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Dedicated to tackling climate change?

Publishing date
28 October 2010

Our response to climate change probably the most pressing policy challenge we face needs to be speedy and global in scale. The EU needs to take an approach that is more concerted and broader than at present and, to achieve that, it needs a commissioner dedicated to the task. That approach should be pro-innovation. To keep the costs of adaptation and mitigation ‘manageable', we will need a portfolio of technologies. That will require us, firstly, to increase use of technologies that are already commercially viable; secondly, to scale up technologies that are near commercial viability; and, thirdly, to dedicate resources for fundamental and applied research in order to develop breakthrough, green technologies. To switch on the private-sector innovation machine, government intervention is needed.
    
A policy framework is required that can harness the power of markets, through the provision of incentives for the investment in new technologies. Markets and entrepreneurs need governments to provide a policy framework that is strong, credible and predictable. Governments can use three sets of instruments. Carbon pricing is one. Support for research and development including support for the early deployment of clean technologies and neutralisation of the installed base advantage of older, dirtier technologies is a second instrument. And, thirdly, governments can eliminate non-market barriers for green technologies and use regulatory tools to ease the substitution of dirty technologies. The more-developed countries should provide less-developed countries with subsidised access to new clean technologies. These principles appear in the EU's current climate-change action plans, but they are too poorly developed for them to switch on the innovation machine. Public commitments for supporting green research and development are too low, vary too much over time and are not co-ordinated internationally. As for carbon pricing, current carbon taxes and the cap-and-trade system have failed to produce a carbon price high enough and predictable enough to give investors a sufficiently strong incentive to invest in green technologies. A pro-innovation approach to climate change requires a change in current EU policymaking. A commissioner dedicated to climate change could not alone set this new direction, but creating the post would help. Why? Firstly, the new European Commission would give a clear and strong political signal to governments and the private sector that works on limiting climate change is a priority.
 
Secondly, much of the climate change-related work to be done at the EU level cannot easily be combined with other responsibilities. That is particularly so since a pro-innovation approach requires more than implementing the EU's existing 20/20/20 plan to reduce emissions by 20%by 2020 and increase the contribution by renewable energy to 20%.A 20/20/20 Mark II is in order. It should improve the cap-and-trade system to ensure a high and predictable carbon price emerges. It should stimulate new technologies by providing funds, co-ordinating international co-operation, and providing an integrated EU market with clear regulations and standards. And the EU should lead international negotiations on an internationally linked cap-and-trade system and an efficient and equitable transfer of know-how and funds to developing countries. The third reason to have a dedicated climate-change post is that a pro-innovation approach requires intense co-ordination across policy areas such as energy, competition policy, the internal market, research and trade. A mandate is needed to cut across the work of so many departments. A commissioner for climate change would have such a mandate.

About the authors

  • Reinhilde Veugelers

    Prof Dr. Reinhilde Veugelers is a full professor at KULeuven (BE) at the Department of Management, Strategy and Innovation.  She is a Senior Fellow at Bruegel since 2009.  She is also a CEPR Research Fellow, a member of the Royal Flemish Academy of Belgium for Sciences and of the Academia Europeana. From 2004-2008, she was on academic leave, as advisor at the European Commission (BEPA Bureau of European Policy Analysis).  She served on the ERC Scientific Council from 2012-2018 and on the RISE Expert Group advising the commissioner for Research.  She is a member of VARIO, the expert group advising the Flemish minister for Innovation.    She is currently a member of the Board of Reviewing Editors of the journal Science and a co-PI on the Science of Science Funding Initiative at NBER.

    With her research concentrated in the fields of industrial organisation, international economics and strategy, innovation and science, she has authored numerous well cited publications in leading international journals.  Specific recent topics include novelty in technology development,  international technology transfers through MNEs, global innovation value chains, young innovative companies, innovation for climate change,  industry science links and their impact on firm’s innovative productivity, evaluation of research & innovation policy,  explaining scientific productivity,  researchers’ international mobility,  novel scientific research.

    Websites:
    https://feb.kuleuven.be/reinhilde.veugelers
    https://bruegel.org/author/reinhilde-veugelers/

Related content

Working paper

Raising EU productivity through innovation

A better overview of which firms are most likely to adopt digital technologies and to innovate, and to turn these investments into productivity growth

Reinhilde Veugelers and Frederic Warzynski