Alternative Energy/Paper

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The Political Economy of Intellectual Property in the Emerging Alternative Energy Market



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The alternative energy field represents a unique case for studying the trends regarding the political economy of intellectual property (IP) in an emerging market. Some of the technology can be considered mature; however many are the barriers - technical, socio-cultural, political or related to funding - that justify a young market in many countries. These issues are at the center of our research under the Industrial Cooperation Project at the Berkman Center for Internet and Society at Harvard University (ICP). This research is part of a broader project being led by Yochai Benkler, Professor of Entrpreneurial Legal Studies at Harvard Law School. Within the ICP, we are seeking to understand the approaches to innovation in the alternative energy[1] sector looking specifically at wind, solar and tidal/wave technologies. The intention is to map the degree to which open and commons-based practices are being used compared to proprietary approaches.

In this sense, our research is guided by the definition of the “commons” molded by Prof. Benkler, who asserts: commons are a particular type of institutional arrangement for governing the use and disposition of resources. Their salient characteristic, which defines them in contradistinction to property, is that no single person has exclusive control over the use and disposition of any particular resource. Instead, resources governed by commons may be used or disposed of by anyone among some (more or less well defined) number of persons, under rules that may range from ‘anything goes’ to quite crisply articulated formal rules that are effectively enforced. Commons can be divided into four types based on two parameters: The first parameter is whether they are open to anyone or only to a defined group. The second parameter is whether a commons system is regulated or unregulated. Practically all well studied limited common property regimes are regulated by more or less elaborate rules - some formal, some social-conventional - governing the use of the resources. Open commons, on the other hand, vary widely. (Benkler, 2003, 6)

We began our research with the intention of limiting our scope to the US only, but given the global scope of the alternative energy market, and the fact that almost all the market leading companies have grown in foreign countries where the markets for this technology have been biggest and which can be considered historical centers of technology innovation, we chose to include Germany, Denmark, and Spain. Among the countries considered emerging economies, we decided to look at China for the geopolitical implications relating to its relationship with the United States. We did not look into other developing countries, however, these will be briefly addressed under the section related to international negotiations around climate change. Under this context, developing countries will appear as actors asking for technology transfer and technology cooperation models, under the justifications of the need for energy to fuel industrial growth and universal access to electricity.

The European countries represent three of the biggest markets for wind and solar technology, and are home to some of the biggest companies producing the technology.[2] China is the newest and biggest market entrant into the solar market, and could become the biggest producer of this technology over the next few years.[3]

We also decided to broaden the scope of the research by exploring the development of governmental policies for alternative energy technology development and innovation as they relate to the global debates about appropriate governmental responses to Climate Change.

Thus, our goal is to follow the alternative energy market and identify the levels of openness and closedness in the areas where innovations are happening, dialoguing with a bibliography that covers the political economy of intellectual property and how intellectual property impacts innovation. We will also be looking for the presence of commons-based arrangements of knowledge production within the alternative energy innovation process to determine if they appear, and if so, where and how they appear.

We chose wind, solar and tidal/wave technologies with the expectation that we would find variations among their approaches to openness and closedness, since the technologies represent different levels of maturity and patenting activity. The maturity can be measured both by the stage of development of the technology and the stage of development of the market. For instance, wind is considered a mature technology because it is fairly well understood, and the cost of generating electricity with wind turbines is closer to the cost of conventional sources of fossil fuel generated electricity (see Figure 10) - though it is still more expensive.[4] Solar photovoltaic (PV) technology is less mature and can be quite expensive, therefore the research and innovation around solar PV technologies is sure to play a critical role in bringing its costs down and generating more efficient technology.[5] Tidal/wave technology is relatively immature compared to wind and solar, and is mostly in the demonstration phase at this time. Only a few small projects around the world - such as a tidal barrage, which was constructed at La Rance in Brittany, France in the 1960s (Bryden 2004, 139) - are generating consumer electricity. We go into more detail on the maturity of these technologies in Section 1.2.5.e, The Maturity of Solar, Wind and Tidal/Wave Technologies.

These technologies are a subset of the many alternative energy technologies that exist, and they are all representative of energy supply technologies, meaning they are focused on bringing energy to a point of final use.[6] There is another set of technologies called energy end-use technologies that are part of our discussions of the cleantech industry as a whole. These technologies are concerned with the most efficient use of the supplied energy. Examples are home appliances, automobiles, and light bulbs.

Within our three focus technologies - wind, solar and tidal/wave - there are a variety of subset technologies. Figure 1 provides descriptions. These energy supply technologies should not be confused with their close relatives listed below, which are not part of our research:

  • Solar thermal - uses the suns energy to heat water for home and commercial use.
  • Solar heating and cooling - uses building design to take advantage of the sun’s direct heat and energy to efficiently heat and cool buildings at different times of the day and during different seasons.
  • Wind or tidal/wave technologies used for mechanical work rather than for conversion to electricity.

We excluded these technologies because they are less common than the energy supply technologies we are researching, and because energy supply technologies can have a bigger impact on reducing global carbon emissions by reducing the use of coal for electricity generation. Reducing the use of coal can facilitate the shift to a lower emissions electric plug-in vehicle market thereby reducing the world’s dependence on both coal and oil the biggest global climate change contributors - as shown in Figure 2.

Figure 1

Technologies for electrical generation from solar, wind and tidal/wave energy Tech Descriptions.png
Sources: Author illustration based on information from: (Bosik 2009; Capello 2007; Capello 2008; Carlin 2004; Lemonis 2004; Luzzi & Lovegrove 2004; Perlin 2004)

Figure 2

Global Anthropogenic GHG emissions divided by type of gas
Global GHG Pie.png
Source: (PEW 2009)

Alternative Energy Technology History

It is important to note that the term "alternative" energy sources is a contemporary moniker that stems from the fact that these energy technologies are alternatives to the mainstream energy sources such as coal, natural gas, oil, and nuclear fission. The 1973 oil crisis spurred the first global push for these alternative energy sources as high petroleum prices threatened the world's (and more specifically the developed world and the United States in particular) access to cheap and plentiful sources of energy. In October 1973, the Organization of Arab Petroleum Exporting Countries (OAPEC) announced an oil embargo that would limit or stop oil exports to the US and any other country that supported Israel during the Yom Kippur war. [3] The result was a steep increase in the price of oil, and oil shortages in the affected countries. Soon after the embargo began the 1973-74 stock market crash followed, which had debatable links to the embargo, but nonetheless influenced governments in their attempts to address their energy supply security concerns. The affected countries responded to the oil crisis by exploring policy and investment strategies to reduce their dependence on the Middle East for their oil, and alternative energy technologies secured a prominent role in these reactions. In the United States, the presidency of democrat Jimmy Carter marked a period of significant investment in alternative energy sources as well as the introduction of government policies that supported the development and diffusion of these technologies.

While the origins of alternative energy supply technologies are all based in the 1800's, the practice of using the wind, sun, and tides/waves as sources of energy for work, are much older. Wind was used to power sailboats up to 5,500 years ago, and there is evidence of windmills for mechanical work in India 2,500 years ago. (Sorenson 1991, 8) Solar energy is the basis of most energy on earth, including the energy in plants from photosynthesis, solar thermal heating, the fossil remains of organic material in oil and coal, and wind, which is created when air, heated by the sun, rises and cold air from another area moves into that space. (Carlin 2004, 348) Using moving water for power can be traced back to 250 BC. (Sorenson 1991, 8)

a. Wind technologies

Wind turbines for electrical generation were first developed simultaneously in the US and Scotland around 1887. Charles Brush was an American inventor who developed an electric arc light system in his home laboratory in Cleveland, Ohio. In order to test the lights he needed his own dedicated source of electricity, so he built a 60 foot wind turbine with an electric generator in it and wired it to a collection of batteries to store the energy. This wind turbine successfully powered his lab for 15 years. While Brush filed many patents for his lighting systems, he never patented his wind turbine. (Righter 1996, 52) The true reason for this is unknown, but some historians have theorized that Brush didn't see a market for wind turbines in Cleveland where the wind was inconsistent on the whole, or perhaps, as the article in Scientific American about his personal wind turbine stated, the capital cost and operations and maintenance costs were too high to make the technology marketable. (Righter 1996, 53) While Brush is credited with the first electrical wind turbine, a Danish inventor named Poul La Cour was concurrently inventing commercial scale turbines. By 1906 there were 40 windmills generating electricity in Denmark, which marked the beginning of the country’s relationship, and innovation edge, in wind technology. (Pasqueletti 2004, 422-423)

Soon afterward, both Germany and the UK started to experiment with wind electricity and install their own turbines. Meanwhile in the US, some small companies were marketing small turbines for electrical generation on rural farms, but the development and adoption of the technology did not match Europe. By the 1930’s the US had a burgeoning market for small rural off-grid wind turbines, but that changed in 1936. The Rural Electrification Act was passed that year, which was tasked with connecting rural areas to the electrical grid. It was so successful that every US electric wind turbine manufacturer had closed its doors by 1957. In Denmark during this same period, wind power was spreading throughout the rural areas providing off-grid electricity. (Pasqueletti 2004, 423)

In 1950, a Danish engineer named Johannes Juul began testing a prototype wind turbine for a Danish utility. The design used some technological elements from the earlier designs of F.L. Smidth, the founder of a successful Danish wind turbine manufacturing company, which had integrated aerodynamics into La Cour’s designs. Juul ultimately built a three-bladed wind turbine that was installed at Gedser, Denmark in 1956. It was in regular service from 1959 - 1967, and became the model for the wind turbines manufactured in Denmark in the late 1970’s after the oil crisis. The design is now referred to as the "Danish concept," which is defined as "a horizontal axis, three-bladed rotor, an upwind orientation, and an active yaw system to keep the rotor oriented into the wind." (Steele 2009, 156) A wind rush began in California in the 1980s, which was also in part due to reactions to the oil crisis, and Denmark was poised to dominate the market in the US. Denmark shipped thousands of wind turbines to California between 1980 and 1985, and after the market in California crashed, Denmark started selling thousands more to Germany. All of these turbines were technologically derived from Juul’s "Danish concept" turbine. (Pasqueletti 2004, 426; Steele 2009, 156) It has been observed that during these early days of wind development in Denmark, the companies did not follow formal R&D activities, but instead relied on practical experimentation and hands-on work to develop core competencies. Over time, traditional R&D functions emerged. (Andersen & Drejer 2005, 3)

