GGSD 2015 Summary Report

Summary Report GREEN GROWTH AND SUSTAINABLE DEVELOPMENT FORUM 14 & 15 December 2015 - OECD, Paris

Enabling the next industrial revolution: Systems innovation for green growth

Table of Contents

Executive Summary

2

Opening Session

3

Keynote Speech

4

Scene Setting Presentation

5

Session 1: Capturing Innovation Complementarities for Green Growth

6

Session 2: Emerging Technologies and Firm Dynamics: Implications for Green Growth 12 Session 3: The Role of New Data Sources in Greening Growth

17

Feedback from Parallel Sessions

21

Closing Remarks

23

Executive Summary Established in 2012, the Green Growth and Sustainable Development Forum is the most important annual green growth event at the OECD. It was designed to create a dedicated space for multidisciplinary dialogue in recognition of that fact that coordination across government ministries, OECD committees, and business and civil society is necessary for delivering green growth. Each year, the Forum tackles an important cross-cutting issue in order to identify best practices as well as key knowledge gaps that can be used to establish future work priorities on green growth for the OECD and others.

This year’s Forum was held on the theme of Enabling the next industrial revolution: Systems innovation for green growth. The three main sessions of the Forum included: (1) Capturing innovation complementarities for green growth; (2) Emerging technologies and firm dynamics: implications for green growth; and (3) The role of new data sources in greening growth. In addition, three parallel sessions were held that considered the following areas: (a) Emerging technologies: risk, trust and public engagement; (b) International cooperation in research and technologies; and (c) Innovation measurement and learning.

The key knowledge gaps identified during the discussions at the Forum include: • Further work could focus on identifying and analysing the barriers and policy misalignments that limit the development and diffusion of green innovations. In addition, an assessment of the role that international cooperation can play in sharing best practices, information, technology and shaping policies is also needed; • Given the urgent need to up-scale existing green technologies, more work is required to identify the appropriate support mechanisms and policy conditions to greatly expand their deployment; • While new firms are often cited as the drivers of green innovation, existing or incumbent firms need to be considered as multi-dimensional entities that can be part of the solution.

Efforts could focus on understanding the drivers (e.g. markets, consumers, policy) that result in the invention and adoption of green technologies by existing firms.

• Future work could focus on determining how policy credibility shapes the trajectory of green innovation. Ambitious environmental policies could be contrasted with credible policies to determine the optimal approach to spur green innovation. Consultation with existing businesses (i.e. incumbents) in the development of green innovation policies could be considered, while ensuring that this would not disadvantage the development of new companies (i.e. firm dynamics).

• Given the important role that lessons from failure plays in innovation, and the fact that the costs and risks of innovation failure are being reduced through technological advancements (e.g. 3-D printing), consideration could be given as to how governments and innovation policies treat the issue of failure.

• Given the pivotal role that governments play in supporting green innovation, work could focus on the evaluation and quantification of the social returns on innovation.

• Giving the growing number of data sources and innovations, integration across technologies and disciplines is important. Work could identify the key areas of focus for the international standardisation of data, terminology, regulations and policies in order to foster multi-disciplinary green innovation.

• Additional work could also focus on identifying the proper moment when financial or policy support for green technologies or programs should be terminated (i.e. the appropriate “sunset” clause)

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Opening Session Opening Remarks: Angel Gurría - Secretary General, OECD

1. Setting the Scene: In the Context of COP21 COP21 provides a strong framework and new pathway to a low-carbon, climate-resilient future.

However, “the hard work starts now”. Even if the Intended Nationally Determined Contributions (INDCs) submitted by 160 countries are fully implemented, there is still an emissions gap to maintain the rise in global average temperatures to below 2°C. Green technology will be an important component in closing that gap. Article 7 of the COP21 agreement notes that “accelerating, encouraging and enabling innovation is critical for an effective, long-term global response to climate change and promoting economic growth and sustainable development”. In addition, “Mission Innovation” was announced by 20 countries that committed to accelerating clean energy innovation through a doubling of their clean energy R&D investments over 5 years.

2. Making Green Innovation Happen: the Need for a Systems Lens Going forward, the focus on green innovation should not be limited to the green sector. Rather, it is necessary to ensure that all innovation is green innovation. That requires incorporating green considerations into all innovation policy settings at the outset. It also requires a focus not only on the pace of innovation, but also on the direction of innovation policies. Systems innovation is not just replacing one technology with another; it is about transforming an entire system. For policy makers this is a horizontal approach – one that mobilises technology, market mechanisms, regulations and social innovations to enable the transition to a low-carbon, resilient economy.

3. The OECD’s Contribution The OECD Project on Systems Innovation aims to re-think innovation policies in the context of green growth. In addition, the OECD Innovation Strategy outlines 3 key strategies in the transition to a systems-based approach: • Framework policies (fiscal, intellectual property rights, product and labour market regulations) must be adapted to support young firms and spur green innovation; • Public funding of basic research must be promoted, and barriers to private R&D investment in green technology need to be removed; and • Innovative tools to help governments create “lead markets” for greener transport and sustainable buildings are to be encouraged. This includes public and private funding of large-scale demonstration projects and public procurement of technologies.

The Aligning Policies for a Low-Carbon Economy report provides a valuable analysis of the lack of alignment between climate objectives and policy frameworks. In many countries regulations have not caught up with the pace of technological development, and this acts as an obstacle to innovation, particularly in resource efficiency.

A more integrated, systems-based approach to policy-making is key to addressing complex global challenges. It is therefore necessary to think beyond traditional silos and deliver benefits to both the economy and society at large.

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Keynote Speech The Path from Paris: Imperatives and Opportunities Eric Beinhocker - Executive Director, Institute for New Economic Thinking Oxford Martin School, University of Oxford, UK 1. COP21 Achievements The presentation noted the major shift in the architecture of the Paris agreement from zero sum to positive sum, and from top-down to bottom-up Intended Nationally Determined Contributions. The ambition moved from that of “well below 2°C” to pursue a limit of 1.5°C temperature rise. The agreement also provides for a ratcheting up of efforts over time, with a global stocktaking analysis every 5 years.

Funding for adaptation and damages was reaffirmed at $100 billion per year. Finally, in terms of politics, there was a global shift to an acknowledgement of the need to take action “now”.

2. Next Steps Even in the range of temperature rise between 1.5°C and 2°C, the world is in a moderate risk zone.

In this context, it is important to note that annual emissions flows do not provide a reliable guide to peak warming. Instead, it is necessary to consider cumulative emissions. Emissions continue to rise while net removals are decreasing. Therefore it is necessary to reach net zero emissions.

The remaining carbon budget for the different warming scenarios points to a maximum of 322 GtC of carbon. Under current projections, that will be reached by around 2040. Given the huge momentum in the world’s capital stock of carbon emitting structures, all new energy investment must be zero carbon by 2017. This sense of urgency was missing at COP21.

Humanity has already discovered more fossil fuels than it can burn under the limits of the Paris Agreement. As such, the $646 billion per year of taxpayers’ money spent on subsidising the discovery of even more fossil fuels should be stopped.

3. Future Options In the aftermath of COP21, a number of choices are available for policy makers: • Drive all new energy investments to zero carbon starting in 2017; or choose between: • Writing off a large portion of the global energy system in the 2020s-2040s; • Making an expensive and risky bet on carbon capture and storage technologies; • Exceeding the 2°C threshold and face major climate risks and adaptation costs.

A clean energy economy is a better economy and clean energy will be adopted because it is a technology and not a commodity (i.e. fossil fuels). Commodity prices tent to remain relatively stable, whereas the cost of technology decreases over time.

