In the ongoing debate of federal energy and climate legislation- which continues to aim at carbon targets for the utility sector- there is little discussion of how to achieve those targets if they can ever be set. How will we innovate to deploy radically cheaper clean energy technologies at an unprecedented speed and scale?
Successful climate technology innovation may not come from where we most expect it – not from the private sector alone or only from carbon pricing policies. A new report issued by Clean Energy Group (CEG) describes how new innovation models coming from some of the least developed counties are achieving success. These new public-private “innovation system” approaches to accelerate climate technologies in developing countries—using what is being termed “reverse innovation”—could be used by the developed world to overcome similar market barriers for clean energy.
Anyone who has worked in the power sector knows that a carbon price alone won’t overcome the major hurdles for new technologies. The most important question for lawmakers should be: how do we deploy clean alternatives at the cost, speed and scale needed to address the challenges of energy and climate security? The US needs new models of innovation- that address the entire energy system.
The paper, “Accelerating Climate Technologies: Innovative Market Strategies to Overcome Barriers to Scale-Up,” identifies the specific barriers to rapid diffusion of three climate technologies—off-grid solar lighting, post harvest cassava processing and marine energy – which are too great for the private sector alone to surmount. The paper then evaluates two projects – Lighting Africa and Innovations for Agricultural Value Chains in Africa – that involve successful, international public-private partnerships to target these barriers along the entire technology development chain. The lessons learned from these bottom-up programs can be applied to clean energy technology challenges in the West—such as the advancement of hydrokinetic marine energy – in an approach that some call “reverse innovation”—where poorer country innovations in products, business processes or policy are transferred to more developed countries. These new strategies, which go far beyond pricing and information sharing, could be adopted worldwide to accelerate the development and commercialization of low carbon technologies.
The two Africa examples show how public agencies, foundations, and NGOs can act as neutral brokers with the private sector to overcome market barriers, unleash innovation, and push products to commercialization.
- For example, in the Lighting Africa project, the International Finance Corporation (IFC) and the World Bank teamed up to deliver reasonably priced, solar-powered, high-quality off-grid lighting to millions of people without access to electricity. The team identified market gaps not addressed by the private sector—such as lack of information, financing, and quality products—and targeted each gap with direct support. It provided consumer education, built local capacity for product testing, and helped businesses access financing. It connected the producer to the consumer, and entrepreneurs to local and international stakeholders. The result is impressive success for the Lighting Africa project: from fewer than 8 off-grid products available in 2008, there are now at least 71 product types manufactured by 49 companies available to African consumers, at lower costs with each passing year.
- The second case study, a unique Gates Foundation-funded project called Innovations for Agricultural Value Chains in Africa demonstrates a new collaborative product development approach for agricultural climate adaptation technologies. Led by the Meridian Institute, a US-based NGO, this project brings together international expertise from non-agricultural disciplines—a form of “open and distributed innovation”—to analyze the problems from fresh perspectives. This interdisciplinary group recommended unexpected and creative technology solutions to overcome value chain gaps and increase the efficiency of agricultural markets for smallholder farmers. A key feature of this collaborative approach is its focus on joint research, and joint product and market development. The project has begun to refine concepts for actual products. One is a modified plastic tank for maize storage, now being sold in Kenya; the project plans to link potential financiers with other product ideas.
- The report also describes how an innovation systems approach could accelerate development and deployment of advanced marine hydrokinetic energy technologies (wave, tidal, and current devices), which have the potential to supply a significant amount of global electricity demand. Major hurdles— including high cost, challenging transmission infrastructure, regulatory thickets, and the absence of a “winning” technology among the vast field of mostly small, independently operating competitors— prevent these technologies from capitalizing on their international market potential. The Africa “innovation system” approaches suggest that public interventions targeted at specific barriers, that taps distributed knowledge and experience, could catalyze rapid learning and radical cost reductions in marine technology. This form of international collaboration could coordinate the creation of testing facilities, aggregate device performance and cost data to inform investors and research dollars, and develop new business models, financing schemes, and regulatory frameworks.
What this report shows is that, in contrast to the conventional wisdom—that the private sector alone, or that information sharing and carbon pricing alone, will solve the climate problem—successful innovation requires new policy thinking and interventions.
These projects demonstrate that much more integrated innovation strategies are needed to overcome the multiple barriers to get new climate products to scale in developing countries—whether it’s solar LED lighting, or agriculture adaptation products. Similar market barriers exist in the developed world, but we too often rely on easy solutions, when these more comprehensive, systems approaches—surprisingly already at use in developing countries—are needed.
The report can be downloaded from Clean Energy Group’s website at www.cleanegroup.org.
By: Jessica Morey and Lewis Milford, Clean Energy Group