By Fang Zhang and Zdenka Myslikova
This summer, Climate Policy Lab (CPL) director Kelly Gallagher, and research fellows Zdenka Myslikova and Fang Zhang, attended the eighth Clean Energy Ministerial (CEM8) and the second Mission Innovation Summit (MI2), held in Beijing on June 6-8th. Beyond attending the two summits and interacting with delegates from many of the participating countries, the CPL team assisted the Energy Foundation in hosting a CEM8 side event on Innovation of Growth Pattern: Clean Energy Economic Transition where Gallagher spoke on the panel entitled, “What have we learned?”. Professor Gallagher was also invited to participate at the MI round table Getting to the Future Fast: Accelerating Innovation in Clean Energy Technology through Public and Private Collaboration. The team also circulated its new report, Mission Innovation 2.0, among delegates from different countries, drawing attention to the opportunities that exist around a new and improved Mission Innovation institution.
CEM and MI are unique multilateral initiatives aiming to share best practices for policies, inspire new action, and accelerate global clean energy innovation. The Clean Energy Ministerial was established in 2010 and currently includes 24 countries and the European Union as its members. Mission Innovation was announced on November 30, 2015 by 22 countries and the European Union with a clear objective and commitment to double their government’s clean energy research, development and demonstration (RD&D) investments over five years.
What can we expect from the United States participation in the clean energy transition?
During the MI2/CEM8 closed door sessions, delegations of the member countries announced pledges and new initiatives, which were a result of the negotiations during the past year among various working sub-groups within the MI2/CEM8. Some of the key announcements for MI were a new collaboration with the World Economic Forum, which aims to deepen the private sector engagement and facilitate the public-private dialogue, and an initiative named “Investor Scan” which aims to identify key actors in clean energy finance.
In addition, each delegation head signaled which technologies are of key interest to their country. The new Secretary of Energy of the United States, Rick Perry, advocated for cost-effective research and clearly stated that the areas of US interest for future research investment will be limited to carbon capture, utilization and storage (CCUS) and nuclear technologies. This message was inconsistent with the fact that the Trump Administration’s FY18 budget request to Congress cuts CCUS 85% and nuclear fission by 29% below the FY17 budget. Perry’s words might not be surprising to some, but they set the tone for a major part of the subsequent discussions. For the rest of the talks, the dialogue was steered away from a focus on renewables and advanced network technologies towards what could be considered the lowest common denominator.
While Perry made clear that investment in a broader spectrum of clean energy technologies is not a priority, the governor of California, Jerry Brown, who was also in attendance, voiced different thoughts. He stated that decarbonizing is the main challenge of society today and that California, with other “We are still in” states, cities, academic institutions and businesses in the US, is committed to forging the path towards achieving the Paris agreement goals.
Can we look to China for new leadership on clean energy?
Despite the fact that President Trump decided to withdraw from the Paris climate accord just a couple of days before MI2/CEM8, China reconfirmed its leading efforts in the clean energy transition. Zhang Gaoli, Chinese Vice Premier and one of the seven members of the Politburo Standing Committee of the Communist Party of China, outlined massive efforts in China to establish a clean energy consumption system, develop cleaner burning coal plants, continue expanding solar and wind power capacity, and extend international clean energy cooperation. Zhang also declared that, to implement the UN Sustainable Development Agenda 2030 and Paris Agreement, “China is willing to work together with the global community to improve the global energy governance system and promote green and low-carbon transition.”
Notably, Chinese President Xi Jinping had a forty-five-minute closed-door meeting with Governor Brown in the Great Hall of the People in Beijing on the first day of the summit. There were no signs of a meeting between President Xi and Secretary Perry. It is unusual for a Chinese president to meet with a state-level American governor in such a formal setting in Beijing for such long time, especially considering the timing of President Trump’s aforementioned announcement. The message from this unusual meeting is that provincial and state corporation may become a new, growing channel for cooperation between China and the United States under the Trump Administration. In line with this new approach, two new sister-state agreements were signed between California and two Chinese provinces, Sichuan and Jiangsu, on Governor Brown’s continuing trip in China. Both agreements state further state-level cooperation on clean energy transition.
