Going Beyond Investments in Single-Point Solutions

22 July 2020 - // Opinions
Kirsten Dunlop
Chief Executive Officer of EIT Climate-KIC

We are working to accelerate the transition to a zero-carbon economy by using systems innovation to effect change in whole places and value chains.

Climate change is not a distant possibility. The capacity of the Earth’s system to absorb greenhouse gas emissions is already exhausted. The IPCC Special Report on Global Warming of 1.5°C estimates that human activities have already caused approximately 1.0°C of global warming above pre-industrial levels.

Changes in temperature, precipitation, sea level, and the frequency and severity of extreme weather events are already affecting how much energy is produced, delivered, and consumed around the world. A global crisis such as the COVID-19 pandemic, aggravated by climate change, impacts the energy world: in the U.S., the price of an oil barrel went negative on 20 March 2020 for the first time ever.

The energy world needs to think in systems

In the last 15 to 20 years, innovation in the energy sector was focused on single-point solutions and commercial scale-up. The traditional paradigm of innovation policy was about supporting research and development and engineering projects, and there was a certain confidence that the world was going to be able to innovate itself out of the climate crisis and eventually find a way to decouple economic growth from environmental impacts.

Today, the energy sector accounts for approximately 2/3 of global CO2 emissions. Business- and innovation-as-usual are not delivering a 1.5°C world. Technology advances alone will not solve the climate crisis: the two decades of technology-focused innovation policy need to be followed by a different innovation paradigm. Innovation support in the energy sector must of course continue, and it will, as it lies at the heart of the European Green Deal. However, it needs to be coupled with social, political, economic, financial and institutional innovations as well.

The climate innovation challenge is so complex that innovation needs to be conceived and deployed to catalyze change at a systems level.

Fast, large-scale change is possible, but the goals of public support programs such as the European Green Deal, which sets the goal of net-zero-carbon emissions by 2050, as well as a 50-55% cut in emissions by 2030, cannot be met by the current rules, norms and short-term culture of the financial system. Nor will they be met by the current practices and accepted wisdom of commercially successful innovation solutions and venturing. Public support programs funding research and innovation need to enable more than advanced engineering and substitution solutions.

Science shows that we need to immediately phase out all fossil fuels to meet the 1.5°C goal, and the EU Member States have already committed to phasing out environmentally harmful subsidies by 2020. Yet, we continue to subsidize oil, gas and coal. Governments could instead direct these subsidies to support community-led just transition in regions like Upper Silesia in Poland and Debagoiena in Spain – where EIT Climate-KIC is working on a ‘deep demonstration’ to phase out coal extraction.

Shifting investment culture to support more resilient systems

There are various ways innovation can help shift investment cultures to longer-term value cycles. One of them is to focus our efforts on designing and using innovation to help us learn as fast as possible how to change multiple systems at once – achieving the critical structural and exponential changes that must occur rapidly and simultaneously on multiple fronts to fight the climate crisis.

The European Union has some great tools at its disposal, such as the EU Taxonomy and the Green Bond Standard, to unlock rapid decarbonization and resilience and to help Europe embark on a green future and recovery from the COVID-19 pandemic. The European Green Deal already frames the challenge not only from an economic and environmental lens, but also from a societal lens (for example with the Just Transition mechanism founded with 1 million euros).

The EU now needs to work with the ambitious leaders of our cities, regions, countries and businesses to make extraordinary change possible. Together, they can unlock a transition to a fairer and more resilient energy system, one of Europe’s toughest challenges, and greatest opportunities.

The views expressed in this article are the author’s own and do not (necessarily) reflect REVOLVE's editorial stance.
Kirsten Dunlop
Chief Executive Officer of EIT Climate-KIC

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