The innovation ecosystem

The innovation ecosystem for climate change adaptation

The primary objective of the Green Technology Book is to illustrate that innovation and technology has solutions to climate change impacts. These solutions come from inventors working within specific environmental and socioeconomic contexts.

A large number of factors determine a healthy innovation ecosystem

When looking broadly on innovation and what brings about high levels of innovation within a society, a surprisingly large number of factors play a part. Some of the countries that consistently score highest in the annual WIPO Global Innovation Index (GII) are Finland, Germany, Netherlands, Republic of Korea, Singapore, Sweden, Switzerland, United Kingdom and  United States.^[1] What characterizes these and other countries with high innovation scores is a socioeconomic environment conducive for an inventor who wants to develop, finance, publicize, market, protect and benefit from an innovation.

The innovation ecosystem's many drivers

No single factor determines what makes an innovation-conducive environment. The GII produces global innovation rankings according to 81 indicators. Most concern the factors conducive for innovation (input indicators). For example, local institutions need to provide political and operational stability, high-quality public services and policies, and ensure the rule of law, including a well-functioning intellectual property (IP) rights system. Human capital is a fundamental resource for innovation. Here factors such as education spending, school attendance and performance, tertiary education opportunities, as well as the number of researchers and research spending, are important. Infrastructure must function well. This includes factors such as information and telecommunication technologies (ICTs), electricity and logistics and environmental performance. Bringing an innovation to market also depends on a number of factors. Internal and external financial resources to fund investments must be available. Markets must be well-functioning, with economies open to international commerce and highly diversified. But also the business community in general must be able to develop, absorb and market innovation. This requires highly qualified employees with opportunities for continued training, R&D funding and linkages to universities and other innovation nuclei.

The level of adaptation innovation as measured through inventions remains low

All these factors combined may create a healthy innovation ecosystem able to provide the adaptation technologies that will be increasingly required. However, the level of adaptation innovation as measured through inventions remains low, as compared both to mitigation and to general invention levels.^{[2] [3]} Most innovation is concentrated within a few high-income countries. With the exception of some of this select few, countries in general do not seem to generate more adaptation innovation, even when more exposed to climate risks.^[4]

This may relate to the low-key role played by adaptation compared to mitigation. Since less attention and fewer supporting policies have been directed toward adaptation solutions, this leaves demand the main driver. Earthquakes and extreme weather events, such as droughts and floods, have been shown to increase innovation in technologies to control such risks (e.g., quake-proof buildings, drought-resistant crops, flood control and so on).^[5] However, because impacts from climate change are diverse, characterized by extreme events and subtle long-term changes, and clearly manifested in some regions and not others, the call for adaptation solutions is not so loud as it is for mitigation technologies. Adaptation technologies show a consistently stronger reliance on public support compared to other technologies, suggesting market demand is weaker.^[6] But as impacts become increasingly persistent and consequential, the need for solutions is likely to grow. And what is more, grow rapidly.

Boosting the innovation ecosystem

Governments wanting to support innovation in adaptation need to have at the front of their mind the drivers behind a well-functioning innovation ecosystem. The difficulty in selecting the best policy instruments is that adaptation concerns a variety of sectors (agriculture, health, infrastructure, water and so on). Also that the sectors present different challenges and involve different actors from the public and private sector. Environmental policies and regulatory pressure can be an important driver for environmental innovation.

Environmental regulation could contain market-based instruments such as subsidies and environmental taxes, as well as non-market instruments such as technology and performance standards. For example, CO₂ emission taxes have been shown to impact innovation in mitigation technologies.^{[7] [8]} And air and water pollution control legislation in the United States during the 1970s was followed by increased innovation in pollution control and treatment technologies.^[9] Government regulations to ensure that new urban developments and infrastructure are fit to resist more extreme weather events are likely to encourage innovation in the same way.^{[10] [11]}

Supporting the market is another option. Market conditions are determined among other things by credit availability and the level of investment. Clean energy research indicates that government support for small and medium-sized enterprises (SMEs) could stimulate commercialization, and that equity and credit availability promotes clean energy production.^[12] The same could be true for adaptation technology. Moreover, increased funding in the form of subsidies can also increase demand for adaptation technologies. Another innovation ecosystem driver is the ability to absorb, modify and utilize new technologies under local conditions.

Fundamental to the innovation ecosystem is a strong research community

Some authors attribute the low level of innovation and technology transfer in part to a lack of such absorptive capacity. Investing to strengthen this capacity could lead to increased development and adoption.^[13] Here education is likely to play a role and further raise consumer awareness and demand.