It is therefore imperative to shift R&D support and subsidies to clean energy technologies by making “the good stuff cheap and the bad stuff expensive”. This involves scaling up investment in R&D, increasing the cumulative volume of clean energy and enabling deployment. On the other hand, this involves removing all fossil fuel subsidies and tax breaks, implementing a carbon price, full disclosure of stranded asset risks in the financial system, and global implementation of air quality and public health regulations.

4. Conclusions A wish list for the G20 includes: a clear commitment to net zero emissions by 2040; an end to all fossil fuel subsidies; no new fossil fuel investments after 2020 in developed countries, after 2025 in emerging countries, and after 2030 in developing countries; and a pledge to increase clean energy R&D spending 10-fold.

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Scene Setting Presentation Korea’s Case and Suggestions for Innovation for Green Growth Jong-won Yoon - Korean Ambassador to the OECD 1. The OECD and Green Growth The presentation noted that the OECD has been involved with green growth for some time, from its 2009 Declaration on Green Growth, the “Making Green Growth Deliver” Environment Ministers Meeting in 2012, and a number of foundational reports, and most recently the Towards Green Growth? Tracking Progress Report. The 2015 Ministerial-level meeting of the OECD Committee on Science and Technology Policy (Daejon Korea, 2015) was held on the theme of Creating our Common Future through Science, Technology and Innovation (STI). It brought together 48 countries and 9 organisations who adopted the Daejeon Declaration on STI Policies, which includes the implementation of national innovation strategies by participants. STI’s role on climate change was confirmed, as was the need for a policy framework to maximise environmental performance, particularly in areas such as the bio-economy, renewable energy, as well as water and food technology.

2. Korea’s Green Growth Policy Framework Korea established the National Green Growth Strategy in 2009 and enacted the Low Carbon and Green Growth Act in 2010. Its first 5-year Green Growth Plan (2009-2013) established a strategy and a number of relevant institutions. The next 5-year plan (2014-2018) determined outcomes, and identified the importance of public-private partnerships.

In the regulation versus de-regulation debate, it has been determined that market signals alone are not sufficient to induce eco-innovation. It is necessary to consider the roles played by the public and private sectors and how they can work together. For example, the Korean Innovation Centres system is a public-private-partnership (PPP) platform that helped develop Tegway technology – an innovative device for a wearable battery. Collaboration among actors has also been important in the Jeju Province initiative for carbon free islands and the Hongcheon initiative for eco-friendly energy towns.

However, despite multi-faceted efforts, the green transition of industry and investment is still not fully occurring. For example, stronger regulations have reduced CO2 emissions per car but the overall CO2 emissions generated by the transport industry are still increasing. This points to the need for a comprehensive approach and a broader policy mix that also involves the global dissemination of green outcomes.

A list of issues to discuss should include: • How to foster an enabling environment for green innovation? Including mechanisms, incentives, market signals and regulatory predictability as well as policy inconsistencies, misalignments and barriers to the diffusion of clean technologies.

• How to enhance public awareness of regulation/costs on economic activities?

• How to foster international cooperation in sharing information and technologies?

• The role the OECD can play in furthering green innovation?

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Session 1: Capturing Innovation Complementarities for Green Growth Joint Session with the OECD Working Party on Innovation and Technology Policy (TIP) Moderator: Jerry Sheehan (US) - Assistant Director for Policy Development, National Library of Medicine, and Chair of TIP under the Committee on Scientific and Technological Policy This session is of great interest to both the innovation policy community and the green growth community based on two major trends: • A shift toward the use of innovation and technology policy to encourage economic growth while at the same time addressing global and societal challenges; and • An increasing focus on systems innovation and systems transformation.

The focus on developing new technologies, new products and new services is being supplemented by an increasing focus on their diffusion, deployment and uptake. This means there is a need for complementary infrastructure investments, and the stimulation of market demand. It is also about regulations, which should not act as a disincentive to investments in the new technologies. Continued engagement is required between the public sector, the private sector, and societal organisations as a part of developing new social innovations.

The innovation policy community cannot do this alone. This requires engagement with experts from different fields. This session highlights the importance of governance as a way of engaging all stakeholders and actors in moving towards a common goal.

This panel session was supported by a Forum issue paper entitled Capturing Innovation Complementarities for Green Growth.

I. Keynote Presentation: Accelerating the Transition to a Low Carbon Economy - Jan Rotmans (the Netherlands), Professor, Dutch Research Institute for Transitions, Erasmus University Rotterdam The presentation noted that the Paris climate agreement was a game changer: the world has opted for a new, clean economy under precise climate goals. There is now a choice of being part of the old economy (based on fossil fuels, carbon, linear, centralised, incremental innovation) or part of the new economy (based on renewables, biomass, circular, decentralised, radical innovation). The outcome of the agreement will lead to a decline in fossil fuels which will be increasingly associated with financial risk.

There will also be a global divestment in fossil fuels, and a stranding of fossil fuel-based assets. This transition will not be easy or smooth.

1. Transition = Power Shift Transitions are often seen as a battle between technologies. However, transitions are really about shifts in power, shifts in institutions, shifts in regulations, and shifts in social structures. A transition is about fundamental shifts in the way we think, the way we organise ourselves, and the way we carry out our daily practices. Transitions are a power shift from the incumbent structure, culture and practices – which need to be broken down – to a new structure, culture and practices. New players want to develop their power and the incumbents try to maintain their power and prevent the shift.

The world has reached the tipping point in the global energy transition, exemplified by:

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• Chaos: oil price volatility; investments in sustainable new capacity have now surpassed investments in fossil fuels; the shale gas revolution; nuclear investment withdrawal; coal power plant phase out; decoupling growth from CO2 emissions; and the struggle of large European energy companies.

• Conflicts: more and more energy-related conflicts are emerging, including the Ukraine crisis, the US-Europe versus China solar panel conflict.

• Battlefield: the market value of one of the biggest energy companies in Europe (RWE) has decreased by 85% since 2008; 3 out of 5 energy companies may not exist in the next 5 years with only the most adaptive and agile surviving.

2. Transition Governance and Policy It is not possible to govern the complexity and uncertainty of a transition, but it is possible to influence its direction and speed through governance. This requires creating innovation spaces for radical innovation. We are very good at incremental innovation but we are not very good at doing things entirely differently. That requires bringing together frontrunners in order to develop a vision and agenda for radical innovation. The transition governance cycle is not about blueprint thinking but about searching, learning and experimenting. The “market arena” and the “political arena” are important, but they do not deal sufficiently in radical innovation. Therefore it is necessary to develop a “transition arena” that is concerned with radical, revolutionary, and long-term goal searching. This transition arena challenges the market and mobilises society while being concerned with long-term thinking and short-term action, thus making it both evolutionary and revolutionary.

Transition policy requires more of a facilitating role for the state, which involves creating spaces for radical innovation, removing barriers, forming coalitions around the frontrunners, and stimulating financial arrangements.

3. Applications Transition governance has been practised in several countries (Netherlands, Belgium, France, Scotland, Switzerland, Austria, Finland, Japan, Australia and Canada) covering hard (energy and transport) and soft (healthcare and education) domains. Results have been achieved in the phase of searching, learning and experimenting. However, there has been a lack of results in the up-scaling phase.

There are no results yet with full implementation, and there are major differences among countries.

As an example, the Netherlands has now taken on the bio-based economy transition. The government’s role is to provide direction and remove barriers. For example, there are 69 “operational, structural, fundamental and conflicting” barriers to the creation of a bio-based economy, including a 20year old law that bans the use of waste in industry even though this is essential to a bio-based economy (i.e. regulatory barrier).

One successful example of efforts related to the bio-based economy is the Green Chemistry Campus created by the petrochemical company SABIAC. The company opens their laboratories to entrepreneurs in order to achieve results in bio-based radical innovation.

