The document discusses emerging technologies and firm dynamics in relation to green growth. It covers three main topics: 1) discretionary public support for technologies, noting that support is needed but current portfolios may not be optimal, 2) the role of firm dynamics in driving green innovation as young firms are important, and 3) public policy considerations including pricing carbon, ramping up R&D, and evaluating support mechanisms. The document concludes that acting now through international cooperation, mission-driven initiatives, and designing policies that support new entrants will be important for promoting green growth.

1. Emerging Technologies
and Firm Dynamics:
Implications for Green Growth
Issue note, GGSD Forum, 15th December 2015, OECD Paris
Florian Egli (Mercator Fellow) and Nick Johnstone (OECD, STI)
florian.egli@mercator-fellows.org, nick.johnstone@oecd.org

2. 22
Growth
Low-carbon
development
Prosperity
Fight climate change
Green
breakthrough
innovation
Technology neutral
Support then exit
and price
Firm neutral
Budget constraints?
Reap investment
benefits
Signalling
System inertia
(path dependence)
Under-Investment Bias
Policies?

3. 33
Academic
Small-firms
Incumbent

4. Which technology?
Which firm?
I. DISCRETIONARY SUPPORT
II. FIRM DYNAMICS
III. PUBLIC POLICY
IV. CONCLUSIONS

5. Discretionary technology support (1)
5
Generality is the only robust
predictor of “success”
(# of future patents, commercial
applicability, risk finance)
-> Cross-industry innovations are
more successful
-> CCMT are more general than
the average
R&D support is necessary, but evidence that existing portfolios are not optimal
-> a number of promising green technologies will not become cost-competitive without support by 2030
-> expert elicitation can provide guidance with respect to technological, economic and societal potential
-> statistical ex-post analysis can help identifying promising “attributes“ (e.g. closeness to science, radicalness,
etc…)

6. 6
IPC code
IPC code
2009-11 2001-03
A01P
B32B
B82Y
C12P
C40B
F21V
F21Y
G02F
G03F
G06F
G06G
G06Q
G06T
G07F
G08B
H01B
H01J
H01L
H01M
H02J
H04K
H04L
H04M
H04N
H04W
H05B
H05K
IPC Classes
A01 - Agriculture
A61 - Medical science
A63 - Sports, games, etc.
B05 - Spraying, atomising, etc.
B32 - Layered products
B60 - Vehicles
B82 - Nanotechnology
C07 - Organic chemistry
C09 - Dyes, paints, etc.
C11 - Oils, fats and waxes
C12 - Biochemistry
C40 - Combinatorial Technology
D06 - Treatment of Textiles
F21 - Lighting
F24 - Heating, ventilating, etc.
G01 - Measuring, testing
G02 - Optics
G03 - Photography, etc.
G05 - Controlling, regulating
G06 - Computing
G07 - Checking-devices
G08 - Signalling, transmission
G09 - Educating, display, etc.
G11 - Information storage
H01 - Basic electric elements
H02 - Electric power
H04 - Electric communication
H05 - Electric techniques n.e.c.
IP5 patent families
100 families
Energy storage and
distribution for electric
and hybrid vehicles
Semiconductors
Lighting
Nanotechnology Digital devices
and cameras
Computers and
data processing
Digital data
acquisition
Batteries
Wireless
and digital
communication
1 000 families
5 000 families
Spillovers are
concentrated and co-
occurances grow in
environmental fields
Discretionary technology support (2)
Top 50 co-occurrences with burst intensity

7. 7
But current environmental
regulations discourage firm entry
Young firms drive green
innovations
Firm dynamics

8. 8
• Some of the most successful technologies received public support
(internet, GPS, approx. 75% of breakthrough drugs)
• Current R&D portfolios are ill-adapted to the need for breakthrough
innovations
Public policy – it depends
And it is necessary
Effectiveness to induce private finance
Support mechanism High credit information
(good market)
Low credit information
(bad market)
Mature tech
(e.g. onshore wind)
FIT 0 +
REQ + 0
Immature tech
(e.g. solar PV)
FIT + 0
REQ 0 0

9. 9
• Act now
• Price carbon and ramp up R&D for clean(er) technologies
• Cooperate internationally and between public and private
• Global Apollo Program
• Mission Innovation
• Evaluate, (exit or continue), revise, share lessons learned
• Participate in successful ventures
• Keep the unborn in mind - design environmental policies
accordingly (at least remove new source bias)
The easy ones

10. 10
• Interact with the “crowd”
• Increase and reallocate R&D – how? where to decrease? – and
define sunset clause
• Evaluate technology potential (overall and given national
circumstances)
• Analyze policies with respect to their differentiated effect
depending on firm age and size
• Lower finance access barriers for new green firms (i.e. by
reducing policy risk)
The tougher ones

11. Thank you for your attention
Florian Egli (Mercator Fellow) and Nick Johnstone (OECD, STI)
florian.egli@mercator-fellows.org, nick.johnstone@oecd.org