Published on Let's Talk Development

Knowledge Gaps on Innovation for Green Growth

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ImageSmall but sometimes radical new steps toward greener energy and green growth are happening on our stressed planet, but we don’t hear enough about them, nor do we sufficiently explore and share policy lessons.

Examples include ‘smart grid’ R&D activities that deploy sensors to gather data on incoming electricity from wind, solar and other renewables with varying power outputs, better management of outages, factoring in the needs of electric vehicles, and installing more energy-efficient power meter usage in homes and offices. At the other end of the spectrum, Husk Power Systems, a company operating in Bihar, India has devised a novel single fuel gasifier for rural electrification based on discarded rice husks – one of India’s most common waste products. Thanks to the risk husks, 60 mini-power plants have now been installed. They  power about 25,000 households in more than 250 villages in rural India. 

These extreme examples of innovation for greener growth raise a number of policy questions. As with all other technologies, green technologies are characterized by market failures in the creation, dissemination and absorption of knowledge by firms – which provide a rationale for public policies. In addition, green technologies are also characterized by environmental externalities. How do knowledge and environmental market failures affect the appropriate mix of public policies in developing countries with differing natural and human capital endowments, industrial structures, technological capabilities, and business environments? And what should be the relative policy priorities for promoting frontier (new-to-the-world) versus catch-up (new-to-the-firm) green innovations in different developing country settings?

To help identify priorities for policy-related knowledge-building and implementation work, scholars and practitioners got together at the inaugural GGKP (Green Growth Knowledge Platform) conference on January 12-13, 2012 in Mexico City; see for the agenda, papers, and outcomes. Green innovation was one of the key themes. Participants in Mexico City reached a broad consensus regarding needed follow-on work – it was agreed that green growth is inconceivable without innovation. A recent Policy Research Working Paper provides an overview of our existing state of knowledge on green innovation policies.

Four leading topics arose at our Mexico City event:

Spillovers. It took a long time for aircraft jet engines to diffuse and be adapted as stationary gas turbines for electric power generation, but yet the spillovers occurred. How large are spillovers from brown to green technologies, and how can they best be accelerated? If there are few spillovers, green innovators cannot “build on the shoulders of brown giants” but need to rebuild a distinct knowledge base – so green innovation may need lots of support. If, on the other hand, there are significant spillovers across technology fields (if knowledge across fields is cumulative), there would be less reason to specifically support green innovation, since promoting innovation in general – including upgrading skills – should mostly do the trick, in combination with carbon taxes and other demand-pull policies to tackle environmental externalities. How much does this depend on whether the required green innovations are predominantly radical or incremental?

Base-of-pyramid innovation. BoP innovations are innovations to meet the needs of the poor – to create more (products) with less (resources) for more (people). They include innovations both by global and local private companies, and by local informal grassroots inventors largely through improvisation and experimentation. Examples of green BoP innovations include higher-yield seeds for drought-prone and saline soils, cleaner indoor non-electric cooking stoves, and rural rainwater harvesting systems. None of these green innovations have been sufficiently scaled up yet. What are the most important barriers to the creation, diffusion and adoption of green BoP innovations, and what are the best ways to overcome these barriers?

Picking winners. Policy-induced prices reflecting the environmental externalities (including appropriate carbon taxes) appear to be the most important green innovation policy, but are typically difficult to implement, at the technical and most importantly at the political level. Since technology-neutral pricing of the externalities is not “sufficient”, what are the best ways to direct technological change while avoiding the costs of “picking winners”? How best to support a portfolio of green technologies to diversify the risk of “getting it wrong”? How best to support “local general purpose technologies” which may complement a variety of green growth strategies?

Leapfrogging. Developing countries may be able to skip some of the dirty stages of development experienced by industrialized countries. As an example, an expanding developing country city could avoid the urban sprawl and more environmentally costly transport and energy networks, and rather develop in a more geographically compact and energy-efficient approach guided by appropriate zoning and complementary policies. Which technologies best allow skipping to a greener growth path, and what are the required support policies?

More generally, what are the most important unresolved “how to” issues regarding the creation of new green technologies, and the diffusion, adaptation to local context and new use of existing green technologies in your countries? What other topics linking frontier and catch-up innovation to green growth should the GGKP focus on? INSPIRE US! We would like to hear from you.


Mark Dutz

Innovation and Growth, PRMED, World Bank

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