GII 2018: Energizing the world with innovation

By Catherine Jewell, Communications Division, WIPO

The focus of the Global Innovation Index 2018 is Energizing the World with Innovation. The GII, now in its 11^th edition, benchmarks the innovation performance of 126 countries, offering policymakers a snapshot of the strengths and weaknesses of national innovation ecosystems. Sacha Wunsch-Vincent, a senior economist at WIPO and one of the co-editors of the GII 2018, discusses some of the key findings of this year’s report.

What are the key findings of the 2018 edition of the GII?

This year, the global economic outlook is rather optimistic, both in terms of growth and innovation. In most economies today, investment in research and development (R&D) and innovation are priority areas. Global R&D spending, which more than doubled between 1996 and 2006, continues to rise. And the private sector is playing an increasingly important role in the global R&D investment landscape, with global business R&D spending rising by 4.2 percent in 2016. 

However, there is still a clear need for policymakers to focus on implementing pro-innovation policies to sustain this momentum and boost the economic performance of low-and middle-income economies. China’s achievements in strengthening its innovation ecosystem and remarkable rise in the GII rankings – ranked 17 this year – is an interesting example for other middle-income countries to follow.

While the innovation gap between high-income economies and the rest of the world remains wide, and marked regional imbalances in innovation performance persist, many countries are progressing. For example, GII 2018 identifies 20 so-called “innovation achievers,” whose innovation performance surpasses their level of development. Colombia, South Africa and Tunisia join this group for the first time.

GII 2018 also confirms that wealthier countries with more diversified and export-oriented economies tend to achieve a higher score in innovation rankings, both in terms of the quality and volume of innovation outputs. In a similar vein, we see the greatest concentration of science and technology clusters in the United States (26 clusters), China (16 clusters) and Germany (8). 

The GII also underlines the need for breakthrough innovations in the energy sector, particularly in light of climate change-related targets and projected increases in energy demand.

Beyond the rankings, what is the focus of this year’s GII?

In GII 2018, WIPO and its partners explore how innovation is contributing to solving the global energy challenge and how different countries are tackling it. By 2040, the world’s energy requirements will increase by 30 percent, according to the International Energy Agency (IEA). Traditional fossil fuel-based energy systems are unsustainable. Only by fostering innovation will it be possible to develop the types of clean energy systems required for the future. 

How would you characterize the current global energy landscape?

The global consensus emerging from international initiatives like the Paris Climate Accord of 2015 and the United Nations Sustainable Development Goals (Goal 7) has added impetus to energy innovation around the world, triggering a general shift away from fossil fuels toward renewable energy as a primary power source. In 2017, the world’s total renewable power capacity surpassed coal for the first time. You could say we are in the midst of “an energy revolution.”

What is the crux of the energy challenge?

The energy equation facing policymakers involves rising energy demand and the need to reduce greenhouse gas emissions while fostering economic growth. Finding effective solutions to this complex challenge requires a radical re-think of the way we produce and consume energy. Today, the global renewable energy supply stands at around 15 percent. By 2050, around 85 percent of the world’s primary energy needs to come from renewables. This will require innovation across energy value chains and across sectors, as well as innovative policymaking to support the rapid deployment and uptake of renewable energy technologies.  

Why is renewable energy on the rise?

A number of factors are at play. The international consensus mentioned above is an important driver. Also, many countries, especially developing countries, are facing rising energy demand, due in large part to population growth, and lack the infrastructure needed to meet existing and future demand. Moreover, in a context where centralized grid systems covering long distances are prohibitively expensive to build and present environmental challenges, renewable energy technologies have become more efficient, affordable and competitive. While the energy mix that renewables represent varies from country to country, there is a marked uptick in their adoption.

What types of technologies does renewable energy encompass?

Solar and wind energy are perhaps the two most familiar forms of renewable energy. Solar photovoltaic (PV) power systems have vastly improved in recent years in terms of their efficiency, affordability and scale of use and have become a competitive alternative to fossil fuels. Novel financing and assembly systems are boosting uptake in high-income countries, and many developing counties, including India and South Africa, are also actively supporting widespread installation of solar PV systems.

Wind power has also become a competitive and viable energy option and now, thanks to innovation, is among the cheapest renewable energy sources. Today, some 24 countries are generating around 5 percent of their annual energy demand from wind power (see Chapter 2).

Innovation is also making less well-known renewable energy sources, such as tidal and geothermal power, more attractive. Innovative and increasingly efficient waste-to-energy-conversion systems are also gaining ground.

In which countries has renewable energy innovation really taken off?

Energy innovation is taking place globally. However, China, the world’s largest producer and consumer of energy, stands out as a driving force in the global development of renewable energy. It is making renewable energy a priority and currently has the largest renewable energy-generating capacity in the world. 