In the US during the 1970s, NASA funded research at the Lewis Research Center in Cleveland, Ohio, to refine the design and function of electrical wind turbines.[4] Soon after the oil crisis, the US government started to fund the Federal Wind Energy Program, and research and development (R&D) funds were devoted to the cause. Research was also conducted at Sandia National Laboratories in California. In the 1980’s the government drastically reduced their R&D funding for wind and other alternative energy technologies (for reason that are explained later in this paper) and shifted the focus of alternative energy developments over to tax credits. (Weiss & Bonvillian 2009, 127-129; Lewis & Wiser 2007)

The wind technology market shows a high degree of consolidation with a small group of companies controlling the majority of the market for large commercial scale wind turbines (see Figure 7 later in the paper). Patent battles have been common, with GE, the largest US manufacturer of wind technology, asserting their patents aggressively in an attempt to keep other companies out of the US market. To date they successfully kept Germany's Enercon out of the market based on a patent infringement case for their variable speed wind turbine technology. They are currently suing Mitsubishi for patent infringement of the same variable speed turbine technology. (de Vries 2009, 1) In a recent report on patents in alternative energy technologies, the authors pointed out that the top four wind turbine manufacturers own 13% of the technology patents and control 57% of the market for wind turbines. (Lee et. al. 2009, viii) This is by far the most consolidated market within the various alternative energy technologies.

The market for wind turbine components is quite competitive. Various original equipment manufacturers (OEM's) may produce wind turbine blades, gearboxes, generators, bearings, towers, and electronic control equipment. This leads to a complicated interconnected market with lots of potential for new innovation in these various parts. Typically, the OEM market is limited to medium-scale turbines of less that 1 MW in peak capacity. (Lako 2008, 35)

Modern wind turbines are manufactured with three-bladed rotors with diameters of 70 to 80 meters mounted on top of towers with 60 to 80 meter heights. A typical turbine in the United States in 2008 produces more than 1.5 MW of electrical power. The power output of the turbine is controlled by rotating the rotor blades to change the angle of the wind hitting the blade. This is referred to as “controlling the blade pitch.” The turbine is pointed into the wind by rotating the nacelle about the tower, which is called “yaw control.” (Bosik 2008, 50)

There are four major component assemblies in modern wind turbines: the rotor, nacelle, tower, and balance of system. The rotor consists of blades used to harness wind energy and convert it into mechanical work, and a hub that supports the blades. In addition, most wind turbines have a pitch mechanism to rotate and change the angle of the blades based on the wind speed as described above. The nacelle is the structure that contains, encloses, and supports the components that convert mechanical work into electricity. These components include generators, gearboxes, and control electronics. The tower supports the rotor and nacelle, and raises them to a height where higher wind speeds maximize energy extraction. Additional balance-of-station components at ground height are required to gather, control, and transmit power to the grid interconnection. (Bosik 2008, 50)

There is no single component that dominates turbine cost, though, the rotor is usually the highest cost item on the turbine and must also be the most reliable. Towers are normally the heaviest component and weight reductions would benefit the price and performance, but lightening the rotor or tower-top weight has a multiplier effect throughout the system including the foundation. The nacelle refers to all of the wind turbine structures that house its generating components, and includes the following: measuring controlling, power transmission, circuits, fans/blowers, iron foundries, all other plastics, motors and generators. (Bosik 2008, 50)

  • An outer frame protecting machinery from the environment
  • An internal frame supporting and distributing weight of the machinery
  • A power train to transmit energy and to increase speeds of the shaft
  • A generator to convert mechanical energy into electricity
  • A yaw drive to rotate the nacelle on the tower
  • Electronics to control and monitor operation

(Bosik 2008, 50)

The top ten companies in the wind industry account for 85% of the global turbine market [5] The market leader is Vestas (Denmark) with 19.8% of the market but GE Energy (USA) is growing quickly and has nearly caught up with 18.6% of the market. [6] The biggest change to this distribution is likely to come from Chinese manufacturers who are expanding and bringing down the cost of manufacturing turbines. [7] Emerging market players like China and India are changing the make-up of turbine manufacturing since, as of 2005, eight of the top ten wind turbine manufacturers were in Europe and they represented 72% of the global market, or a value of US$23.3 billion. (Gallagher 2009, 93)

b. Solar photovoltaic (PV) technology

The solar photovoltaic (PV) effect was discovered in 1839 by Alexandre-Edmond Becquerel. He observed that when selenium was exposed to sun a small electrical current was created. In 1888 Edward Weston received the first U.S. patent for the solar cell, and in 1901 Nicola Tesla received a US patent for a "method of utilizing, and apparatus for the utilization of, radiant energy". [8] Solar PV panels remained undeveloped until 1953 when the first commercial panels were manufactured at Bell Laboratories after one of the lab’s scientists discovered that silicon could be used in place of selenium as a more efficient material for creating electricity. The US government took a keen interest in the technology for use in the space program, and funded PV developments for that purpose. (Sorenson 1991, 9; Perlin 2004, 616-617) Throughout the 1960s solar research was funded by governments and in research labs, mostly for applications in the space industry for satellites and space-based vehicles. When the oil crisis of the 1970s occurred the US government founded the Solar Energies Research Institute - later renamed the National Renewable Energy Laboratory (NREL) - to develop new, lower cost solar energy technologies. US President Jimmy Carter further supported the R&D efforts of the solar industry by allocating $3 billion for solar energy research, and installing a test solar water heater in the White House as well as a solar PV array on the roof. Image 1 below shows the solar installation on the White House roof during the Carter Administration. (Is there any information on the IP policy in force by then? Or all the results were patented? If patented do we have numbers or examples?) These developments came to a halt in the 1980’s when President Ronald Reagan took office and drastically cut the R&D funding for solar energy, while also removing the solar PV array from the roof of the White House. (Bradford 2006, 98)

The US represented 80% of the global solar energy market at the time, and soon, the other industrialized countries followed the United States’ lead. (Bradford 2006, 98) Throughout the 1980’s and 1990’s solar research was limited to research universities, inventors and state energy agencies, and the assets and patents of the original solar energy technology companies were purchased by large oil companies like Mobil, Shell, and BP. (Bradford 2006, 98)

Image 1

US President Jimmy Carter showing off the new solar PV panels on the roof of the White House in the 1970's
Source: Flickr [9]

Research conducted at the Belfer Center for Science and International Affairs at Harvard’s Kennedy School of Government [7] identified the source of funding for 14 of 20 key innovations in PV technology developed over the past three decades (1970s, 1980s, 1990s). It was discovered that only one of the 14 was fully funded by the private sector, and 9 of the remaining 13 were financed with public funding, while the other 3 were developed in public-private partnerships. The researchers assumed that the innovations for which they could not identify funding sources were developed in the private sector. (Norbeg-Bohm 2000, 134)

Over the last twenty years, the market for solar technology has grown in foreign countries while still moving slowly in the US. Other countries - especially Japan and Germany - have taken the lead in technology development and installation of solar technology. Solar is still an expensive technology with a small but growing global market share. Countries such as Spain and Germany have used generous renewable energy subsidy programs - referred to in this paper as demand-pull policies - to rapidly install massive amounts of solar PV technology. China, while a leading producer of solar PV technology (as shown in Figure 3), has only recently begun to implement solar PV subsidy programs that will help to encourage the adoption of the technology on a larger scale. (Gipe 2009, 1) Figure 3 shows a comparison of the countries with the top production share and the countries with the most installed PV capacity, while Figure 4 shows the percentage of PV cell and module production in IEA countries (excludes China).

Figure 3

Comparison of Solar PV production market share by country and total installed capacity by country
Solar PV Comparison.png
Source: Authors' illustration based on (SEIA 2008; REN21 2009; Cappello 2008)

Figure 4

PV Cell & Module Production in IEA countries (excludes China and India)
PV CellandModuleProduction.png
Source: Authors' illustration based on (Lako 2008, 33)

The researchers at Harvard's Belfer Center came to the following conclusions on solar PV innovation in the US:

"In sum, the strengths of the U.S. Solar R&D program have been: (1) a parallel path strategy, (2) collaborations between industry, universities, and national labs including public-private partnerships with cost sharing, (3) attention to the full range of RD&D needed, from basic scientific work through to manufacturing, including attention to all components, materials, cells, and modules. Critiques of the solar PV R&D program include: (1) a lack of consistency in funding that created fits and starts in technological progress, and (2) concern that manufacturing R&D was not begun soon enough. Overall, the trend has been to increase attention to manufacturing issues and to increase public-private partnerships, including growth in the level of private sector cost sharing." (Norberg-Bohm, 2000, 135)

There are a few different types of Solar PV technologies, which vary in cost and efficiency. [8] The most commonly available PV panels on the market are crystalline silicon cells. Mono-crystalline cells make up 33% of the global market and can achieve up to 18% efficiency, while polycrystalline cells make up 56% of the global market and, while cheaper than mono-crystalline cells, they can achieve up to only 15% efficiency. (Lako 2008, 31) Future price drops are expected due to economies of scale, reductions in the price of silicon, R&D investment in the technology, and learning through project installation experience.

