Creating Innovation Policy Frameworks to Unlock the Value

of Green Growth

Richard A. JohnsonVice-Chairman, BIAC Technology Committee;Chairman, Biotechnology and Nanotechnology

Committees

OECD Workshop on Delivering Green GrowthSeoul, 5-6 March 2010

johnsri@alum.mit.edu

New Thinking about Innovation is Key to GG

• It’s not just about R&D and S&T – the key role of non-technological innovation

• The demand-side matters, too– Smart Regulations and standards– Public procurement and demand supports– Demand-led Innovation

• Emergence of New Business Models and Types of Public-private Collaborations – No One Size Fits All – at the Global, Regional and Local Level

• Open Innovation allows “plug and play” on a global scale

• GG must be placed in context of broader Innovation

Integrating Green Growth as a Core Part of National Innovation Systems

2. Convergence Creates New Opportunities for GG

Interdisciplinary is the New Normal – Complexity, Convergence and Networking

Policy Frameworks to Realize the Potential of Multiple Core Technology Platforms for Creating Economic

Value and Meeting Societal Grand Challenges

• Next-generation ICT

• Bio-based Economy and the Life Sciences Revolution– Industrial Biotechnology and Sustainable Bio-based products– Synthetic Biology– “Omics”

• Nanotechnology

3. Multiple Dimensions of Green Growth Sustainability for Business

• All business sectors have potential for green growth

• Aligning the corporate “green growth” strategy with its overall business strategy– Environmental strategies integrated (2x increase in 4 years)– Green branding and value creation across the product and

service life cycle (80% of CEOs now agree)– Compliance management – regulatory, standards, reporting– Knowledge management– Cost-efficient sustainability

• Performance monitoring• Advanced modeling techniques

IBM – Green and beyond (2009)

GG - Moving from Business Cost to Business Growth

Key Goal for Business: Unlocking the Value in Green

• Instrumentation + Interconnections + Intelligence

• Promoting sustainable operational efficiency– Supply chain management– Design for green growth and sustainability– Greening of jobs– Green buildings and Infrastructures– Intelligent “green growth” ecosystems

• Low-Carbon Conversion Challenges for Policy – GG is not “painless”– Predictability and Sustainability of Policy Measures– Structural Adjustments and Transition Costs– Transaction Costs and Unintended Competitive Consequences

Energy Efficiency and Best Available Technologies Provide a “Win-Win” for Business and Public Policy

• You are only as Green as your Supply Chain

• Design products with sustainability as core principal

• Meaningful goals and metrics (‘What gets measured gets managed”)

• Supply network key to environmental/energy strategy

• New competitive edge for suppliers

• Standards and collaboration

Increasing Role of Supply Chains in Green Growth

Customer-Driven Innovation for Green Growth

• Key shift: consumer expectations about green growth change how we define, design and deliver value

• Emerging Marketplace for Values

• But don’t market to “green consumers” (S. Bishop, IDEO)– Alienates mainstream base of consumers– Green ghettos derail green growth– Marketing and consumer studies increasingly show:

• Ted Levitt/HBS: “people who buy electric drills don’t need drills, they need holes”

• Consumers want solutions to their day-to-day needs that also make sense for the environment, energy and climate change

• Increased role of brands, corporate sustainability strategies, competition

Knowledge-Intensive Services Enable GG

4. Entrepreneurial Ecosystems Increasingly Drive Green Growth

Enabling the Entrepreneurial Ecosystem for Green Growth

• Governments need to support all types of entrepreneurship and an entrepreneurial culture – SMEs (sustainable companies that can grow are key)– Increased competition for global enterprises– Social Entrepreneurship– Venture Philanthropy and Market Accountability– Emergence of Public-Private Entrepreneurs (PPEs)

• Increasing role of university-based entrepreneurial ecosystems at the heart of GG – New university-industry models: collaboratories and

broader/deeper partnerships (e.g., MITEI and OSCAR/Brown)– New opportunities for commercialization

5. Investment and Capital Formation Demand More Attention, More Predictability and More Innovation

Promote Sustainable Policies for Investment and Capital Formation – and Don’t Forget Tax Policies

• Short-term stimulus measures v. MT/LT sustainable financing, linked to tax and capital formation policies

