Innovation for Decarbonisation

Key messages:

• The European transition towards net-zero emissions by 2050 requires both competitive technology costs and the removal of a wide array of non-cost-related diffusion barriers.
• Innovation successfully takes place when a diversity of actors and institutions share a common value system, which can be promoted by EU institutions providing a unifying framework across member states to reduce the impact of countervailing national and cross-national pressures.
• Increased public support for net-zero R&D is still crucial. Support for R&D in small firms and start-ups is a particularly useful tool to advance the twin goals of innovation in hard-to-decarbonize areas and economic competitiveness and opportunities, provided it is designed adequately.
• Many of the policy instruments that have been deployed to reduce GHG emissions have also been shown to promote technology innovation alongside emissions reductions.
• Demand-pull policies play an important role in promoting diffusion and reducing different barriers, but they need to be designed to be flexible and adjustable to minimize negative competitiveness and distributional impacts, particularly for small firms and low income households.