There are also thin-film solar PV cells which cost less than the cells mentioned above, but have lower efficiencies (8% - 12%), making the return on investment calculations difficult. Thin film silicon cells represented 8.8% of the global market in 2003, while thin-film copper iridium di-selenide cells held 0.7%. (Lako 2008, 31) R&D investments in experimental multi-layer cells and low-cost polymer based cells, as well as cells made with quantum dots and nano-structures, hold promises for more efficient and cheaper future cells, but will take time to reach market deployment. (Lako 2008, 31) Nanotechnologies are increasingly gaining ground in solar cell research, for instance, to produce dye-sensitized solar cells or multi-junction thin-film solar cells. (WIPO 2009, 51)

Electricity generated from PV panels is on average about $0.30 per kWh, much more expensive than the average retail price of electricity of ~$0.10 per kWh. [10] (Kammen 2004, 401)

Annual global Solar PV growth has been in the 40% - 60% range since 2000 and resulted in 3,800MW of PV capacity by 2007. (Cappello 2008, 6) Global Solar PV production almost doubled in 2008 rising to 7.3 GW an 80% increase over 2007. [11] After years of market domination in Japan, China is now the leading producer of solar cells, with an annual production of about 2.4 GW. China could secure about 32% of world-wide production capacity by 2012 if this trend continues. [12] Behind China's production prowess are Europe with 1.9 GW, Japan with 1.2 GW and Taiwan with 0.8 GW.[13] European PV production has grown on average by 50% per annum since 1999 and its market share has increased to 26% in 2008. [14] The US is the leader in thin film PV technology, which represents only 7% of global production (170MW). (Capello 2008, 6)

In 2009 the global economic crisis exacted a heavy toll on solar companies due to the high cost of the technology, and therefore the high cost of the projects. [15] The credit crunch slowed project developers acquisitions of loan money and caused a precipitous drop in tax equity investing [9]

c. Concentrating Solar Power (CSP) Technology

Solar PV’s lesser known and less common relative is Concentrating Solar Power (CSP). Solar thermal furnaces that generated sufficient heat to produce steam - the basis of a CSP plant - were first developed in the eighteenth century and used in small scale applications in the US and France during the 1860’s. (Sorenson 1991, 8) Today, the US is seeing renewed interest in CSP plants, while the current supply of CSP generated electricity comes from a number of 80MW (megawatt) plants in Southern California, which were built in the late 1980’s. (Luzzi & Lovegrove 2004,1)

Nevada, a state with very strong renewable energy support policies, [10] initiated the first long term power purchase agreement of concentrating solar electricity signed between two public utility companies and the US solar developer Solargenix (which is now owned by a Spanish solar company named Acciona). The developer built the second largest CSP plant in the world with 75 MWe (Megawatts of electricity) trough plant that was completed in 2007. It uses 760 parabolic troughs and has over 300,000 m2 (square meters) of mirrors and limited energy storage to guarantee the capacity. (Philibert, 2004, 14); [16]

In June 2004, the Governors of New Mexico, Arizona, Nevada, California, Utah, Texas and Colorado voted a resolution calling for the development of 30 GW of clean energy in the West by 2015. Of this alternative energy development, 1 GW would be of solar concentrating power technologies. The US Department of Energy decided to back this plan and to contribute to its financing in June of 2004. (Philibert, 2004, 14; Luzzi & Lovegrove, 2004, 669) CSP is a mature and very well understood technology with growing adoption in the US.

New innovations in CSP technology are enabling greater growth and cheaper power production. Much of the innovation in CSP technology has taken place in the heat transport material, of which a number currently exist: (Philibert, 2004, 14; Luzzi & Lovegrove, 2004, 669)

  • Synthetic heat transfer oil - Oil is effective, but suffers from decomposition due to high heat. Oil also creates an environmental and fire hazard if it leaks.
  • Air - Air is reportedly quite effective.
  • Molten Salt - very effective, especially for heat storage overnight in insulated tanks (this can allow electricity generation when the sun is down). The downside is that the salt can be corrosive and reacts with air or water.
  • Chemical - Thermochemical cycles with fluid reactants can provide very effective heat transport and storage for use when the sun is down.

CSP plants are very effective and quite cheap in comparison to PV, while still a bit more expensive than conventional gas and coal electricity plants. At 80MW, the plants in California are generating large quantities of electricity at a levelized electricity cost of $0.12 - $0.16 per kWh, a fairly competitive cost compared to a US "Average Retail Price of Electricity to Ultimate Customers" of ~$0.10 per kWh. [17]

d. Tidal/wave technologies

Tidal and wave technology are a subgroup of Ocean Technologies.[11] There are many different established tidal and wave technology designs in use or in various phases of testing. It is believed that the world could cover a significant portion of its electricity demand from tidal and wave energy sources. The potential global energy contribution to the electricity market from wave technology is estimated to be approximately 2000 TWh/year, which is equal to 10% of world electricity consumption. The global tidal range energy potential is estimated at approximately 3000 GW, with around 1000 GW (~3800 TWh/year) available in shallow waters. Tidal energy conversion technologies are predicted to supply up to 48 TWh/year from sites around Europe. While other large tidal current resources are yet to be explored worldwide. While research and development on ocean energy exploitation is being conducted in several countries around the world, the technologies for energy conversion have not yet progressed to the point of large scale electricity generation. This is partially due to the rough and unpredictable ocean conditions where these technologies have to operate. Meanwhile though, advances in ocean engineering have improved the technology for ocean energy conversion. Advances in some areas of the technology could achieve the goal of commercial power production by or even before 2010. (Lemonis 2004, 1)

Tidal energy generators are mainly divided into two categories: underwater turbines and hydrokinetic generators. Underwater turbines are simply freestanding turbines/propellors that can be grounded to the bottom of the ocean or the bottom of a tidal inlet. Hydrokinetic generators are more similar to existing hydroelectric power generation systems that are used in rivers throughout the world. However, rather than using a dam system or tidal barrage, which would create a structural barrier across a tidal inlet, hydrokinetic generators can be freestanding like the underwater turbines, and thereby are proven to have far fewer deleterious environmental impacts on marine ecosystems. (Perez, 2009, 2) The first bona-fide tidal energy plant was constructed in France, at La Rance in Brittany between 1961 and 1967. It consisted of a barrage across a tidal estuary that utilized the rise and fall in sea level induced by the tides to generate electricity from hydro turbines. (Bryden 2004, 142)

Wave power generators can be divided into four main technologies: Point absorbers, attenuators, terminator devices and overtopping devices. The most ideal conditions for wave power plants are in the Pacific Northwest. To date several international and domestic companies have filed applications with the Federal Energy Regulation Commission (FERC) for test projects off the coasts of California, Oregon and Washington. (Perez 2009, 3)

Internationally, wave power generators have received strong government support in Europe and Australia. Portugal is home to one of the first grid-connected, wave-power conversion farms, which began operation in September 2008. The technology used is an attenuator generator, which resembles linked sausages that float on top of the water and generate electricity by harnessing the power in the oscillation of the waves. (Perez 2009, 3) The same technology is being considered for test sites in Scotland, Hawaii, Oregon, California and Maine. A company called Energetech has been testing a full-scale, 500kW terminator device, which is “an oscillating water column (OWC) used in onshore or near-shore structures,” at Port Kembla, Australia and is developing another OWC project for Rhode Island. (Perez 2009, 4) In Wales, an overtopping device called the Wave Dragon is being tested for full-scale deployment. The overtopping device works by channeling waves into a reservoir structure that sits higher than the surrounding ocean; the water in the reservoir is released through turbines that generate electricity. (Perez 2009, 5) There are many different designs for wave energy conversion technology, even when compared with other alternative energy technologies. More than 1000 wave energy conversion techniques are patented worldwide. (Lemonis 2004,387 - 388)

Currently there are no tidal or wave grid-connected, full-scale commercial power plants in the US, and due to market concerns and regulatory agencies competing over jurisdiction of the US Outer Continental Shelf, it is expected that a working plant will not be feasible until 2020. Meanwhile in April 2009, the Federal Energy Regulatory Commission (FERC) signed an agreement to remove the regulatory barriers for hydrokinectic (ocean energy) development on the US Outer Continental Shelf, which opens the door for new developments. (Perez 2009, 10) In 2007 and 2008 FERC started to expedite permits for ocean energy projects and 2007 saw a marked increase in the number of permits for tidal energy projects.

The market for ocean technologies started to grow in 2004 and maintained healthy growth though 2007 when the total investment in the technologies including both public and private sources, was $76 million. In 2008 the investments dropped by $26 million. (Perez 2009, 7) Figure 4 shows the evolution of investment in the technology from 2004 onward. The future promise of tidal/wave technology is great both in terms of total amounts of energy that can be generated, and the predicted cost-competitiveness of the technologies.

Figure 4

Total public and private investment in ocean technologies ($ millions)
Ocean Tech Inv.png
Source: (Perez 2009)

e. The Leading Companies in Wind, Solar, Tidal and Wave


For more information on particular companies, see This Page

Wind Companies 2008 Revenue Headquarters Primary Outputs
€6.035 billion
Randers, Denmark development, manufacturing, marketing and maintenance of wind power systems.
Clipper Windpower
London, England turbine manufacturing and wind project development company
GE Energy
US$ 182.515 billion
Atlanta, GA Wind turbine suppliers. Over 10,000 worldwide wind turbine installations.
$2.8 billion
Randers, Denmark (moving to Aarhus, Denmark)[CAROL I THINK THAT SUZLON IS BASED IN CHINA - Silas] supplier of wind turbines
€3.274 billion (2007)
Navarra, Spain The company participates in"promotion, construction and sale of solar and wind farms; engineering, design, manufacture and sale of wind generators; energy solutions"

Solar Companies Revenue ($m) Headquarters Primary Outputs
San Jose, CA designs, manufactures and markets high-performance solar electric power technologies.
First Solar
$638 million (2007)
Tempe, AZ design and manufacture solar modules
Jiangsu Province, People's Republic of China Wind turbine suppliers. Over 10,000 worldwide wind turbine installations.
Evergreen Solar
Marlboro, MA "develops, manufactures and markets solar power products"
Applied Materials
$9.734 Billion (2007)
Santa Clara, CA provides Nanomanufacturing Technology solutions for the global semiconductor, flat panel display, solar and related industries

Tidal Companies Revenue ($m) Headquarters Primary Outputs
Verdant Power
New York, NY designs, analyzes, develops for manufacture tidal electric power technologies.
Ocean Power Technologies, Inc
Pennington, NJ Company focuses on offshore wave power technology, specifically their PowerBuoy® system
Edinburgh, Scotland Manufacturer of offshore wave power technology, specifically the Pelamis Wave Energy Converter. This is a relatively mature technology that is deployed for commercial power generation.
Wave Dragon ApS
Copenhagen, Denmark Tidal energy manufacturer producing a floating slack-moored energy converter of the overtopping type.
Hammerfest Strom
Hammerfest, Norway develops and manufacturers tidal power stations.

f. The Maturity of Solar, Wind and Tidal/Wave Technologies

As mentioned above, each of these technologies is at a different stage of maturity, which influences its chances of commercialization, its cost of deployment, or - in the case of the most mature technologies - its market cost and the level of subsidies required to attain market competitiveness with incumbent energy technologies. In Figure 5 below, various alternative energy technologies are graphed on a time continuum, which maps the stages of technology development starting with basic research, moving to development, then demonstration, deployment and ultimately, maturity. The Y axis tracks the cost of the technologies showing that the research stage is typically a low cost, but the cost increases in the development stage and can peak between the development and demonstration phases, which then leads to a trip "down the hill" of decreasing costs as the technology approaches more far reaching deployment and maturity. (Lako 2008, 9) In economic terms this process can be referred to as reaching Economies of Scale, when the technology has a large enough market that the increasing deployment leads to reductions in the technology cost.

