Keith Smith, Imperial College, London.

1. Keith Smith, Imperial College, London. Transition to Renewables – Innovation and Policy Issues Globelics, Copenhagen, 4-5 April 2013

2. Adoption and sustainability • There is a viewthatthebasic problem is to encourageadoptionofavailablerenewableenergytechnologies. • There is a range of fundamental policy problems in thisthat must be approached in an integratedway • Background: the problem really is at least as serious as Erlichsuggests. Ny Powerpoint mal 2011

3. Core RETs problems If we are going to have large-scale RETS systems, then we must address: • Efficiency improvements via incremental innovation • Transition costs and the fallacies of ‘green growth’ • Intermittency and backup technologies • Supply constraints, the long-term investment profile and industrial capacity • Long-term radical innovation in energy carriers • Grids and transmission systems • Multilateral collaboration instruments NyPowerpoint mal 2011

4. Incrementaly improving RETS efficiency • Cost differentials and need for post-introduction improvements via innovation policy support • Technological improvements are system issues, so systems policies needed • History of technology suggests this is a long-term issue Ny Powerpoint mal 2011

5. Intermittency and backup A large-scale RETS-based system would require an on-demand backup. • Short-run: nuclear and natural gas? Big short-run task – move away from coal. • Costs of the ‘take or pay’ system • Long-run: a new technology based either on storage or a new solar technology Ny Powerpoint mal 2011

6. Industrial Policy • The scale of production increases is very large. • For renewable, roughly 10% CAGR is needed every year for 70 years. Major investment costs: with K/Y ratio of 3, we would be investing very large proportion of GDP over time • This only feasible with serious cost-reducing innovation • No industry has every grown at these rates for such a period Ny Powerpoint mal 2011

7. Costs of ‘green growth’ • ‘Green growth’ widely promoted in OECD, IEA etc • Simultaneous solution to recession and environmental constraints • But at present this would entail major GDP and welfare costs: what are political implications of this? • The implication for innovation policy is that we need long-range radical innovation in energy carriers Ny Powerpoint mal 2011

8. Radical energy innovation Tasks: Governance Define search paths Create organisations Capability building Finance Distribute benefits Implementation Ny Powerpoint mal 2011

9. System transitions • Recenttheory stresses system transitionsoften in thepresenceoflock-in and pathdependence. • Does not denytheeconomic dimensions, butlooks at thecomplexofchangesthatsecureeconomicviability • Theseincludechanges in infrastructure, training, complementary assets and regulatoryframeworks. Ny Powerpoint mal 2011

10. States and system transitions State action has playedsignificantroles in many system transitions: Rail – compulsorypurchaseof land, massive city reconfigurations Automobiles – highways, regulatory systems Generally – creationof networks and infrastructures, management of risk (reduction, allocation, sharing, bearing) Ny Powerpoint mal 2011

11. Governance Whyare states so ofteninvolved? States areunique in governance systems becausetheycancompelcompliance. Within system transitionstherearedomainsof state action thatneed more detailedwork – not just in developmentoftechnologiesbut in procurement, regulation etc. Ny Powerpoint mal 2011

12. Multilateral collaboration Three dimensions: Creation of major technical interdependencies – energy transmisssion across countries, with big implications for energy security • Collaborative search is necessary because of scale, risks, etc. Issues of finance, priority selection, IPRs, capability building, access. • At present, no institutional framework for this • A possible approach: Ostromon common property resources Ny Powerpoint mal 2011