Public R&D and commercialization of energy-efficient technology: A case study of Japanese projects

Are public R&D programs really effective in developing innovative technologies? How many technologies developed in these programs have been successfully commercialized? What are the key factors for successful commercialization and diffusion in the market? This paper tries to answer these questions by examining the Japanese experience of public R&D in demand-side energy efficiency, focusing on two major projects conducted in the 1980s and 1990s. It is found that of the 34 technologies developed in the two projects, only seven have been commercialized so far, four of those seven have only a very limited number of installations, and only one has a growing market. The results show that, while public R&D investments have a high risk of failure, they can bring new technologies to the market after a certain lead time. In addition, several factors resulting in the success or failure of commercialization/diffusion are identified, such as long-term R&D support by the government, a marketing strategy to respond to and influence market demand, and combination of R&D and deployment policy.     

Impact of energy technology patents in China: Evidence from a panel cointegration and error correction model

Enhancing energy technology innovation performance, which is widely measured by energy technology patents through energy technology research and development (R&D) activities, is a fundamental way to implement energy conservation and emission abatement. This study analyzes the effects of R&D investment activities, economic growth, and energy price on energy technology patents in 30 provinces of China over the period 1999–2013. Several unit root tests indicate that all the above variables are generated by panel unit root processes, and a panel cointegration model is confirmed among the variables. In order to ensure the consistency of the estimators, the Fully-Modified OLS (FMOLS) method is adopted, and the results indicate that R&D investment activities and economic growth have positive effects on energy technology patents while energy price has a negative effect. However, the panel error correction models indicate that the cointegration relationship helps to promote economic growth, but it reduces R&D investment and energy price in the short term. Therefore, market-oriented measures including financial support and technical transformation policies for the development of low-carbon energy technologies, an effective energy price mechanism, especially the targeted fossil-fuel subsidies and their die away mode are vital in promoting China's energy technology innovation.     

Energy technology roadmap for the next 10 years: The case of Korea

The Korea Institute of Energy Research (KIER), the only government-sponsored research institute specialized in the development of energy technology and policy, has established a long-term strategic energy technology roadmap (ETRM) for the period spanning from 2006 to 2015. Taking into account such variables as the energy environment, economic spin-off, and commercial potential, the ETRM was classified into 3 sectors, namely high oil prices, the UNFCCC, and the hydrogen economy. The ETRM not only represents a milestone in terms of the development of national energy technology in Korea, but also serves to identify the primary energy technologies which should be developed. The ETRM also supplies energy policymakers with successful R&D alternatives vis-à-vis the development of energy technologies under the current Korean energy environment.     

Hydrogen in China: Policy,program and progress

The paper introduces the role of energy in China economy context, criteria for sustainable development in energy sector, China's hydrogen vision, the role of hydrogen in China's R&D plan, recently launched national programs, and progresses and achievements in research, development and demonstration. The paper concludes that with fast economy development in the new era in China, the energy sector has been confronted with severe challenges in terms of supply security, environment pollution and greenhouse gas emission, and China has attached significant priority on research and development in hydrogen and fuel cell areas, as one of effective counter-measures to address these challenges. Transition to the hydrogen economy in China, a long-term, non-carbon energy solution, is believed to play a significant role, complementary to electricity, in the future sustainable energy system. It is recommended that more priority be attached for R&D in secondary industry, especially the utilization of hydrogen and fuel cell in stationary power generation from coal gasification.     

Is there a relationship between public expenditures in energy R&D and carbon emissions per GDP? An empirical investigation

Energy innovation plays a crucial role in the reduction of carbon emissions. In order to design climate and energy policies that promote the development, deployment and diffusion of new energy technologies, policy makers not only require a theoretical understanding of the energy innovation system, but also empirical evidence of the effects that policy actions have had. This paper focuses on public energy R&D, a traditional and controversial option among the various climate technology policies, and empirically analyses its relationship with carbon emissions per GDP (i.e. carbon intensity) and its two components: energy intensity and the carbon factor. Evidence of the causality links that have prevailed in 13 advanced economies over the 1980–2004 period has been obtained through dynamic panel models. Our findings confirm that government R&D spending is not sufficient by itself to boost the energy innovation process. Public energy R&D has been successful in improving energy efficiency at country level, but it has failed to have a significant impact on the carbon factor and carbon intensity. At the same time the formation of energy R&D budgets is found to be significantly affected by carbon trends.     