Figure 5

Stages of R&D, demonstration and commercialization of RE technologies
ICTSD Stages of Dev.RE energies.png
Sources: (Lako 2008, 9; EPRI 2007)

The graph demonstrates that tidal and wave technologies are still in the development stages, signaling both a high cost and a rising cost as they follow the curve towards demonstration. Further along the cost curve in the demonstration phase, central receiver STE, a version of concentrating solar power that uses tracking mirrors to concentrate the suns rays on a central heating tower, is at the highest cost point and just beginning move towards the deployment stage. Parabolic trough STE, a version of CSP that uses concave mirrors to heat pipes full of heat conducting liquid, thin-film PV, and silicon PV, round out solar technologies in the graph, and are all at various points in the deployment stage. Silicon PV is the furthest along in terms of affordable price, but in real terms it is still very expensive and requires generous subsidies to compete in the technology market. The final technology we are focusing our research on, wind, shows two vastly different costs for offshore and onshore deployed technology. Offshore wind is experiencing a growing market, but still suffers from high costs due to the shear size of the turbines - they are designed to produce up to 5MW per turbine and tend to be several hundred feet tall - the cost of designing turbines that can resist the increased pressures of high winds, rough water, and salt corrosion, and the difficult and costly underwater electrical transmission infrastructure - not to mention environmental permitting costs of offshore development. Additionally the difficulty of conducting regular maintenance raises costs as well. Onshore wind is the most competitively priced and most mature of the current alternative energy technologies. It is only eclipsed by hydropower, which has been used as a mainstream electricity source around the world for many years. Hydropower is not typically included in alternative energy technology growth studies due to its limited growth potential. There are very few river sites available, and in many cases rivers are experiencing reduced flows (in the US) and the required permitting to construct a dam is both complicated and expensive.

Concentrating solar power (CSP) technologies have been around for 25 years and measured approximately 400 MW of electrical capacity in 2008 with another 400 MW being built and 6GW in the planning stages. The market for CSP is being driven by government subsidies in Spain, the USA,and other countries. (Lako 2008) As mentioned above, parabolic trough and central receiver CSP technologies are on the path to maturity, though newer technologies referred to as solar dish and Fresnel-lens CSP, are less mature and are not noted in Figure 5.

Solar PV technologies are expensive as mentioned above, but they have benefited from generous subsidies in Germany, Spain, Japan and the US, which have greatly expanded their markets. The result has been a steady reduction in the cost of the technology. Developing economies like China and India are starting to build large PV manufacturing industries, which have similarly reduced the prices of PV panels. China's role in this growing market is explained in more detail in the Section 1.6.1 China's Market Share. While silicon PV panels are the most mature PV technology, new thin-film panels are coming down in price and beginning to benefit from increases in efficiency. Concentrating PV is another technology that is still in the development stages, but which shows great promise. (Lako 2008, 7)

Investments in on- and off-shore wind technology equaled € 27.5 Billion in 2007 and the technologies are considered mainstream. Know-how for onshore wind technology is more prevalent and has spread quickly, especially in Europe. Off-shore wind is experiencing growth in the UK, the USA, and South East Asia. Economies of scale have brought the price of wind technology down and onshore wind is approaching cost competitiveness incumbent fossil energy technologies. (Lako 2008, 7)

As discussed in the previous section 1.2.4 d Tidal/wave technologies, there is great potential for energy from the tides and waves, but currently, the technology is immature and will need time and development to enter the deployment stage and achieve economies of scale.

For detailed assessments of the development stages of these technologies, see Figure 6 below.

Figure 6

State of the art of RE sources
ICTSD Stateof art of RE sources.png
Source: (Lako 2008, 13)

There are many reasons why we are conducting this research, most notably, because climate change has the potential to be one of the most difficult and dangerous forces that humankind will face. By understanding the markets, technology development and forces that accelerate or slow innovation, we can learn more about which policies aid climate change mitigation efforts, and which do not. Wind and solar technologies in particular were chosen due to their potential for major reductions in global carbon emissions. In a 2004 article in Science Magazine that has become the canonical text in climate change mitigation efforts, Stephan Pacala and Robert Socolow of Princeton University, discussed the necessary steps that should be taken to meet the carbon mitigation goals set out by the Intergovernmental Panel on Climate Change (IPCC). The article, entitled Stabilization Wedges: Solving the Climate Problem for the Next 50 Years with Current Technologies unveils a plan to reduce carbon emissions and stabilize them at less than half the pre-industrial level using a portfolio of technologies that are already available and at commercial stages. (Pacala & Socolow 2004, 1) Among these technologies are on- and off-shore wind, solar PV and solar CSP. Wind technology and solar technology represent 1 wedge each out of a total 7 wedges. A wedge is defined as equaling a reduction of one gigaton of carbon equivalent per year from 2004 (the year the article was published) until 2054. Under this model, wind technologies would have to grow by fifty times the capacity in 2004 or by 2 million 1MW peak windmills, and offset coal power by this amount. Paul Lako of the Energy Research Centre of the Netherlands, assess the current and future growth of wind energy in the US, EU and the rest of the world and determines that Pacala and Socolow's wind growth prediction is within the realm of possibility. (Lako 2008, 16) Lako conducts a similar study of the growth of solar power and determines that it is plausible that an increase of 2000GW of peak PV (or 700 times the solar capacity in 2004) could take place by 2054 as deemed necessary in the Pacala & Socolow report. (Lako 2008, 17) It is assumed that after 2054, the R&D investments taking place now will pay off in the form of commercial scale innovative technologies that can further reduce emissions.

The Contributions of Software to Innovation in Alternative Energy Technologies

The inspiration for our research is derived from the past and current success of commons-based peer-production [18] - as defined by Yochai Benkler - which has been the source of innovation in online networks like Wikipedia and open-source software such as Linux. While the majority of this paper tackles the more complicated task of defining instances of commons-based peer production in the development of alternative energy technology, we would be remiss if we did not spend some time discussing the role of software, and more specifically open-source software, in the successful development and operation of alternative energy technologies and the interconnected role it will play in electrical transmission grids. The US Secretary of Energy, Steven Chu, has recognized the valuable contributions that open-source software can make to energy efficiency in buildings and has called for more development in the area. As it stands, the Lawrence Berkeley National Laboratory, where Chu used to be the director, has been working on EnergyPlus software, which is a free open-source building design software that allows the user to identify areas of the design that can be improved to increase energy efficiency. While the project has made good progress, it has suffered from lack of funding for many years. [19] Meanwhile, a new product called Open Studio is an open-source plug-in for the already free Google Sketch-Up, which allows the user to implement energy efficient design elements into their plans. As Chu has noted, the importance of providing free or low cost open-source software is that developing countries like China are in the midst of enormous build outs that could benefit immensely from access to software such as this to reduce the possible carbon emissions impact of the new buildings. [20]

While energy efficient building design presents one practical and high impact use of open-source software, the role of software in the world's energy economy will become much more pronounced with the further development of renewable energy technologies. Incumbent fossil fuel sources of electricity have created a centralized energy system, which is to say that large central electricity plants fueled by coal and natural gas, generate electricity, which is transported over the electrical transmission and distribution system to end-users. Variations in the amount of electricity needed based on the demand of consumers, are met by varying the electrical output at the plant. Renewable energy technologies such as solar PV panels, wind turbines, and tidal or wave generation plants, represent a distributed energy system, which means that many smaller and widely distributed plants will be generating electricity that will be fed back into the transmission and distribution grid. To add another layer of complexity, these energy sources are all intermittent which means that they will only produce electricity when the sun is shining, wind is blowing, or tides and waves are in movement, which is not necessarily happening in sync with the rising demand for electricity from consumers. [21] It will be necessary to have powerful and well designed software to record all of this data, and interpret it in order to provide efficient feedback to the transmission grid operators and energy plant operators about demand and supply of electricity. This type of software is an integral aspect of Smart Grid technology [22], which tracks the supply and demand metrics of the grid and individual consumers appliances, to adjust for the most efficient use and delivery of electricity. Smart grid proponents see the vast potential for improved performace of such software through the power of open-source development. [23] This is an area where commons-based peer-production in the open-source community could have a huge impact on future energy efficiency efforts. One person posting on the O'Reilly Radar commented: "The alternative energy space is doing so much good for the world, and has such a great need for rapid innovation and change. It seems a shame that the norm is to shroud new alternative energy innovations in secrecy. Venture capitalists will always push for keeping the technology locked down until they squeeze every last dollar out of it, but in the software world they're gradually learning that open source is not only good for the progress of technology as a whole, but also good for their profits. I wonder how long it'll take the energy investors to catch on." [24]

A Rapidly Growing Market


According to the United Nations Environment Programme (UNEP) and New Energy Finance, the cleantech industry grew to over $155 billion in 2008, up almost forty-eight percent from 2006, worldwide. (SEFIa 2009, 1) Figure 5 shows the gradual growth by financial quarter over the past few years. Its importance is not only environmental, but also geopolitical. The technologies that form alternative energy - and companies that explore them - vary immensely in type, innovation cycles, maturity and techno-economic readiness.

