Overview

The planet is becoming increasingly warmer and greenhouse gas emissions continue to grow. Since the beginning of the industrial revolution the world has emitted two trillion tons of carbon dioxide. To keep global temperatures within 2ºC above pre-industrial levels we can only emit a further one trillion tons. To achieve this goal, global greenhouse emissions will need to be reduced by 50% by 2050. This will require urgent acceleration of the development, deployment and diffusion of new technologies, not only to meet the emission reduction targets, but also to ensure the most effective use of the remaining carbon-based resources.

In general terms, the world already knows how to achieve this. Historically, technological innovation has fueled enormous global economic growth, and many of the required short-term technological solutions are already available. One of the greatest challenges is how to deploy these technologies at the scale required to achieve affordable, secure reliable supplies of energy without damaging the environment. This will require not only future innovation in technology – both incremental and radical/disruptive – but also significant innovation in mechanisms for investment, financing, capacity building, technology transfer, diffusion, new institutional and regulatory frameworks, as well as changes in human behavior. Given the deep uncertainties associated with technological change a broad portfolio of potential solutions will need to be developed.

Understanding Innovation

Key to success will be a better understanding of the innovation process itself. Innovation does not occur spontaneously but within a system of innovating institutions, agencies, regulations, and markets, therefore we need to consider changes to the overall design of national innovation systems. Acceleration is required across all stages of the innovation cycle – creating options, demonstrating viability, early adoption, and improvements in use. Three overlapping waves of innovation will be required:

• 2015-2025: increasing energy efficiency– most of the technologies are currently available however, innovation in financing mechanisms and business models is required
• 2025-2050: improvements and reducing the costs and risks of existing low-carbon energy supply technologies for large scale deployment
• 2050+: radically new technologies e.g., nuclear fusion

The level of investment required for the necessary transition to a cool earth by 2050 is estimated at about US150 trillion or about twice the current annual investment in energy systems of some US11.3 trillion, however energy savings and other multiple co-benefits such improved human health and energy security will more than compensate this cost over the period. Although overall investment in research, development and deployment has increased over recent years, the proportion invested in the energy sector has declined in real terms. Not only do investment levels need to increase but they also need to be smarter and more targeted in terms of how the overall innovation system works, for example, the level of investment required to accelerate development and deployment depends on the level of maturity of the technology.

Energy Efficiency

Increasing energy efficiency is a crucial first step towards addressing climate change. Improving energy efficiency is often viewed as the “low hanging fruit” within the energy debate. The technologies required to make substantial savings, in terms of energy savings, greenhouse gas reductions, and cost, are already available. Given that the energy sector as a whole accounts for approximately 70% of total global greenhouse gas emissions, even a moderate increase in efficiency would have enormous benefits for combating the impacts of climate change.

Despite the significant benefits of increasing energy efficiency, the rate of implementation of energy efficiency policies and the deployment of energy efficient technologies lag well behind their potential. However, increasing energy efficiency is not simply a matter of introducing new energy efficient technologies. The entire energy management system needs to be considered; from how the power is generated, through supply chain and industrial process optimization, waste management, total life cycles costs, energy efficient products and appliances, through to patterns of consumer use. The focus needs to be on energy management and behavioral changes, particularly end use.

Technology Transfer and Diffusion

One of the major challenges facing the widespread deployment of innovative solutions for addressing climate change is technology transfer and diffusion of existing technologies and knowledge. This is particularly evident for small and developing nations with little internal human and infrastructure capacity. The issue is not only one of transfer and diffusion of relevant technologies but also includes knowledge sharing on policy formulation and implementation, best practice energy efficiency strategies and management systems, project development, financing options, and risk management. In addition, needs to be adapted to local political, geographic, economic, and social conditions. There has been considerable local success in this area over recent years, for example, through the Global Environment Fund (GEF), however there is an urgent need to scale up from small narrowly focused programs to large broad-scale and integrated initiatives.