Fundamental to the innovation ecosystem is a strong research community. Much innovation originates in universities and research agencies, with an important spill-over of innovation and researchers into the private sector.

Therefore funding and other support for such innovation nuclei is likely to be an effective driver. Again, in the case of adaptation innovation, such support must be allocated to a wide variety of technical fields, reflecting the diversity of adaptation needs.

Well-managed intellectual property rights (IPRs) are a cornerstone of protection for the rights of the inventor and as such enable continued innovation and development. Local IP offices (IPOs) which grant patents and other IP assets can for example support the deployment of adaptation technologies by fast-tracking patenting processes; assisting inventors in connecting with investors and the market; facilitating access to patent information; and by cooperating with foreign IPOs and international patenting processes. A collection of initiatives that IPOs can implement in order to support adaptation and green technologies can be found through the WIPO IPO Green initiative.^[14]
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Intellectual property in green technology transfer

Transfer of adaptation technologies

Once a new solution has been created, it must next be deployed in the field. This can be a complex and long process. It is one thing is to make a new solution work in the controlled environment of a test-field, laboratory or workshop. It is quite another to make it work in diverse and variable environments inhabited by actual users and make it economically attractive at the same time.

International technology transfer is not only about transferring technologies from developed to developing countries, but also in the opposite direction

Financing, legislation, permits, taxes, know-how, spare-parts and IPRs are some of the other factors determining whether a new solution will be successful. This process is commonly referred to as technology transfer. The term covers both the process of transferring technology from the inventor to the market, as well as from one stakeholder to another. Also international technology transfer is not only about transferring technologies from developed to developing countries, but also the opposite way, or between high-income as well as between lower-income countries.

Often, a new technology will need adapting to local conditions and complex systems may have to be in place for a solution to work properly. This requires the receiving country or region to be capable of creating the right conditions for a solution to work. This can entail having adequate education or training, a stable electricity supply, a communication and internet connection, reliable transport and delivery systems, a functioning legal system, efficient financial services, an openness to trade, a well-functioning and sizeable market, and peace and stability. In other words, many of the same factors determining a well-functioning innovation ecosystem identified in the previous section.

IPR is an important factor in technology transfer. This is because it clarifies ownership, strengthens an inventor’s negotiating position and helps attract partners and financing

Technology transfer can take different channels, including foreign direct investment (FDI), international trade, joint research, patents and licensing, as well as certain people moving from one place to another. IPR is an important factor in technology transfer. This is because it clarifies ownership, strengthens an inventor’s negotiating position and helps attract partners and financing.

The importance of IPR depends on the technology. If additional inputs are required and infrastructure a major factor in its implementation, such as for instance construction skills for coastal adaptation technology, IP may be less important than for example for health- and agriculture-related adaptation technologies, which often rely on a stronger science base.^[15]

Monitoring international technology transfer can provide an indication of how knowledge and innovation arises and spreads. However, in view of the diverse channels through which innovation travels, assessing international technology transfer levels can be difficult. One indicator using the IPR system is the rate of diffusion, as measured by how many patents are filed in at least two different patent offices. Recent research suggests that the diffusion rate for adaptation technologies is only 17 percent. That is significantly lower than for technologies generally (24 percent), and only around half the rate for mitigation technologies (31 percent).^[16]

Adaptation innovation is concentrated within a few countries, including China, Germany, Japan, the Republic of Korea and the United States. Diffusion from these to other countries is also low and even shrank by half between 2008 and 2015.^[17] Patent data and FDI analyses do not indicate any significant international transfer to low-income countries.^[18] That is not to say such transfer does not happen through other channels, for example between universities or companies, which is more difficult to capture.

Since adaptation technologies are highly diverse, it is difficult to draw general conclusions about the apparently limited international technology transfer. The barriers hampering adaptation technology transfer appear to be similar to those hampering other technologies.^[19] Among them are the receiving country’s technical capabilities, tariffs, weak financial markets making it difficult to obtain loans, and weak legal systems and IPR enforcement. With the need for adaptation technologies expected to rise dramatically in the near future, it will become increasingly important that these barriers are removed to enable a free flow of innovation, knowledge and technology.
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Technological knowledge within the patent system

The international IPR system generates technological knowledge

An inventor of a new solution is best served by securing the intellectual property right (IPR) on their invention. The legal protection conferred by an IPR is an important measure against unauthorized use of an invention. It is also in effect a market tool that allows an inventor to recoup investment in R&D through a government-sanctioned competitive advantage for a fixed period of time.