Figure 5

New global investments in clean technologies by year
Cleantech Investment.png
Source: (SEFI 2009)

In terms of constituencies, the presence and influence of actors vary among countries, imprinting different forms to the organization of alternative energy innovation. For instance, in Japan, the government has traditionally taken a strong role in coordinating such activities through its Ministry of Economy, Trade, and Industry; while European countries have stressed and exemplified cross-country collaboration and coordination. In the US, the private sector exercises greater autonomy, even after the emphasis on public-private partnerships since the 1990s. In developing countries, such as Brazil, the government typically takes a very strong role in funding and coordinating innovation in energy, as in the biomass efforts of Petrobras. The various entities collaborate in a range of combinations, within countries and internationally, and impacts the availability of funding for R&D. For instance, the private sector accounts for the majority of expenditures for energy R&D in International Energy Agency (IEA) member countries, although governments account for a large fraction as well. (Gallagher et. al. 2006, 206)

However, as long as the external costs and benefits related to climate change, fossil fuel depletion, and security of supply, are not fully included in the energy prices, the competition between renewable energy and conventional electricity supply is biased in favor of the latter. (Waltz, 2008) Thus it is correct to affirm that the global market for clean energy technologies relies on government support and regulation, which helps these technologies attain cost competitiveness with fossil fuel energy generation. Currently, as shown in Figure 6, the cost of generating electricity with alternative energy technologies is higher than with coal, which provides 50% of the electricity generated in the US and 80% of the electricity in China.[12] (Schell 2009, 1) Government support policies that subsidize the cost of deploying alternative energy technologies are referred to as demand-pull policies. The market leading companies, have generally developed in the areas of the world with the most generous demand-pull policies, and, predictably, under governments that have prioritized the growth of alternative energy technologies. The majority of the biggest and most successful wind and solar technology companies in the world are located outside of the US, with wind manufacturers being disproportionately grouped in Germany, Spain and Denmark, and solar companies being more widely distributed between Germany, Japan, China and the US. What distinguished these other countries from the US are their government's alternative energy policies. In Germany, Spain and Denmark a demand-pull policy called a Feed-in Tariff[13] (FiT) has been responsible for the rapid growth of their alternative energy technology markets, and has thus encouraged the development of many of the leading technology companies. (Rickerson & Grace 2007, 1) China, on the other hand, has taken advantage of the growing market for solar energy technologies, and has funded significant R&D to create cheap and efficient solar photovoltaic cells that are being sold in foreign markets, most notably the US and Europe. Only recently has China added its own FiT for wind and solar to help encourage their home market (Gipe(a) 2009, 1). Like most FiTs, China’s includes a “buy local” provision, which gives better financial incentives to those who install clean technology produced by Chinese companies. (Martinot & Junfeng 2008, 1)

Figure 6

The costs for generating one kilowatt hour with various types of electricity generation technology[14]
Technology prices.png
Sources: (U.S. DOEa 2008), [25]



The Market in the United States

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The market for alternative energy technologies in the United States has grown due to a myriad of indirect and direct factors. Indirectly, global climate change concerns and volatile fossil fuel prices, along with US energy security concerns tied to its dependence on unstable foreign sources of oil, have pushed alternative energy into a strategic position of importance. Direct factors affecting the growth of the market have been a recent increase in private VC funding for alternative energy technologies, and a growing public-sector opinion that supporting these technologies is in the best interest of the country. In 2008, $19.3 billion of venture capital and private equity funds were invested in renewable energy and energy efficiency firms, an increase of 43% compared with 2007.[15] Up to this point, the US has lagged behind other countries, mainly those in Europe, in terms of its technology deployment funding (demand-pull policies). This has been due to complicated political and economic factors that have not plagued European nations to the same degree, which allowed policies that encourage the adoption of renewable energy to flourish. In terms of its public research and development (R&D) and demonstration funding (supply-push policies), the US reduced its investment in the 1980s - like many other developed countries - and has only recently begun to increase the funding for alternative energy and cleantech developments. (Gallagher et al. 2006)

The current market growth comes after a long lull that followed the original US push toward energy independence and alternative energy technologies in the 1970’s. The 1973 oil embargo caused the US and Europe to prioritize alternative energy investment and development, providing a buffer from the volatility of supply and demand for oil. The supply-push and demand-pull policies targeting alternative energy technologies, which were initiated during this period, defined the market leaders (Germany and Denmark) and those left behind (the US). Ultimately, the US was able to take a haphazard approach to alternative energy policies due to its prodigious stores of coal, oil and natural gas and political leadership that favored these industries. Now, spurred in part by the increasing momentum of the cleantech movement, alternative energy producers, consumers, and various regulatory and advocacy bodies are each responding to and evolving with the field, and thereby creating new market demands and offerings. While these trends are complicated in their economics, politics, and other social factors/barriers, the gradual consolidation of the field’s largest producers is already perceptible in the wind market, for instance. Figure 7 shows the distribution of the wind market by market share.

Figure 7

Top wind turbine manufacturers by market share
Source: (Efiong & Crispin 2007)

As noted in Figure 6, wind energy technology is the most cost competitive of the available alternative energy technologies, and has thus far been the most successfully and widely adopted technology in both the US and abroad. (REN21 2009, 8) In 2007 US wind power generation capacity grew by 45% with the installation of 5244MW of new wind turbines, which brought the total capacity in the US to 16,819 MW. This growth equaled one third of the new electricity generating capacity in the country that year, and established the US as one of the fastest growing wind markets in the world. As of 2008, the US became the fastest growing and largest wind market in the world following 2007 with another 8,351MW of new wind capacity to bring the country's total to 25,170MW edging out Germany (23,903MW) for first place. (WWEA 2008, 5) The US wind market was valued at $151.3 billion in 2008. (Bosik 2009, 1)

In 2008, the White House started to explore ways to support better development of wind energy innovations. They announced a memorandum of understanding for a two-year collaboration with six leading wind energy manufacturers - GE Energy, Siemens Power Generation, Vestas Wind Systems, Clipper Turbine Works, Suzlon Energy, and Gamesa Corporation. The agreement was designed to promote wind energy in the U.S. through advanced technology research and development, and siting strategies aimed to advance industrial wind power manufacturing capabilities.[26] The specific areas of research that will be addressed by the DOE and the collaborating companies are:

  • 1) Turbine Reliability and Operability Research & Development to create more reliable components; improve turbine capacity factors; and reduce installation and operations and maintenance costs.
  • 2) Siting Strategies to address environmental and technical issues like radar interference in a standardized framework based on industry best practices. Standards Development for turbine certification and universal generator interconnection.
  • 3) Manufacturing advances in design, process automation and fabrication techniques to reduce product-to product variability and premature failure, while increasing the domestic manufacturing base.
  • 4) Workforce development including the development, standardization and certification of wind energy curricula for mechanical and power systems engineers and community college training programs.

DOE Assistant Secretary Andy Karsner made the following announcement:

“The MOU between DOE and the six major turbine manufacturers demonstrates the shared commitment of the federal government and the private sector to create the roadmap necessary to achieve 20 percent wind energy by 2030. To dramatically reduce greenhouse gas emissions and enhance our energy security, clean power generation at the gigawatt-scale will be necessary to expand the domestic wind manufacturing base and streamline the permitting process.” [27]

Programs like this show that the US government is beginning to understand two of the major barriers to increased development of affordable and efficient clean technology. First, the historical failures of the DOE labs to understand the private sector and how to successfully launch technologies in the market, and second, the importance of collaboration and information sharing towards the development of better technologies.

While the US is making a late entry into the global clean energy market, it has had a successful start in terms of technology deployment as evidenced by their installations of wind turbines. The US has fallen behind in technology development though, and is left in a position of being dependent on foreign nations for technology licenses. So far the Obama Administration and the Secretary of Energy, Steven Chu - a Nobel Prize winning physicist and renewable energy advocate - have made favorable progress toward regaining the country's lead in energy technology innovation. President Obama said: “Our investments have declined as a share of our national income, (and) as a result, other countries are now beginning to pull ahead in the pursuit of this generation’s great discoveries.” (Belsie 2009, 1) In response the President has pledged to increase government R&D funding for new technologies, including alternative energy technologies, to over 3% of GDP, a higher percentage than the US reached at the peak of the Space Race in 1964. (Belsie 2009, 1) (MORE AT:

Additionally, in February 2010, the Department of Energy (DOE) released new estimates of the U.S. potential for wind-generated electricity, tripling previous estimates of the size of the nation's wind resources. The new study, which was carried out by the National Renewable Energy Laboratory (NREL) and AWS Truewind, finds that the contiguous 48 states have the potential to generate up to 37 million gigawatt hours annually. By contrast, total U.S. electricity generation from all sources was roughly 4 million gigawatt hours in 2009. The estimates show the total energy yield that could be generated using current wind turbine technology on the nation's windy lands. (The estimates show what is possible, not what will actually be developed.)

The new estimates reflect substantial advances in wind turbine technology that have occurred since DOE's last national wind resource assessments were conducted in 1993. For example, previous wind resource maps showed predicted average wind speeds at a height of 50 meters, which was the height of most wind turbine towers at the time. The new maps show predicted average wind speeds at an 80-meter height, the height of today's turbines. Because wind speed generally increases with height, turbines built on taller towers can capture more energy and generate more electricity. The new estimates also incorporate updated capacity factors, reflecting improvements in wind turbine design and performance.

A financial commitment of this level plus the good news of the improved potential capacity in regard to specific types of technology - such as wind - will be needed as the challenges of encouraging growth in the cleantech industry are unlike any of the US's previous technological challenges. No single clean technology will be sufficient to replace conventional carbon emitting energy sources as professors Pacala and Socolow have demonstrated through their study of stabilization wedges. (Pacala & Socolow 2004, 1) Clean technologies will require cost-effective development to succeed. Direct competition with the powerful coal, natural gas and oil industries and their lobbyists will make balancing government funding difficult because the government is simultaneously and extensively subsidizing both fossil fuels and clean technologies.

