U.S. Technology and Innovation Policies: Lessons for Climate Change

New technologies for electric power generation, transportation, industry, and consumer products are expected to play a major role in efforts to reduce the greenhouse gas (GHG) emissions that contribute to global climate change. Yet technological change on this scale cannot happen overnight. Government policies will be instrumental in encouraging more rapid development and adoption of technology. In the United States—long a leader in innovation—well-crafted policies that encourage the development, deployment, and diffusion of new technologies will be essential complements to other GHG-reduction policies.

The Pew Center commissioned this report to examine U.S. experience with technology and innovation policies—both successes and failures—and to draw lessons for future applications, including efforts to address climate change. The authors found that because innovation is a complex, iterative process, different policy tools can be employed as catalysts at various phases (e.g., invention, adoption, diffusion). They also discuss the roles that intellectual property protection and regulatory policies play in driving innovation, and examine programs such as the Defense Advanced Research Project Agency (an innovative force in information technology), as well as public-private collaborations such as the Partnership for a New Generation of Vehicles, to glean lessons for climate change policy. The insights revealed are clear:

  • A balanced policy portfolio must support not only R&D, but also promote diffusion of knowledge and deployment of new technologies: R&D, by itself, is not enough.
  • Support for education and training should supplement research funding.
  • “Non-technology policies” provide critical signposts for prospective innovators by indicating technological directions likely to be favored by future markets.
  • Policy-makers should channel funds for technology development and diffusion through multiple agencies and programs, because competition contributes to policy success.
  • Public-private partnerships can foster helpful, ongoing collaborations.
  • Effective programs require insulation from short-term political pressures.
  • Policy-makers must be prepared to tolerate some “failures” (i.e., investments that do not pay off), and learn from them as private sector entrepreneurs do.
  • In light of the inherent uncertainty in innovation processes, government policies should generally support a suite of options rather than a specific technology or design.

Technology policies, while important, cannot by themselves achieve the GHG reductions necessary to mitigate climate change. Rather, they should be part of a comprehensive approach that includes “non-technology policies,” such as a GHG cap and-trade program. The authors and the Pew Center thank Bob Friedman, Ken Flamm, David Hart, and Ev Ehrlich for commenting on previous report drafts.