Optimal policy of energy innovation in developing countries: Development of solar PV in Iran

The purpose of this study is to apply managerial economics and methods of decision analysis to study the optimal pattern of innovation activities for development of new energy technologies in developing countries. For this purpose, a model of energy research and development (R&D) planning is developed and it is then linked to a bottom-up energy-systems model. The set of interlinked models provide a comprehensive analytical tool for assessment of energy technologies and innovation planning taking into account the specific conditions of developing countries. An energy-system model is used as a tool for the assessment and prioritization of new energy technologies. Based on the results of the technology assessment model, the optimal R&D resources allocation for new energy technologies is estimated with the help of the R&D planning model. The R&D planning model is based on maximization of the total net present value of resulting R&D benefits taking into account the dynamics of technological progress, knowledge and experience spillovers from advanced economies, technology adoption and R&D constraints. Application of the set of interlinked models is explained through the analysis of the development of solar PV in Iranian electricity supply system and then some important policy insights are concluded.     

Replacing tedium with transformation: Why the US Department of Energy needs to change the way it conducts long-term R&D

To avoid promoting technologies that merely produce incremental change, the US Department of Energy needs to establish a new organization designed to focus on transformational R&D projects. From its inception in 1977, the US Department of Energy (DOE) has been responsible for maintaining the nation's nuclear stockpile, leading the country in terms of basic research, setting national energy goals, and managing thousands of individual programs. Despite these responsibilities, however, the DOE research and development (R&D) model does not appear to offer the nation an optimal strategy for assessing long-term energy challenges. American energy policy continues to face constraints related to an overly rigid management structure and loss of mission within the DOE, layers of stove-piping within and between the national laboratories, and inadequate public and private funding for energy R&D. To address these concerns, an independent organization dedicated to transformative, creative energy R&D is required.     

Biofuels in the U.S. – Challenges and Opportunities

Biofuels are of rapidly growing interest for reasons of energy security, diversity, and sustainability – as well as for greenhouse gas mitigation. In recent years, the U.S. has enacted regulations – and adopted aggressive goals – to encourage increased usage of biofuels. Individual States (especially California) have taken even stronger positions with respect to biofuels. Initial efforts have focused mainly on ethanol, produced via fermentation of sugars from grains (especially corn). Today's R&D focus is on “2nd Generation Biofuels” that are produced from a variety of biomass feedstocks utilizing a wide range of conversion technologies. This paper summarizes policy and regulatory drivers for biofuels in the U.S., describes usage trends and projections, and highlights major R&D efforts to promote development and commercialization of 2nd Generation Biofuels. R&D is being conducted in many areas, including biomass resource assessment, development of new biomass feedstocks, improved conversion technologies, and integration of systems. Other important considerations include fuel quality and specifications, as well as requirements for blending, distribution, and storage. Considerable R&D, policy, and regulatory efforts are also focused on the energy and environmental consequences of biofuels. This includes not only direct emissions associated with vehicular uses, but also the fuels' life-cycle impacts with respect to total energy usage, greenhouse gas emissions, and multi-media effects. Due to the wide diversity of biomass feedstocks, conversion technologies, and systems integration approaches, the life-cycle impacts of biofuels can vary widely.     

The ECOS 2009 World Energy Panel: An introduction to the Panel and to the present (2009) situation in sustainable energy development

This paper introduces the ECOS 2009 conference World Energy Panel, and presents the opening talk that briefly surveys the present (2009) situation in sustainable energy development. Recent (2008) estimates and forecasts of the oil, gas, coal resources and their reserve/production ratio, nuclear and renewable energy potential, and energy uses are surveyed. A brief discussion of the status, sustainability (economic, environmental and social impact), and prospects of fossil, nuclear and renewable energy use, and of power generation (including hydrogen, fuel cells, micro-power systems, and the futuristic concept of generating power in space for terrestrial use), is presented. Comments about energy use in general, with more detailed focus on insufficiently considered areas of transportation and buildings are brought up. Ways to resolve the problem of the availability, cost, and sustainability of energy resources alongside the rapidly rising demand are discussed. The author’s view of the promising energy R&D areas, their potential, foreseen improvements and their time scale, and last year’s trends in government funding are presented.     

Prioritizing the weights of hydrogen energy technologies in the sector of the hydrogen economy by using a fuzzy AHP approach

KIER, government supported research institute, establishes a long-term strategic energy technology development roadmap essentially with selection and specialization of energy technology R&D and for Korea's national security. In this paper, we establish a strategic hydrogen energy technology roadmap taking economic impact, commercial potential, inner capacity, and technical spin-off into account. We suggest a methodology to prioritize the relative weights of hydrogen energy technologies of hydrogen energy technology roadmap (ETRM) as we allocate R&D budget effectively using a fuzzy analytic hierarchy process (AHP), which reflects the vagueness of human thoughts instead of crisp numbers efficiently. In the sector of the hydrogen ETRM which is composed of 6 hydrogen energy technologies, PEMFC technology is the most preferred and technology (0.29), followed by DEFC tech (0.28), SOFC tech (0.24), Hydrogen separation & storage tech (0.10), and Hydrogen production tech (0.09).     