Alternative Energy Policies in the United States

The United States has a deeply politicized energy policy history. While the environmental wing of American politics, now tied to the political left, has urged subsidies to renewable energy - specifically to sun and wind - for decades, they neglected support for geothermal energy. The political right has meanwhile been just as enthusiastic in its support of subsidies to oil, natural gas, and nuclear energy. The coal and oil industries have been protected by the congressional delegations in key states where they provide employment. Due to these pressures, and a long regulatory history, the role of the government in the energy sector has been intense and interventionist. Even with the growing geopolitical and climate change realities, neither political party has attempted a balanced, technology-neutral approach to energy policy. Even today this legislative policy debate is missing in the U.S. Congress; each energy technology, both alternative and incumbent, seeks its own separate legislative deal for federal backing. (Weiss and Bonvillian 2009) This leads to the government picking technology winners, which is a policy destined for failure in the new energy future where a wide array of new technologies will be necessary to address the climate change issue.

In the US, the first favorable government subsidy policy for alternative energy was introduced in 1978 - The Public Utilities Regulatory Policy Act (PURPA)[16] - which encouraged the installation of over 1400 MW of wind power capacity in California. (PURPA 2007; Gipe 1995) Most of the turbines installed were built in Denmark by the leading manufacturer at that time, Vestas, which is still the top manufacturer today. Figure 8 below shows other US demand-pull policies used to encourage deployment of alternative energy and clean technologies. Supply-push policies fall under the R&D investments in the US, and will be explained in the next section.

Figure 8

Demand-Pull technology deployment policies in the United States
Demand pull policies.png
Source: (DSIRE 2009)

Currently, the US is considering a carbon cap and trade bill, referred to as the Waxman - Markey Bill or the American Clean Energy and Security Act of 2009. [28] The idea behind a cap and trade bill is to assign an artificial price for carbon through tradable carbon credits. A carbon credit market introduces chances of profit for those who reduce their carbon emissions and have credits to sell, whereas those who don't reduce their carbon emissions will be forced to buy credits. The economic theory behind assigning a price to carbon is called internalizing externalities, or what some call "polluters pay." The theory refers to internalizing the cost of the environmental damage caused by incumbent fossil fuel sources (coal mining, oil drilling, carbon emissions, air-quality, water quality, general public health and climate change) into the price of power from those sources. This negates the need for subsidies to reduce the cost of alternative sources of energy by raising the cost of incumbent sources of energy and creating price parity. The other policy that can be used to achieve this is a carbon tax, which is a government regulated price on the cost of carbon emissions through a pollution tax. This model, while economically more efficient, is much less popular, especially among financial conservatives as it gives the government the power to choose a carbon price.

Renewable Energy Policies and Technology Innovation

While a response to the global threat of climate change requires an unprecedented response in terms of the large variety of GHG mitigation technologies and government policies to encourage the development and adoption of these technologies (Pacala and Socolow, 2006, 1), the necessary innovation to meet the challenge will not necessarily be met through the policies currently in use. There is an erroneous assumption among many stakeholders that policies that promote technology diffusion will also promote technology innovation. The way in which various energy policies affect the drive for higher efficiencies and energy outputs of myriad renewable energy technologies are the subject of heated debates. It is beyond the scope of this paper to analyze the full portfolio of energy policies being used around the globe to encourage renewable energy diffusion and, by some estimates, innovation, but a short discussion of the subject is necessary to frame the issue. As Nemet (Nemet 2006, 4) argued in a paper on demand-pull policies and the California wind energy market, when demand-pull policies are used to grow the market for a renewable energy technology through subsidies or other payments - “Increasing the expected profitability of investment in innovation may not provide sufficient incentives to induce efforts toward innovation.” His argument is that incentives for technology diffusion are not automatically synonymous with pushes for new efficiency innovations in the technology. The discussion can be simplified into a debate between two possible drivers of technology innovation - changes in market demand or advances in science and technology. (Nemet 2006, 5)

Advances in science and technology can determine the rate and direction of innovation, or so the argument goes. This is linked to the theory of Vannevar Bush (Bush 1945) referred to as the “post-war paradigm” in which the model of technology transfer was described as a progression from basic science to applied research to product development to commercial products. It was later theorized that this paradigm gained prominence in part due to the apparently strong correlation between R&D and innovation output. (Nemet 2006, 6) A principle argument against the theory was that it ignores the economic conditions, such as price, that can affect the profitability of technology innovations. Overall though, the theory stands that companies would need to invest in the science through R&D funding in order to have the knowledge to exploit opportunities emerging from the research. (Nemet 2006, 6)

The central discussion around the demand-pull innovation theory is that changes in the market demand create investment opportunities for firms to invest in innovation to meet new technology needs. Demand-pull energy technology policies are based on the idea that by subsidizing renewable energy technology and making these technologies competitive with the incumbent fossil fuels and nuclear energy sources, firms will be driven to innovate and create cheaper and better technologies to try and compete more effectively in the market. Other factors that can affect this demand-pull theory are the prices of fuel for energy plants, or the geographic variations in demand. In general, the argument against this theory is skepticism that firms can identify the technology needs from a fairly vast number of them, that their ability to then meet those specific needs with the existing technology abilities that the firms have is probably fairly limited, and that the firms will be unlikely to deviate from their existing R&D paths to fill a needed technology niche if it’s not a technology they have significant experience with. (Nemet 2006, 8)

There are ongoing debates about these two theories of innovation and how they interact. Many people have tackled the discussion. In some cases theories have developed around the idea that technology-push and demand-pull complement each other and innovation arises out of a complementary intersection of the two. In theory, certain market demands intersect with ongoing private technology pushes creating economic factors that accelerate the development of a particular developing technology. While there is still ample debate around this theory, a number of government supply-push and demand-pull policies have developed over the years in order to attempt to encourage innovation by reducing the cost to firms of producing innovations, and increasing the payoffs in the market for successful innovations. In the US, the political debates around the approval of these policies on state and federal level has led to continuous political wrangling. Despite the recognition that both of these policies are necessary to encourage innovation, especially in renewable energy technologies where barriers to profitable development are high, political debates continue.

In (Nemet 2006) exploration of the demand-pull policies, he uses a case study of the California wind market from the 1970’s through 1995. His study affirms that demand-pull policies increased the profitability of wind power and stimulated the diffusion of the technology, and that diffusion created opportunities for learning by doing. At the same time, his study found little evidence that the policies stimulated inventive activity. (Nemet 2006, 11,16)

Government and Non-Profit Organizations and Their Roles in the US Alternative Energy Market

The US Department of Energy (DOE) laboratories are the main centers of government funded research in the US. There are seventeen labs in all, and each has a different mix of research focuses, though none except for the National Renewable Energy Laboratory, are exclusively focused on alternative energies. Many combine research in fossil energy and weapons, with particular topics of research in alternative energy sources.

Among the seventeen labs, the following twelve have the most prominent roles in non-nuclear alternative energy research:

  • Los Alamos National Laboratory

Located in Los Alamos, New Mexico, Los Alamos is most well known for its secret nuclear bomb research during World War II, or the "Manhattan Project."[29] Today, the Manhattan Project is often used as an example of the level of R&D funding and government support that should be the model for devotion to alternative energy research if the US is to address global warming with the urgency many feel is needed. It is one of the largest science and technology institutions in the world and conducts multidisciplinary research in national security, the space program, alternative energy, medicine, nanotechnology, and supercomputing.[30]

Los Alamos started a commons-based information project called the “Global Energy Observatory”] or “GEO,” which is a "wikipedia-like mass editable online database of energy sources and energy flows."It is an open but moderated Wiki.

  • NREL, National Renewable Energy Laboratory

NREL is the flagship renewable energy lab of the national laboratory system, and is managed for the DOE by the Alliance for Sustainable Energy, LLC. It is located in Golden, Colorado with prime siting for research in solar technology, wind technology and geothermal technology. The lab focuses on renewable electricity conversion and delivery systems, renewable fuels formulation and delivery, efficient and integrated energy systems and strategic energy analysis. One example of free information that they provide are the GIS maps on its website that have the renewable resource measurements for solar, wind, geothermal, and biomass across the US. These maps are used to determine what types of renewable energies are viable options for different areas of the US, and to encourage development of new alternative energy plants. NREL collects the data through national wind speed measurements and categorizes the information in a Wind Power Class (WPC) measurement of 1 - 7 from least desirable to most. The lab also collects measurements of solar insolation - the amount and intensity of the sun, averaged over a period of years, that is hitting the US in various areas. Insolation data is crucial for determining how much electricity a PV panel is likely to produce over a year or years.

  • Lawrence Berkeley National Laboratory

Located in Berkeley, CA, Berkeley Lab is managed by the University of California (UC). The lab is charged with conducting unclassified research across a wide range of scientific disciplines," and sustainable energy is one of their main disciplines. [31] The lab focuses mainly on solar energy used to produce biofuels through a simulated photosynthetic process, and bioenergy and biofuels for transportation. The lab's Helios Solar Energy Research Center collects data on solar energy for biofuels production. Berkeley Lab was formerly directed by the current Secretary of Energy, Steven Chu. The lab works with China through their China Energy Group, which works "collaboratively with energy researchers, suppliers, regulators, and consumers in China and elsewhere to better understand the dynamics of energy use in China, to develop and enhance the capabilities of Chinese institutions that promote energy efficiency, and to create links between Chinese and international institutions."[32]

  • Argonne National Laboratory

Located just outside of Chicago, the lab's energy research focuses on energy storage, alternative energy & efficiency and nuclear energy. Their energy storage research looks at systems for electric-drive vehicles and a green-energy grid.They are also working on promoting energy independence through improved chemical fuels, advanced biofuels, and solar energy systems, as well as through the optimization of fuel and engine dynamics. Their nuclear energy research looks at advanced reactor and fuel cycle systems to enable the safe and sustainable generation of nuclear energy. [33]

  • Brookhaven National Laboratory

Located on Long Island, New York, the lab does research on solar energy, efficiency, energy modeling and analyses tools, water/energy issues, and nuclear technologies. The lab is home to the National Photovoltaics (PV) Environmental Research Center.[34]

  • Idaho National Laboratory

Located in Idaho Falls, Idaho, the lab conducts research in biofuels and renewable energy, energy storage and transportation, energy efficiency and energy resource recovery.[35]

  • Lawrence Livermore National Laboratory

Located in Livermore, CA, the lab conducts a broad range of scientific research in national and global security including nuclear and renewable energy fields.[36]

