Invest Now in CO2 Reduction Innovations

The current economic crisis has been sapping momentum behind vital policy steps to address climate change.

This is unfortunate, since negotiations on concerted actions by leading industrialised countries to reduce emissions have proceeded too slowly considering the global nature of the problem and the stakes involved.

In fact, the biggest threat is precisely the lack of a long-term policy commitment to minimise delays in halting the rise of CO2 and other greenhouse gas (GHG) concentration levels: delays that could allow the warming process to run irreversibly out of control.

It is recognised that there are likely some critical threshold levels of GHG concentrations or temperature that, when crossed, will impart a self-reinforcing momentum to the process. Then large-scale events would be set in motion that will have direct and damaging consequences. This result would necessitate the shifting of resources to urgent environmental damage limitation and away from further efforts to slow down and halt the warming process.

Therefore, a robust response to the challenge of ongoing global warming must make every effort to prevent those critical thresholds from being crossed. The problem is that aiming for some stable level of GHG concentration with an a priori (theoretical) optimum set of policy instruments may lead to falling short of the appropriate moving target defined in terms of emissions reduction. For it is difficult to predict what rate of emissions reduction will lead to what GHG level and when.

Minimising maximum regret

Given the enormous costs of adapting to a climate that has switched from a stable mode to one of irreversibly accelerating change, the only sensible course of action is to adopt the precautionary principle and commit to pursuing what are known as minimax-regret policies. These policies aim to minimise the likelihood of the worst-case outcomes — i.e., those that would cause the maximum regret.

The appropriate minimax-regret climate change strategy therefore focuses on doing whatever is feasible to stabilize GHG concentrations at present levels, or as close to the present as possible, in the hope that there is still enough surplus environmental absorption capacity left to accommodate the additional warming that is already in the pipeline due to recent and present emissions.

The fact that news items about thawing permafrost in the tundra of Siberia and Canada, and crumbling ice sheets in Greenland and the Antarctic seem to become more frequent year-by-year suggests that the environment is more fragile than earlier Intergovernmental Panel on Climate Change targets for emissions control, GHG levels and warming had supposed. In our opinion, this simply reinforces the urgency of formulating a “prudential global strategy”.

We can identify three ways in which government can constructively respond to the “climate change crisis.”

Coordinated betting required

A commitment to lowering the actual expense of complying with GHG reductions is a prerequisite for an international agreement on science, technology and innovation policies. This would require major coordinated investment in basic and applied research that aims to cut the costs of drastically reducing net GHG emissions.

This R&D effort needs to be large, broad and diversified. Diversity in R&D is important, both to avoid committing resources too early in the face of ongoing knowledge creation and also to reduce the risk of betting on the wrong technology horse.

In other words, a successfully focused program of exploratory R&D investment could spur the creation of technologies that would lower the investment costs necessary for achieving the required GHG reductions.

Furthermore, it would delay the most lumpy and irreversible of the capital formation commitments in order to preserve the option of implementing more efficient technologies when these emerge. But exploratory research is particularly uncertain, and so the risks call for an early start: a diversified research portfolio from which the more promising lines can be selected for further development.

Government climate change and energy strategies should therefore include the undertaking of major programmes of both exploratory and more focused scientific and technological R&D investment. Such programmes would seek new technologies that would make it affordable to actually achieve the required GHG reductions, and make it rational.

There is an evident need for international coordination on the part of governments at different levels regarding the funding of climate change R&D programmes, and the sharing of the resulting advances in technological knowledge. The diversity of scientific and engineering capabilities relevant for concerted global actions offers opportunities for mutually advantageous cooperation.

In fact, when it comes to emission reduction innovation, the strategic fixation with national science and technology policies that aim to make a country more internationally competitive is not only a dangerous obsession. It is a real danger to all people of this world.

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For more details, please download the United Nations University – Maastricht Economic and Social Research and Training Centre on Innovation and Technology (UNU-MERIT) policy brief on this topic from the link below.

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Invest Now in Co2 Reduction Innovations by Luc Soete is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.

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Author

Luc Soete is Director of the United Nations University – Maastricht Economic and Social Research and Training Centre on Innovation and Technology. He is also Professor of International Economic Relations (on leave) at the Faculty of Economics and Business Administration, University of Maastricht. His research interests cover a broad range of theoretical and empirical studies of the impact of technological change on employment, economic growth, and international trade and investment, as well as the related policy and measurement issues.

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