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Pathways to Decarbonization in Energy:
Role of Energy Technologies and Innovation
#Infra4Dev Conference: Decarbonizing Infrastructure
Prof. Kenneth Gillingham
November 18, 2020
The world is in the midst of a dramatic
transition
There are big questions for energy policy in the context of
climate change
• What influences the overall path of technological change?
• What influences the adoption process of new technologies?
Technological change
is a tricky processSource: Frank
Market failures motivate policy to guide the
transition
Key market failures that influence investment in
infrastructure:
• Environmental – climate change, local air pollution
• Innovation – R&D spillovers, learning-by-doing
• Credit constraints – can prevent profitable clean investments
• Network externalities – coordination needed for many new technologiesWhich came first:
the chicken or the egg?
Source: National Academies
“Power of Change” (2016)
What do we know about innovation?
My review article with Grubb et al. (2020)
• Reviews over 200 papers leading to three main conclusions:
1. Demand-pull forces enhance patenting
2. Technology costs decline with cumulative investment – learning-by-doing
3. Overall innovation is cumulative, multifaceted and self-reinforcing
Low carbon patents
Source: OECD
How path dependency comes about: spillovers
Spillovers play a key role in path dependency
• Bollinger et al. (2019) on learning-by-doing in solar photovoltaics
• Data on all solar installations in California during a period of price declines
• Clear empirical evidence of learning-by-doing and spillovers to other firms
• Spillovers may also influence costs of infrastructure in developing countries
How does adoption of new technologies
occur?
Information and social interactions play a key role
• Gillingham and Bollinger (2020) - social learning influences adoption and
can be leveraged by interventions
• Field experiments on grassroots solar campaigns show massive treatment
effect
• Similar campaigns are currently being run in India for residential solar
• Adoption of technology is crucial for planning infrastructure investment
Equity in diffusion of new technologies
Different groups respond to different stimuli
• In developed countries, rooftop solar is primarily installed by upper income
• Messaging differently in the campaigns can help reach lower income
communities
• This emphasizes the importance of understanding local conditions
• But shows that success is possible in a diverse array of communities – with
appropriate financing During campaign Post campaign
Bollinger et al. (PNAS 2020)
“Field Experimental Evidence Shows
That Self-interest Attracts more Sunlight”
Concluding thoughts
Technology change in energy is happening quickly
• Policies can speed up the pace of innovation by addressing market failures
• This will require much new infrastructure – and with path dependencies in
technology change, the infrastructure we put in today matters
The process of adoption of new technologies is a social
one
• Such social interactions can be leveraged to acceleration adoption
• This applies in both the developed and developing world
• Equity can be accommodated through on-the-ground understanding of
what makes people respond in adoption decisions (as long as affordability
is met)
• This can influence the path of private provision of infrastructure
Thank you!
Kenneth Gillingham
• Associate Professor of Economics
• Yale School of the Environment, School of Management, Department of Economics
• kenneth.gillingham@yale.edu
Kroon Hall, Yale School of the

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Pathways to Decarbonization & Digital Innovation in Energy: ​Role of Energy Technologies and Innovation

  • 1. Pathways to Decarbonization in Energy: Role of Energy Technologies and Innovation #Infra4Dev Conference: Decarbonizing Infrastructure Prof. Kenneth Gillingham November 18, 2020
  • 2. The world is in the midst of a dramatic transition There are big questions for energy policy in the context of climate change • What influences the overall path of technological change? • What influences the adoption process of new technologies? Technological change is a tricky processSource: Frank
  • 3. Market failures motivate policy to guide the transition Key market failures that influence investment in infrastructure: • Environmental – climate change, local air pollution • Innovation – R&D spillovers, learning-by-doing • Credit constraints – can prevent profitable clean investments • Network externalities – coordination needed for many new technologiesWhich came first: the chicken or the egg? Source: National Academies “Power of Change” (2016)
  • 4. What do we know about innovation? My review article with Grubb et al. (2020) • Reviews over 200 papers leading to three main conclusions: 1. Demand-pull forces enhance patenting 2. Technology costs decline with cumulative investment – learning-by-doing 3. Overall innovation is cumulative, multifaceted and self-reinforcing Low carbon patents Source: OECD
  • 5. How path dependency comes about: spillovers Spillovers play a key role in path dependency • Bollinger et al. (2019) on learning-by-doing in solar photovoltaics • Data on all solar installations in California during a period of price declines • Clear empirical evidence of learning-by-doing and spillovers to other firms • Spillovers may also influence costs of infrastructure in developing countries
  • 6. How does adoption of new technologies occur? Information and social interactions play a key role • Gillingham and Bollinger (2020) - social learning influences adoption and can be leveraged by interventions • Field experiments on grassroots solar campaigns show massive treatment effect • Similar campaigns are currently being run in India for residential solar • Adoption of technology is crucial for planning infrastructure investment
  • 7. Equity in diffusion of new technologies Different groups respond to different stimuli • In developed countries, rooftop solar is primarily installed by upper income • Messaging differently in the campaigns can help reach lower income communities • This emphasizes the importance of understanding local conditions • But shows that success is possible in a diverse array of communities – with appropriate financing During campaign Post campaign Bollinger et al. (PNAS 2020) “Field Experimental Evidence Shows That Self-interest Attracts more Sunlight”
  • 8. Concluding thoughts Technology change in energy is happening quickly • Policies can speed up the pace of innovation by addressing market failures • This will require much new infrastructure – and with path dependencies in technology change, the infrastructure we put in today matters The process of adoption of new technologies is a social one • Such social interactions can be leveraged to acceleration adoption • This applies in both the developed and developing world • Equity can be accommodated through on-the-ground understanding of what makes people respond in adoption decisions (as long as affordability is met) • This can influence the path of private provision of infrastructure
  • 9. Thank you! Kenneth Gillingham • Associate Professor of Economics • Yale School of the Environment, School of Management, Department of Economics • kenneth.gillingham@yale.edu Kroon Hall, Yale School of the