4. Lessons Learnt The first phase of a transition is relatively easy. There is a natural tendency by governments to fall back into the command and control mode. Creating space for frontrunners is crucial, and it is also necessary to challenge cumbersome processes. The success factors are therefore vision and ambition, taking a network approach, combining strategy and action, and taking a regional approach. In all of this the government must play a facilitating role.

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In terms of research gaps and future work priorities, more case studies are required. More experience is also needed with up-scaling and implementation. Transitions need to be considered more broadly, but also within companies and organisations. Finally, a multiple- actor model that is both theoretical and empirical must be used. In this, it is necessary to overcome individual’s fears (i.e. job loss) as every organisational transition requires a personal transition, and this involves social and psychological processes.

II. Panel Presentations 1. The New Normal Led by Innovation and Green Development - Zhaoyuan Xu (China) on behalf of Changwen Zhao Director-General, Department of Industrial Economy, Development Research Center of the State Council The presentation noted that after 30 years of rapid growth, China has entered a phase of economic development called the “new normal”. There has been a shift from a model based on quantity and speed to a model based on quality and efficiency. It is now necessary to further shift to an innovationdriven model. Extensive resource consumption has put pressure on the environment requiring a new green growth model.

China believes that innovation and being green will become the core factors of its national competitiveness. International trade will experience major changes as digital manufacturing (concentrated in developed countries) will make economies of scale less important and the proportion of trade in goods will decline.

The Chinese government has set a number of goals for innovation and green growth including: • By 2020, R&D spending should represent over 2.5% of China’s GDP, with basic research accounting for 10% of total research; • By 2020, China should reduce its carbon intensity by 40-45% as compared to 2005; and • By 2030, carbon emissions should have reached their peak level with clean energy accounting for over one-third of total energy consumption.

China wants to focus its innovation and green development on four key areas: (1) an efficient and low carbon approach to industrialisation; (2) exploring a green and smart approach to urbanisation; (3) the development of smart buildings; and (4) enhancing energy efficiency.

In terms of China’s innovative and green development policies, the aim is to build and improve a national innovation system with responsibility for coordinating and promoting innovation in universities, companies and research institutions. Second, the Made in China 2025 strategy will move China from a quantity manufacturer to a quality manufacturer. Third, it will coordinate the development of various market trading systems and promote the environmental conservation market. Fourth, it will build an ecological and environmental monitoring network. By 2020, this network will cover the whole of China, monitoring factors such as environmental quality and key sources of pollution. To be successful, China will have to change government behaviour in order to drive innovation and push the new growth model in the context of a declining or even contracting economy.

2. IBM Smarter Cities - Philippe Sajhau, Vice President of Smarter Cities, IBM France The presentation highlighted that the world is undergoing a digital revolution, driven by the internet, mobile telephones, big data, open data, connected devices, and social networks – all of which are based on the logic of platforms, bringing people and devices together. What is key is collecting the data, processing it, and then making informed decisions.

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The quantity of data is enormous with 90% of the data used today being created in the past 2 years; 80% of the world’s data is unstructured; and only 20% of this data is being used by traditional systems. It is necessary to use the cognitive concept – machine learning, natural language processing, high performance computing, and being adaptive – to achieve better interaction between people and computers.

Digital solutions can be used for the circular economy. In phase 1, data is collected from various sources including sensors. In phase 2, business intelligence is used to visualise and integrate data from different sources. In phase 3, deep analytics are injected into the system in order to optimise operations and workflows. In phase 4, predictive analytics are made possible by advanced data mining.

Examples include: the use of real time and predictive data to improve waste management in Nice (France), leading to annual savings of €700,000; the Optimod’ project in Lyon (France), which is based on developing high value-added services to improve the efficiency of transporting goods – saving 19% on distance travelled and reducing CO2 emissions by 10%; and partnering with Veolia, a world expert in water management, IBM worked to reduce leakages, decrease capital budgets, improve operational performance, and optimise the maintenance workforce in Africa.

In conclusion, the internet of things, big data, analytics and cognitive concept represent many opportunities to deliver green solutions. To succeed, it is necessary to think in a cross-disciplinary manner, breaking down silo mentalities. This has to be done now, taking advantage of real time and predictive data to anticipate action.

III. Discussant: Incumbent Firms in Green Growth and Systems Innovation - Frank Geels (UK), Professor of System Innovation and Sustainability, Manchester Business School The presentation clarified that systems innovation is different from technological innovation. For example, innovating transportation technology requires developing and implementing a new power source for the car. Innovating the entire transportation system requires the introduction of new business models (car sharing, Uber), inter-modal transport systems, and new technology. The electricity system can also be reconfigured by introducing renewable energy sources, developing new business models (e.g. community energy, citizen producers), expanding technologies and policies (e.g. electricity storage, grid extensions, and demand-response tariffs etc).

It is possible to work with incumbents in achieving a system transition. Taking this approach could help reduce the incumbents’ natural resistance to change. At the same time, the high hopes given to new entrants are not always justified as they can suffer from a lack of skills, limited access to finance, and difficulties with scaling-up. There are therefore 2 pathways going forward in which incumbents can play a role: • Regime transformation – where incumbents build on incremental improvements and reorient towards radical innovation; and • Regime reconfiguration – where incumbents enter into alliances with new entrants, and innovations are adopted into existing systems (e.g. smart grids or retrofitting).

Nevertheless, the reorientation of green incumbents will be difficult. They resist transition in order to protect sunk investments. Strategic orientation is risky and often fails. In addition these are uncertain markets both in terms of consumer demand and government policies. To overcome this inertia, it is necessary to exert external pressure via markets and consumers, policy makers, and civil society.

The green reorientation process is a gradual one. Phase 1 is characterised by resistance to change, followed by phase 2 (hedging), phase 3 (diversification) and finally phase 4 (reorientation). The core drivers in this process are growing public awareness, the strengthening of policies, and the materialisation of market demand. For example, the re-orientation of the US car industry around safety began with the development of seat belts. However, it was only in the 1990s when consumers began to care about safety that industry began upscaling rapidly. The industry only reoriented when there was a market. The US car industry is currently in the hedging phase with respect to low-carbon cars.

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The proposed knowledge gaps and suggestions for future OECD work priorities are: • Better understanding incumbent firms as both a problem and a potential solution; • Understanding firms as multi-dimensional where their innovation strategies are shaped by broader corporate strategies and also determine how and when firms commit to new technologies; and • Analysing how multiple innovations can reconfigure specific systems and sectors rather than focusing on single technologies.

IV. Q&A Session The moderator asked the panel for their perspective on scaling up.

Jan Rotmans noted that it can take about 10 years to scale up a technology under today’s conditions and this needs to be reduced. This timeframe is related to culture and the existence of transformative leaders within a company. There is diversity in this matter among companies and also within companies.

It is necessary to start with a small group of frontrunners within the incumbents and then broadening that and expediting the scaling-up process. This requires consistency, courage and leadership.

Philippe Sajhau noted that the smart city is an opportunity – by definition, many of the climate issues we face are located in cities where 80% of CO2 emissions are generated. There are 2 complementary approaches to scaling up. First, everything launched by local governments has to be completely rethought in terms of technology, approach, and usage. That requires cultural change and leadership.

Second, all European, national and local governments have to be involved and committed to providing support (e.g. legislation and regulation).

Frank Geels noted that this session is a joint initiative of the OECD Working Party on Technology and Innovation Policy (TIP) and the OECD Green Growth unit. The question of scaling up speaks to the core of their joint work. Green growth is about the diffusion of existing technologies. However, the TIP also focuses on R&D. He noted that R&D is not required for green growth; more efforts are required on upscaling, including more financing. It also requires the political will to create markets, and that political will only emerges in a particular cultural context. That means it is necessary to have a positive public discourse and public debate on why this transition is necessary. This needs to be presented as a positive story.

