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

=== 16.4.1 Overview of Policy Instruments for Climate Technology Innovation ===

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Government policies can influence changes in technologies, as well as changes to the systems they support ( [[#Somanathan--2014|Somanathan et al. 2014]] ) ( [[IPCC:Wg3:Chapter:Chapter-13|Chapter 13]] and Sections 16.2 and 16.3).

Technology-push policy instruments stimulate innovation by increasing the supply of new knowledge through funding and performing research; increasing the supply of trained scientists and engineers which contribute to knowledge-generation and provide technological opportunities, which private firms can decide to commercialise ( [[#Mowery--1979|Mowery and Rosenberg 1979]] ; [[#Anadon--2009|Anadon and Holdren 2009]] ; [[#Nemet--2009b|Nemet 2009b]] ; [[#Mazzucato--2013|Mazzucato 2013]] ).

Governments can also stimulate technological change through demand-pull (or market-pull) instruments which support market creation or expansion and technology transfer, and thus promote learning by doing, economies of scale, and automation ( [[#16.2|Section 16.2]] ). Demand-pull policy instruments include regulation, carbon prices, subsidies that reduce the cost of adoption, public procurement, and intellectual property regulation. Typically, technology push is especially important for early-stage technologies, characterised by higher uncertainty and lower appropriability ( [[#16.2|Section 16.2]] ); demand-pull instruments become more relevant in the later stages of the innovation process ( [[#Mowery--1979|Mowery and Rosenberg 1979]] ; [[#Anadon--2009|Anadon and Holdren 2009]] ; [[#Nemet--2009b|Nemet 2009b]] ) ( [[#16.2|Section 16.2]] ).

The second column of Table 16.8 summarises the set of policies shaping broader climate outcomes over the past few decades in many countries outlined in Chapter 13, [[IPCC:Wg3:Chapter:Chapter-13#13.6|Section 13.6]] , which groups them into economic and financial, regulatory, and soft instruments. Other policies, such as monetary, banking and trade policies, for instance, can also shape innovation, but most government action to shape energy has not focused on them. As Table 16.8 shows, this section discusses the set of policy instruments on innovation outcomes, or a subset of the ‘Transformative Potential’ criterion presented in Chapter 13, and thus complements the more general discussion presented there. Table 16.8 specifically prioritises the impact of the subset of policy instruments on innovation outcomes for which evidence is available. This focus is complemented by a discussion of the impact of the same policy instruments on competitiveness (a subcomponent of the economic effectiveness evaluation criterion) and on distributional outcomes. Many of the policy instrument types listed in Table 16.8 have been implemented or proposed to address the different types of market or systemic failures or bottlenecks described in Sections 16.2 and 16.3 ( [[#OECD--2011a|OECD 2011a]] ).

'''Table 16.8 | Overview of policy instrument types covered in [[IPCC:Wg3:Chapter:Chapter-13|Chapter 13]] and their correspondence to the subset of policy instrument types reviewed in [https://www.ipcc.ch/report/ar6/wg3/chapter/chapter-16 Chapter 16] with a focus on innov''' '''ation outcomes.'''

{| class="wikitable"
|-
! '''High-level categorisation'''

! '''Lower-level policy instrument type in Chapter 13'''

! '''Policy instrument types reviewed in [[#16.4|Section 16.4]] (for definitions see Peñasco''' '''et al.''' '''2021)'''

|-
| rowspan="10"| '''Economic or financial policy instrument types'''

| Research and development (R&amp;D) investments

| R&amp;D investments (including demonstration) (Box 16.3)

|-
| rowspan="3"| Subsidies for mitigation

| Feed-in tariffs or premia (set administratively)

|-
| Energy auctions

|-
| Other public financing options (public investment banks, loans, loan guarantees)

|-
| Emissions trading schemes

| Emissions trading scheme

|-
| Carbon taxes

| Taxes/tax relief (including carbon taxes, energy taxes and congestion taxes)

|-
| Government provision

| Government provision (focus on innovation procurement)

|-
| Removing fossil fuel subsidies

| ''Not covered''

|-
| Border carbon adjustments

| ''Not covered''

|-
| Offsets

| ''Not covered''

|-
| rowspan="7"| '''Regulatory policy instrument types'''

| rowspan="6"| Performance standards (including with tradeable credits)

| Renewable obligations with tradeable green certificates

|-
| Efficiency obligations with tradeable white certificates

|-
| Clean energy or renewable portfolio standards (electricity)

|-
| Building codes (building efficiency codes)

|-
| Fuel efficiency standards

|-
| Appliance efficiency standards

|-
| Technology standards

| ''Not covered''

|-
| rowspan="3"| '''Soft policy instruments'''

| Divestment and disclosure

| ''Not covered''

|-
| rowspan="2"| Voluntary agreements (public voluntary programmes and negotiated agreements)

| Voluntary agreements

|-
| Energy labels

|}

[[#16.3|Section 16.3]] characterised technological innovation as a systemic, non-linear and dynamic process. Figure 16.1 below presents a stylised (and necessarily incomplete) view connecting the innovation process stages presented in [[#16.2|Section 16.2]] , some of the key mechanisms in technology innovation systems, and some of the decarbonisation policy instruments that have been assessed in terms of their impact on technological innovation outcomes in [[#16.4.4|Section 16.4.4]] . As noted in the caption and discussed in [[#16.4.4|Section 16.4.4]] , regulatory policy instruments also shape the early stages of technology development.

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[[File:58d4a938317017deb24c44d75542f4b5 IPCC_AR6_WGIII_Figure_16_1.png]]

'''Figure 16.1 | Technology innovation process and the (illustrative) and role of different public policy instruments (on the right-hand side).''' Source: adapted from [[#IEA--2020a|IEA (2020a)]] . Note that, as shown in [[#16.4.4|Section 16.4.4]] , demand-pull instruments in the regulatory instrument category, for instance, can also shape the early stages of the innovation process. Their position on the latter stages is highlighted in this figure because typically these instruments have been introduced in latter stages of the development of the technology.

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