Reliable indicators can help policy makers assess the effectiveness of policies at encouraging the development of new green technologies and evaluate their economic and environmental impacts. To fill this need, the OECD has developed new indicators to measure green innovation, covering a wide range of areas, from renewable technologies to plastic waste recycling, using various sources of data.
Green technology and innovation
The development and deployment of new green technologies is key to mitigate and adapt to climate change, reduce negative impacts of economic activity on nature and reduce pollution. To support better policymaking, the OECD provides reliable data to measure and track green innovation and conducts robust analysis linking green innovation, public policies and economic and environmental outcomes.
Key messages
In today’s knowledge-based economy, innovation is key to improving productivity and driving economic growth. Green innovation can help countries reach their environmental goals by improving material productivity, reducing pollution and mitigating climate change. However, the impact of green innovation on economic outcomes such as firms’ competitiveness is unclear. The OECD works to fill this gap by investigating the relationship between green innovation, environmental performance and economic performance.
The digital transformation provides substantial opportunities to support environmental objectives, but also raises new challenges in this area. Although digitalisation is transforming our economies and lifestyles at an extraordinary pace and scale, achieving climate goals and other environmental objectives in parallel will require an even deeper transformation. For instance, AI systems have a myriad of environmental applications but also have large energy requirements. In this context, it is essential for policymakers to better understand the synergies between these two transitions and the principal trade-offs that need to be addressed.
Science, technology, and innovation will be the backbone for reaching climate change mitigation targets in the industrial sector. While moving forward in industrial decarbonisation will require making better use of existing technologies across industries and countries, shifting the technology frontier will be crucial for implementing the long-term 2050 strategies defined within the Paris Agreement.
Context
Innovation in patented green technologies has slowed down
After continuously increasing since 1990, green innovation as measured by the share of green patents (% of all patented technologies) has decreased since 2010. Many factors can explain this relative decline. Falling fossil fuel prices, a low price on carbon emissions, the maturity of several technologies like solar photovoltaics and the high number of patents in digital technologies are all suspected although no causal evidence has been derived yet. Developing new metrics to measure green innovation could help to further investigate its drivers.
Low-carbon public RD&D expenditures have stagnated for 30 years
Public expenditures on research, development and demonstration for low-carbon technologies have remained broadly flat (as a percentage of GDP) over the last 30 years. However, recent policy actions adopted in response to the Covid-19 crisis, such as the European Union member countries’ Recovery and Resilience Plans and the U.S. Inflation Reduction Act may provide a key impetus to public low-carbon RD&D support.
Venture capital data can help track environmental innovation
Venture capital is a way to finance firms that are developing high-risk, high-reward innovation. Firms raising venture capital are generally small, young and highly innovative, hence the OECD has increasingly used venture capital data to measure innovation effort in breakthrough technologies. OECD analysis shows that breakthrough green innovation as measured by venture capital raised, and venture capital deals for firms involved in green activities, has been increasing since 2007.
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