• Subsidies are not optimal LT instruments

• Public funding instruments: few “innovative” instruments and approaches to finance eco-innovation; need a mix of different instruments

• Private funding -- private equity and VCs are necessary but not sufficient; need a broader toolkit (including bank incentives for R&D)

• Public-private partnerships and leverage public R&D

• Avoid distortions for environmentally-friendly goods and services

Need Multiple Financing Mechanisms to Overcome Gaps

Technofixes – Low Hanging Fruit (Connors, MITEI 2009)

• Five Classes• • Buildings and Appliances

• • Vehicle Fuel Economy and Biofuels

• • Industrial Energy Efficiency

• • CO2 Intensity of Power

• Four Questions• • Only CO2 Cost Benefits?• • New Energy Technology Bias? (New vs. Retrofits)

• • Substitution of Energy with Information

• • Reliability/Variability

6. Broaden Policy Focus from Green Jobs to “Greening of Jobs”

• Innovation capacity in GG depends on Human Capital

• Innovation + Green Growth = Job Creation

• Interactions among sectors and green employment –both traditional and new “green growth” business

• Investment in training, skills and education for GG

• Creating “sustainable” and “growth” SME jobs

7. Create Smart Infrastructures for Green Growth

• Smart Grids, Sensors, and Digital Utility Networks

• Transportation and Logistics

• Systems Approach

• Intelligent energy exploration, production and storage

McKinsey “Pathways to a Low-Carbon EconomyVer.2 Global Greenhouse Gas Abatement Cost Curve”

(Jan.’09)

Infrastructure Includes Smarter Buildings and Construction (U.S. – Sec’y Chu/DOE) – Open

Innovation and Trento

Policies Linking Short and LT GG Investment -- Smart Grid Infrastructure (EPRI)

Need for a Common Language and Metrics in GG Infrastructure – What’s a “Smart Grid”?

• Many Flavors of the “Smart Grid” – Steve Connors, MITEI (Oct. 2009)• • Which Smart Grid are You?• • Large Scale Renewables Integration (HV/MV)• • The Smart Meter-Smart House Smart Grid (LV)• – Including Net-Zero Buildings and Smart Vehicle Charging

• • Local Microgrids - with Dist. Gen. and V2G• • All of the Above? If so, when and how?

• • How Smart is Your Smart Grid?The “Mensa Grid” (Genius Grid)

• The “Not Dumb Grid”• The “Not as Smart as it Thinks it Is Grid”• • Beyond Smart Grid OEM Hardware…

• • Who’s Smart Grid is It? (Access and use of Information)• • Timely Upgrade/Retrofit Approach• • Who Invests? Who Pays? Who Benefits

New Policy Frameworks to Link GG Infrastructures, New Technologies and “Old” Industries

8. Intellectual Assets, IPR and Knowledge Networks Increasingly Drive GG and Value Creation

– Intellectual Assets for Value Creation – it’s more than IPR

– Proliferation of Knowledge Networks and Markets

– Getting the IPR Framework “Right” • Investments, risk sharing and ROI• Tradable, securitization, and transparent• Incentives

– Collaborative Mechanisms for Green Growth• New Access and Diffusion Models for IPR• Precompetitive Consortia• New Models of Public-Private Partnerships

Networks and Boundary Spanning Intermediaries (Steward)

9. Strategic Partnerships Increasingly Drive Green Growth – “No One Size Fits All”

• Sponsored Research and “windows into research”• Increased trend toward “Collaboratories” and other

longer-term, multi-directional partnerships • “User-driven Innovation” and distributed R&D networks

create new commercialization opportunities• Integrating entrepreneurial ecosystems and investments• Public-private partnerships for addressing societal issues • Social Entrepreneurship and Venture Philanthropy• Pre-competitive and shared infrastructure• Spatial Dimension of Innovation -- Location-specific

competencies and the role of clusters/hubs

10. Need Systems Thinking in Policymaking for Green Growth

• Essential to solving complex problems

• Broader context of interconnections and networks must be linked to – Technological– Business– Organizational– Social issues

THANKS! 감사합니다

Contact Information – Richard A. Johnson

CEO, Global Helix LLCrichard.johnson@globalhelix.net

Senior Counsel and Senior Partner (Ret.), Arnold & Porter LLP

richard.johnson@aporter.com