Innovation Gathers Pace in Renewables Sector
By Sarah Helm, Manager, CambridgeIP, UK
Climate change is one of the biggest challenges of our time. Global greenhouse gas emissions, a main driver of climate change, continue to rise with recent observed concentrations of carbon dioxide (CO2) reaching unprecedented levels. There are, however, encouraging signs that the technologies needed to tackle climate change – so-called climate change mitigation technologies (CCMTs) - are being developed and becoming more widely available.
A recent report published by WIPO and Cambridge IP, a UK-based innovation consultancy, points to striking increases in commercial innovation in four key renewable energy technology sectors, namely, biofuels, solar thermal, solar photovoltaic (PV) and wind. The report, Renewable energy technology: Evolution and policy implications, evidence from patent literature 
, tracks global trends in innovation and technology ownership in these rapidly growing sectors. The report also presents broad analyses of renewable technologies markets and policy frameworks within which they operate including information on investment levels and case studies on technology deployment in each of the focus areas.
Technology: the key to climate change mitigation
International negotiations relating to climate change, most notably in the context of the United Nations Framework Convention on Climate Change (UNFCCC), have emphasized the key role of technology and its transfer in helping to stabilize greenhouse gas concentrations (Article 4.5). Success in this area, however, hinges on the global adoption of climate change mitigation and adaptation technologies and policies that support their effective transfer.
While many CCMTs exist, ensuring they get to where they are most needed and are adapted to local conditions remain significant challenges. To develop effective policies that support technology transfer in this area, policy-makers and other stakeholders need a sound understanding of what is happening in these technology sectors. When novel and improved CCMTs are combined with appropriate policy frameworks and financing, they have the potential to provide global and regional climate change benefits opening pathways to low-carbon development, greenhouse gas reductions and job creation.
Mining opportunities for technology development and diffusion
Patent documents are a rich source of structured and reliable information about inventors, technologies, innovation and technology ownership. Analysis of patent data, relating to a specific technology or industry can reveal important information about the origins of a technology, how a technology space is developing and how the composition of industry players is evolving. It can also identify the most important (commercially or scientifically) technologies within a given sector. Patent data analyses can help shape commercial decision-making and the formulation of effective public policy.
They can also help identify opportunities for innovative partnerships by highlighting areas of technological similarity and overlap. Information on the geography of filings and the innovation capacity in different areas can accelerate technology diffusion between markets and help identify knowledge networks and technological strengths. This, in turn, can support technology transfer between economies.
Climate change mitigation: a fast-moving area of innovation
The report compares patenting activity for the four focus technology sectors during the periods 1975 to 2005 and 2006 to 2011. It shows that patent filing rates in the four focus CCMTs (see Table) began to rise in the 1990s and took off from 2006, outstripping global patenting performance (which grew on average by 6 percent per year) with annual growth rates of 24 percent across all focus areas. More patents were filed in these areas in the 5 years to 2011 than in the previous 30 years. Such dynamism is a likely response to market conditions, including increased levels of R&D investment, shifts in policy incentives, such as feed-in tariffs, and technological advances, such as more cost efficient manufacturing.
Overall renewables attract high levels of investment
Investment in renewable energy and fuel in 2012 stood at US$224 billion. While this fell short of the record US$279 billion invested in 2011, investment in renewables in 2012 remained 8 percent higher than in 2010. Uncertainty in policy environments in developed markets and the need to generate capacity in these markets are thought to have driven the 2012 decline in investment.
In real terms, however, the overall investment remains high and is driving innovation in areas such as new materials and improved performance, as well as in process manufacturing and operation and maintenance applications.
Unprecedented investment by developing economies
The report cites a 2012 study by the United Nations Environment Programme (UNEP) and the Frankfurt School which shows that developing economies are playing an increasingly central role in the renewable sector accounting for 46 percent of all renewable investment in 2012. In that year, total investment in renewables in developing economies rose to an unprecedented US$112 million.
The US and China continued to make the highest levels of investment in renewable energy in 2012 and remained primary patenting locations for renewable technologies. Other major growth markets for renewables included India, Brazil and South Africa. Greater investment into more diverse markets could also indicate an enhanced capacity for technological solutions to be deployed on a global scale. This presents an opportunity to create knowledge transfer networks that share pathways to development.
Changing patterns of technology ownership
The report also points to shifting technology ownership with increased patent activity across the focus areas from players in emerging economies. In the area of biofuels, for example, the majority of entrants in the top 20 league table are new; eleven of them are headquartered in China. Moreover, 25 percent of all biofuel patent applications between 2006 and 2011 were filed in China. This could be indicative of China’s increasing role in the manufacturing of established biofuel technologies for large corporate suppliers, such as Mitsubishi (Japan) and Sinopec (China). It further indicates that China is emerging as a major investor in biofuels innovation.
In the area of solar thermal, 16 of the top 20 technology owners are new entrants; half of them come from China. Similarly in the solar PV patent landscape, China and the Republic of Korea emerged as major entrants, driven in large part by the rising number of patents held by LG and Samsung. Solar thermal is the only CCMT in which all of the top 20 patent holders are based in Asia.
European companies, however, feature more prominently in the wind energy space, reflecting the base of operations of technology owners and the current markets in which wind technology is most heavily deployed and invested. Patent filings in Europe, Japan, the Republic of Korea and the US account for 40 percent of wind energy-related filings.
The report shows that in recent years, most patent applications across all four focus areas have been filed in China and the Republic of Korea.
Diverse industry structures and drivers
The report confirms that the four CCMTs are at different stages of maturity. Wind energy for example, is a more mature and established renewable energy technology than the others. It also has the highest concentration of IP ownership when measured by patents. By contrast, the biofuels sector, the least mature renewable energy technology, has a relatively low concentration of patent ownership with a high level of participation from universities and public sector research institutions.
Internationalization of markets
A marked rise in the use of the Patent Cooperation Treaty (PCT) – a cost-effective mechanism that streamlines the process of filing for patent protection in multiple jurisdictions – points to the increasingly global nature of markets for patented technologies in the focus areas. Since 2006, over 30 percent of the patents filed within the four CCMT areas were filed through the PCT, nearly double the rate of PCT filings between 1975 and 2005.
| Technology classification | Average annual growth rate | |
|---|---|---|
| 1975-2005 | 2006-2011 | |
| Biofuels | 9% | 13% |
| Solar thermal | 3% | 24% |
| Solar PV | 10% | 33% |
| Wind | 9% | 27% |
| Global patent filings | 3% | 6% |
Table: Global patent filing rates
The rapid development of CCMTs around the world suggests that technology will continue to play an important role in solving the global challenge of climate change. Comprehensive and up-to-date patent mapping that highlights key features of emerging technology landscapes provide invaluable, evidence-based insights that enrich the debate on the role of technology and innovation in moving to a low-carbon future. The patent landscapes reviewed in this report provide evidence of increasing rates of global commercial innovation and interest in CCMTs from a range of players across developed and emerging economies. These findings provide food for thought and underline the importance of efforts to facilitate continued discussions around IP and technology transfer at the international level.
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