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Governments around the world in recent years have been shouldering more of the burden in tackling climate change by investing more in renewable energy R&D. In 2004, public R&D made up 10 percent of global renewable energy R&D investments, but by 2014 the figure had risen to 35 percent. Public investment is key to accelerating a shift toward a low-carbon economy since it often funds riskier, but potentially more-transformative R&D projects.
As researchers from the UK explain, private R&D in renewable technologies tends to focus on low-risk incremental innovations, such as slowly improving the efficiency of commercial solar cells. Because of that, high-risk, high-reward research tends to be underfunded globally. This is where public institutions, being focused more on the long term, step in to high-risk, high-reward projects. In fact, these same researchers estimate that public investments tend to fund projects that are 30 percent riskier than private projects.
As ITIF outlines in “Rescuing the Low-Carbon Energy Transition From Magical Thinking,” if the United States wants to be a global driver in low-carbon energy innovation, Congress should embark on a smart, aggressive energy policy agenda that maximizes the innovation capabilities of all sectors of the U.S. economy and society.