  • National Energy Technology Laboratory

The lab has mutiple locations, in Morgantown, West Virginia; Pittsburgh, Pennsylvania; Houston, Texas; Albany, Oregon; and Fairbanks, Alaska. It conducts a great deal of research into the reduction of environmental damage from fossil sources of energy, looking at the following technologies: turbines and fuel cell hybrids, fuel cells, fuel processing for fuel cells, gasification, carbon dioxide capture for pulverized coal and for integrated gasification combined cycle (IGCC) systems, reciprocating engines, sensor/control methods for all these energy systems, and carbon capture and sequestration. [37]

  • Oak Ridge National Laboratory

Located in Oak Ridge, Tennessee, the lab conducts research in bioenergy, energy efficiency, and transportation. [38]

  • Pacific Northwest National Laboratory

Located in Richland, WA, the lab does research in energy efficiency such as: advanced fuel-efficient transportation, including vehicle electrification and hydrogen technology, processes to convert biomass to fuels and chemicals, improving the energy-efficiency of residential and commercial buildings, enabling the effective use of renewable resources. [39]

  • Sandia National Laboratories

With locations in Albuquerque, NM and Livermore, CA, the lab conducts research in: Solar photovoltaics, concentrating solar power, solar thermal energy, wind energy, fuel cells, geothermal energy, energy storage, and bioenergy. The lab is currently conducting collaborative work with the Dutch on wind energy through an MOU signed with the Technical University of Delft in the Netherlands. "The MOU will allow Sandia's Wind Energy Technology Dept. 6333 to work closely with the Dutch institution, helping the two entities share knowledge and do joint research." Dutch Agreement [40]

  • Savannah River National Laboratory

Located near Savannah, Georgia on the Georgia/South Carolina border the lab's research areas include: biofuels, fuel cells, hydrogen, and nuclear production of hydrogen. [41]

Policy and Technology Non-Profits and Advocacy Groups

  • ACORE, American Council on Renewable Energy

"ACORE is an organization of member companies and institutions that are dedicated to moving renewable energy into the mainstream of America’s economy, ensuring the success of the renewable energy industry while helping to build a sustainable and independent energy future for the nation."[42] ACORE is home to the Center for Economic Research, which is: "aimed at communications and data development for policy makers, media and thought leaders to promote all renewable energy options and to talk about their significant role in the U.S. economy."[43] The website provides free information about various alternative energy technologies for the benefit of the general public. ACORE organizes three major conferences each year that focus on the three major areas that shape and advance renewable energy innovation and development in America: Policy, Markets and Finance. The conferences convene companies, institutions, and individuals who will share information and advances in driving renewable energy forward. [44]

  • New Energy Congress

The New Energy Congress (NEC) is a global association of of experts who review the most promising new and emerging energy technologies. [45] Each year they publish a list of the top 100 most promising global alternative energy technologies. The NEC and Pure Energy Systems, a website powered by Media Wiki and published under a GNU Free Doc License, were founded by a scientist named Sterling Allen, and are meant to provide free access to the public on promising alternative energy technologies, and to encourage sharing and collaboration on the technologies, including improvements and upgrades.[46]

  • The Rocky Mountain Institute (RMI)

RMI is an independent, entrepreneurial, non-profit organization that focuses on consulting for energy efficiency in the built environment, energy resources, mobility & vehicle efficiency and sustainable cities. RMI operates like a for-profit consultancy keeping its research and data closed to the public and open to their clients. Website includes an RMI library that provides free publications from RMI on various topics of research including energy, buildings and land, climate, energy security, and energy efficiency.[47]

  • U.S. Department of Energy: Office of Energy Efficiency and Renewable Energy (EERE)

EERE is the DOE's main office for energy efficiency and renewable energy and it handles the commercialization and deployment process for all of the DOE energy labs alternative energy technologies. The office bridges the gap between R&D, venture capital funding and marketing and identifies interested investors. [48]

  • American Wind Energy Association (AWEA)

The AWEA is a national trade association that works as an advocate in the US government for wind power developers, equipment suppliers, services providers, parts manufacturers, utilities, researchers, and others involved in the wind industry. The AWEA tries to ensure that wind energy gets fair treatment and equal consideration in renewable energy policy discussions. [49] In addition, AWEA represents wind energy advocates from around the world, and provides up-to-date information on wind projects being constructed, companies that work in the field, technology developments and policy developments.

  • California Energy Commission (CEC)

The California Energy Commission supports public interest energy research that advances energy science and technology through research, development, and demonstration programs. The commission's RD&D Division administers a total of $83.5 million in public interest energy research funds annually - $62.5 million for electricity and $21 million for natural gas. Some portion (un-disclosed) of this money goes toward renewable energies. [50]

  • Solar Energy Industries Association (SEIA)

Located in Washington, DC, the SEIA is the biggest trade organization in the US for solar technologies. The organization works to expand markets, strengthen research and development, remove market barriers and improve education and outreach for solar energy professionals. Their main role is advocacy for solar energy within the US government, but they also coordinate with state and regional chapters and other groups including the American Solar Energy Society, Solar Alliance, Solar Electric Power Association, Solar Nation and Vote Solar as well as numerous renewable energy, business and environmental groups. [51]

R&D Investment in the United States

As of 2007, federal support for energy R&D had fallen by more than half since a high point in 1978, and private-sector energy R&D has similarly fallen. (Gallagher, et. al. 2006) Since 2007, with the renewed interest in clean technologies and most recently, the economic meltdown and subsequent American Recovery and Reinvestment Act (ARRA), which designated billions of dollars for energy R&D, the landscape has changed. Figure 9 shows the overall expenditures for US government energy research, development and deployment (RD&D). (Anadon et. al. 2009)

Figure 9

US Department of Energy RD&D Spending 1978 - 2010 Request by expenditure type
US Energy RD&D spending.png
Source: (Anadon et. al. 2008)

While the ARRA funds have raised R&D and demonstration funding back to its 1979 level, the FY2010 request drops back down to previous levels which compare poorly to other major federal R&D efforts that met challenges of similar magnitude: the Manhattan Project, the Apollo Project, the Carter-Reagan defense buildup, and the doubling of the budget of the National Institutes of Health. Advances in energy technology will not occur on the scale required without significantly increased investment by both government and business, and in the years after 2009, the challenge will be to find that money in the government’s coffers.

a. Public R&D Funding

Most of these funds are being given to the 17 U.S. Department of Energy laboratories, which have historically been an ineffective model for cleantech development and commercialization. The main reason for this ineffectiveness is that most of the labs do weapons research, which is developed for one guarantied client - the U.S. Government - and is considered a high priority given the size of U.S. military forces and their active involvement in two wars. Of the 12,400 PhD scientists employed in the DOE's labs, 5000 of them work at the top three weapons labs despite the US's shrinking arsenal, and far fewer PhD scientists work at the energy labs. The largest alternative energy lab, The National Renewable Energy Laboratory, employs 350 PhD scientists, and there is no system in the DOE that encourages collaboration between the public and private sectors. (Weiss & Bonvillian 2009, 152 - 153) As a result the lab system knows how to develop products for the military, but as a whole, lacks the experience and private sector business acumen to launch energy technologies from initial innovation through demonstration across the “valley of death”[17] and into commercialization. (Weiss & Bonvillian 2009, 31)

While energy technology innovation experts often note that it will take an R&D effort similar to historical US technology pushes like the Manhattan Project or the Apollo Project, this challenge differs fundamentally. The former projects had sole technological outputs and the government was the only user of that output. There wasn't a private market involved and the funding for the projects was unlimited. (Ogden et. al. 2008) In contrast, the current energy technology push requires a more logically designed innovation system that brings the publicly funded R&D labs closer to the private sector and the private market to ensure an effective technology transfer of multiple technologies. The recent release of ARRA funding has increased the US energy R&D funding a great deal as noted in Figure 9 above, but sound policies that avoid selecting technology winners and encourage all promising technology development, must follow. Figure 10 shows the historic investment in R&D for wind, solar and ocean technologies, and gives a clear indication that funding has stagnated since the 1970s allowing countries like Japan and China to make significant inroads in alternative energy and cleantech development. In tandem with this funding reduction has been an ineffective patchwork of energy policies that lack fundamental stability and consistency. (Weiss & Bonvillian 2009) Other issues that have plagued the US DOE lab system, have been a tendency for individual technologies' R&D funding to fluctuate significantly. It has been observed by researchers at Harvard's Kennedy School of Government that between 1978 and 2009 the average standard deviation of the variation across six fossil energy and energy efficiency technology areas was 27% meaning that there was a one in three chance that a particular technology area's funding would increase or decrease by more than 27%. (Narayanamurti et. al. 2009, 8) Additionally, over the years funding to the labs has changed to involve more small grants to individual investigators for basic research, rather than large project investments. This model is effective for universities, but tends to be ineffective when trying to integrate basic and applied science. (Narayanamurti et. al. 2009, 9)

Figure 10

Renewable RD Budgets.png
Source: Authors illustration with data from (IEA 2009)

The same graph, limited to data from 1985 to 2007, is displayed in Figure 11.

Figure 11

Total renewable RD from 1985.png
Source: Authors illustration with data from (IEA 2009)

In Figure 12 the R&D spending on solar, wind and ocean energy technologies is displayed as a percentage of each country’s GDP. Given the overall size of the United States and Japan’s GDP’s it is not surprising that alternative energy technology is such a small percentage. Alternative energy technologies form a much larger percentage of Denmark, Germany and Spain’s GDP.

Figure 12

Renewables RD perc of GDP.png
Source: Authors illustration with data from (IEA 2009)

It is apparent that the investment level of the ARRA funds in 2009 will need to be sustained for more than a year to provide the type of funding that will be needed for this clean technology revolution. These graphs show that allowing the R&D funding to drop back to the levels it has been at for the past 25 years will result in the stagnant development we have seen over that period.

Another portion of public R&D funding goes to universities. The US Department of Energy funds 46 research centers through its Energy Frontier Research Centers (EFRCs), which are designed to address energy and science “grand challenges.” The 46 EFRCs are to be funded at $2 - $5 million a year for 5 years, and were chosen from over 260 applicant institutions. In total the program represents $777 million in DOE funding over five years, and 31 of the centers are led by Universities. In August, Secretary Chu announced the selection of the new EFRC centers and said:

Meeting the challenge to reduce our dependence on imported oil and curtail greenhouse gas emissions will require significant scientific advances. These centers will mobilize the enormous talents and skills of our nation’s scientific workforce in pursuit of the breakthroughs that are essential to expand the use of clean and renewable energy.

