Policies forEnergy TechnologyInnovation SystemsArnulf GrublerIIASA & Yale University

www.globalenergyassessment.org© GEA 2012 2

Energy Technology Innovation

Energy technology innovation isthe embodied result of institutionalized research, development and deployment effortsdriven by collective learning processesinvolving both suppliers and users of technologiesoperating in specific contextsof adoption environments and incentive structures.

GEA Chapter 24

www.globalenergyassessment.org© GEA 2012 3

Chapter 24 Highlights & News

● New concepts:-- Systems perspective (ETIS)-- “granularity” of technologies/projects

● New quantifications:- ETIS resource mobilization- R&D in BRIMCS- knowledge depreciation- impacts of policy misalignments and volatility- innovation portfolio biases

● Generic criteria for policy design:-- Knowledge: feedbacks (experimentation), spillovers (globalization)-- Policy: stability, alignment-- Targets: systems, and portfolio based

● Literature review + research + 20 GEA case studies

www.globalenergyassessment.org© GEA 2012 4

World – Primary Energy Transitionschangeover time Δts: 80-130 years

World Primary Energy Substitution

0

25

50

75

100

1850 1875 1900 1925 1950 1975 2000 2025

Perc

ent i

n Pr

imar

y En

ergy

traditional biomass

coal

modern fuels:oil, gas,electricity

World Primary Energy Substitution

0

25

50

75

100

1850 1875 1900 1925 1950 1975 2000 2025

Perc

ent i

n Pr

imar

y En

ergy

traditional biomass

coal

modern fuels:oil, gas,electricity

Begin of energy policy focus: Δt’s >2000 yrs

Δt -130 yrs

Δt -80 yrs

Δt +90 yrs

Δt +130 yrs

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The GEA ETIS Framework

AC

TOR

S &

INS

TITU

TIO

NS

TEC

HN

OLO

GY

CH

AR

AC

TER

ISTIC

SKNOWLEDGE

RESOURCES

learninggenerationsh

ared

ex

pect

atio

nsen

trepr

eneu

rs /

risk

taki

ng cost

resourceinputs

public policy & leverage

performance

AC

TOR

S &

INS

TITU

TIO

NS

TEC

HN

OLO

GY

CH

AR

AC

TER

ISTIC

SKNOWLEDGE

RESOURCES

learninggeneration

shar

ed

expe

ctat

ions

entre

pren

eurs

/ ris

k ta

king cost

resourceinputs

public policy & leverage

performance

www.globalenergyassessment.org© GEA 2012 6

ETIS at Work: US Solar Thermal 1982-1992

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Post Fossil Technologies Cost Trends

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Cumulative Experience /Learning Favors “granular” Technologies

category technology data for: cumulative production (units) learning# exp period rate

energy Transitors World >1 10^18 1960-2010 40end-use DRAMs World >1 10^11 1975-2005 16 - 24 Automobiles World >2 10^9 1900-2005 9 - 14

Washing machines World >2 10^9 1965-2008 33 ±9Refrigerators World >2 10^9 1964-2008 9 ±4Dishwashers World >6 10^8 1968-2007 27 ±7Freezers (upright) World >6 10^8 1970-2003 10 ±5Freezers (chest) World >5 10^8 1970-1998 8 ±2Dryers World >3 10^8 1969-2003 28 ±7Hand-held calculators US >4 10^8 early 1970s 30CF light bulbs US >4 10^8 1992-1998 16A/C & heat pumps US >1 10^8 1972-2009 18 ±1Air furnaces US >1 10^8 1953-2009 31 ±3Solar hot water heaters US >1 10^6 1974-2003 -3

average for end-use technologies 10^9 20energysupply PV modules World >1 10^10 1975-2009 18-24

Wind turbines World >1 10^5 1975-2009 10-17Heat pumps S, CH <1 10^5 1982-2008 2 - 21Gas turbines World >4 10^4 1958-1980 10-13Pulverized coal boilers World >6 10^3 1940-2000 6Hypropower plants OECD ~5 10^3 1975-1993 1Nuclear reactors US, France <1 10^3 1971-2000 -20 - -47Ethanol Brazil <1 10^3 1975-2009 21Coal power plants OECD <1 10^3 1975-1993 8Coal power plants US <1 10^3 1950-1982 1 - 6Gas pipelines US <1 10^3 1984-1997 4Gas combined cycles OECD <1 10^3 1981-1997 10Hydrogen production (SRM) World >1 10^2 1980-2005 27LNG production World >1 10^2 1980-2005 14

average for suppy technologies 8average for supply, excluding nuclear 1210^4

learning

Draft, table will be replaced by graphic in final presentation

www.globalenergyassessment.org© GEA 2012 9

Knowledge Depreciation Rates (% per year)empirical studies reviewed GEA KM24 (2012) and

modeled R&D deprecation in US manufacturing (Hall, 2007)

Knowledge Depreciation Rates (% per year)empirical studies reviewed GEA KM24 (2012) and

modeled R&D deprecation in US manufacturing (Hall, 2007)

Degree of technological obsolescence (rate of innovation)

Deg

ree

of k

now

ledg

e st

ock

turn

over

(pol

icy

& h

uman

cap

ital v

olat

ility

)

PV Japan:30%Wind US:

10%

Engineeringdesigns US:

<5%

Serviceindustries:

95%

Aircraft,Liberty shipsmanufct. US:

40%

Chemicals,Drugs:15-20%

Computers:32%

Electrical,Machinery:

32-36%Miscell.>20%

OECDnuclear R&D:

10 – 40%

Francebreeder reactors:50-60%

High

High

Low

www.globalenergyassessment.org© GEA 2012 10

ETIS Actors & Institutions

Institutional design for technology innovationremains amiss of importance of BRICs in energy R&D and “minimizes” global knowledge spillovers

0

5

10

15

20

25

OECD BRICs

Billi

on U

S$20

05 P

PP

Energy R&D Investments (public+private)

electricity+other

fossil fuels

nuclear

renewables

efficiency

National Energy R&D(public+private)

0 25 50 75 100 125 150

End-Use: Industry

Fussion Pow er

Cross-Cutting

End-Use: Electricity

End-Use: Transport

Fossil fuels

End-Use: Buildings

Renew ables andHydrogen

OECD vs BRICs

International Clean-tech collaborations(# of IEA implementation agreements)

www.globalenergyassessment.org© GEA 2012 11

World ETIS Resource MobilizationBillion $2005

innovation market diffusion(RD&D) formation

End-use & efficiency >>8 5 300-3500Fossil fuel supply >12 >>2 200-550Nuclear >10 0 3-8Renewables >12 ~20 >20Electricity (Gen+T&D) >>1 ~100 450-520Other* >>4 <15 n.a.Total >50 <150 1000 - <5000 non-OECD ~20 ~30 ~400 - ~1500 non-OECD share >40% <20% 40% - 30%

* hydrogen, fuel cells, other power & storage technologies, basic energy research

Source: GEA KM24, 2012

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Public Policy-induced ETIS Investmentsbillion US$2005

Source: Wilson et al. Nature CC 2012

Technology Lifecycle

R,D&D(public $)

Diffusion Support

Market Formation

Social Rates of Return

Analysis & Modelling

Future Needs

CLIMATE MITIGATION

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KNOWLEDGE

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learninggenerationsh

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ex

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atio

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trepr

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rs /

risk

taki

ng cost

resourceinputs

public policy & leverage

performance

key

Roadmaps & Portfolios

Technology Collaborations

Learning Effects

Directable (Activities)

Non-Directable (Outputs)

Technology Lifecycle

R,D&D(public $)

Diffusion Support

Market Formation

Social Rates of Return

Analysis & Modelling

Future Needs

CLIMATE MITIGATION

supply : end-use(relative effort)

AC

TOR

S &

INS

TITU

TIO

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TEC

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OLO

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AR

AC

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ISTIC

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KNOWLEDGE

RESOURCES

learninggenerationsh

ared

ex

pect

atio

nsen

trepr

eneu

rs /

risk

taki

ng cost

resourceinputs

public policy & leverage

performance

key

Roadmaps & Portfolios

Technology Collaborations

Learning Effects

Directable (Activities)

Non-Directable (Outputs)

LAs:Francisco Aguayo (Colegio de México)Kelly Gallagher (Tufts University)Arnulf Grubler (IIASA & Yale), CLAMarko Hekkert (Utrecht University)Kejun Jiang (ERI, China)Lynn Mytelka (UNU)Lena Neij (Lund University)Gregory Nemet (Univ. Wisconsin)Charlie Wilson (Tyndall Centre)

CAs:Leon Clarke (JGCRI, University of Maryland)Per Dannemand Andersen (Denmark TU)Laura Diaz Anadon (Harvard University)Sabine Fuss (IIASA)Martin Jakob (ETH Zürich)Daniel Kammen (University of CA, Berkeley)Ruud Kempener (Harvard University)Osamu Kimura (CRIEPI, Japan)Bernadette Kiss (Lund University)Anastasia O'Rourke (BigRoom Inc.)Robert N. Schock (World Energy)Paulo Teixeira de Sousa Jr. (Univ.Mato Grosso)

LAs:Francisco Aguayo (Colegio de México)Kelly Gallagher (Tufts University)Arnulf Grubler (IIASA & Yale), CLAMarko Hekkert (Utrecht University)Kejun Jiang (ERI, China)Lynn Mytelka (UNU)Lena Neij (Lund University)Gregory Nemet (Univ. Wisconsin)Charlie Wilson (Tyndall Centre)

CAs:Leon Clarke (JGCRI, University of Maryland)Per Dannemand Andersen (Denmark TU)Laura Diaz Anadon (Harvard University)Sabine Fuss (IIASA)Martin Jakob (ETH Zürich)Daniel Kammen (University of CA, Berkeley)Ruud Kempener (Harvard University)Osamu Kimura (CRIEPI, Japan)Bernadette Kiss (Lund University)Anastasia O'Rourke (BigRoom Inc.)Robert N. Schock (World Energy)Paulo Teixeira de Sousa Jr. (Univ.Mato Grosso)

GEA Chapter 24 Authors and Resources

Resources:Chapter 24: http://www.globalenergyassessment.org/Chapters/Chapter 24

Case studies: http://www.iiasa.ac.at/web/home/research/researchPrograms/ TransitionstoNewTechnologies/CaseStudy_home.en.html

Related publications: Gallagher, K.S., A. Grubler, L. Kuhl, G. Nemet, C. Wilson, 2012. The Energy Technology Innovation System.

Annual Review of Environment and Resources, 37:137-62 doi:10.1146/annurev-environ-060311-133915.Wilson, C., Grubler, A., Gallagher, K. S., Nemet, G.F., 2012. Marginalization of end-use technologies in energy innovation

for climate protection. Nature Climate Change, 2(11), 780-788, doi: 10.1038/nclimate1576. A. Grubler and C. Wilson (eds.), Energy Technology Innovation: Learning from Historical Successes and Failures,

Cambridge University Press (in press)