José Manuel Medina Aguilar (Minister-Counsellor for Environment and Natural Resources, Permanent Delegation of Mexico to the OECD) asked the panel how the OECD and other organisations can help implement the Paris agreement in developing countries and help them accelerate into the new industrial revolution?

Jan Rotmans noted that his perspective focused on the global divide between the new and old economies.

That also holds for the divide between developing and developed countries. Many developing countries could be in a better position. It is easier to implement renewable energies in Africa or Latin America than it is in many European countries (e.g. 69 barriers in the Netherlands). In the next 10 to 15 years, many of the developing countries could be quite dominant in the new economy. Second, radical innovation is stimulated by perseverance and consistency, and the role of the government is crucial here. Almost all of the radical innovations in recent decades received support from local, regional, national and international governments which is a good lesson for developing countries.

Frank Geels noted first that the volume of renewable investments in the developing world has now surpassed that of the developed world. Second, we are currently building the big cities of the future: roads, infrastructures, buildings, grids, sewer systems, public transport systems, and so on. The real opportunities therefore lie in the building of those cities in developing countries, as they will be locking themselves into 50 to 100-year infrastructures. Jan Rotmans noted that we are seeing the emergence of regions rather than cities. To build the circular economy, we need to think across these different levels of local, regional and national.

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Eric Beinhocker agreed that this is a complex system that is near a tipping point. Prices are not a sufficient condition to get us over that tipping point. However, they are a necessary condition. Governments have a limited appetite for subsidies and costly regulations, and there is a belief that the green economy is a more costly one. By focusing on policies that drive those prices down, we can help enable the kind of innovation system we need. From a policy messaging perspective, it would be cheaper to have smart policies.

Africa Zanella (Consultant) noted the lack of gender equality in the panels and asked the panel as to whether we should be talking about an industrial revolution or about a societal revolution or a digital revolution?

Philippe Sajhau stated that with respect to the digital revolution, we have been seeing a major shift in the past 5 years – cloud, analytics, social networks, mobility etc. These new applications can be developed more rapidly, and the costs of trying and failing have declined. It is therefore more important to be a designer rather than a technical engineer. That is a radical change or revolution as compared to past changes in the IT landscape.

Frank Geels noted that historically, there is little evidence to show that economic growth can be decoupled from negative environmental pressures, and few have seriously tried to achieve this. Some argue that it is necessary to shift to de-growth; however, this would not be politically or socially acceptable.

The transitions are now about to unfold and there is scope to de-couple – growth is not just about more or less; there is also the question of the direction of growth. This is not just an industrial revolution, and that is why we have been referring to a social and technical revolution.

Jan Rotmans said that without a personal transition we can never achieve a more sustainable society. We keep on positioning the issue outside ourselves – in technology, in economics – but to be sustainable we need to change the way we live and the way we consume. In the past 25 years, his attention has shifted from systems transformations, to organisational transformations, and now to personal transformations.

Wynand Van der Merwe (National Cleaner Production Centre, South Africa) argued in favour of mobilising that side of society through education, showing people what they need to change in their behaviour as this is an area that is greatly neglected in South Africa.

Jan Rotmans noted that our economies are changing more radically than our education systems and we are training students for jobs that will not exist in 10 to 15 years’ time. Conversely, the jobs that are emerging are not included in our curricula. This is a particular issue for secondary schooling. He supports educating, training and working in parallel. To prepare for a more sustainable economy we need to transform our education systems. We have been trying to do that for the past 40 years on the basis of a top-down approach. We now need to focus on doing this via a bottom-up approach. “United for Education” is a social movement in the Netherlands working to transform education systems.

Frank Geels disagreed as the emphasis on education places hopes on individual responsibility. We have learned from the social sciences that structures are more important than individuals. Changing people’s behaviour is a small part, but we also need to change incentive structures, institutional structures, and power structures.

Jan Rotmans stated that he wants to change the education system rather than the individuals, although that will be a side product.

Ariadne Zanella (Head of Social Media and Content Innovation, Aginnovators) noted that radical innovation can be achieved by putting products in the hands of designers – designers are creative problem solvers. The issues of creativity and storytelling were raised (e.g. story tanks instead of think tanks).

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Session 2: Emerging Technologies and Firm Dynamics: Implications for Green Growth Moderator: Erik Fahlbeck (Sweden) - Chief Analyst, Swedish Ministry of Enterprise and Innovation, and Chair of the OECD Committee on Industry, Innovation and Entrepreneurship (CIIE) Based on micro-data, the CIIE investigates the conditions that are critical to productive firms. The CIIE also tries to identify the patterns, if any, that characterise radical innovations. The session focused on radical versus incremental innovation and the conditions for more dynamic development, and in particular the associated policy and market risks.

I. Keynote Presentation: Challenges in Innovation and Public Policy - Gregory Nemet (US), Associate Professor, Robert M. La Follette School of Public Affairs, University of Wisconsin-Madison The presentation focused on the interaction between policy and innovation, in particular: how government actions can stimulate innovation in low-carbon energy technologies. This work is partly empirical/historical (i.e. case studies), and partly forward-looking through the consideration of alternatives among policy actions. Innovation combines both emergent properties of surprise (i.e. radical), as well as drivers of smoothness, inertia and stationarity (i.e. incremental) – particularly for energy technologies.

1. Policy and Innovation The innovation process begins with the discovery of new innovations, the commercialisation of those innovations, and their subsequent adoption and diffusion.

• Technology push is about marshalling science and engineering, major investments in R&D, tax credits, education and demonstration (e.g. Mission Innovation). The objective of the government is to increase the amount of knowledge available.

• Demand pull increases the size of the market for new technologies - increasing the payoffs for success (e.g. intellectual property regulation, pricing of externalities, subsidies, government procurement, and technology standards).

Both technology push and demand pull are required. However, achieving the right mix between the two is a significant policy challenge.

2. Policy Challenges The first policy challenge is fragile demand pull. The pay offs to new inventions depend on the market and policy expectations. If policy expectations are uncertain, additional incentives may be necessary to encourage investment. In interviews with venture capitalists, they were asked how they value the benefits of policy in their decisions to invest in start-up companies. It was found generally that they ignore government policies due to their lack of credibility. The most sophisticated technology investors appear to be highly risk averse when it comes to policy.

For example, the prices of solar photovoltaics (PV) have dramatically decreased in the past 80 years based on the economies of scale that were made possible due to expectations of future demand (i.e. policy credibility).

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The second policy challenge relates to those technologies that are still in the intermediate stage between technology push and demand pull (i.e. the “valley of death”). At this stage, social returns are high but private returns are still low. Examples include Jimmy Carter’s Synfuels Corp. concept from the 1970s, a $5 billion investment that produced no useable fuel. This was considered “technology pork barrel”. On the one hand, it is necessary to make large investments to advance technologies; on the other hand, the historical record shows that money can be squandered, mismanaged and even be the source of corruption. It is not the role of governments to pick winners.

It is nevertheless necessary to find a way to bridge the valley of death while also avoiding the technology pork barrel. This requires identifying the factors on which the case for government intervention rests, and developing strategies to maximise the effectiveness of support.

3. Future Research Proposed future research priorities include: • Evaluating the incentives in bureaucracies (i.e. approach to failure); • Maximising knowledge dissemination; • International cooperation; • Credibility of policy targets; • Public attitudes to novel technologies; • Characterising the social returns on innovation; and • Near-term metrics to orient innovation towards longer-term human needs.

A priority issue should be determining how actors form expectations about future markets. How do they interpret policy uncertainty? How do individuals make decisions, in particular those affecting the long-term? There is little empirical work on the credibility of policy from the perspective of stakeholders.

