacles to Low-Carbon Technology Innovation
According to clean energy studies by the World Bank and the Stern Review on the Economics of Climate Change, several barriers inhibit public and private investment in clean energy research and the development, scale-up, and cost reduction of existing technologies:
• Carbon emissions are priced variably or not at all, creating too much risk in climate policy. This limits private investment in climate technologies.
• Recognized “valleys of death” — certain points in the development process when significant funding is needed — inhibit private investment.
• It is difficult to attract enough capital without reducing investor risk through specific government support.
• The technology needs of developing countries are especially underserved because of barriers specific to their condition, such as lower incomes and dispersed population.
Cap and Trade Alone Won’t Work
Global experts agree that a market-based cap-and-trade system alone will not deliver emissions reductions and technology innovation at the scale and speed necessary fully to address climate change. The Stern Review agrees that carbon pricing must be complemented by measures to develop technologies. Nicholas Stern writes, “…uncertainties and risks both of climate change and the development and deployment of the technologies to address it are of such scale and urgency that the economics of risk points to policies to support the development and use of a portfolio of low-carbon technology options.”
There virtually is no dispute about that from any reputable organization, including the Group of 20 Finance Ministers and Central Bank Governors (G20), the World Bank, the Intergovernmental Panel on Climate Change (IPCC), the International Energy Agency (IEA), and the United Nations Framework Commission on Climate Change’s (UNFCCC) Expert Group on Technology Transfer.
Overcoming Technological, Economic, and Political Roadblocks
A number of centrally coordinated international distributed innovation programs have resulted in successful technological innovations. Presented in this publication are two of them:
Innovations in Agricultural Value Chains focuses on removing market barriers, such as difficulties in safe processing, in the production and delivery of cassava, maize, and dairy products in Kenya and Ghana. The project demonstrates how a centrally coordinated distributed innovation approach can produce concrete results in developing innovative technological solutions in industries requiring accelerated product development in difficult markets.
Lighting Africa serves as a partner clearinghouse to facilitate international collaboration among an assembly of public and private sector partners. It is modeling a distributed innovation approach to accelerate product development to bring modern off-grid lighting products to this “bottom of the pyramid” population. Starting with lighting and advancing to additional energy services, Lighting Africa acts as broker between private companies and customers to create markets for better products.
Also presented in this publication is a case for using distributed innovation to accelerate product development in the highly technical area of advanced marine-based renewable energy solutions. While the opportunity for marketing these products is significant, development costs are extremely high and funding is more difficult to obtain. An internationally coordinated market acceleration approach that taps distributed knowledge and experience could support rapid cost reduction and remove other barriers.
The Need for Structural Reform
The technology innovation required is so great, and the roadblocks so significant, as to require a structural reform at the international level. Indeed, many countries, including members of the European Union, are already well aware of the benefits of international collaborative research and development, including “pooling financial resources, sharing risks and setting common standards for large or relatively risky R&D projects … and supporting technology deployment in and technology transfer to developing/emerging countries,” according to research by the European Commission.
The world is searching for new ways to collaborate on climate technology innovation. The need for collaboration is obvious and well documented. A challenge of this scale requires creative new strategies and structures beyond conventional networks, information sharing, and bilateral research programs. Needed are ways to accelerate product development and innovation and to scale up clean-energy technologies.