By Arianna Griffa

In the span of just a few weeks, the COVID-19 pandemic has brought unprecedented changes to many aspects of life across large parts of the world.  The impacts on the society, the economy and the environment could be profound and long-lasting and could affect governments’ priorities and investment plans in clean energy innovation in both the short- and long-term.

Mission Innovation is seeking to understand what the impacts are and how they can potentially affect the clean energy innovation ecosystem in the short- and long-term. Working in collaboration with members and international organisations committed to accelerating clean energy innovation, we are tracking how policymakers in different countries are responding to new challenges and which policy measures are being put forward to mitigate them.

While it is too early to draw a full assessment of the impacts of COVID-19 on clean energy R&D, evidence is slowly emerging. Our analysis of potential global trends suggests that the direction the economic recovery will take across the world might lead to fundamentally different outcomes for the clean energy innovation ecosystem. In general, early evidence shows that the low carbon industry has been less affected and is recovering quicker than the fossil-based energy sectors, yet disruptions in both manufacturing supply-chains and mobility of skilled resources might affect R&D in the long-term.

Significantly, the current global context presents both risks and opportunities for the clean energy sector:

• International collaboration vs national protectionism

Strengthened global cooperation in sectors such as health might drive greater international collaboration to drive clean energy transition, thanks also to new smart solutions for communication and mobility. Conversely, countries could decide to re-focus resources and recovery efforts towards national priorities, further hindering international collaboration and knowledge-sharing among researchers and innovators due reduced mobility.

• Clean recovery paradigm vs business-as-usual

Some countries have highlighted the opportunity to mobilise major investments in early-stage technologies (e.g. CCUS, hydrogen, etc.) thanks to currently low interest rates. However, the collapse of oil prices could potentially increase consumption of fossil fuels and reduce support for clean technologies and energy efficiency.

• Building new decentralised supply chains vs long-term disruption of global supply-chains

Renewed interest in building more decentralised, resilient, and sustainable supply chains creates new growth opportunities for the energy sector. However, there is a significant risk that a prolonged stall in production and distribution of key components may cause a slowdown in investments in those clean technologies that depend on global supply-chains.

• New lifestyle priorities vs employment concerns

On the one hand, emerging behavioural and lifestyle changes could define new energy use patterns, stimulating reduced demand for travel, a focus on clean air and a desire for green jobs. On the other hand, employment concerns may lead to a diversion of funding to energy-intensive infrastructure projects that do not support a clean energy transition, negatively affecting smaller players in the innovation ecosystem.

• Targeted support for innovative firms vs crowding out of start-ups

Innovative start-ups and SMEs are more negatively impacted by the crisis due to their cash-sensitivity, particularly in emerging economies. Stimulus packages might unlock substantial funds not only to keep existing firms afloat but also to attract and fund new innovations. Failing to support them might risk drying out the start-up ecosystem and lead to a brain drain of talents towards bigger players or other countries.

Clearly, several factors and scenarios need to be carefully considered by policymakers as healthcare remains a priority. Yet a fundamental question remains: How can we ensure that the wider economic recovery safeguards the ongoing need for accelerated clean energy innovation?

A number of organisations have also been analysing the impacts of COVID-19 and looking into the most effective policy options to kick-start the economy and accelerate the clean energy transition. For example, a recent study[1] by leading economists at Oxford University has identified clean R&D spending as one of the top five clean policy measures that have greater economic returns for government spending i.e. that deliver high economic multiplier both in the short-term, by creating higher number of jobs, and in the long-term, by producing future-proofed assets and solutions for the energy needs of tomorrow. The Energy Transitions Commission[2] – a global coalition of leaders across the energy, industry, finance and civil society sectors – also stresses that innovation is a key driver of economic growth; continued innovation support, focusing on early-stage development and industrial scale demonstration, increases competitiveness of national economies while providing solutions for carbon reduction.

In the past few weeks, we have seen numerous calls from academia, policy and industry urging countries across the world to implement “green stimulus” measures to speed up the transition.  In fact, a number of countries have announced measures to support innovation through the recovery, mainly in the form of grants or loans to innovative firms. While the focus remains understandably on health and economic recovery, there are clear opportunities for aligning long-term economic and political priorities with clean energy R&D investments.

Mission Innovation is committed to helping its members in responding to the challenges of COVID-19 on the clean energy ecosystem and identifying opportunities to continue to support its mission to accelerate clean energy innovation. By leveraging the international collaboration network built since its launch, MI is well placed to bring together new alliances of global leaders in the clean energy innovation landscape and ensure there is continued support for the development of new solutions to satisfy our future energy needs.

As part of the initiatives to help the clean energy innovation community navigate the global developments, we are creating an online repository of policy responses that will have an impact on clean energy innovation, as they emerge across the world. If you would like to contribute to this work or have suggestions, please get in touch with us at: secretariat@mission-innovation.net.

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Arianna Griffa is a Policy Advisor in the Mission Innovation Secretariat leading MI work on COVID-19 response and supporting B2020 strategy development

[1] https://www.smithschool.ox.ac.uk/publications/wpapers/workingpaper20-02.pdf

[2] http://www.energy-transitions.org/content/7-Priorities-for-Global-Recovery