NEW REPORT: The New Economics of Innovation and Transition: Evaluating Opportunities and Risks
To keep Paris goals in sight, we need to decarbonise 5x faster. This means that all emitting sectors need to transition at the same time. However, these transitions are interrelated, and a transition in one may help accelerate or decelerate the transition in another. This report investigates the simultaneous transition in the power sector, personal transport, trucking, and residential heating. We find two superleverage points: sector-specific policies with an outsized effect on other sectors.
This research highlights that some of the greatest successes in the clean energy transition so far, such as dramatic cost reductions in wind and solar power and LED lighting, have come from policies to shape markets that were not generally those recommended by conventional economic analysis. To replicate these successes, the report calls on policy makers to learn the lessons and think differently about the dynamics of change in our economies.
This research highlights that some of the greatest successes in the clean energy transition so far, such as dramatic cost reductions in wind and solar power and LED lighting, have come from policies to shape markets that were not generally those recommended by conventional economic analysis. To replicate these successes, the report calls on policy makers to learn the lessons and think differently about the dynamics of change in our economies.
Given the scale, speed and interdependencies of the energy transition being pursued, this action will require from governments the application of an additional set of tools and principles to support policy-making and appraisal. This report offers governments new methods to use policy to accelerate clean technology transitions to drive action on climate goals.
Through 15 real-world, global, regional and national case studies, developed in partnership with policy stakeholders, New economic models of energy innovation and transition demonstrates how new economic modelling approaches can deliver crucial insights for decision makers. It also provides guidance on how to evaluate and choose between different modelling approaches and how to support their use.
This report aims (i) to provide the specific context of the energy transition in India, including previous successes and lessons learned, and the potential challenges it faces both in economic development and decarbonisation; (ii) to introduce the Risk Opportunity Analysis (ROA) approach to the policy context in India, which represents the flagship policy appraisal fundamental of the EEIST programme, and (iii) to present results from a modelling comparison exercise with both simulating and optimising models to explain the key differences and complementarities between existing and new modelling approaches through model-specific information and data.
This report outlines power sector reforms developing in China and the increasingly complex landscape of climate and energy policies intended to support carbon neutrality. It then presents two different but complementary energy-economy models of the energy transition and power sector in China: the REPO model developed by 3E at Tsinghua University and the E3ME-FTT:Power model developed by the University of Exeter and Cambridge Econometrics.
This report provides insights on how unique dimensions of the Brazilian landscape and financial situation give scope for effective action towards a low-carbon re-industrialisation. It illustrates in particular that the dynamic nature of low-carbon re-industrialisation offers an opportunity, with ROA a more useful tool than traditional (but impractical) cost-benefit analysis (CBA) to assess the green transition via empirical case studies.
This practitioner-focused paper – Net-zero transition planning for pension funds and other asset owners – sets out how the Economics of Energy Innovation and System Transition (EEIST) programme – initially targeted at net-zero policymakers – can be applied to catalyse a paradigm shift in transition planning in the investment industry.
This dialogue gathered participants including academic experts and government representatives, to share learning on the application of dynamic analysis techniques to policy decisions on low carbon transitions. Participants also identified opportunities for work to further advance understanding, build analytical capabilities, and inform policy. Read the Economics of Energy Innovation and System Transition (EEIST) Wilton Park Meeting Report to find out more.