Sustainability Science Program

Sustainability Science Program Working Paper No. 2013-03

Sustainability Science Program Working Paper No. 2013-03

Energy Sector Discussion Paper: Background Paper for the Project on Innovation and Access to Technologies for Sustainable Development

Laura Diaz Anadon, Gabe Chan, Erin Kempster, Lee Vinsel, Jennie Stephens, Kathy Araujo, and Patricia Guardabassi

Abstract

This background paper examines how the model set forth in the “Conceptual Framework for the Project on Innovation and Access to Technologies for Sustainable Development” applies to the energy sector. The project posits that increasing innovation and access to technology in several key sectors, including the energy sector, can enhance economic development and improve environmental quality to enable sustainable development and a more equitable society. However, the project does not presume the desirability of any specific technology. Instead, the project relies on the existing scholarly literature and original case studies to understand the key barriers (or missing mechanisms) that slow innovation in different specific technologies. This paper, and the project as a whole, seeks to understand the most important barriers and missing mechanisms throughout the entire range of innovation stages: from invention through filtering, adoption, adaptation, use, and obsolescence.

The paper first articulates the key goals and norms that have influenced the evolution of the global energy innovation system, with an emphasis on the issues of intra- and inter-generational equity in accessing the benefits of technological progress widely. These goals and norms can be classified as: (1) improving energy availability and access to promote human development; and (2) decreasing the risks of climate change and other negative environmental and health impacts.

Second, the paper summarizes the key actors and institutions in the global energy innovation system and its many national sub-systems. A thorough analysis of what international and national actors can do to promote innovation in different energy technologies is difficult due to important gaps in information and data.

Third, the paper identifies a range of innovation mechanisms that are weak or absent in the four technology clusters of the energy sector. Where appropriate, the paper also postulates causes for the weakness or absence of these mechanisms, particularly in the context of low- and middle-income countries. This section comes to several preliminary conclusions which we study in five energy sub-sectors: centralized power generation, distributed power generation, liquid fuel technologies, transportation technologies, and stationary end-use technologies.

The most important missing mechanisms in centralized power generation systems are primarily in the filtering and adoption stage, where entrenched actors favoring the status quo often do not have an incentive to promote new technologies. Cultural differences as well as variation in national political priorities, such as energy security, can also contribute to whether or not a country pursues a technological option.

In distributed power generation, end users may not see the benefits of adopting technologies, such as solar photovoltaics, that often have high relative prices, thereby slowing innovation. While this has been a key barrier to widespread adoption, solar power is becoming cost competitive in some contexts, such as rural settings without existing centralized power generation systems.

In liquid fuel technologies, one important fuel technology, biofuels, faces relatively weak mechanisms in the adoption and widespread use stages, where innovation is generally limited by insufficient access to financing, a lack of regulations for land ownership, a lack of physical and logistical infrastructure to support technologies and disseminate products, and disputes regarding the environmental benefits of the technology.

In transportation technologies, there are generally weak invention mechanisms, but the adoption stage is also slowed by the lack of mechanisms to co-develop the physical infrastructure to enable more widespread adoption of vehicles with advanced drive trains.

In stationary end-use technologies, more efficient and safer end-use products face multiple challenges across the innovation stages. Many of the challenges stem from innovation mechanisms which insufficiently account for cultural and behavioral tendencies that affect adoption, with repercussions for the effectiveness of invention and filtering mechanisms. Relatively recently, actors in the energy innovation system have begun to devote greater focus to developing end-use products for developing country markets. Higher up-front costs, which make financing investments more difficult, in conjunction with relatively poor information about the long-term health and energy savings benefits of more efficient end-use technologies may also contribute to limited adoption.

The goal of this paper is to allow a comparison with other sectoral background papers (on the water, health, food, and manufacturing sectors) using a common terminology and framework developed in the broader project. In the coming months, these five sectoral background papers will be complemented by over 18 detailed case studies covering different technologies, stages of technology development, and innovation systems across the five sectors. The background papers and cases will be summarized in a synthesis paper, which will also distil lessons from the entire project for international actors and policy makers.

Keywords: Energy policy; technology innovation; innovation systems; sustainable development

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