Understanding that better would help improve outcomes.

II. Panel Discussion 1. Bringing Radical Innovation to the Market - Marjolein Helder (Netherlands), CEO, Plant-e The presentation focused on the experience of developing a new company based on technology that produces electricity from living plants. Biomass has been used for electricity production but has not proved to be very efficient. It also raises issues of competing claims for land use. Nevertheless, much biochemical energy is stored in biomass and the aim of this technology is to exploit that energy in order to produce electricity.

Plants produce organic matter via photosynthesis, converting solar power into chemical energy (glucose). The plant uses part of that organic matter for its own growth, and the rest is excreted into the soil. In the soil, bacteria break down the organic matter, releasing electrons in the process. The technology developed allows for the capture of those electrons in a carbon electrode, which forms the basis of a battery. First products have been brought to the market, and have scaled up to a 100m2 system that can be used to power road lighting.

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Most people believe that innovation follows the linear path of having a great idea, conducting experiments, developing a business plan and then making money. However, innovation is a much more chaotic process where profits can come from unexpected sources and a number of challenges need to be overcome: • Financing – innovative products require innovative business models that identify and target a specific customer group, but in the case of Plant-e, customers are diverse; • Credibility – obtaining customers is more effective than receiving subsidies; • Managing expectations – the media tends to oversell the technology and the timelines - the trick is to take advantage of this, if possible; and • Knowledge dissemination – it takes about 6 months for people to get used to our technology - therefore the training of employees is costly.

With the first products on the market, people are starting to believe in this breakthrough technology and the possibility that 15% of world’s wetlands could be electricity plants.

2. Innovating Early or Waiting for Regulatory Certainty - Dermott Crombie (UK), Vice President, Strategic Initiatives, Ingersoll Rand Ingersoll Rand is a multinational manufacturing company with main activities focusing on electric vehicles, transport refrigeration, and air conditioning for buildings. It operates in a world that faces a number of major challenges including urbanisation, food and water scarcity, global industrialisation, and technical challenges such as refrigerants and energy efficiency within the existing building stock. In the past, people ate local, fresh and seasonal food. Now it is possible to eat anything at any time in the developed world (i.e. transport refrigeration).

In terms of global opportunities and challenges, 75% of the infrastructure that will be in place in 2050 does not exist. There will be a 70-85% increase in urban populations in the next 35 years. Within those urban populations, it will be necessary to provide quality of life. It is necessary to find solutions for the existing building stock and for existing transport refrigeration. By 2050, there will be an additional 2-3 billion people in the world, requiring further reductions in CO2 emissions per capita.

There are competing values in innovation, including control versus creativity, and cost versus resources. The innovation funnel covers the full spectrum from identifying ideas to explore, developing hypotheses, validating hypotheses, establishing new offerings, and upscaling. There are always more ideas than new products, making it critical to establish priorities.

The private sector dilemma exists: innovate early or wait for regulatory certainty. Early actions bring risks, and there are additional challenges to innovating during a period of uncertainty. New solutions can cost more - will consumers pay more for low-carbon technologies? Will the new technologies meet near-term environmental and efficiency regulations? What will be the new industry standard? Will the regulations become a reality (i.e. certainty and credibility)?

3. Overcoming the Under-Investment Bias - Florian Egli (Switzerland), Mercator Fellow on International Affairs The presentation provided an overview of the Forum Issue Note on Emerging Technologies and Firm Dynamics: The Implications for Green Growth.

COP21 identified a major dilemma - fighting climate change while ensuring growth and prosperity.

To resolve this dilemma, the world needs radical (disruptive) green innovations. However, we observe a (private) under-investment in these technologies because climate change damages are a negative externality and because the future payoffs of these technologies are uncertain.

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Policies can be used to address this under-investment bias. Ideal policies are technology neutral and firm neutral; assuming the market will pick the winner. However, that may not be sufficient. For radical breakthrough innovations, it may be necessary to select a few technologies and finance them more significantly. This raises the following issues: • Discretionary Technology Support – R&D support is necessary, as a number of promising green technologies will not become cost-competitive without support. Experts can provide guidance, and statistical ex-post analysis can help identify promising attributes. In this, generality appears to be a robust predictor of future success: cross industry firms tend to come up with more successful innovations and this is good news for green technologies, which tend to be more cross-cutting.

• Firm Dynamics – statistics show that green innovations originate from younger than average firms and young firms patent more radical technologies. However, environmental regulations and tax credits often favour incumbents and discourage firm entry. For example, tax credits are more advantageous for established firms making profits as compared to start ups that do not. In general, the fact that start up rates are declining in OECD countries today should be worrying from a green innovation point of view.

What does this all mean for public policy? It depends – both on the national context and on the technology in question. It has been established that public support is necessary: the majority of successful technologies – the Internet, GPS, 75% of breakthrough drugs – have received public support in the initial phase or throughout their development.

It is necessary to act now. There are huge benefits to be gained from international cooperation and public-private cooperation (e.g. Mission Innovation). Governments should find ways – perhaps through equity participation – to participate in successful ventures and not only bear the costs of those that fail.

Environmental policies should be designed with new entrants in mind. It is also necessary to define appropriate sunset clauses to set the limit on the support provided to innovative firms. Finally, access barriers to finance are high for new green firms.

III. Q&A Session Antoine Dechezleprêtre (Associate Professorial Research Fellow, London School of Economics) asked about developing environmental regulations with industry wondering whether that could improve credibility or result in lower objectives/targets. He also inquired as to whether Plant-e had generated any intellectual property, citing Tesla’s decision to put all of its intellectual property in the public domain in order to increase scale.

Gregory Nemet stated that the US data shows a clear trade-off between ambition and credibility. The decision depends on your social ambition: are ambitious goals with low credibility productive or are they distracting? Collaborating with industry could enhance the credibility of those policies but could act as a barrier to entry for new firms. It is important to consider how actions can increase credibility, but also consider the impact on firm dynamics.

Marjolein Helder responded by stating that Plant-e holds 2 patents, the first of which was filed by the university in the early stage. This patent was decided to be kept in order to provide credibility; however it was only filed in developed Western countries, as the company’s goal is to be both economically viable and environmentally/socially friendly.

Freija Van Duijne (Senior Policy Advisor, Ministry of Economic Affairs, Netherlands) inquired about the role of strategic foresight and scenario planning.

Gregory Nemet stated that strategic foresight and scenario planning appear promising, but are still at an early stage of development. The Japanese government has done a good job at creating visions and roadmaps, navigating an interesting trade-off between being too prescriptive and narrow while still providing guidance. That guidance of expectations has given confidence to firms to expand and achieve scale. This was most successful with electronics and semi-conductors, and that could be replicated for green and climate-related technologies. It is an important way of enhancing credibility by creating shared expectations.

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Florian Egli noted that foresight planning is promising, but there is a lack of examples at the country level.

An audience member noted the lack of discussion on the role of banks and financial institutions.

In many cases, technology exists but lacks financing. This is important as banks are becoming overly prudent (e.g. Basel III) which could result in project delays.

Ian Hughes (TIP, OECD) noted that Egli’s paper calls for a large increase in R&D funding. At the same time, the technology pathways are unclear. Nemet’s presentation goes some way to explaining how governments might take the risk of large-scale investment in such a climate of uncertainty. Do governments need to change how they think about and deal with “failure”?

Florian Egli noted the need to re-think the way we provide support to “losers”, which are an essential part of innovation. What is crucial is defining the sunset clause – the right moment at which the government should stop providing support.

Marjolein Helder noted that there is a need to re-think the way we view success and failure. In the Netherlands, the government prefers to support established firms because they generate the greatest number of jobs. However, some of those existing firms are in decline, and are only being maintained through subsidies. That money could support new firms that could grow over time.

