Research and development (R&D) brings to light new technologies that can accelerate and complete global decarbonization. Continued and broadened support for R&D is an essential component of remaining below the two-degree warming target, and can lower the cost of future emission abatement by decreasing the costs of low-carbon technologies.
The term “learning curves” describe these regular patterns of declining costs in new technologies, as embodied by solar photovoltaic (PV) electricity generation. This technology dates to the 1950s, but for many years was too expensive for commercial use except in very limited circumstances. The price per watt of crystalline silicon solar cells was $76.67 in 1977 but over time, laboratory research drove down prices and accelerated commercial applications as prices declined, starting a feedback loop that drove prices down 99.6% to $0.26 per watt in 2016. This learning curve shows that every time the world’s solar power has doubled, the cost of solar panels has fallen about 22%.
R&D support must go beyond short-term thinking to encourage companies to invest and drive long-term innovation. To help guide funding priorities and help ensure government R&D dollars are spent wisely, the government should involve the private sector to secure crucial expertise regarding the technologies, markets, scalability, and technical challenges associated with early-stage technologies.
Because funding is limited, R&D should not continue investing in dead-end technologies. Stage-gating, which ensures research projects meet definable milestones to keep funding flowing, can avoid over-investment in technologies lacking promise
“Innovation hubs” like Silicon Valley allow researchers working on similar technologies to share information and work together. Public-private partnerships also allow private sector companies access to government-owned high-tech equipment for R&D purposes prevents re-inventing of the wheel and reduces overall R&D costs.
A strong intellectual property (IP) foundation encourages R&D investment by private firms because if patents are not protected, any firm can use of research results in its own products, reducing or eliminating the incentive for firms to engage in R&D. Policymakers should ensure patent systems are sufficiently strong and enforced to encourage innovation while taking care to prevent overly broad IP protections leading to unnecessary litigation and stifled innovation.
A highly educated labor force is the final key element for successful R&D. Ideally, companies and government-owned research facilities will have a large pool of researchers to draw on with strong backgrounds in science, technology, engineering, and mathematics (STEM). To attract this talent, policymakers can establish top-quality education programs and ensure immigration laws allow companies to hire STEM talent from other countries.
Create Long-Term Commitments for Research Success
Performing research and developing new technology are lengthy processes, and several years may elapse after the start of R&D for any specific technology. Support for R&D must be robust and continuous over the long term to encourage companies to invest in the personnel and equipment needed to drive innovation.
Use Peer Review to Help Set Research Priorities
To help guide funding priorities, the government should involve the private sector, which can bring crucial expertise regarding the technologies, markets, scalability, and technical challenges associated with early-stage technologies. Bringing this experience to bear on funding decisions can help ensure that government R&D dollars are spent wisely.
Use “Stage-Gating” to Shut Down Under-Performing Projects
Because R&D is inherently risky and can involve a lot of time and resources, it is useful for firms or governments funding R&D to review projects periodically and ensure they continue to be worth investing in. Stage-gating is the process of establishing certain milestones that projects must hit before they are given additional funding. Projects that fail to meet critical milestones are defunded, allowing resources to be spent elsewhere on more promising research.
Concentrate R&D by Type or Subject to Build Critical Mass
An efficient way for the government to fund and support R&D is to concentrate funding on a specific topic in more focused, granular institutions, possibly co-located with one another. This allows researchers working on similar technologies to share information and work together while avoiding the inefficiencies that can arise from spreading funding for similar research across many different institutions. Done well, this approach also helps establish “innovation hubs,” such as Silicon Valley in California, which has become the premier global location for software and information technology innovation.
Make High-Quality Public Sector Facilities and Expertise Available to Private Firms
Many countries have already invested in expensive, high-tech equipment for R&D purposes, often owned by the government. One way to improve government and private sector R&D is to allow businesses to partner with government-owned labs to conduct research together. Partnering with private companies can help overcome some of the cost barriers that prevent companies from buying their own equipment and conducting advanced R&D.
Protect Intellectual Property Without Stymieing Innovation
A strong intellectual property (IP) foundation is critical for encouraging R&D investment by private firms. If patents are not protected, then any firm can make use of research results in its own products, reducing or eliminating the incentive for firms to engage in R&D in the first place. Policymakers should ensure that patent systems are sufficiently strong and enforced at a level that encourages innovation while also taking care not to provide overly broad IP protections that encourage unnecessary litigation and stifle innovation
Ensure Companies Have Access to High-Level STEM talent
A highly educated labor force is a key element for successful R&D. Ideally, companies and government-owned research facilities will have a large pool of researchers to draw on with strong backgrounds in science, technology, engineering, and mathematics (STEM). To attract this talent, policymakers can establish top-quality education programs and ensure immigration laws allow companies to hire STEM talent from other countries.