Impact of innovation programs on development of energy system: Case of Iranian electricity-supply system

The paper presents further experiments with an extended version of a comprehensive model for assessment of energy technologies and research and development (R&D) planning to evaluate the impact of innovation programs on development of Iranian electricity-supply system. This analytical instrument is a model of energy R&D resource allocation with an explicit perspective of developing countries which has been linked to a bottom-up energy-systems model. Three emerging electricity generation technologies of solar PV, wind turbine and gas fuel cell are considered in the model and the impact of innovation programs on cost-reducing innovation for them is examined. The main results provided by the modeling approach include optimal allocation of R&D resources, induced capacity expansion policies to guarantee the effectiveness of R&D activities, competitive cost of emerging technologies, impact of innovation programs on optimal structure of electricity-supply system and benefits of innovation programs in the long-run.     

Green electricity market development: Lessons from Europe and the US

This study compares the development and implementation of green electricity policies in Germany, the Netherlands, Sweden, and the United States, a set of countries applying a range of policy instruments to encourage electricity from renewable energy sources. A general tendency is identified that policies shift emphasis from R&D stimulation towards dissemination and market application of renewable energy technologies. We argue that in light of the long term nature of policy goals on energy security, mitigation of climate change, and environmental protection, the applied range of policy instruments may be lacking in providing incentives for the long term development of new technologies. Clarifying policy objectives would allow careful selection of policy instruments, including support for R&D. Improved capacity building for policy implementation is also important.     

The case for a new energy research,development and promotion policy for the UK

This paper is a critical assessment of the current balance of efforts towards energy research and development (R&D) and the promotion of low-carbon electricity technologies in the UK. We review the UK's main technological options and their estimated cost ranges in the medium term. We contrast the energy R&D spending with the current and expected future cost of renewable promotion policies and point out the high cost of carbon saving through existing renewable promotion arrangements. We also note that liberalisation of the electricity sector has had significant implications for the landscape of energy R&D in the UK. We argue that there is a need for reappraisal of the soundness and balance of the energy R&D and renewable capacity deployment efforts towards new energy technologies. We suggest that the cost-effectiveness of UK deployment policies needs to be more closely analysed as associated costs are non-trivial and expected to rise. We also make a case for considering increasing the current low level of energy R&D expenditure. Much of energy R&D is a public good and we should consider whether the current organisation of R&D effort is fit for purpose. We argue that it is important to build and maintain the research capability in the UK in order to absorb spillovers of technological progress elsewhere in the world. Against this background, the recent signs that an energy R&D renaissance could be underway are therefore positive and welcome.     

Japanese wind energy development policy: Grand plan or group think?

This paper analyzes Japan's national power generation strategy with a view to explaining Japan's phlegmatic approach to wind energy development. The analysis concludes that Japan's current power generation strategy is not optimized to achieve the government's three strategic energy objectives of simultaneously enhancing economic security, national energy security and environmental security (3Es). To achieve long-run energy sustainability, Japan needs to strive to phase out nuclear power, which is the centerpiece of its current power generation strategy. The analysis concludes by offering four suggestions for a sustainable 3E power generation strategy: (1) internalize all external costs associated with power generation technologies in order to level the economic playing field, (2) increase feed-in mandates for renewable energy to 20%, (3) fully liberalize the power generation industry and (4) intensify R&D in energy storage technologies to support intermittent renewable technologies.     

U.S. energy research and development: Declining investment,increasing need,and the feasibility of expansion

Investment in energy research and development in the U.S. is declining despite calls for an enhancement of the nation's capacity for innovation to address environmental, geopolitical, and macroeconomic concerns. We examine investments in research and development in the energy sector, and observe broad-based declines in funding since the mid-1990s. The large reductions in investment by the private sector should be a particular area of concern for policy makers. Multiple measures of patenting activity reveal widespread declines in innovative activity that are correlated with research and development (R&D) investment—notably in the environmentally significant wind and solar areas. Trends in venture capital investment and fuel cell innovation are two promising cases that run counter to the overall trends in the sector. We draw on prior work on the optimal level of energy R&D to identify a range of values which would be adequate to address energy-related concerns. Comparing simple scenarios based on this range to past public R&D programs and industry investment data indicates that a five to ten-fold increase in energy R&D investment is both warranted and feasible.     

