Recent research from the University of Oxford argued that decarbonizing the global economy would provide a $12 trillion boost by 2050 due to the improving efficiencies of renewable sources of energy.
The authors highlight that the current energy crisis prompted in large part by the Russian invasion of Ukraine should prompt a renewed investment in such sources of energy. It’s a conclusion that a second study, from UC Berkeley, examines in more detail.
Spurring renewable innovation
The researchers highlight that despite the invasion prompting many countries to double down on renewable innovation, others have responded by doubling down on domestic production of fossil fuels.
They argue that such an approach will not only prompt countries to miss out on the bounty outlined by the Oxford study, but will also do little to provide the emissions reductions needed to meet the Paris climate agreement.
Interestingly, however, the Berkeley research doesn’t suggest that the stimulus spending after the financial crisis contributed to a boost in clean energy funding. Instead, it is participation in initiatives like Mission Innovation, which has done.
Energy funding
After examining R&D spending across the world alongside 57 public energy innovation institutions, they found that energy funding grew from $10.9 billion in 2001 to $20.1 billion in 2018. Despite this growth, much of the additional funding was diverted from investments in nuclear rather than fossil fuels. In China, for instance, spending on fossil fuel innovation grew from just $90 million in 2001 to $1.673 billion in 2018.
Despite this growth, the researchers don’t believe the investment is sufficient to meet the Paris commitments, and argue that it would need to have doubled between 2010 and 2020 to have made a meaningful impact. Similarly, they believe that public institutions are not transforming fast enough to support such rapid decarbonization.
“While we have seen the creation of a lot of new energy innovation agencies since 2000, they experimented only marginally with designs that bridge lab to market and manage only a fraction of total energy RD&D funding,” they explain.
Driving the change
Interestingly, while energy prices obviously play a part in driving investment in renewable energy sources, the analysis found that clean energy investments continue to grow even as the price of oil fell. Instead, they found that international cooperation, through initiatives such as Mission Innovation, played a greater role.
“We show that Mission Innovation is associated with major economies scaling their clean energy RD&D funding,” the researchers continue. “Technological competition with China also matters, as it creates an incentive to invest in future growth sectors where China has taken a lead—including various clean energy technologies.”
The stimulus spending introduced after the financial crisis did little to help matters, with the analysis showing that this mostly diverted investment to fossil fuels and nuclear. They believe that the stimulus introduced during the Covid pandemic may have followed the same pattern.
They’re also cautious about the ability of international cooperation to continue driving things forward. Indeed, prior to the pandemic, the annual Global Risks report from the WEF cited a breakdown in international cooperation as one of the biggest risks facing the world.
“We live in times of heightened geopolitical tensions—China recently announced plans to stop climate cooperation with the US,” the authors explain. “Government officials need to focus on embedding energy innovation in effective industrial policy strategies to be able to turn innovation into competitive advantages.”
