Accelerating Energy Innovation: Insights from Multiple Sectors

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Rebecca M. Henderson, Richard G. Newell
University of Chicago Press, May 30, 2011 - Business & Economics - 274 pages
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Re-orienting current energy systems toward a far greater reliance on technologies with low or no carbon dioxide emissions is an immense challenge. At the broadest level the histories presented here are very much consistent with widely held views within the energy innovation policy literature. In general, this literature has suggested that greatly increasing rates of energy innovation requires creating significant demand for low carbon technologies, substantially increased federal funding for "well-managed" research, and in at least some cases support for the initial deployment of new technologies. As the other markets explored in this volume do not face the same degree of unpriced environmental externality, there is no straightforward equivalent to a carbon price in the history of agriculture, chemicals, IT or biopharmaceuticals. Nonetheless, our authors outline a number of ways in which public policy has often stimulated demand, particularly in the early stages of a technology's evolution, and confirm that the expectation of rapidly growing demand appears to have been a major stimulus to private sector investment in innovation. Each history also confirms the centrality of publicly funded research to the generation of innovation, particularly in the early stages of an industry's history, and highlights a range of institutional mechanisms that have enabled it to be simultaneously path breaking and directly connected to industrial practice. Our histories depart somewhat from the bulk of the energy innovation policy literature in focusing attention on the role of vigorous competition -- particularly entry -- in stimulating innovation, suggesting that in several industries a mix of public policies -- including procurement, antitrust and intellectual property protection -- played an important role in stimulating innovation by encouraging extensive competition and entry by newly founded firms. Many of the most innovative industries profiled here have been characterized by a lively "innovation ecosystem" that both rapidly incorporated the results of publicly funded research and supports widespread private sector experimentation and rapid entry. There are, of course important differences between the industries profiled here and the energy sector, but we believe that exploring the potential of these kinds of innovation ecosystems in clean energy might be a fruitful avenue for future research.
 

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Contents

Introduction and Summary
1
A Historical Perspective
25
2 Agricultural Innovation
49
3 Implications for Energy Innovation from the Chemical Industry
87
Lessons from the Life Sciences Innovation System for Energy RD
113
A Policy Model forClimate Change RD?
159
Lessons from the Internet
189
7 Venture Capital and Innovation in Energy
225
Contributors
261
Author Index
263
Subject Index
269
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About the author (2011)

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Rebecca M. Henderson is the Senator John Heinz Professor of Environmental Management at Harvard Business School and a research associate of the NBER. Richard G. Newell is Administrator of the US Energy Information Administration, on leave from both the NBER and Duke University, where he is the Gendell Associate Professor of Energy and Environmental Economics.