Spending on pet food and energy R&D - not an apocryphal claim

I think the numbers you show us about "the world spending less on energy R&D than on pet food" probably will make (some of ) us think about the current world priorities. The numbers give some insights and possible hints on world policy directions. However the "claim" may need in-depth analysis.

I think that the amount of the R&D dollars spent may not be proportional to the outcomes of the research. Does the R&D need the huge amount to generate good results for energy sustainability? Is the comparison meaningful? How?

Americans spend more on pet's healthcare than on themselves, see the picture in the link
http://blog.american.com/?p=2991

That's a very good point. In fact, R&D can translate into very different outcomes depending on the industry and the company making the investment. For example, although General Motors (GM) was the second biggest global R&D spender in 2007 (http://bit.ly/5L0tK), with more than $8 billion in spending, it's not a company that is typically associated with breakthrough innovation.

This year, GM did not make it into either the Business Week/Boston Consulting Group (http://bit.ly/RCiJc) or Fast Company (http://bit.ly/1ldcd) list of top 50 innovative companies. And it’s not only because GM has been hard hit by the global financial crisis. The company has only made it once in the Business Week/Boston Consulting Group list, at number 18 (behind Toyota and Honda), in 2008. GM’s patenting activity, a measure of inventive activity, provides a similar story. In spite of huge R&D spending GM did not make it among the top 35 US patent recipients in 2008 (http://bit.ly/b6c9). Compare the slow progress in automobile fuel efficiency and autonomous control to the dizzying growth in computing power. Electronics firms consistently dominate in patent rankings.

These differences are explained by the fact that innovation depends on much more than R&D. It depends on things like an organization's ability to identify which R&D projects are worth investing in from the very beginning. It depends on its ability to identify and partner with other organizations that have capabilities it does not have. It depends on its ability to meet user needs and commercialize the product of its R&D. It also depends on the pace of technological change in related sectors. For example, the fast pace of innovation in the portable media players is largely due to improvements in memory storage and processing power in the electronics component industry.

So how do we know that we need to invest more in energy R&D? The answer may lie in an interesting paper* published in 2007 by Gregory Nemet and Daniel Kammen from the University of California, Berkeley. The paper shows that since the 1980s public R&D investments and patenting have been highly correlated in low-carbon energy sectors. The paper also finds that both public R&D and patenting in those sectors have declined since the early 1980s. Other statistical sources from the OECD confirm that patents in those sectors account for a tiny share of total global patents. These findings strongly indicate that we could expect a significant increase in inventive activity by significantly increasing R&D in low-carbon energy sectors.

Jean-Louis

* Nemet, G.F. and Kammen D.M (2007) "US energy research and development: Declining investment, increasing need, and the feasibility of expansion", Energy Policy 35, pp 746-755.

Your article is very interesting as well as depressing! It actually goes as far as pointing to the dysfunctional fiats that have been drivers of our thinking globally. There is truly a strong disconnect with our  
thoughts globally on what is the right path on environmentally sustainable energy drive, policies and lifestyles.

One has only to look at the impact that PEPFAR first round funding for  
HIV/AIDS has had on the low-income nations to see what I mean. The irony is that this fund was not even up to 20 billion USD. We need more political will from leaders to get energy R&D on the right  
track.

Helo,

I am impressed by the web page. I will study these artical all time and also contribute.Climate has shifted its traditional trends.

Thanks to Cary for the news.

Collins

Hi, I've written an article on clean energy R&D from the corporate world on my site...there's loads of other info too. Check it out if you get a chance:

http://hotclimate.wikidot.com

This is a worrying article: even though we have a lot of pets, to spend more on their food than energy R&D makes you wonder.

I've written an article about the percentage share that the corporate world spends on clean energy or environmental R&D out of their total R&D budgets. There's a lot of analysis of the utilities sector and also the transport and tech sectors. The direct link is here: http://hotclimate.wikidot.com/corporate-investment

I have also done an article on the World Bank's historical investment into clean energy and energy efficiency, perhaps it could be of some use to you? Here's the link to that one as well: http://hotclimate.wikidot.com/world-bank

It is not a fair comparison.

Yes, US$14 billion was spent on pet food. But where did that US$14 billion actually go? That revenue contributed to employee wages and business profits, as well as to tax revenues that were then alocated to various public needs, mostly likely including funding for energy R&D.

Rather than argue that Western consumers are blindly misallocating their wealth, perhaps it would be more constructive to recommend a way to utlize the consumer power of Western countries to create products (or non-profits selling products) that support energy efficiency and innovative energy technology research and development.

The point of the comparison is to drive the message that very little is actually spent on energy R&D. Global public spending on energy R&D is the same order of magnitude as what one country spends on one item of household grocery. It is not to say that the French should be denied their cheese, or the Americans starve their pets.

And we fully believe that the key to climate smart growth is in using consumer (and citizen!) power to attract higher investments in clean energy.

Marianne Fay

I was stunned by the comparison in investment levels.

It seems that public and private investment in energy R&D correlate fairly closely to energy prices. The higher the price, the higher the apparent level of R&D. No surprises there.

I came up with an idea (which may or may not be original) related to the commentary above on the impact of innovation culture on R&D outcomes. I discussed it first in my personal blog

http://climatecommercial.wordpress.com/2009/10/22/will-chinas-fuel-subs…

and would be interested in commentary.

If R&D investment, and usefulness of outcomes, is linked to energy prices, and successful commercialisation on innovation then, globally speaking, high energy prices in innovative countries should generate a higher return (energy innovation outcomes) than high energy prices in lower-ranking innovation countries. Also seems straight-forward.

Ergo, is the G20 asking china and india to remove fuel subsidies an appropriate course of action if medium-term low-emissions outcomes are the goal?

By removing the subsidies in e.g. China and India, which do not come in the top 20 of innovative countries, prices will rise there but will decrease globally. - perhaps substantially if the consumption decline is enough.

By prompting a relative decline in energy prices in innovative countries (OECD), R&D will decrease there accordingly, as will R&D outcomes.

(admittedly the short-term global energy emissions may decline, which is the 'normal' perspective).

I think to work out the effect of removal of subsidies, one would have to understand what the level of impact on global energy prices might be, and the responsiveness of R&D investment to price change. (Understanding R&D inputs to outcomes better would also be good!).

grateful for thoughts etc.