The development of low-carbon technologies will need to be supported through R&D policies. According to OECD calculations, a marke t-based policy that seeks to stabilize GHG concentrations at 550 ppm could provide incentives for a four -fold increase in world energy R&D spending by 2050. In practice however, pricing carbon is unlikely to be enough to spur sufficient investment in R&D b ecause barriers to innovation are large. The most obvious barrier is political uncertainty about future climate policy, and thus uncertainty about returns on R&D investment. Speeding up the emergence and deployment of low-carbon technologies will ultimately require increases in – and reallocation of – the financial resources channelled into energy related R&D. Figure 20: The roles of the public and private sectors in financing technology development
Source: FCCC/TP/2008/7: Investment and financial flows to address climate change: An update . Technical paper.
Therefore specific policies for boosting climate -friendly R&D will be needed, in addition to carbon pricing, for major breakthroughs in low-carbon technologies to occur. 2.5.2. Policy instruments to stimulate R&D and technology deployment
Technology-support policies provide R&D and/or technology adoption incentives. On the R&D side, they range from basic public research to direct government funding of private R&D and tax incentives, and can also strengthen intellectual property rights (IPRs ). On the technology adoption side, they may include subsidies, public purchases, and legal obligations (e.g. for electricity providers to purchase a certain share of their electricity from renewable sources, which may be best achieved through market mecha nisms such as “green certificates”). 38 For example, in the USA, R&D tax credits to industry totalled an estimated $6.4 billion in 2001. However, in dustries associated with high GHG emissions did not take advantage of this opportunity in that the utility industry received only 23 million US$ (IPCC, AR4). Possible policies could include rewarding innovation through the use of innovation prizes, and/or establishing a global fund for helping with technology transfers and rewarding
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The Economics of Climate Change Mitigation: Policies and Options for Global Action beyond 2012 , OECD 2009.
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