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Accelerating Green Innovation: Insights and Policy Recommendations

Explore the synergy between demand and induced innovation, public and private subsidies, and effective management strategies to advance green innovation in energy and environmental sectors. Analysis of supply and demand dynamics, workforce skills, and international knowledge spillovers. Review of eco-innovation studies and policy instrument design.

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Accelerating Green Innovation: Insights and Policy Recommendations

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  1. Policy WorkshopIssues, questions Dominique Foray, Marianna Marino, Claudia Pellegrin and Markus Simeth Project Synergia Morzine,17-18 January, 2014

  2. Accelerating innovation in energy/environment – insights fromothersectors(R.Henderson) • Demand and induced innovation: creatingdemand for carbon-free energy and green innovation • «Carbon-emissions-pricing» policy • Private R&D subsidies • Public procurement and adoption policy • Public support for fundamentalresearch and R&D • Effective management of fundamentalresearch • Supporting the diffusion of research • Training the people whowillinnovate in the privatesector • Enablingcompetition • Antitrust, intellectualproperty, standards

  3. Romer conjecture: supply-demandproblem • R&D subsidies try to stimulate the demand for R&D human capital: scientists, engineers and so on in the privatesector (to develop green innovation) • But…if the supplycurve of R&D human capital isfixed (at least in the short run) then the increase in demandinduced by R&D subsidies will translate into a proportionalincrease in wages for R&D people and not in an increase in the supply of R&D people

  4. Dimensions • Supplyside (economics of science/human capital/institutions) • Demand (for private R&D) side • Industrialpolicy

  5. Supply side

  6. Knowledge base • Which skills and knowledge are relevant for green R&D? • Firm-levelworkforcecomposition-/diversity • Key scientificresearchdomains • Is research on green technologies better organized in a university or in a national lab setting? • Is the supplyofhuman capital increasingwith the provisionof public R&Dfunding? • Are researchers from traditional domains moving to green technologies? • Is new groundbreakingresearch stimulated or incrementalinnovationby public R&Dfunding?

  7. Institutions Solartechnology: research conducted in universities vs. nationallabs? Interpretation: in x % of all publications, the German (Swiss) authors are affiliated to the following institutions (perc. exceeds 100%)

  8. Scientificfields Scientific fields engaged in scientific publications related tosolartechnology

  9. Technologicalfields Fields engaged in patents related tosolartechnology

  10. International knowedgespillovers • Is the internationalmobilityoftertiarystudents a channelofknowledgespilloverfor green patents in countriesoforigin? Potentialmeasureofknowledgespillover (adaptedfrom T. Le, 2010): • Potential focus on the studentsflowsfrom a developingcountryto a developedcountry • DATA: • tertiary students: OECD Education and Training Database; • green patents: PATSTAT; • country R&D expenditures: OECD STAN Database.

  11. Demand side

  12. LiteraturereviewPublic policy for green innovation • Double market failure → necessity to combine: • carbontax: environmental externality, demand pull, • green subsidies: technological externality, supply push Jaffe, Newell, Stavins (2006) Arrow, Cohen, David, Hahn, Kolstad, Lane, Montgomery, Nelson, Noll, Smith (2009); Acemoglu, Aghion, Bursztyn, Hemous (2009); Aghion, Hemous, Veugelers, (2009); Aghion, Veugelers, Serre (2009) Carbontax + environmentalsubsidies constitute the optimal environmental policy package

  13. Literature reviewPorter Hypothesis • Weak version ENVIRONMENTAL REGULATION→ INNOVATION Eco-innovation as dependent variable • Strong version ENVIRONMENTAL REGULATION→ INNOVATION → COMPETITIVENESS (generally measured as productivity) Eco-innovation also as explanatory variable Porter and Van der Linde (1995) Porter (1990)

  14. LiteraturereviewEmpirical green innovationstudies • ECO-INNOVATION AS DEPENDENT VARIABLE Weak version of Porter Hypothesis Determinants of eco-innovation

  15. Literature reviewEmpirical green innovation studies-focus on policy and knowledge capital

  16. Literature reviewEmpirical green innovation studies-focus on policy and knowledge capital General consensus on the positive effect of policy and knowledge capital on eco-innovation

  17. Literature reviewEmpirical green innovation studies • ECO-INNOVATION AS EXPLANATORY VARIABLE • Firmproductivity - Strong versionof Porter Hypothesis Controversialfindings: presenceoffirm/industry/institutional-specificcharacteristics • Employment rate Effectdepends on the typologyofeco-innovation

  18. General idea Literature until now Novelty In this way itispossibleto look at the influenceof policy on knowledge capital.

  19. Policy instruments design • Designing flexible, competitive-friendly, non-neutral instruments • Preventing capture • R&D subsidies design • all the subsidies at once vs stagedapproach; • funding a large variety of projects vs focusing on one largerproject/over time; • interimevaluation; • administrative costs; • which green technologies have to besupported more.

  20. Policy instruments design • Carbontax design • emission/energycomsumptiontax rate components; • Double Dividend: recyclingof revenues for R&D subsidies? • Proportion carbontax/R&D subsidies • Public procurement for green innovation • Protection formemissionsleakage • border taxadjustments.

  21. Workshop structure • General : Henderson, Newell • Supplyside : CEMI • Demandside: CEMI, Veugelers, Simcoe (public procurement)

  22. Thankyou!

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