Mobilizing Advocacy for Greater Clean Energy Innovation Investment

For over a decade energy experts have insisted that the world is dramatically underinvesting in zero-carbon energy research, development, and demonstration (RD&D). The Center for Clean Energy Innovation and other leading organizations, including the Intergovernmental Panel on Climate Change and the International Energy Agency, argue the world should be investing upwards of $100 billion per year in clean technology RD&D to mitigate the worst effects of climate change. In reality the world is investing nowhere close to that amount; in fact nations are investing no more than $23 billion per year. Without increased investment in clean energy innovation, adopting clean energy at the pace and breadth needed to reach near-zero carbon emissions during this century will be much harder.

The $100 Billion Campaign advocates that increased public investments in clean energy innovation must be a key pillar of global climate policy. Climate change is a technology challenge at its most fundamental level—deep decarbonization of the global economy requires zero-carbon technologies that are cost-competitive with fossil fuels. While the world has made progress towards this goal, significantly more innovation is necessary. Unfortunately the world is grossly underinvesting in the advancement of the very technologies needed to break fossil fuels’ grip on the global economy—solar, wind, carbon capture, bioenergy, nuclear, energy efficiency, and energy storage.

Pragmatic climate policy needs to include significant investments in clean energy innovation, which is why the $100 Billion Campaign was created. The request is straight-forward: all developed and emerging economies should commit to increasing public investments in clean energy innovation to at least 0.15 percent of GDP annually, which would amount to $100 billion a year collectively. Successfully meeting the $100 billion goal is the equivalent of a global moon-shot— the mass stimulation of the world’s best scientists, engineers, entrepreneurs, and thinkers to advance clean energy faster than any energy technology in human history. We need nothing less to avert climate catastrophe.

For this new moon-shot to succeed, policymakers around the world must commit to greater public investment in energy innovation, both at the national level and on the global stage at international climate negotiations, including those scheduled for Paris in 2015 and beyond.

Deep Decarbonization Requires More Clean Energy Technology

In April 2014, global CO2 concentrations hit 402 ppm, the highest level in over 800,000 years. As a result of increasing greenhouse gas concentrations, global mean surface temperature (both land and oceans) has increased by 0.85°C since the late 19th century. Recent scientific research suggests the importance of avoiding warming greater than 2°C to mitigate the effects of global climate change, but current estimations of future economic and population growth suggest that avoiding overstepping the 2°C mark will require peaking global emissions within the next decade and reducing emissions to near-zero by 2050. This kind of deep decarbonization requires switching from all petroleum-based fuels for transportation and heat and eliminating all coal and natural gas consumption globally. Today only 20 percent of the world’s energy generation comes from renewable resources (including hydropower). Installed renewable capacity is expected to continue to grow, but clearly much more clean energy is necessary.

(Renewable Energy Generation; International Energy Agency (2014), Tracking Clean Energy Progress 2014, OECD/IEA, Paris)

Clean Energy Must Be Cheaper than Fossil Fuels

To realize widespread adoption of zero-carbon energy, zero-carbon energy technologies must be as cheap or cheaper than fossil fuels. Clean energy technologies have experienced real cost declines and performance improvements in the last decade that have allowed for accelerated adoption in many nations. The most commonly used metric for assessing clean energy competitiveness is levelized cost, which represents the per-unit price at which energy must be generated from any source in order to “break even” over the course of the generation system’s lifetime. Thanks to a combination of technology improvements and evolving policy environments levelized costs for solar PV and wind power generation have fallen, but these declines have still not succeeded in bringing the cost of renewable energy below costs for conventional coal or natural gas electricity generation.

(Levelized Cost of Energy; International Energy Agency (2014), Tracking Clean Energy Progress 2014, OECD/IEA, Paris)

Lowering the cost—as opposed to just the price—of clean energy technologies is a necessary part of any climate strategy. To realize the levelized cost targets and renewable integration targets projected by the International Energy Agency and other leading organizations including the U.S. Energy Information Administration and the IPCC, large public investment in programs that accelerate clean energy technology research, development, and demonstration (RD&D) projects is necessary.

Energy Innovation is Pragmatic Climate Policy

Global investment in energy RD&D is estimated to be about $23 billion per year; the majority of this investment is made by high-income countries. Emerging economies including Russia, China, Mexico, and India collectively contributed $6 billion in 2008 to global RD&D, and policy changes indicate these investments are increasing.

(Government investments in clean energy RD&D as a percentage of GDI in 2011, also called RD&D intensity. Investment data from IEA and GNI data from the World Bank. Investment data for emerging economies (Brazil, Russia, India, and China) from 2008. Figures above represent amount of additional investment in millions necessary per country to reach RD&D intensity of 0.15%.)

If countries increased public investment in energy RD&D to at least 0.15 percent of GDP, $100 billion could be dedicated to advancing next generation clean energy technologies. Increasing RD&D investment affords countries significant flexibility to adopt a range of “innovation-friendly” policy options that boost economic growth and complement existing energy policies including energy efficiency targets, clean energy mandates, cap and trade systems, or carbon taxes.

Investing in innovation should be seen as capitalizing on an opportunity. This kind of agreement allows all countries to participate in the global innovation ecosystem and to benefit from the subsequent domestic economic growth and technology development. To that end, negotiators at the 2015 Paris climate talks should adopt provisions committing themselves to increasing public investments in clean energy innovation.

Clean Energy Innovation Enables Energy Access

According to the International Energy Agency (IEA), approximately 1.3 billion people do not have access to electricity. Access to energy affects nearly all sectors of an economy—including manufacturing, education, public health, and food security—and improved energy access often leads to gains in public security, rural economic activity, and access to services for women and children. Energy access is also associated with longer life expectancy and improved quality of life.

Providing universal energy access is one of the defining global energy issues today. As the billions with little-to-no access to energy shift to greater use of electricity and transportation fuels, and while fossil fuels remain the most affordable energy option, global carbon emissions will increase. Recent estimates suggest that carbon emissions from low-income and emerging countries will exceed those from high-income countries in the coming decades. Improving energy access and mitigating climate change are goals at odds with each other as long as clean energy remains more expensive than fossil fuels. However, forgoing support for cheaper fossil fuel projects prolongs energy poverty or results in low-access countries paying more for clean energy. This imparts unfair additional costs on low-income countries and at best will not solve climate change, as the carbon reductions will be too marginal to make any real global difference. The only way to align these two goals is to develop clean energy that is cheaper than fossil fuels, through accelerating innovation.

Previous attempts to address energy access and rural poverty around the world have focused on deploying energy efficiency technologies, solar lamps, battery charging stations, or micro-grids that provide limited energy services to low-income populations. These initiatives, which certainly have useful applications for improving human well-being, are unfortunately still not to scale with low-income countries’ energy poverty and development needs. A new focus on clean energy innovation provides a realistic path toward providing energy access and decreasing carbon emissions at a meaningfully global scale.

Policy Recommendations

Achieving $100 billion in global investment in clean energy innovation is a lofty, but attainable goal. The 2015 Paris climate negotiations should prioritize energy innovation by encouraging countries to increase energy RD&D investments to at least 0.015 percent of GDP. This goal can be accessed with pragmatic policy solutions that support science and technology programs and enhance national energy innovation ecosystems, from basic science to commercialization.