Brazil is also notable. It has one of the world’s cleanest energy systems and a very active energy innovation ecosystem. Renewables currently account for 43.5 percent of total energy consumption for transport and electricity.

Chile is also on track to become a major solar energy producer. It is investing heavily in strengthening its energy innovation ecosystem to exploit the unique conditions of the Atacama Desert – which has the world’s highest levels of solar radiation – to become a solar energy exporter by 2035. It also aims to produce 70 percent of its energy requirements from renewables by 2050.

India, too, is making the shift away from fossil fuels a priority. On the back of a five-fold increase in solar PV units since 1980, India is expected to become the world’s second largest producer of electricity from PV units by 2040, according to the IEA. But further innovation is essential if India is to meet its expanding energy needs, foster economic growth and address climate change.

Of course, many other countries are also active in the renewables area, but the countries mentioned above are striking in their ambitions and achievements in the renewables space.

Is there a role for small countries?

Yes; in the 2018 GII we see how Singapore, a country with limited capacity to install solar power units, is punching above its weight in driving renewable energy innovation (see Chapter 11). Through its “living lab” approach, Singapore has positioned itself as a hub for global innovators to “experiment, innovate and collaborate.” Since 2006, Singapore has invested USD 1.5 billion in clean tech R&D, targeting, in particular, optimization of solar PV systems and support structures.

What about grassroots innovation?

We see important practical innovations relating to the production and use of biomass in Sub-Saharan Africa, where 90 percent of people depend on wood fuel and charcoal for energy. In Malawi, for example, wood pruned from on-farm agro-forestry activity, coupled with the deployment of efficient cooking stoves, is proving a more sustainable fuel option. Similarly, in Kenya, briquetting technology – where charcoal dust (80 percent) is combined with soil (20 percent) – is mitigating climate change by reducing demand for wood fuel, providing a longer-lasting and cleaner energy option, and creating jobs.

Why is innovation important in the energy sector?

Shifting to renewable energy is an essential step on the path to a sustainable future. Continued investment in energy innovation is critically important if we are to find cleaner, more efficient and cost-effective ways to meet rising energy demand; provide power to the1.2 billion people that still lack access to electricity; reduce greenhouse gas emissions; and maintain economic growth.

Analysis of international patent data by WIPO shows that the accelerated growth in renewable energy-related patenting between 2004 and 2013 was followed by a slow decline, and that innovation is uneven across the energy value chain. 

Innovation is the key to building global renewable energy capacity and energy efficient solutions across all sectors and at all stages of the energy lifecycle, including generation, transmission and storage.

Given the complexity of the task, GII 2018 outlines the advantages of adopting a systems approach to energy innovation (see Chapter 5) to support comprehensive energy policy frameworks that: identify priority areas for innovation; foster the development of a range of energy options to meet the varying needs of end users; and that support optimal integration of power systems.

But innovation also has a role to play in supporting the more rapid deployment and uptake of these technologies by end users to optimize energy use through smart grids and advanced energy storage systems; for example, for more efficient industries, transport systems and cities.

Ultimately, innovation creates options and is the key to unlocking new approaches and new solutions for affordable and reliable renewable power systems underpinned by competitive and innovative energy markets.

Is energy storage still a big issue?

Yes, energy storage remains a big challenge. Energy storage systems and re-charging stations that are effective, affordable, safe, convenient and that meet the varying needs of users are vital to the future development of the world’s energy systems. Significant progress has been made in recent years in optimizing batteries for small-scale use, including for mobile phones and electric vehicles. And despite remarkable advances by TESLA and others in installing large energy storage facilities – in South Australia, for example – much more innovation is needed in this area. A recent study by Australia’s Office of the Chief Scientist indicates that “using the total world’s battery production capacity in 2014 would translate into only 11 minutes and 27 seconds of global electricity consumption stored” (see Chapter 6).

What role is there for government in creating an enabling energy innovation environment?

Government has a key role in driving energy innovation and in implementing the incentives and regulations needed to stimulate investment in energy innovation and its deployment and uptake.

Continued public investment in energy innovation is crucial, as is the need to create a favorable business environment to attract private sector funding. Innovative companies will be key drivers of the energy sector’s evolution, but their participation hinges on their ability to commercialize their products and secure a return on investment. Government can help by providing access to a robust intellectual property (IP) system that supports the process of translating breakthrough research into marketable products. This will go a long way in attracting the investment required to support ongoing innovation and strengthen national energy innovation ecosystems. IP systems also generate useful business and technological intelligence that can support businesses and policymakers in their R&D investment decisions.

Similarly, the emergence of an innovative and competitive energy ecosystem involves government actively fostering collaboration between the private sector – including large utilities and innovative startups – and universities and research institutes. It also involves coordinating public policy and innovation programs to leverage synergies and to ensure the emergence of integrated renewable power systems and improved levels of energy efficiency across all sectors. Innovative policymaking is critically important.