“With climate change and depleting natural resources threatening our future, we need to change the way we think, the way we live and the way we do business. We need to innovate – to take advantage of new ideas and new technologies,” says OECD Secretary-General Angel Gurria. “At the same time, the economic crisis means governments must decrease their deficits and create jobs. And here again eco-innovation has a key role to play”.
The report outlines how and why carbon capture and storage, combined heat and power generation and fuel cells, electric cars, bio-packaging and solar tiles have developed and spread. It finds government policies to support eco-innovation are partly driven by market structures and competition, and so differ from country to country.
In Canada, the oil and gas industry developed technology for carbon capture and storage (CCS) to save money by enhancing operating efficiency. In Germany, where there is a price on carbon emissions, the power sector saved money by developing innovative CCS technologies to reduce the CO2 emitted by coal-fired power plants. In France, the priority is to develop CCS technologies that will sell in international markets.
Better Policies to Support Eco-innovation warns governments to ensure that their eco-innovation policies don’t interfere with other environmental efforts. For example, governments should be aware that pushing new CCS technologies can dampen enthusiasm for investment in alternative energy sources. This happens in Germany where cost-effective CCS technologies might crowd-out interest in renewable energy.
Provinces and municipalities in Canada promoted electric cars by stimulating demand and building infrastructure for electric vehicles, often in close collaboration with car manufacturers and utilities. These local and regional initiatives later spread to the rest of the country. In Germany, the initiative came from car manufacturers, with no financial support from the government. In France, the central government took the lead, setting domestic targets and supporting one car company.
With the rapid growth of new green car technologies, governments need to give markets positive signals. The report suggests they can do so by sharing information, investing in infrastructure, or taxing conventional cars. International standards can mitigate uncertainty and stimulate convergence, but policy intervention must be carefully timed: acting too early can discourage healthy competition - too late can be a waste of money and lead to duplication of efforts.
