Editing IPCC:AR6/WGIII/Chapter-16 (section)

=== 16.3.2 Identifying Systemic Failures to Innovation in Climate-related Technologies ===

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Traditional perspectives on innovation policy were mostly science-driven, and focused on strengthening invention and its translation into application in a narrow sense. Also, a second main traditional perspective on innovation policy was focused on correcting for ‘market failures’ ( [[#Weber--2017|Weber and Truffer 2017]] ) ( [[#16.2|Section 16.2]] ). The more recent understanding of, and shift of focus to, the systemic nature on the innovation and diffusion of technologies has implications for innovation policy, since innovation outcomes depend not just on inputs such as R&amp;D, but much more on the functioning of the overall innovation system (see Sections 16.3.1 and 16.4). Policies can therefore be directed at innovation systems components and processes that need the greatest attention or support. This may include, for example, strengthening the capabilities of weak actors and improving interactions between actors ( [[#Jacobsson--2017|Jacobsson et al. 2017]] ; [[#Weber--2017|Weber and Truffer 2017]] ). At the same time, a systemic perspective also brings into sharp relief the notion of ‘system failures’ ( [[#Weber--2017|Weber and Truffer 2017]] ).

Systemic failures include: infrastructural failures; hard (e.g., laws, regulation) and soft (e.g., culture, social norms) institutional failures; interaction failures (strong and weak network failures); capability failures relating to firms and other actors; lock-in; and directional, reflexivity, and coordination failures ( [[#Klein%20Woolthuis--2005|Klein Woolthuis et al. 2005]] ; [[#Chaminade--2010|Chaminade and Esquist 2010]] ; [[#Negro--2012|Negro et al. 2012]] ; [[#Weber--2012|Weber and Rohracher 2012]] ; [[#Wieczorek--2012|Wieczorek and Hekkert 2012]] ). Most of the literature that unpacks such failures and explores ways to overcome them is on energy-related innovation policy. For example, Table 16.6 summarises a meta-study ( [[#Negro--2012|Negro et al. 2012]] ) that examined cases of renewable energy technologies trying to disrupt incumbents across a range of countries to understand the roles, and relative importance, of the ‘systemic problems’ highlighted in [[#16.3.1|Section 16.3.1]] .

Depending on the sector, specific technology characteristics, and national and regional context, the relevance of these systemic problems varies ( [[#Trianni--2013|Trianni et al. 2013]] ; [[#Bauer--2017|Bauer et al. 2017]] ; [[#Wesseling--2017|Wesseling and Van der Vooren 2017]] ; [[#Koasidis--2020a|Koasidis et al. 2020a]] , b), suggesting that the innovation policy mix has to be tailor-made to respond to the diversity of systemic failures ( [[#Rogge--2017|Rogge et al. 2017]] ). An illustration of how such systemic failures have been addressed is given in Box 16.2, which shows how the Indian government designed its standards and labelling programme for energy-efficient air conditioners and refrigerators. The success of this programme resulted from the careful attention to bring on board and coordinate the relevant actors and resources, the design of the standards, and ensuring effective administration and enforcement of the standards ( [[#Malhotra--2021|Malhotra et al. 2021]] ).

'''Table 16.6 | Examination of systemic problems preventing renewable energy technologies from reaching their potential, including number of case studies in which the particular ‘systemic problem’ was identified.''' Source: [[#Negro--2012|Negro et al. (2012)]] .

{| class="wikitable"
|-
! '''Systemic problems'''

! '''Empirical sub-categories'''

! '''No. of cases'''

|-
| Hard institutions

| – ‘Stop and go policy’: lack of continuity and long-term regulations; inconsistent policy and existing laws and regulations

– ‘Attention shift’: policymakers only support technologies if they contribute to the solving of a current problem

– ‘Misalignment’ between policies on sector level such as agriculture, waste, and on governmental levels, i.e., EU, national, regional level, etc.

– ‘Valley of Death’: lack of subsidies, feed-in tariffs, tax exemption, laws, emission regulations, venture capital to move technology from experimental phase towards commercialisation phase

| 51

|-
| Market structures

| – Large-scale criteria

– Incremental/near-to-market innovation

– Incumbent’s dominance

| 30

|-
| Soft institutions

| – Lack of legitimacy

– Different actors opposing change

| 28

|-
| Capabilities/capacities

| – Lack of technological knowledge of policymakers and engineers

– Lack of ability of entrepreneurs to pack together, to formulate clear message, to lobby to the government

– Lack of users to formulate demand

– Lack of skilled staff

| 19

|-
| Knowledge infrastructure

| – Wrong focus or not specific courses at universities knowledge institutes

– Gap/misalignment between knowledge produced at universities and what is needed in practice

| 16

|-
| Too weak interactions

| – Individualistic entrepreneurs

– No networks, no platforms

– Lack of knowledge diffusion between actors

– Lack of attention for learning by doing

| 13

|-
| Too strong interactions

| – Strong dependence on government action or dominant partners (incumbents)

– Networks allows no access to new entrants

| 8

|-
| Physical infrastructure

| – No access to existing electricity or gas grid for renewable energy technologies

– No decentralised, small-scale grid

– No refill infrastructure for biofuels, hydrogen, biogas

| 2

|}

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