Will technological innovation save us from climate change or do we need policy and the law?
Climate change is the most pervasive threat facing humanity today. Unless greenhouse gas emissions are reduced dramatically, global temperature rise will have severe and irreversible impacts on communities and ecosystems, as well as the economy, trade, defence, food security and health.
Carbon-intensive technologies and practices must be phased out rapidly. The global average surface temper.[1]
Add rising global energy demand into the equation, and our planet is in dire need of carbon-neutral technologies that are capable of meeting our energy needs.
Technological innovation is essential in the transition to a low-carbon future
Wind turbines and solar photovoltaics are rapidly becoming more efficient and cost-effective. In 2016, the International Energy Agency (IEA) reported that new installations of renewables accounted for more than 50 per cent of additions to power capacity.[2]
Nevertheless, further innovations will be necessary if renewable energy technologies are to drive existing, carbon-intensive technologies from the market. For example, batteries that store surplus energy generated by solar panels need to become more efficient and affordable, and we need to design “smart” electricity grids which encourage low-carbon technologies, improve energy efficiency and more effectively manage peak load.
Policy and the law are the “enablers” of innovation
Policy and the law are necessary to accelerate innovation and correct market failures which prevent brilliant innovations from transitioning to commercially viable technologies.
One barrier to innovation is the failure of the electricity market to adequately compensate for investment in research and development. This can be overcome by:
Financing emerging technologies: for example, the Australian Renewable Energy Agency (ARENA) provides funding for research, development, demonstration and pre-commercial deployment of renewable energy technologies. The Clean Energy Finance Corporation (CEFC) provides the next stage of support by helping demonstrated technologies to secure the long-term debt finance.
Targeted deployment incentives: for example feed-in tariffs and priority dispatch, are a “leading edge” economic tool which aim to reduce the risk of investing in emerging technologies by giving investors a long-term guarantee of a reasonable rate of return. In Germany, for example, eligible low-carbon generators are guaranteed priority access to the grid until 2020 and public utilities are obliged to purchase electricity from these generators at a fixed rate for a period (thereby guaranteeing investor return), and thereafter at a sliding rate which decreases by a fixed annual percentage (thereby incentivising continued improvements to the efficiency of technology and operations).
Another barrier to the competitiveness of carbon-neutral technologies is the environmental market failure whereby the environmental costs of emitting carbon dioxide are not reflected in the price of goods and services, and therefore exist as a negative externality. This can be corrected by putting a price on carbon, in the form of an emissions trading scheme or a carbon tax. In 2016, 40 national and over 20 sub-national jurisdictions were putting a price on carbon.[3]
A complex solution
Saving the planet from climate change will require a lot more than replacing carbon-intensive technologies and processes with innovative, carbon-neutral technologies and processes. We need to stop deforestation because, globally, forests are net carbon sinks. We need governance structures and technologies that are capable of monitoring, reporting and verifying every country’s emissions in an open and transparent manner. We need to adapt our lifestyles, infrastructure and agricultural practices to a changing climate.
For some communities, adaptation to climate change is a matter of survival. And many countries require support to mitigate and adapt to climate change in the form of climate finance, the transfer of clean technologies and capacity building initiatives.
There is no “silver bullet” to the threat of climate change. Preventing dangerous climate change will require not only technological innovation, but unprecedented international cooperation and reforms to domestic law and policy in the spirit of high ambition as well as equity.
In the words of the former UN Secretary General, Ban Ki-moon, “We must turn the greatest collective challenge facing humankind today, climate change, into the greatest opportunity for common progress towards a sustainable future.”
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[1] Paris Agreement, Art 2.
[2] IEA (2017) Tracking Clean Energy Progress 2017. Accessed online : <www.iea.org >.
[3] World Bank Group; ECOFYS (2016) Carbon Pricing Watch 2016 (Washington, DC: World Bank).
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