How can some of the RD&D gaps be filled?
An alarming fact, highlighted by Fatih Birol of the IEA, and also mentioned in our report is that rather than increasing, the global public investments in clean energy technology RD&D since 2010 dropped approximately USD $1 billion to USD $26 billion in 2015. Birol noted that public RD&D clean energy expenditures worldwide are significantly lower than research and development (R&D) investment in other sectors. For instance, in 2015, public RD&D expenditures in clean energy technologies reached only half of the R&D spending carried out by three major IT companies in the same year!
It’s not a secret that the Trump administration’s plan to substantially cut energy RD&D spending in the new federal budget further challenges the Mission Innovation goal of doubling global energy RD&D spending. However, without neglecting the importance of RD&D expenditures, it is crucial to set additional performance-based goals as well.
The CPL team prepared a set of recommendations for the next phase of the MI, highlighting the need for, and benefits of, striving for improved data collection and data management systems, as well as collecting comparable data on key innovation metrics beyond RD&D expenditures. These are, for example, the cost reduction by technology, performance improvements by technology, annual rates of improvement, etc. Also, since currently there is no data collection system to capture the progress in energy technology innovation for the non-OECD countries, MI could provide the needed institutional setting and fill this gap. However, it’s not until next year’s MI/CEM gathering that we may witness a stronger push in this direction. Meanwhile, our CPL team will keep collecting data on public energy RD&D expenditures for the non-OECD countries we don’t yet have information on in cooperation with the International Energy Agency.
How should ministers enable public and private cooperation?
Public and private partnerships continued to be the hot topic this year. Both CEM8 and MI2 featured a public-private action day to share lessons and facilitate engagement among private and public actors; multiple closed and high-profile roundtable discussions with ministers, enterprises and academic professors; and a series of side events on how the private and public sector can cooperate. Mariana Mazzucato, Professor in the Economics of Innovation and Public Value at the University College London (UCL) and author of The Entrepreneurial State: Debunking Public vs. Private Sector Myths, was invited to give a keynote speech on June 7th. She made the argument that every major technological change in recent years can trace most of its funding back to state funding, and called for more ambitious actions from the government on clean energy transition.
More lessons came from closed-door roundtable discussions on public and private collaboration in accelerating innovation in clean energy technologies. Energy ministers from different regions and countries, including the European Commission, United Kingdom, Finland, Norway, Australia, China, India, Mexico, and Saudi Arabia, shared their experiences with public and private sectors working together to cut costs of advanced new clean technologies (such as energy storage technologies), and how public actors can share risks where private investors hesitate to do so. A consensus reached among ministers, entrepreneurs and experts, was that governments should play a more active role in new technology adaptation. This includes setting up clear goals and targets to guide innovation, providing risky finance, establishing new mechanisms to foster knowledge sharing, and ensuring wide sharing of the benefits of a green transition.
As mentioned in the Climate Policy Lab’s report, the Mission Innovation group is unique in bringing together the leading countries -- both industrialized and developing -- in energy innovation. This diversity of countries will be especially beneficial when some members slow the pace or deviate attention - even in that case the rest of the group could still come together, take the relay and forge the path towards the ambitious goals of MI and CEM. The diversity will also facilitate sharing of best practices and promoting policies and programs to scale the deployment of clean energy technologies (the purpose of the CEM), which eventually leads to widely affordable clean energy (the purpose of the MI).
Perhaps the path will have a little different scenery, based on which members set the tone, but as long as the objectives are clear and the pace is maintained, who holds the torch is not important. The next ministerial for both the MI and the CEM will be held in Europe in May 2018, with the European Commission, Denmark, Finland, Norway, and Sweden co-hosting the event. We look forward to seeing what happens there and until then!