Synopsis: The energy system has historically been characterised as “mature”, displaying small, incremental technological improvements and low levels of both public and private research intensity. However, over the past decade this situation has been changing, illustrated by significiant increases in public and private energy R&D expenditure across many countries in reaction to strengthening concerns around fossil fuel prices, climate change and energy security. These challenges have driven the search for alternative sources of energy, as well as more efficient ways of extracting and consuming fossil fuels. As support grows for energy innovation so too does the need to understand how energy innovation unfolds with a view to ensure that the vast public and private resources currently being committed to innovation in this sector are being deployed effectively. In this context the talk outlines the Energy Strategy Fellowship’s current research project, which seeks to map out systems of energy innovation for a range of countries and technologies, measure the effectiveness of these different arrangements and compare different approaches with a view to learning lessons for successful energy research and innovation policy. Following a discussion of the drivers that have led to this renaissance in energy innovation and the project’s research objectives, the talk introduces the different technology and country case studies under examination, the methods employed and some of the innovation theory that underpins this research. Finally, the talk explores some emerging issues in the field of energy technology innovation the project engages with, such as the globalised nature of energy innovation, the role of the private sector and energy innovation outside ‘Western’ countries. Biography: Matthew has worked as a Research Associate within the RCUK Energy Strategy Fellowship team at Imperial College since 2012. His research examines the types of conditions responsible for accelerating the development and deployment of energy technologies with the potential to address critical challenges facing the global energy sector, such as climate change, energy security and fuel poverty. This work examines the development of a handful of promising, high-profile energy technologies across a variety of different countries worldwide to understand what makes for an effective energy innovation system. Prior to this he undertook his PhD thesis at the University of Leeds from 2009 exploring how the application of innovative energy business models could help to drive forward sustainability transitions.

1. Innovation in the energy sector:
Paradigm-busting or paradigm-reinforcing?
CEP lunchtime seminar
19 November 2014
Matthew Hannon
Research Associate - RCUK Energy Strategy Fellowship

2. Outline
• Introduction
• Context
• Research objectives
• Case studies
• Methods
• Theory
• Emerging issues

3. RCUK Energy Strategy Fellowship
Phase 1 - Synthesis of prospectus for research,
skills and training needs across UK energy
landscape
• Prospectus informs development of the Research Councils
Energy Programme. It was published in November 2013 and
will be maintained and updated until the end of the Fellowship
in 2017.
• It responds to a recommendation from the RCs’ International
Review of Energy Research undertaken in 2010.
Phase 2 - Research programme: the
effectiveness of systems of energy innovation
• The research programme will compare the effectiveness of
energy innovation systems in a number of leading countries

4. The team
Jim Skea
RCUK Energy
Strategy Fellow
Aidan Rhodes
Research Fellow
Matt Hannon
Research Associate
Rui Hu
PhD Researcher

5. Outline
• Introduction
• Context
• Research objectives
• Case studies
• Methods
• Theory
• Emerging issues

6. Cumulative CO2 emissions are correlated
with global temperatures
Source: IPCC
2◦C
3◦C
4◦C
today
Cancun
Agreement
2010
IPCC 5th
Assessment
Report
To remain lower
than 2oC above
pre-industrial
levels, global
emissions will need
to be 40-70% lower
in 2050 than in
2010

7. GHG emissions growth has accelerated in the last decade
driven by CO2 from fossil fuel combustion
Source: IPCC

8. GHG emissions rise with income and population
but are moderated by energy efficiency gains
Source: IPCC

9. ...but long-term energy decarbonisation has been reversed
Source: IPCC

10. Stabilising the atmosphere means moving away from
business-as-usual – regardless of how ambitious we are
40-70% reduction
Source: IPCC

11. There is still a lot of oil out there and it’s still affordable
versus alternatives
Source: IEA

12. Import dependence has also been rising in major
economies…
Source: IEA

13. Energy scenarios and outlooks are diverging with
response to climate change the biggest differentiator
Outlooks
to 2040

14. Areas of agreement
• Energy demand will rise
• Energy demand has saturated in developed countries
• Energy demand could start to saturate in some emerging economies
(e.g. China) by the late 2020s…but other economies may “emerge” to
take their place
• Fossil fuels will continue to dominate the world energy system…no real
physical constraint on their supply
• The use of natural gas will expand
• Renewable energy output (wind, solar) will expand, but will not
dominate the energy system
• Electricity will take an increasing proportion of demand

15. Areas of uncertainty
• Peaking (plateauing?) of oil
• Level of coal use – could be down
• The role of natural gas in transport
• The role (if any) for biofuels – declining role in successive outlook
exercises
• Whether electric/H2-fuel cell vehicles take any significant market share
• The impact of energy efficiency on demand

16. Public sector energy RD&D spend has recovered,
and is focusing increasingly on renewables and efficiency
120
100
80
60
40
20
0
-20
-40
-60
30
25
20
15
10
5
0
1974 1979 1984 1989 1994 1999 2004 2009
$/barrel 2012
$bn 2012 US
Other
Renewable Energy
Nuclear
Fossil Fuels
Crude oil price
Source: IEA

17. Private sector energy R&D has also recovered -
but much of it is spent on oil and gas
25
20
15
10
5
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
bn USD2012
Alternative Energy
Utilities
Electricity
Oil & Gas
Source: derived from EU R&D Scoreboard

