Determinants of the Pace of Global Innovation in Energy Technologies

TL;DR

This paper analyzes global energy innovation trends from 1970 to 2009, revealing a recent surge in patenting driven by market growth and R&D, despite low funding levels, and introduces a model explaining these dynamics.

Contribution

It provides a comprehensive global patent database and a nonlinear model linking patents, R&D, and market growth to explain recent innovation acceleration.

Findings

Patent filings increased sharply in the last decade, especially in renewables.

Market growth significantly amplifies the impact of R&D on innovation.

The model accurately predicts patenting trends across different technology stages.

Abstract

Understanding the factors driving innovation in energy technologies is of critical importance to mitigating climate change and addressing other energy-related global challenges. Low levels of innovation, measured in terms of energy patent filings, were noted in the 1980s and 90s as an issue of concern and were attributed to low investment in public and private research and development (R&D). Here we build a comprehensive global database of energy patents covering the period 1970-2009 which is unique in its temporal and geographical scope. Analysis of the data reveals a recent, marked departure from historical trends. A sharp increase in rates of patenting has occurred over the last decade, particularly in renewable technologies, despite continued low levels of R&D funding. To solve the puzzle of fast innovation despite modest R&D increases we develop a model that explains the nonlinear response observed in the empirical data of technological innovation to various types of investment. The model reveals a regular relationship between patents, R&D funding, and growing markets across technologies, and accurately predicts patenting rates at different stages of technological maturity and market development. We show quantitatively how growing markets have formed a vital complement to public R&D in driving innovative activity; these two forms of investment have each leveraged the effect of the other in driving patenting trends over long periods of time.