Measuring the relative efficiency of hydrogen energy technologies for implementing the hydrogen economy: An integrated fuzzy AHP/DEA approach

To provide and improve national energy security and low-carbon green energy economy, as a government-supported research institute related to developing new and renewable energy technologies, including energy efficiency, Korea Institute of Energy Research (KIER) needs to establish a long-term strategic energy technology roadmap (ETRM) in the hydrogen economy sector for sustainable economic development. In this paper, we establish a strategic ETRM for hydrogen energy technologies in the hydrogen economy considering five criteria: economic impact (EI), commercial potential (CP), inner capacity (IC), technical spin-off (TS), and development cost (DC). As an extended research, we apply the integrated two-stage multi-criteria decision-making approach, including the hybrid fuzzy analytic hierarchy process (AHP) and data envelopment analysis (DEA) model, to assess the relative efficiency of hydrogen energy technologies in order to scientifically implement the hydrogen economy. Fuzzy AHP reflects the vagueness of human thought with interval values, and allocates the relative importance and weights of four criteria: EI, CP, IC, and TS. The DEA approach measures the relative efficiency of hydrogen energy technologies for the hydrogen economy with a ratio of outputs over inputs.The result of measuring the relative efficiency of hydrogen energy technologies focuses on 4 hydrogen technologies out of 13 hydrogen energy technologies. KIER has to focus on developing 4 strategic hydrogen energy technologies from economic view point in the first phase with limited resources. In addition, if energy policy makers consider as some candidates for strategic hydrogen technologies of the other 9 hydrogen energy technology, the performance and productivity of 9 hydrogen energy technologies should be increased and the input values of them have to be decreased.With a scientific decision-making approach, we can assess the relative efficiency of hydrogen energy technologies efficiently and allocate limited research and development (R&D) resources effectively for well-focused R&D.     

Uncertainty modeling of CCS investment strategy in China’s power sector

The increasing pressure resulting from the need for CO₂ mitigation is in conflict with the predominance of coal in China’s energy structure. A possible solution to this tension between climate change and fossil fuel consumption fact could be the introduction of the carbon capture and storage (CCS) technology. However, high cost and other problems give rise to great uncertainty in R&D and popularization of carbon capture technology. This paper presents a real options model incorporating policy uncertainty described by carbon price scenarios (including stochasticity), allowing for possible technological change. This model is further used to determine the best strategy for investing in CCS technology in an uncertain environment in China and the effect of climate policy on the decision-making process of investment into carbon-saving technologies.     

A MERGE model with endogenous technological change and the cost of carbon stabilization

Two stylized backstop systems with endogenous technological learning (ETL) are introduced in the “model for evaluating regional and global effects” (MERGE): one for the electric and the other for the non-electric markets. Then the model is applied to analyze the impacts of ETL on carbon-mitigation policy, contrasting the resulting impacts with the situation without ETL. We model research and development (R&D) spending and learning subsidies for the demonstration and deployment stage as control variables, and we investigate the ability of this extra spending to create path-dependent experience and knowledge to aid in the implementation of carbon-free technologies. Based on model estimations and sensitivity analyses, we conclude that increased commitments for the development of new technologies to advance along their learning curves has a potential for substantial reductions in the cost of mitigating climate change and thereby helping to reach safe concentrations of carbon in the atmosphere.     

Sustainable energy development: The present (2009) situation and possible paths to the future

Recent estimates and forecasts of the oil, gas, coal resources and their reserve/production ratio, nuclear and renewable energy potential, and energy uses are surveyed. A brief discussion of the status, sustainability (economic, environmental and social impact), and prospects of fossil, nuclear and renewable energy use, and of power generation (including hydrogen, fuel cells, micropower systems, and the futuristic concept of generating power in space for terrestrial use), is presented. Comments about energy use in general, with more detailed focus on insufficiently considered areas of transportation and buildings are brought up. Ways to resolve the problem of the availability, cost, and sustainability of energy resources alongside the rapidly rising demand are discussed. The author’s view of the promising energy R&D areas, their potential, foreseen improvements and their time scale, and last year’s trends in government funding are presented.     

A model-based assessment of the impact of revitalised R&D investments on the European power sector

This paper presents an analysis of the effect of enhanced research and development (R&D) efforts for a set of low-carbon power technologies on the development of the European energy sector. It applies a methodology using the concept of Two-Factor-Learning, which quantitatively links trends in technology cost to both accumulated R&D investments and production volumes. The impacts of the latter on the energy sector are then simulated in a consistent manner with the POLES global energy model. On this basis, it compares the total system costs of an assumed increase in worldwide R&D investments that for the EU are in line with proposals made in its European Strategic Energy Technology Plan to a baseline development. It finds that an increase in research efforts at a global level will contribute to reducing the costs of currently less mature low-carbon technologies, thus accelerating their market entry. When comparing two scenarios that both fulfil the EU's 2020 energy and climate objectives and differing only in their R&D investment levels, the reduced technology costs allow EU support policies for renewables and carbon values to be reduced, and the cumulative (discounted) benefit of the accelerated research efforts is positive in the long term.