Session 1: Mission-oriented innovation for a net-zero energy secure future

Yongsuk Jang, Senior Research Fellow at the Korean Science and Technology Policy Institute (STEPI) and Chair of the OECD Committee for Scientific and Technological Policy (CSTP), moderated this session on mission-oriented policies for the low-carbon transition.

In her scene-setting presentation, Ann Mettler, Vice-President for Europe at Breakthrough Energy, echoed Ambassador Spaeth’s call for weaning off dependency on fossil fuels, which has proved to be a threat for climate and energy security. She underlined that the “breakthrough” spirit that animated countries’ response to the pandemic is not yet visible for the energy transition. However, COVID-19 recovery packages are a step in the right direction: preliminary findings from the work by Breakthrough Energy and the OECD on the innovation impact of COVID-19 recovery packages suggest that we are witnessing a turning point in the energy sector since they injected $1.2 trillion towards low-carbon technologies. But more needs to be done for less advanced technologies: less than 10% of recovery spending is dedicated to R&D and demonstration of emerging clean technologies, such as hydrogen and carbon capture, utilisation and storage. Furthermore, analysis shows that recovery funding does not close the IEA estimated gap in investments needed to reach 2050 net-zero targets.

Philippe Larrue, Policy Analyst at the OECD Science and Technology Policy Division, underlined that the dominant policy paradigm is based on the concept of “fixing” market failures. However, this is increasingly considered ineffective to address systemic challenges as it results in a fragmented approach. For this reason, a number of countries have started to look at Mission- oriented Innovation Approaches (or MOIAs) to accelerate innovation to address societal challenges, including climate change. Recent OECD work finds that MOIAs represent a marked improvement over existing frameworks because of stronger orientation of innovation and better coordination across policy and administrative silos. However, improvements are still needed. For instance, albeit displaying some systemic features, net-zero missions remain mostly focused on research and innovation and are led by science and technology agencies.

Matthias Weber, Head of Centre for Innovation Systems and Policy at the Austrian Institute of Technology, stressed that next-generation missionoriented innovation policies need to adopt a “goaloriented project modulation” approach rather than fixed “targets”, because of the uncertainty generated by the current period of multiple crises. Also, he stressed the importance of a wholegovernment approach and strong involvement of the private sector and citizens. He also highlighted the need to invest in the public sectors capabilities to oversee, trigger and govern these collective change processes. Finally, he noted that national differences, including cultural aspects, are likely to have implications for governance mechanisms of missions.

Göran Marklund, Deputy Director-General at Vinnova, Sweden, and Chair of the OECD Working Group on Innovation and Technology, underscored that clear targets are needed to ensure that missions fully deliver on their orientation capacity. Also, he underlined that a whole-of-government approach is the ideal mechanism for mission design and governance, but this is often very difficult to achieve. The Swedish experience shows that bottom-up collaboration could be a second-best alternative. He highlighted some recent positive developments. Fist, COVID-19 has shown that governments can successfully adopt mission-oriented approaches. Secondly, Swedish businesses believe that greenness is a key lever for competitiveness in the future and are leading an industrial transformation in the carbon-free steel and electric mobility sectors. Finally, he argued that EU Mission on Climate Neutral Cities is a game-changer because it sets a clear target for carbon-free citiese.

Jennifer Gerbi, Acting Director at the US Department of Energy, Advanced Research Projects Agency-Energy (ARPA-E), highlighted the ARPA-E focuses on high-risk and high-reward search. Programme directors have a 3- to 5-years term to spend the programme budget of $40 million. Given the focus on high-risk innovation, the Agency accepts technical failure: as few as 3 out of 12 funded technical pathways are successful. ARPA-E is characterised by strong cooperation among teams, which is aided by the short duration of directors’ terms and group stress-testing of ideas, including from a carbon lifecycle perspective. For example, hydrogen is a very potent indirect greenhouse gas that is difficult to contain: if policy does not keep up with the technology, there is the risk of unintended consequences. She concluded by remarking that the Agency invests in broad portfolios of technologies, including options that are not on roadmaps yet.

In the open discussion, Mathias Weber stressed the importance of avoiding micro-management in MOIAs and the role of soft coordination mechanisms, such as the development of shared problem perceptions, to bring together multiple actors. Göran Marklund highlighted that the contracts that cities are signing on climate neutrality in the context of the EU Mission on Cities can be an effective tool to generate a whole-of-government approach. Philippe Larrue presented the example of the Irish Challenge Programme, which established the position of “societal challenge champion” to ensure that a systemic dimension is integrated in all financed projects. Ann Mettler remarked that “clean” products are often not very different from those developed using polluting technologies, except for their lower carbon content. Therefore, incentives are needed to create a market for these products.

Key takeaways and knowledge gaps

• Recovery packages marked an important increase in funding for net-zero innovation, but they fell short of closing the investment gap to meet net-zero targets. Future work could investigate how to mobilise private capital and the potentially catalysing role of philanthropic capital.

• Evidence suggests that mission-oriented innovation approaches are characterised by stronger orientation of innovation systems than traditional innovation approaches, and could help to accelerate green innovation

• Existing net-zero missions tend to focus mostly on research and innovation and to be led by Science and Technology Agencies. Further research is needed on how to make missions more systemic and the changes needed in public sector governance for their successful adoption.

• Many breakthrough technologies are developed by young firms that often lack the global reach of larger firms. Better understanding of the interplay between incumbents and young firms is needed.