Technology research, development, deployment, diffusion and transfer
The pace and cost of any response to climate change concerns will also depend critically on the cost, performance, and availability of technologies that can lower emissions in the future, although other factors such as growth in wealth and population are also highly important [2.7].
Technology simultaneously influences the size of the climate change problem and the cost of its solution. Technology is the broad set of competences and tools covering know-how, experience and equipment, used by humans to produce services and transform resources. The principal role of technology in mitigating GHG emissions is in controlling the social cost of limiting the emissions. Many studies show the significant economic value of the improvements in emission-mitigating technologies that are currently in use and the development and deployment of advanced emission-mitigation technologies (high agreement, much evidence) [2.7.1].
A broad portfolio of technologies can be expected to play a role in meeting the goal of the UNFCCC and managing the risk of climate change, because of the need for large emission reductions, the large variation in national circumstances and the uncertainty about the performance of individual options. Climate policies are not the only determinant of technological change. However, a review of future scenarios (see Chapter 3) indicates that the overall rate of change of technologies in the absence of climate policies might be as large as, if not larger than, the influence of the climate policies themselves (high agreement, much evidence) [2.7.1].
Technological change is particularly important over the long-term time scales characteristic of climate change. Decade- or century-long time scales are typical for the lags involved between technological innovation and widespread diffusion and of the capital turnover rates characteristic of long-lived energy capital stock and infrastructures.
Many approaches are used to split up the process of technological change into distinct phases. One is to consider technological change as roughly a two-part process: 1) conceiving, creating and developing new technologies or enhancing existing technologies – advancing the ‘technological frontier’; 2) the diffusion or deployment of these technologies. Our understanding of technology and its role in addressing climate change is improving continuously. The processes by which technologies are created, developed, deployed and eventually replaced, however, are complex (see Figure TS.6) and no simple descriptions of these processes exist. Technology development and deployment is characterized by two public goods problems. First, the level of R&D is sub-optimal because private decision-makers cannot capture the full value of private investments. Second, there is a classical environmental externality problem, in that private markets do not reflect the full costs of climate change (high agreement, much evidence) [2.7.2].
Figure TS.6: The technology development cycle and its main driving forces [Figure 2.3].
Note: important overlaps and feedbacks exist between the stylized technology life-cycle phases illustrated here. The figure therefore does not suggest a ‘linear’ model of innovation. It is important to recognize the need for finer terminological distinction of ‘technology’, particularly when discussing different mitigation and adaptation options.
Three important sources of technological change are R&D, learning and spill-overs.
- R&D encompasses a broad set of activities in which firms, governments or other entities expend resources specifically to gain new knowledge that can be embodied in new or improved technology.
- Learning is the aggregate outcome of complex underlying sources of technology advance that frequently include important contributions from R&D, spill-overs and economies of scale.
- Spill-overs refer to the transfer of the knowledge or the economic benefits of innovation from one individual, firm, industry or other entity, or from one technology to another.
On the whole, empirical and theoretical evidence strongly suggest that all three of these play important roles in technological advance, and there is no compelling reason to believe that one is broadly more important than the others. As spill-overs from other sectors have had an enormous effect on innovation in the energy sector, a robust and broad technological base may be as important for the development of technologies pertinent to climate change as explicit climate change or energy research. A broad portfolio of research is needed, because it is not possible to identify winners and losers ex-ante. The sources of technological change are frequently subsumed under the general drivers ‘supply push’ (e.g., via R&D) or ‘demand pull’ (e.g., via learning). These are, however, not simply substitutes, but may have highly complementary interactions (high agreement, much evidence) [2.7.2].
On technology transfer, the main findings of the IPCC Special Report on Methodological and Technological Issues of Technology Transfer (2000) remain valid: that a suitable enabling environment needs to be created in host and recipient countries (high agreement, much evidence) [2.7.3].