Dermott Crombie stated that regulations should be more realistic in terms of the investment timescale.

Ingersoll Rand has changed enormously in the past 100 years, demonstrating that big companies can and do innovate. In fact, that is the only way for them to survive.

Gregory Nemet noted that access to credit is an issue and that governments could help to resolve this issue. Knowledge dissemination is also an important issue. If the information generated by the new technologies becomes proprietary, that is probably not the most productive use of government money. Governments should be more tolerant of failure. This is a crucial issue that comes down to the incentives that bureaucracies face: the risk of failure is large for bureaucrats on a personal level, whereas the payoffs for success are much lower. That leads to a higher level of risk aversion.

Erik Fahlbeck concluded by identifying three of the main messages of the session. First, the crucial role that public procurement can play in creating markets. Second, there is a need for incremental innovation and radical innovation. Third, for governments to be credible, much more information is required, and knowledge should be shared as widely as possible.

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Session 3: The Role of New Data Sources in Greening Growth Moderator: Vincent Champain - President, Long-Term Observatory, France This session covered economic factors and practical issues. Past experience has shown that technologies accelerate once they become cheap enough to allow people to experiment with them in innovative ways. The cost of the acquisition of data, storage and analysis is close to zero today. As a result, the flow of data is dramatically increasing and can be used in different ways: smart monitoring, predictive maintenance, improved energy management, etc. This session considered the policy implications related to these issues.

I. Panel Discussion 1. The Role of New Data Sources in Greening Growth: The Case of Drones - Lammert Kooistra, Assistant Professor, Laboratory for Geo-information Science and Remote Sensing, Wageningen University, Netherlands The presentation provided an overview of the Forum Issue Note on The role of new data sources in greening growth – the case of drones. Drones in agriculture are considered as innovative data collection tools that can be used to green growth. There are various technologies other technologies that can be used to collect and analyse data throughout the growing cycle (e.g. identification of soil characteristics, planting density, crop behaviour, and yield mapping). But drones represent an independent data acquisition source that can be used even in cloudy conditions and can be timed for critical moments in the growing cycle – representing an added value over satellite-based surveillance. They can also include customised sensors and provide increased spatial detail.

Drone technology is already being used in spraying, remote sensing, field scouting, and land administration. Potential future applications could include: assessment of crop damage, infrastructure inspections, pest/disease control, cattle inventories, and phenotyping.

Drones have extended remote sensing capabilities as compared to satellite images and are able to provide digital surface data and hyperspectral data. They also provide detailed 3-D information on plant heights, which could only be done manually in the past. Nevertheless, going from data to informed decisions – which is critical for farmers – represents a major step forward. To do this, challenges need to be addressed including variable collection standards and procedures, intellectual property issues, and questions of data ownership.

A further step involves moving up from the level of the farmer to that of the final consumer – from farm to fork. Connections are already being made between farmers and consumers: smart agri-logistics, and smart food awareness by consumers. This requires a shift to highly integrated solutions that are based on common data standards.

In conclusion, agriculture is becoming a software business. Monitoring is likely to improve even further in the future allowing greater optimisation of agriculture and greater specialisation. Shortcuts are emerging, such as online trading, farming on demand, or harvest on demand. All of these new approaches have policy implications. Related to the environment, monitoring data is becoming more effective, and best practices can be exchanged more easily. Undesirable market changes may need to be addressed such as the rise of new monopolies or the impact of cyber security. Finally, research efforts should be focused on providing support for big data analytics.

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2. GOSAT and DIAS: Japan’s Contribution to Green Growth - Sachiko Hayashida, Professor, Faculty of Science, Nara Women’s University, Japan The presentation focused on the GEOSS plan – a 10-year plan adopted by Japan in 2005 with climate change as its major focus. The GOSAT (Greenhouse Gases Observing Satellite) was launched in 2009 and is the first satellite dedicated to the monitoring of greenhouse gases (CO2 and CH4). It has a wide spatial coverage, and enables an estimation of the sources and sinks for greenhouse gases. It combines an atmospheric tracer transport model with “first guess” and revised flux data sets as well as monthly CO2 flux estimates.

However, there is a gap between the existing technology and scientific needs. Greenhouse gases move around in a 3-D manner and most optical measurements from space are based on the absorption of solar light and can therefore only measure in columns. In addition, thermal infrared wavelength is not sensitive to the lower part of the atmosphere.

AMASA (Atmospheric Methane from Agriculture in South Asia) is a project sponsored by the Environment Research and Technology Development Fund that uses GOSAT to improve estimates of methane emissions in South Asia. It also aims to develop a proposal for emissions mitigation. Very recently, GOSAT allowed for the observation of anthropogenic CH4 emissions.

It is also necessary to analyse all the data collected. To that end, DIAS (Data Integration and Analysis System) has been developed. It aims to build knowledge that will help resolve the earth’s environmental issues and generate socio-economic benefits.

GOSAT has been observing CO2 and CH4 emissions for 6 years. As a result, the flux estimates of have been greatly improved. Next steps involve downscaling to the regional level. The integration of satellite measurements, on-site measurements and output models is critical and necessary to effectively analyse all of the data. Integration is essential for the technology, the data and the terminology used across the different applications. For now, the technology remains relatively limited, but the intention is to make further improvements.

3. Big Data: SMART Water Technologies - Ick Hoon Choi, Director, Korea Environmental Cooperation (KECO), Korea The presentation focused on the application of big data to water management. While there is no perfect definition of big data – there is agreement that they can make an important contribution to humanity. Data help to explain challenges, such as droughts in Korea, and support decision-making towards more efficient water supply.

By analysing data from 37 water supply facilities, it was possible to better manage water pressure.

Following the detailed analysis and implementation of a series of targeted measures, a 48% reduction in energy consumption in water facilities was achieved. Environmental monitoring in Korea covers water quality, hydrological information, air quality, indoor air, noise, and radioactivity. This produces terabytes of environmental data each year. When analysed and interlinked, data have the potential to generate new knowledge and intelligent solutions for both environmental and societal challenges. The combination of environmental data with social data allows for the nowcasting and forecasting of trends such as flu outbreaks, industry flows, and political opinions at a more rapid and accurate rate. This is relevant to both the public and private sectors.

Data information platforms can be used to address societal challenges faced today. Big data can be used to build public-private-academic partnerships, to bridge the global-local gap, and bring complementary skills and experiences to those who need them. It is important to open up access to data as much as possible and build a strong network of stakeholders. To accelerate the use of data, it is important to be able to scale up or scale down data sets and organise workshops to gain expert insight.

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4. New Data Sources in Energy Systems - Luis Munuera, Smart Grids Technology Lead, International Energy Agency The presentation noted that “reaching the 2°C target requires a drop in the carbon intensity of energy by almost two-thirds”. The carbon intensity of the energy sector has been quite stable for the past 50 years, and technology and innovation emerge slowly in this sector. A new transition is required based on renewables, distributed energy, and alternative energy sources.

Electricity systems are late adopters of new technologies and any networks are ageing (i.e. over 40 years old). At the same time, the take-up of alternative and distributed energy is accelerating. In nonOECD countries, the deployment of distributed photovoltaics (PV) will actually overtake OECD countries in the next 4-5 years. Global electric vehicle sales are picking up, with 8-fold growth in charging points over the past 2 years. Smart metering is becoming mainstream, with roll-outs underway in many countries. Costs for batteries are decreasing faster than forecasted and faster than regulators can adapt to. As a result, consumers are increasingly looking for more control of their energy use and consumption.