Although usually commercially oriented, an IPR may also be relevant for any inventor who wishes to control their invention’s release into the public domain but without benefitting commercially. For example, securing an IPR for an invention destined for free public access can ensure that it stays within the public domain, and that no third party can seek to capture the IPR or market the invention commercially. Protection against competing patenting can also be obtained through a defensive publication of the invention, adding it to the state of the art and thereby effectively rendering it un-patentable.

Granting of a patent is a decision by the designated national authority based on national law

The most common way of obtaining an IPR for a new technology is to apply for a patent in those countries where the invention is expected to be marketed and deployed. Granting of a patent is a decision made by the designated national authority based on national law.

However, a few regional patent systems do exist and have different degrees of convergence (e.g., African Intellectual Property Organization (OAPI), African Regional Intellectual Property Organization (ARIPO), Eurasian Patent Organization (EAPO), European Patent Office (EPO), Patent Office of the Cooperation Council for the Arab States of the Gulf (GCC Patent Office)).

The Patent Cooperation Treaty (PCT) administered by WIPO,^[20] is an international arrangement that can greatly facilitate obtaining patent protection in various jurisdictions. It also provides for publication of patent applications according to internationally agreed standards.

Once a patent has been granted, the patent holder has exclusive rights to exploit the invention in the country or countries where the patent was granted for a fixed period of time. This is typically 20 years from the filing date. In return for this exclusive right, the inventor has to disclose detailed information on the invention to the extent that it can potentially be carried out by a skilled person.

The international patent system makes an immense body of technological information and knowledge available to the general public

This information is made publicly available from large patent databases. In this way, the international patent system makes an immense body of technological information and knowledge available to the general public. The information enables authorized (licensed) use of an invention in countries where a patent has been granted, free use in countries where a patent has not been granted, and further development into new patentable inventions.

Technology information availability

Several patent databases are available. Two of the biggest are WIPO’s Patentscope^[21] and the European Patent Office’s Espacenet.^[22] Data collections and search functions vary depending on the nature and purpose of the database concerned. Several national patent offices have databases of national patents and patents having effect within their territories. Commercial patent databases also exist. Patents can also be explored through dedicated search engines such as Google Patents^[23] and Lens.^[24]

Patent databases often contain millions of patent documents. Navigation can therefore be complex. Intricate and highly detailed classification systems are used to organize the many patents. Within these classifications are classes dedicated specifically to green technologies. For example, the IPC Green classification^[25] is a collection of already existing classes that relate to Environmentally Sound Technologies (ESTs). And EPO has created a so-called Y02 classification for patents that relate to climate change mitigation and adaptation.^[26]

A thorough understanding of patent classification systems allows databases to be used to analyze trends in innovation and technological development. Such an analysis uses patents as a proxy for innovation and for identifying where innovation hotspots are located. This can produce complex insights that would otherwise be difficult and costly to obtain. WIPO publishes a number of such technology trends reports based on patent analyses.^[27]

Another reason why patent databases can be difficult to navigate is their sheer size. Dedicated green technology databases may be a more accessible alternative for anyone interested in this particular field. Several exist. Some are dedicated to specific topics, areas or countries, or are commercial enterprises. The WIPO GREEN database of needs and green technologies is UN-based, freely available and a public database.^[28] It contains a large collection of user-uploaded needs and technologies, as well as relevant patents, knowledge material and expert profiles. The WIPO GREEN database also serves as a repository for the adaptation technologies collected for this publication. Collected technologies not included in this publication can also be found there. The database provides an always-on auto-matching of needs and green technologies using artificial intelligence (AI) algorithms.

Patent as a solution

A patent is an IPR granted for innovative technological solutions. There is no easy way of knowing whether a patented invention has gone on to be developed into a solution available on the market for licensing, buying or otherwise accessing. Furthermore, a patent contains a detailed description of the invention for which it was granted. But this information can be highly technical and not always written in a way that is readily accessible to the general public. The WIPO GREEN Database of needs and green technologies has a search function dedicated to searching for commercial applications of patents found in the database. AI-supported analyses of a patent’s technology description are analyzed and form the basis of a customized internet search for solutions. This “Patent2Solution” search function is available as a helpful option when patents are displayed in the database.

The international system of IPRs – notably the patent system – creates and publishes a huge body of technological information which can be the basis for licensing, deployment and further innovation. It is also a sound basis for knowledge upon which the innovation ecosystem can function and develop.
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