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demand and markets for clean energy (e.g., pricing mechanisms, 2.1
public procurement, minimum energy performance standards, energy
efficiency labels, mandatory targets) is an important consideration for
countries when designing their mix of policy instruments to support
innovation. Any of these policies implemented alone would be less
effective and more expensive. The key challenge is to strike a balance
between the various instruments.
If demand for innovation is augmented, a continuing flow of
technology developments will improve the portfolio of available CO2
mitigation options, bring down the costs of achieving global climate
goals and provide significant economic, environmental, and security
benefits. However, scale, timing, and duration of policies to foster
demand need to be determined carefully and modified as necessary,
and should allow for gradual removal of support as technologies reach
maturity, such as in the case of gas and nuclear.
1.3.4 R&D Portfolios should be Consistent with Technology
Portfolios
A comparison of technology portfolio scenario studies with past and
current energy R&D portfolios reveals that the latter are highly biased,
with energy efficiency/conservation under-represented and nuclear
R&D over-represented in comparison to their respective option values
in a climate-constrained world.
Ifcurrent energy technology R&D portfolios were to represent the
respective ‘option value’ of alternative technologies in a climate and
resource constrained world, one would have to increase current R&D
into energy efficiency by at least a factor of five or by some USD 6 billion
PPP per year (thus not proposing a reduction in nuclear R&D). Given
that improved energy efficiency has multiple public benefits beyond
climate change (e.g., less energy use, reduced local air pollution, and
lessened import dependence), even more ambitious increases in public
energy R&D budgets for energy efficiency would be justified.
1.3.5 R&D Investments in Supply Side and Demand Side
should be Balanced
Analysis of investment flowing into different stages of the innovation
process reveals an apparent mismatch of resource allocation and
resource needs.
Early in the innovation process, public expenditure on R&D
is heavily weighted towards large-scale supply side technologies.
Of an estimated USD 50 billion in annual investment globally, less
Chapter 1 Low Carbon Technology and Innovation Policy 53
public procurement, minimum energy performance standards, energy
efficiency labels, mandatory targets) is an important consideration for
countries when designing their mix of policy instruments to support
innovation. Any of these policies implemented alone would be less
effective and more expensive. The key challenge is to strike a balance
between the various instruments.
If demand for innovation is augmented, a continuing flow of
technology developments will improve the portfolio of available CO2
mitigation options, bring down the costs of achieving global climate
goals and provide significant economic, environmental, and security
benefits. However, scale, timing, and duration of policies to foster
demand need to be determined carefully and modified as necessary,
and should allow for gradual removal of support as technologies reach
maturity, such as in the case of gas and nuclear.
1.3.4 R&D Portfolios should be Consistent with Technology
Portfolios
A comparison of technology portfolio scenario studies with past and
current energy R&D portfolios reveals that the latter are highly biased,
with energy efficiency/conservation under-represented and nuclear
R&D over-represented in comparison to their respective option values
in a climate-constrained world.
Ifcurrent energy technology R&D portfolios were to represent the
respective ‘option value’ of alternative technologies in a climate and
resource constrained world, one would have to increase current R&D
into energy efficiency by at least a factor of five or by some USD 6 billion
PPP per year (thus not proposing a reduction in nuclear R&D). Given
that improved energy efficiency has multiple public benefits beyond
climate change (e.g., less energy use, reduced local air pollution, and
lessened import dependence), even more ambitious increases in public
energy R&D budgets for energy efficiency would be justified.
1.3.5 R&D Investments in Supply Side and Demand Side
should be Balanced
Analysis of investment flowing into different stages of the innovation
process reveals an apparent mismatch of resource allocation and
resource needs.
Early in the innovation process, public expenditure on R&D
is heavily weighted towards large-scale supply side technologies.
Of an estimated USD 50 billion in annual investment globally, less
Chapter 1 Low Carbon Technology and Innovation Policy 53