Future energy systems will be more diverse, dynamic and localised. In the energy sector, data volumes double every 3 years. Today, the first generation of smart metering involves uncontrollable distributed generation. The second generation of smart metering will allow smart charging and smart distributed generation, making it possible to respond to system needs and availability. The next phase will involve distributed intelligence with local control and local balancing of markets. Further along, it will be possible to incorporate behavioural data, demographic data, smart homes and the Internet of things.

To be successful, it is necessary to address systemic gaps along the innovation chain.

• Institutional Gap: How can we accelerate the deployment of new technologies in highly regulated systems? In Europe, there are about 100 million kilometres of distribution networks already in operation overseen by over 2,400 different entities. Infrastructures and energy markets are highly centralised with no real standardisation to allow for coordinated communication.

• Behavioural Gap: How will consumers adopt and react to technologies that bring them closer to their energy use? To what extent will they respond? To what extent will they be willing to shift energy use? Data security, data privacy, access and ownership are all emerging issues in this context. Electricity networks are extremely complex, and the security needs of the different actors in the system are quite different.

II. Q&A Session Roland Sommer (Vice Chair, BIAC Committee on Innovation and Technology) noted the statement that electric vehicles will become pervasive in the coming years. On what data is this prediction made? In the automotive industry, it is believed that hybrid cars, biofuels, and fuel cells will become prominent, and that there is a difference between passenger cars and long-haul freight. The freight industry can be expected to use diesel for quite some time. In addition, we are often told not to pick technology winners although it is necessary to provide specific support to certain technologies at specific times.

Luis Munuera responded by saying that in the light duty vehicle sector, there is an expected massive up-take of electric vehicles. For freight, we are not seeing the same trend. The data from the global electric vehicle outlook shows that there will be some 20 million electric vehicles on the road in 2020, and 80 million in 2030. Today, we have reached a figure of 650,000 electric vehicles, meaning we need continuous support. Regarding betting on the technology winners, with respect to renewables, the IEA focuses on solar PV and wind, two areas where there are benefits from of some of the bets that were taken in the past.

Vincent Champain noted that there are 2 ways that governments can support innovation: through big bets or through price signals. This is a subject on which the OECD could focus in the future. It is also important to remember that being green is not only about carbon.

Frank Van Tongeren (Trade and Agriculture Directorate, OECD) noted that agricultural and environmental policies typically target behaviour and practices rather than outcomes. With more precise data (e.g. drones), will it be possible to reward outcomes?

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Lammert Kooistra stated that it would require a guarantee of the quality of measurements of environmental outcomes. For example, it is difficult to measure nitrogen in ground water in an accurate manner, especially when dealing with individual farms. That can only be done through very dense sampling.

Vincent Champain noted that smart grids are a very fashionable concept today. What is the most impactful practical example of the value created from a smart grid?

Luis Munuera stated that Hawaii has a very high concentration of solar PV. Traditionally, it was the role of transmission system operators to guarantee the security and reliability of the grid. In Hawaii, the distribution system operator is starting to project expected demand and generation, leading to the emergence of local energy markets. This has led to 30% savings in infrastructure spending based on the use of remote sensing and remote monitoring.

Roland Sommer (Vice Chair, BIAC Committee on Innovation and Technology) noted the need for new business models in the agriculture sector. Who will profit from the data system or platform of companies? How do those companies interact and who is in the lead?

Lammer Kooistra stated that the major instrument manufacturers and plant companies are leading in the development of large-scale data platforms in order to serve their customers with information. At the same time, smaller companies are also providing short-cut solutions for individual farmers. However, if they want to scale up, they have to engage with the large-scale companies. There is a level of dependency between all the players in the field that could result in more of an open data system being adopted.

Africa Zanella (Consultant) asked if there is much demand for information from the monitoring of climate change by actors other than academia?

Sachiko Hayashida stated that the actual users of the information are scientists but the results are brought to policy makers. All of the data is publicly available.

Africa Zanella (Consultant) noted that the cement industry is starting to use waste (in particular tyres) to create fuel. However, this can lead to high levels of pollution in some countries. Would the satellite technology be applicable in that type of case?

Sachiko Hayashida said that there are many requests for this information – however, atmospheric sensing is more difficult to achieve than surface sensing. To collect more data, the spatial and temporal resolution of the technology needs to be improved.

Gregory Nemet noted that one of the most contentious topics to emerge from last week’s COP21 negotiations was the verification and monitoring of emissions. Could this technology address that issue?

Sachiko Hayashida stated that it would depend on the size of the country in question, again related to the issue of spatial resolution.

Vincent Champain noted that there has been a lot of innovation in the area of satellites and monitoring.

What surprising applications could be envisaged for the future?

Sachiko Hayashida stated that a new age of satellite remote sensing is emerging, in particular the move from passive to active remote sensing.

Vincent Champain commented that given all the big data technology available today, there are still not many concrete examples of where this technology is being used. What do you consider to be the bestin-class countries in using this technology? What policies have contributed to that success?

Lammert Kooistra responded by noting that the agricultural sector began using GPS signals 15 years ago, resulting in improved use of fertilisers and fewer spills. With respect to sensing, this technology is now at the point where it is providing real value. For example, pesticides are used to destroy above ground biomass and ensure better growth of below ground potato tubers. Sensing allows farmers to spatially localise the amount of pesticide used, resulting in reduced volumes, reduced leaching and reduced materials (i.e. costs) for farmers. Significant investments are underway in satellite-based remote sensing, and in drone-based sensing, and this technology initially emerged from the military complex. It will be interesting to see how green growth applications of this technology are developed.

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Feedback from Parallel Sessions Moderator: Simon Upton (Director, Environment Directorate, OECD) Session A: Emerging Technologies – Risk, Trust and Public Engagement Moderator: Jim Dratwa, European Commission, Director-General for Research and Innovation (US) Panellists: • René von Schomberg, Directorate-General for Research and Innovation, European Commission (Netherlands) • Jeremy Ouedraogo, Head of Plant Genetics and Biotec Laboratory, INERA/CNRST Ouagadougo (Burkina Faso) • Andy Stirling, Professor of Science & Technology Policy, University of Sussex (United Kingdom) Jim Dratwa noted that the first point to emerge in the session was a question: where are the others (e.g. farmers, scientists)? This Forum has successfully brought policy makers together from different organisations and sectors. However, consideration could be given to how other stakeholders could be engaged (e.g. consumers, firms)? The next question was what innovation are we talking about? How do we define systems innovation? There has been an emphasis on technology and carbon. This led to the question of what was green and what was green growth? Do we assume we now know where we want to go and only need to focus on the how? Or is the question of what is green still open?

In terms of the next steps, various speakers called more attention for innovation that will tackle societal challenges as opposed to technological and technical innovation. This involves keeping an open space between social and technological innovation, and broadening the definition of innovation itself. Examples or best practices could be used to identify the key stakeholders and success factors of enabled innovations. Trust should not be seen as a synonym for social acceptance but a reflection of the power relations on which trust is based.

Contestation and diversity should not be avoided. This requires moving away from predefined notions of goals and how to achieve them.

Session B: International Cooperation in Research and Technologies Moderator: Roland Sommer, Vice-Chair of BIAC Committee on Innovation and Technology & Director of Public-Private Affairs, AVL (Austria) Panellists: • Pranab Baruah, Senior Knowledge Manager, Knowledge Solutions Division, GGGI (India) • Marcos Alegre, Executive Director, Grupo GEA/CER, President RECPnet (Peru) • Asaf Tzachor, Head of Strategy, Ministry of Environmental Protection (Israel) Roland Sommer provided an overview of the specific examples of international cooperation including the Green Growth Knowledge Platform (GGKP), the National Cleaner Production Centre in Peru, as well as the measures and programs that the Israeli government has implemented.

