Global Trends in the Innovation and Diffusion of Climate Change Mitigation Technologies

Abstract

Increasing the development and diffusion of low-carbon technologies on a global scale is critical to mitigating climate change. Based on over two million patents from 1995 to 2017 from 106 countries in all major climate mitigation technologies, our analysis shows an annual average low-carbon patenting growth rate of 10 percent from 1995 to 2013. Yet, from 2013 to 2017 low-carbon patenting rates have fallen by around 6 percent annually, likely driven by declining fossil fuel prices and, possibly, a readjustment of investors’ expectations and a stagnation of public funding for green R&D after the financial crisis. The Paris Agreement does not appear to have reversed the negative trend in low-carbon patenting observed since 2013. Innovation is still highly concentrated, with Germany, Japan, and the US accounting for more than half of global inventions, and the top 10 countries for around 90%. This concentration has further intensified over the last decade. Except for China, emerging economies have not caught up and remain less specialised in low-carbon technologies than the world average. This underscores the need for more technology transfers to developing and emerging economies, where most of the future CO2-emissions increases are set to occur. Existing transfer mechanisms, such as the UN Technology Transfer Mechanism and the Clean Development Mechanism, appear insufficient given the slow progress of technology transfer.

The effect of carbon price on low carbon innovation

“…This classification includes a technological class 'Y02' pertaining to "technologies or applications for mitigation or adaptation against climate change". This class provides the most accurate tagging of climate change mitigation patents available today, represents the international standard for low-carbon innovation 43 , and has been used to analyse trends in low carbon patenting 15 . Table 2 provides codes and descriptions of the 8 technological subclasses within Y02.…”

“…Despite the theoretical prediction that higher carbon prices lead to greater investment in the development of low emission technologies 14 , there is only limited empirical evidence of the relationship between carbon prices and low carbon innovation. Econometric analysis shows that the EU ETS increased low-carbon innovation (i.e., patenting) in regulated firms versus unregulated firms by up to 10% 12 ; however, low carbon prices might weaken this effect 15 . Other studies of the EU ETS find only partial evidence of the carbon price having an effect on low carbon innovation 12,[16][17][18] ; these studies focus on only a handful of firms and sectors during the two initial ETS phases (2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012), in which grandfathering tended to hamper low carbon investments 19 .…”