18. Outline
• Introduction
• Context
• Research objectives
• Case studies
• Methods
• Theory
• Emerging issues

19. Research objectives
System of innovation: “the elements and relationships which interact in the
production, diffusion and use of new, and economically useful, knowledge”
(Lundvall, 1992)
Overarching project aim: To better understand the effectiveness of energy
innovation systems rooted in different countries and centred on different
technologies
Objectives
• To map out systems of energy innovation for a range of countries and
technologies
• To attempt to measure the effectiveness of these different arrangements
• To compare different approaches with a view to learning lessons for
successful energy research and innovation policy

20. Outline
• Introduction
• Context
• Research objectives
• Case studies
• Methods
• Theory
• Emerging issues

21. Technology case studies
Heat
pumps
Smart
grid
Shale
gas
Wind
energy
Wave
energy

22. Technology case studies (continued)

23. Technology case studies (continued)

24. Technology case studies (continued)

25. Technology case studies (continued)

26. Technology case studies (continued)

27. Country case studies

28. Outline
• Introduction
• Context
• Research objectives
• Case studies
• Methods
• Theory
• Emerging issues

29. The research plan
1. Mapping systems of energy innovation through documentary analysis
and field trips. “System boundaries” will emerge from the mapping
exercise; different systems of innovation are associated with different
technologies. These might have sub-national and international
dimensions.
2. Development and analysis of innovation indicators covering all parts of
the energy innovation chain
3. Phases 1 and 3 will give rise to a set of hypotheses and findings, which
will be tested through structured interviews and re-interviews with
experts inside and outside the case study countries.
4. A desk-based comparison of different approaches to energy innovation
to tie together the findings.

30. Case study templates
Technologies
1. Technology description
2. History of the technology –
narrative
3. Deployment and resources
4. Commercial players
5. Environmental impacts and
management
6. Social acceptability and
community impacts
7. Innovation activity
8. Roadmaps and scenarios
Countries
1. Population and economy
2. Geography and climate
3. Governance
4. Education
5. Environment and climate change
6. Science and technology
7. The energy sector
8. The energy innovation system

31. Field trips: first wave early 2015
Generic aspects (all countries):
• Science and innovation system
• Energy policy and technology
• Energy innovation system
Technology specific aspects (selected countries):
• Narrative for technology development and deployment
• Mapping of technology innovation system
• Role of technology of innovation system actors
Contacts through:
• FCO/BIS Science and Innovation Network;
• Other international contacts (e.g. IPCC)
Outcomes:
• Refinement of country and technology case studies
• Pointers to the collection and analysis of innovation indicators

32. Innovation metrics
• Science, technology and innovation (STI) indicators serve as a proxy to reveal specific
aspects of innovation systems, assess changes over time and drive policy debate.
Input indicators Throughput
indicators
Output indicators Outcome indicators
Research and
development
expenditure
Human resources in
science and
technology
Science and research
hubs, e.g. top
universities, top think
tanks and top
corporate R&D
investors
Publications
Patents
Trademarks and
designs
International flows of
researchers
Government budgets
for demonstration,
deployment and
public procurement of
new products or
services
% of innovative firms
with significantly
improved or new
products/services
% of innovative firms
with significantly
improved or new
processes
% of innovative firms
with new
organisational
practices
% of innovative firms
with new marketing
Export and market
shares of
commodities and
services
Revenues of
international
technology transfers
Labour and energy
productivity
Energy mix and self-sufficiency
CO2, SOX and NOX
emissions

33. Methodological challenges
• Comparability of data between countries: are we comparing
like with like?
• Data availability, e.g. private sector, variability across
countries
• Over-emphasis of metrics on particular elements of the
energy innovation system
• Identifying causality in a ‘noisy’ policy/economic
context……..how do we know the success of technology X
was influenced by factors Y & Z?

34. Outline
• Introduction
• Context
• Research objectives
• Case studies
• Methods
• Theory
• Emerging issues

35. Theoretical underpinnings
Innovation systems
• Innovation as a complex evolutionary process shaped by a wide variety of
system components (e.g. actors, institutions, resources etc.) and dynamics (e.g.
positive feedbacks, accumulation/depreciation of stocks etc.)
• Scale of analysis split between national, regional, sectoral and technology
innovation systems
Energy innovation
• Focus on distinctive aspects of energy innovation systems, e.g. capital intensity,
longevity of capital stock, politicisation of energy etc.
Socio-technical transitions
• Concerned with the conditions that result in a shift from socio-technical system
state to another
Wider innovation theory
• Business and management literature e.g. Porter hypothesis, disruptive
innovation, open innovation etc.

36. The energy innovation system
Grubler & Wilson (2014)

37. Outline
• Introduction
• Context
• Research objectives
• Case studies
• Methods
• Theory
• Emerging issues

38. Emerging issues
• The globalised nature of energy innovation systems
• Energy innovation systems outside Europe/North America/Anglophone
countries
• The role of the private sector and public-private engagement in shaping
the development and performance of innovation systems
• The influence of the physical/engineering aspects of energy technologies:
e.g. system vs. component; commodity vs. site-assembled
• The roles of: learning by doing; transfer of non-codified knowledge (e.g.
training and human mobility); “secondary” research (learning by osmosis)
• Measuring innovation system performance to inform innovation policy and
institutional design

39. Thank you!
W: http://www3.imperial.ac.uk/rcukenergystrategy
E: rcep.energystrategy@imperial.ac.uk
T: @ES_Fellowship