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

==== 16.2.1.1 Research and Development ====

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This phase of the innovation process focuses on generating knowledge or solving particular problems by creating a combination of artefacts to perform a particular function, or to achieve a specific goal. R&amp;D activities comprise basic research, applied research and technology development. Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view. Applied research is original investigation undertaken in order to acquire new knowledge, primarily directed towards a specific, practical aim or objective ( [[#OECD--2015a|OECD 2015a]] ). Importantly, R&amp;D activities can be incremental – that is, focused on addressing a specific need by marginally improving an existing technology – or radical, representing a paradigm shift, promoted by new opportunities arising with the accumulation of new knowledge ( [[#Mendonça--2018|Mendonça et al. 2018]] ). Technology development, often leading to prototyping, consists of generating a working model of the technology that is usable in the real world, proving the usability and customer desirability of the technology, and giving an idea of its design, features and function ( [[#OECD--2015a|OECD 2015a]] ). These early stages of technological innovation are referred to as the ‘formative phase’, during which the conditions are shaped for a technology to emerge and become established in the market ( [[#Wilson--2013|Wilson and Grubler 2013]] ) and the constitutive elements of the innovation system emerging around a particular technology are set up ( [[#Bento--2016|Bento and Wilson 2016]] ; [[#Bento--2018|Bento et al. 2018]] ) ( [[#16.3|Section 16.3]] ).

The outcomes of R&amp;D are uncertain: the amount of knowledge that will result from any given research project or investment is unknown ''ex ante'' ( [[#Rosenberg--1998|Rosenberg 1998]] ). This risk to funders ( [[#Goldstein--2020|Goldstein and Kearney 2020]] ) translates into underinvestment in R&amp;D due to low appropriability ( [[#Weyant--2011|Weyant 2011]] ; [[#Sagar--2014|Sagar and Majumdar 2014]] ). In the case of climate mitigation technologies, low innovation incentives for the private sector also result from a negative environmental externality ( [[#Jaffe--2005|Jaffe et al. 2005]] ). Furthermore, in the absence of stringent climate policies and targets, incumbent fossil-based energy technologies are characterised by lower financing risk, are heavily subsidised ( [[#Davis--2014|Davis 2014]] ; [[#Kotchen--2021|Kotchen 2021]] ), and depreciate slowly ( [[#Arrow--1962a|Arrow 1962a]] ; [[#Nanda--2016|Nanda et al. 2016]] ; [[#Semieniuk--2021|Semieniuk et al. 2021]] ) ( [[#16.2.3|Section 16.2.3]] ). In this context, public research funding plays a key role in supporting high-risk R&amp;D, both in developed and developing economies: it can provide patient and steady funding not tied to short-term investment returns ( [[#Kammen--2007|Kammen and Nemet 2007]] ; [[#Anadon--2014|Anadon et al. 2014]] ; [[#Mazzucato--2015a|Mazzucato 2015a]] ; [[#Chan--2016|Chan and Diaz Anadon 2016]] ; [[#Anadón--2017|Anadón et al. 2017]] ; [[#Howell--2017|Howell 2017]] ; [[#Zhang--2019|Zhang et al. 2019]] ) ( [[#16.4|Section 16.4]] ). Public policies also play a role in increasing private incentives in energy research and development funding ( [[#Nemet--2013|Nemet 2013]] ). R&amp;D statistics are an important indicator of innovation and are collected following the rules of the ''Frascati Manual'' ( [[#OECD--2015a|OECD 2015a]] ) ( [[#16.3.3|Section 16.3.3]] , Box 16.3 and Table 16.7).

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