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The outcomes of the discussion highlighted a perceived emphasis on bilateral agreements as opposed to broader multilateral efforts. The need for indicators at the grassroots level was also identified, including social indicators. The requirement for greater accessibility and availability of data should be a priority, for example consumption data (i.e. behavioural economics). In addition, R&D agreements should not be limited to technology and should also explore social innovation and new business models.

Consideration should also be given as to how to change mind-sets and what levels should be key target areas in the education system. Cooperation could also be increased with African countries, particular with respect to solar PV. Lastly, the European Technology Platforms were highlighted as an example of best practices with respect to multilateral agreements.

Session C: Innovation Measurement and Learning Moderator: Teimuraz Murgulia, First Deputy Minister, Ministry of Environment and Natural Resources (Georgia) Panellists: • Lucas Porsch, Senior Fellow, Ecologic Institute, Project NETGREEN – Green Economy Indicators (Germany) • José Pineda, Adjunct Professor, Sauder School of Business, University of British Columbia (Venezuela) • Antoine Dechezleprêtre, Associate Professorial Research Fellow, Grantham Institute on Climate Change and the Environment, London School of Economics (France) Teimuraz Murgulia outlined the 3 main points discussed during the session. Firstly, related to knowledge gaps, it is difficult to define innovation, and even more difficult to define good innovation.

Developing indicators for measuring systems innovation is also a challenge. Data availability is limited, and the few indicators that do exist are not being used systematically (e.g. a standard green growth indicators or benchmark). Second, related to best practices. Antoine Dechezleprêtre identified patent data and R&D spending as an input for measuring innovation. This is not a perfect measure but a good starting point. Lucas Porsch discussed the measurement of impact chains, which recognises the fact that innovation is not static. Jose Pineda presented the integrated measurement framework that could eventually lead to a system that would allow comparisons to be made across countries. Teimuraz Murgulia presented the Georgian case of monetising pressure changes. This approach is not easy or perfect but also a potentially good first step.

Priorities for future work could include improving the definition of “green” and developing indicators in a format that is useful for decision-makers. Finally, it is necessary to continue to innovate on the measurement of innovation (i.e. develop new approaches and methodologies).

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Closing Remarks I. OECD Response and Next Steps – Andrew Wyckoff (Director, STI, OECD) Green growth is a fascinating policy issue that is inter-generational and involves the entire planet. This Forum is timely as the OECD is currently thinking about its future work programme for 2017-2018. The world is indeed at a pivot point and it is time to move dramatically. That means radical innovations, but it also means trillions of incremental innovations. More work is also needed to consider non-technological innovations. The aim is to dramatically increase the efficiency of how we make things while reducing the need for transportation (e.g. 3D printing). Importantly, mainstream policy makers are beginning to realise that a bottom-up, micro-economic approach can play an important role in the macro-economic scene.

Considerable work is being done on the bio-economy (i.e. reducing waste). One neglected area relates to oceans. The OECD Space Forum also shows that more can be done through earth observation to help us pinpoint interventions and reduce risks. We need to increase cooperation within science, technology and innovation. The Daejeon Declaration calls on the OECD to map basic R&D around the globe (i.e. who is doing what in basic fundamental research in which subject areas). That would help identify areas where countries could cooperate, places to avoid duplication and determine areas where research is lacking.

It is necessary to employ differentiated innovation policies rather than fixating on only one aspect.

It is also necessary to differentiate between start-up and legacy sectors (i.e. incumbents), which have completely different innovation needs (i.e. firm dynamics). As noted, non-technical innovations are another important area to consider. The InnoCentive website offers bounties for the resolution of R&D problems. It has been successful and shown that solutions often come from outside the original field of study. That points to the need for orthogonal thinking. In addition, the institutionalisation of intellectual property rights has occurred with specialised courts and legal firms established to specifically deal with these issues. To successfully diffuse technologies, this needs to be taken into consideration. Lastly is the issue of regulatory incumbency. So many regulations are influenced by the vested interests of incumbents (e.g. scientists, institutions, firms). The role of incumbency needs to be factored into policy making so that new entrants can benefit from regulations.

II. Q&A Sesssion Kumi Kitamori (OECD, Green Growth and Global Relations) inquired about intellectual property rights and the approach by Tesla of not filing patents. Does the OECD have a view on this issue?

Andrew Wyckoff noted that the problem with intellectual property rights is that they have become mainstream and a framework condition like trade policy or labour policy. The focus often turns to patents – but there are other types of intellectual property (e.g. trademarks, design rights, or copyright).

The UK Intellectual Property Office tried to value the stock of different types of intellectual property, and found that intellectual property was 6-times more valuable to the economy than patents alone. There is therefore a need to differentiate our policies. Companies such as Weta Digital (responsible for the Avatar animation) do not patent anything. On the contrary, they want their sophisticated software to increase users and build a community of skilled users. Other examples include companies such as LinkedIn or Tesla that have put close to $1 billion into an open artificial intelligence research centre.

Simon Upton noted that we have spent the last 250 years mobilising vast amounts of material to create

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our civilisation. GDP grew up around a quantifiable and materially-based economy. We now have to dematerialise the economy and reduce the amount of “stuff” we produce and the amount of transportation we undertake. Does that mean that the rents associated with intellectual property will replace the rents associated with natural resources and commodities?

Andrew Wyckoff responded by stating there are those who are concerned that world trade is declining.

They see this as a warning that the economy is in cyclical decline – but this instead could be a result of structural changes. This could be the result of two trends: demographics and de-materialisation/ digitisation. As people get older, they buy less “stuff” and more services. In addition, a 2013 OECD publication Knowledge Based Capital showed that capital was traditionally seen as machinery, equipment and structures. Today, capital is increasingly seen to include R&D, software, intellectual property, databases, brands, know-how (e.g. complex systems integration). This new type of capital is far more productive than traditional capital – this is where rents will be coming from in the future.

III. Closing of the Forum – Rintaro Tamaki (Deputy Secretary-General, OECD) The Green Growth and Sustainable Development Forum has met its key objective: to identify knowledge gaps and to prioritise next steps. The event aims to tackle horizontal and cross-cutting green growth issues. Systems innovation is a perfect example of a concept that cuts across all that we do, and the requirement to transition to a greener economy. This includes the use of drones in the agricultural sector to improve productivity and environmental performance as well as the role of big data in greening growth. The SPINE (Spatial Planning INstruments and the Environment) project is another example of the OECD’s work in this area.

This Forum identified issues that can be further addressed by many OECD committees. The knowledge gaps and research priorities identified in the Forum should inform the OECD’s programme of work and budget for 2017-2018 and beyond. The OECD’s work in this area is also being carried out with other partner institutions such as the International Energy Agency (IEA), the International Transport Forum (ITF) and the Nuclear Energy Agency (NEA). It is critical that the OECD keeps up its cooperation with other international organisations that are active in these fields (e.g. Green Growth Knowledge Platform).

Last year’s GGSD Forum addressed the social implications of green growth. As a follow-up to the 2014 Forum, the OECD supported the Partnership for Action for Green Economy (PAGE) event: the Global Forum on Green Economy Learning. It draws on the OECD’s work on green skills, education and training, and will bring together over 100 practitioners from developed and developing countries.

Next year’s GGSD Forum that will be held in November 2016 will focus on Spatial Planning, Land Use and Urban Green Growth. Suggestions and recommendations on how to shape that event are welcome.

He noted his hope that the Forum has generated momentum for further policy research on green innovation from a broader, integrated systems perspective. He also recommend the OECD report, Aligning Policies For a Low-Carbon Economy (published in July 2015) that includes chapters on innovation and urban mobility / sustainable land use.

He concluded by thanking the audience for their active participation in the 2015 Green Growth Sustainable Development Forum and encouraged everyone to attend the 2016 event.

GGSD 2015

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