International Policy

Carbon emissions know no boundaries. Climate change is a global phenomenon requiring globally relevant solutions, which necessitates new international solutions and policy priorities. As the world continues to negotiate a new climate agreement, global institutions have an opportunity to pivot away from failed carbon caps and prices and towards an aggressive energy innovation strategy.

CCEI believes every country and global institution must play a role. Developed countries must aggressively support investments in the entire clean tech innovation lifecycle. Global institutions including development banks, aid agencies, and nongovernmental organizations should tie providing universal energy access to the demonstration and smart deployment of breakthrough clean energy. And developing countries should leverage their competitive advantages to impact parts of technology development, rather than rely on innovation-stifling green mercantilist policies.

In other words, CCEI believes a new global campaign for energy innovation is necessary to build a thriving international energy innovation ecosystem, and to effectively mitigate climate change.

International Policy

End Global Underinvestment in Clean Energy R&D

Developed countries should at least triple clean energy RD&D. The dominant narrative at the international level is focused on carbon targets, with little high-level discussion on boosting international energy innovation. A key step developed countries can take to combat climate change is to supplement existing climate change negotiations with the option for nations to investment in clean energy innovation in lieu of near-term carbon caps. Even a modest target of 0.065 percent of a developed nation’s GDP devoted to clean energy RD&D would increase public investments by $40 billion annually, representing a long-term stimulus for next-gen clean tech.

Reform Subsidies to Support Smart Deployment of Clean Energy Technologies

High-income countries should reform existing subsidies into “smart deployment” policies that provide subsidies contingent on continued cost and technology improvement. Countries should support smart clean energy deployment by implementing performance-based subsidies or incentives that steadily decrease over time, requiring technologies to compete on technological merit and innovation, not government largesse.

The World Bank should finance smart deployment in low-income countries. The World Bank should prioritize innovation in its energy investment portfolio by supporting the demonstration and deployment of emerging, rather than just existing, technologies to drive innovation. The Bank should execute such an institutional change by using IBRD policy loans to support the implementation of clean energy innovation policy strategies in lower-middle income and emerging countries, moving beyond carbon prices, targets, and subsidies.

The Clean Technology Fund should be redesigned to focus on testing and demonstration. The Clean Technology Fund should be redesigned to represent the premier “clean energy innovation” financial mechanism for low-income and emerging countries to coordinate the testing and demonstration of advanced clean energy technologies.

The UN should encourage smart deployment through leapfrogging for energy access. For the past few years the UN and other development organizations have supported “technology leapfrogging” for small devices like solar lamps and clean cookstoves. These technologies, while largely unnecessary in high-income countries, address important and specific needs in low-energy-access countries, but still don’t provide high-energy access. The UN should expand this leapfrogging approach with a more ambitious program for deploying larger clean energy systems in situations and regions where clean energy is cheaper than fossil fuels.

International Policy

Combat International Green Mercantilism to Enhance Global Innovation

Create a Clean Technology Agreement modeled after the Information Technology Agreement. Trade negotiators should create a global clean energy free trade zone. Modeled after the ITA, this clean tech-specific free trade pact would gradually eliminate tariffs on clean energy, greatly expanding international trade. This would not only increase investment in clean energy, it would provide an avenue to reduce tensions among countries engaged in clean energy trade wars, such as the United States and China over solar policies.

Countries should step-up enforcement of existing trade agreements related to clean energy. While new trade agreements for clean energy are needed, enforcing existing free trade agreements within the WTO framework is critical to combating rampant green mercantilism. For the United States this means increasing funds for the U.S. Trade Representative to expand capabilities to focus on unfair clean tech trade practices. For other free-trade based countries this means making it a national policy to bring cases to the WTO whenever free trade violations are made and even if the clean energy industry doesn’t initiate the case. In the short term, countries should combat green mercantilism with tariffs on mercantilists’ products.

The UN should discourage green mercantilism in international climate negotiations. The UN should work to facilitate negotiations through the UNFCCC process on an international climate agreement that doesn’t include compulsory licensing or assume clean energy falls under the Doha Declaration of the TRIPS agreement, as it pertains to addressing climate change.

The World Bank should shift partial funding away from countries practicing green mercantilist policies. The Bank should immediately stop funding projects that include provisions for compulsory licensing or domestic content requirements, which would empower clean energy projects to use the most innovative and affordable technologies available. The Bank should shift some of its financing away from green mercantilist countries and toward low-income countries that do not utilize mercantilist policies.

Facilitate International Energy Innovation Collaborations

The IEA should develop energy innovation ecosystem mapping. A significant challenge in many low-income countries is a lack of informed strategic energy planning. Lack of data on regulatory structures, market trends, infrastructure, government investments, and institutional involvement often inhibits or undermines the implementation of projects or policy.168 To correct this, IEA should develop an energy innovation ecosystem mapping initiative for low-income and emerging economies to inform better international clean energy innovation for developing technology test-beds and facilitating smart deployment.

The IEA should develop clean energy innovation agreements to demonstrate new technologies. To coordinate high-income countries’ investments in RD&D with low-income countries’ willingness to host clean energy pilot and demonstration projects, IEA should implement “Clean Energy Innovation Agreements,” modeled on the Agency’s Technology Implementing Agreements. These agreements should be revised or complemented to also include low-income countries aiming to expand clean energy access by hosting projects that pilot and demonstrate breakthrough clean energy technologies—with strong and proper IP protections—that otherwise would struggle to advance from the lab bench in high-income countries.

Support Innovation-Based Energy Access to Address Climate Change and End Energy Poverty

The UN should properly define “modern energy access.” Doubling or tripling energy consumption in energy-poor countries means little when the gap in energy consumption per capita between high- and low-income countries is actually more on the magnitude of one hundred instead of one. For example, rather than meeting the IEA’s low estimate of what constitutes modern energy access—100 kWh per capita, per year—the UN should work toward raising low-income countries’ energy consumption to that of, say, Japan (7848 kWh per capita, per year), which has a high standard of living but is also a leader in energy efficiency. The UN should elevate the international energy access debate toward a much more humane and prosperous goal that is in line with the high levels of energy access high-income countries benefit from today.

The World Bank should finance the most affordable technology options in low-income countries. The World Bank’s IDA lending program should continue to make credit available to low-income countries for developing energy-generating systems that are the most affordable option, even if they are fossil fuel-based. International institutions should not limit global economic development and energy access in the name of climate mitigation, or offer more expensive energy options when cheaper sources are available.