NCPA - National Center for Policy Analysis

The Need for Energy Innovation Consensus

November 7, 2013

Most clean energy advocates believe that the world has all the low-carbon technologies needed to effectively address climate change. In their view, we don't need technology breakthroughs; we need political breakthroughs that will establish regulatory mandates, subsidies for clean energy and taxes on "dirty energy" that will drive widespread deployment of clean energy technologies. Unfortunately, this widely held "deployment consensus" is largely misguided: existing technologies still cost more, often substantially more, than fossil fuels, while exhibiting sub-optimal performance, say Megan Nicholson and Matthew Stepp, researchers at the Information Technology & Information Foundation.

Only when clean energy is cheaper than fossil fuels will it be massively deployed globally because countries, companies and individuals will want to adopt it -- not out of civic mindedness, but out of self-interest. To the extent that the Deployment Consensus acknowledges the need for better technology, it emphasizes support for deployment alone as an innovation strategy; deploying more, they claim, will be enough to get clean energy cheaper than fossil fuel. But this assumption ignores the complexities of clean energy innovation.

  • While deployment policies can incrementally lower costs of existing technologies, obtaining the dramatic cost declines necessary to make clean energy as cheap as fossil fuels requires an innovation strategy that invests throughout the innovation ecosystem, with a particular focus on significantly more funding for applied clean energy research.
  • Policies supporting deployment can help support innovation, particularly if these policies tie the deployment of next-generation, breakthrough technologies to cost and performance improvements, called "smart" deployment.
  • In short, advancing globally cost-competitive clean energy solutions to climate change requires a shift from a deployment consensus to an innovation consensus.

Building a new innovation consensus for climate and energy policy will not be simple, but it will be significantly easier than convincing nations to spend trillions of dollars more on high-cost clean energy than they would otherwise on "dirty" energy, if for no other reasons than nations want to build competitive clean energy industries. This goal would be even more accessible if environmental and climate advocates put their considerable political weight behind an innovation agenda.

Source: Megan Nicholson and Matthew Stepp, "Challenging the Clean Energy Deployment Consensus," Information Technology & Information Foundation, October 23, 2013.


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