Figure 13 shows the 46 EFRC centers. See EFRC's Map.

Figure 13

Source: (EFRC 2009)

Each institution received funding for a particular center doing research on a particular type of clean technology, and in some cases more than one center at a particular institution was awarded funding, as is the case with the Massachusetts Institute of Technology (MIT), which receive EFRC funding for the Solid-State Solarthermal Energy Conversion Center, and American Reinvestment and Recovery Act of 2009 (ARRA) funding for the Center for Excitonics, which is also conducting research into solar PV technology. The EFRC represents an increased emphasis on the importance of university based research, and expands the R&D funding for this research.

The newest edition to the government's energy technology innovation efforts is a program sponsored by the DOE's Advanced Research Project Agency called ARPA-E. It has been modeled after the US Department of Defense's successful DARPA program, which funds research in defense technology [52]. ARPA-E is handing out $151 million to 37 energy projects that it has termed bold and transformational. (Madrigal 2009) The DOE noted that:
The grants will go to projects with lead researchers in 17 states. Of the lead recipients, 43% are small businesses, 35% are educational institutions, and 19% are large corporations. In supporting these teams, ARPA-E seeks to bring together America's brightest energy innovators to pioneer a low cost, secure, and low carbon energy future for the nation. [53]
The program has proven to be extremely selective given that of the applicants, 99% received letters of denial for their funding request. This exemplifies the financial risk factor of the program's stated goal "to overcome the long-term and high-risk technological barriers in the development of energy technologies." [54]

The role that universities play in innovation and development of new energy technologies varies with each institution, and it can sometimes be hard to determine which universities are having the biggest impact, but a recent article published by the Cleantech Group, LLC. makes an attempt to rank the top 10 cleantech universities in the US for 2010.

Here are the rankings and their justifications: 1. Massachusetts Institute of Technology (MIT) - MIT has inspired myriad cleantech spinoffs. The institution is the home of the MIT Clean Energy Prize, which is regarded as the premier student clean energy innovation and venture creation competition in the country. Each year a $200,000 prize is awarded to the top student energy venture as determined by the award selection committee. This Prize has helped launch several energy ventures, including FloDesign, FastCap Systems, Levant Power, Husk Insulation, and Covalent Solar. MIT also hosts the MIT Energy Initiative, an institute-wide initiative designed to help transform the global energy system to meet the needs of the future and to help build a bridge to that future by improving today's energy systems.

2. University of California at Berkeley - UC Berkeley is to connected to the Lawrence Berkeley National Laboratory, one of the premier US DOE labs, which provides additional research access and exposure to both students and the business community. Berkeley also hosts several partnerships with big players in the cleantech industry. The most important ones are the Energy and Biosciences Institute—a partnership of UC Berkeley, Berkeley Lab, and the University of Illinois, funded by BP with $500 million over ten years and the Bio Energy Institute, which is a partnership of three national labs and three research universities in the San Francisco Bay Area, funded by the U.S. Department of Energy with $125 million over five years. Berkeley's proximity to Silicon Valley and the East Bay Cleantech Corridor provides students with access to the entrepreneurs, venture capitalists and consulting companies that are defining the new cleantech sector.

3. The University of Texas at Austin - The University of Texas at Austin is a historical leader in energy innovation, R&D and teaching, especially with the oil and gas industry, but the university is using its leadership of the conventional energy industry as a launching pad for continued leadership in the cleantech sector. Many oil and gas companies with historic relationships to UT are investing aggressively into cleantech and they are continuing their affiliations with UT for R&D in these new technologies. John Goodenough, the inventor of the lithium-ion battery, is a professor of mechanical engineering at UT, and the university has also established itself as a leader in algae based biofuels. UT is a part of a multimillion dollar DARPA-sponsored project to produce jet fuels from algae, and was awarded $35 million by the Department of Energy to conduct research on carbon sequestration.

4. Stanford University - Stanford established the Precourt Institute for Energy, a $100 million research institute focused on energy issues, and independently invests more than $30 million each year in energy research. The School of Engineering hosts the Stanford Technology Ventures Program (STVP), which is is focused on accelerating high-technology entrepreneurship education and creating scholarly research on technology-based firms. Independent of energy research, Stanford has developed an ambitious $250 million initiative to sharply reduce the university's energy consumption and greenhouse gas emissions.

5. University of Michigan, Ann Arbor - "With research expenditures of over $1 billion and an innovation pipeline unparalleled among the nation’s public universities, the University of Michigan can rightly take its place among the leading Cleantech universities in the U.S. Student engagement in Cleantech Entrepreneurship is at a all-time high, driven by the Zell Lurie Institute for Entrepreneurial Studies in the Business School, the Center for Entrepreneurship in the College of Engineering, and the student organization MPowered. The student-led Wolverine Venture Fund and the Frankel Commercialization Fund managed by the Zell Lurie Institute made recent investments in Environmental Operating Systems, and Accio Energy. The Universities TechArb program is poised to leverage a rich entrepreneurial ecosystem to stake out a leadership position in the emerging green economy." [55]

6. University of Colorado at Boulder - CU Boulder has created a new joint energy institute with the National Renewable Energy Laboratory (NREL) called the Renewable and Sustainable Energy Institute (RASEI). The institute partners leading researchers from CU-Boulder and NREL on cross discipline research across multiple areas. Among the 19 major corporations that comprise the RASEI leadership council are Xcel Energy, ConocoPhilips, Toyota, SAIC, Good Energies, Wells Fargo and Vestas. In addition, dozens of companies are involved in collaborative research with the university and its partners across several major cleantech initiatives. [56] With more than $350 million of annual research funding, the University of Colorado at Boulder leads the Rocky Mountain region in world class research. In addition, the university was recently recognized by Sierra Magazine as the No. 1 sustainable campus in the United States.

7. University of Wisconsin at Madison - University of Wisconsin's Solar Energy Lab, founded in 1954, is the oldest of its kind, and more recently, the university has begun to focus research on bio-energy and is home to one of three Department of Energy-funded Bioenergy Research Centers, the only one based at an academic institution. In 2009, the College of Engineering entered into a long-term partnership with the wind turbine manufacturer, Vestas. In May, the University snagged 10 of 71 funding awards from the U.S. Department of Energy for advanced nuclear research, totaling more than $5 million. To coordinate the energy-related research and education, a group of professors came together in 2006 to create the Energy Institute, focused on sustainability opportunities through “real world” design and engineering practices. [57]

8. Cornell University - Cornell is known for world-class research in the physical sciences, engineering and nanotechnology fields, and is a natural spawning ground for cleantech research. Cornell's campuswide Center for a Sustainable Future is unique in fostering innovative multi-disciplinary research into new energy sources, environmental and biodiversity initiatives, and economic development projects for global implementation of these programs. [58]

9. Georgia Institute of Technology - While Georgia Tech is one of the nation's top research universities with over $500 million of current sponsored research activity, their VentureLab program is leading the Institute's march into cleantech. The Advanced Technology Development Center is a nationally recognized science and technology incubator that helps Georgia entrepreneurs launch and build successful companies, and their Commercialization Services moves the innovations out of Georgia Tech laboratories and into the marketplace. The Commercialization Services office assesses the commercial potential of research results and assists in the development of new companies through the VentureLab program.

10. Washington State University - Washington State University has legacy expertise in agriculture, power and applied engineering, and their Clean Technology program is rapidly growing. The university's new Bioproducts Science and Engineering Laboratory was opened last year in partnership with the Pacific Northwest National Laboratory and the recently funded Washington State Algae Alliance. [59] One of the main objectives is the commercialization of aviation biofuels with partner Boeing Commercial Airlines.

Further, within the AE the innovation pipeline, the Obama Administration announced, in February 2010, a multi-agency initiative to spur regional economic growth while making buildings more energy efficient. Seven federal agencies today issued a combined Funding Opportunity Announcement of up to $129.7 million over five years to create a regional research center that will develop new building efficiency technologies and work with local partners to implement the technologies in area buildings.

The agencies are working together to leverage funding and resources to promote regional growth through an Energy Regional Innovation Cluster (E-RIC) that is centered around an Energy Innovation Hub focused on developing new technologies to improve the design of energy-efficient building systems. This Energy Innovation Hub, one of three proposed by the Administration and funded by Congress in the FY10 budget, will bring together a multidisciplinary team of researchers, ideally working under one roof, to conduct research and work to solve priority technology challenges that span work from basic research to engineering development to commercialization readiness.

The E-RIC will work to disseminate new technologies into the local marketplace and share best practices with the public and private sectors. It will be supported through agency investments in technology and business development, and will include support for workforce education and training. By linking researchers at the Hub with local businesses and supporting specialized workforce education and training in the area, the initiative will create an economically dynamic region focused on building efficiency technologies.

b. Private R&D Funding

Private investment in R&D for alternative energy technologies to replace the incumbent fossil fuel technology has been discouraged by the history of wild oscillations in the price of energy. In relation to transportation related alternative energy technologies, oil has been particularly volatile over the past two years during which time it rose to over $140 a barrel, then dropped precipitously, and has since begun to rise again. These peaks and valleys make private investors ambivalent about investing in alternative energy technologies because only sustained high prices for oil will provide the appropriate economic climate in which alternative energies can be profitable. Research has shown though that the rising prices for oil are tied to increased demand from developed and emerging economies, which, if sustained, could change the private investment climate for new technologies in the future. (Weiss & Bonvillian 2009, 7)

Based on a study conducted by the National Research Council in 2001, it has been estimated that between 1978 and 1999 almost two thirds of the total energy R&D expenditures in the United States were made by industry. (Comm. on Benefits of DOE 2001; Gallagher et al. 2006, 216) Due to this research and the assessments of experts at the Kennedy School of Government at Harvard University, it is believed that the private sector provides a larger portion of the R&D funding for clean technologies. A more detailed assessment of this estimate is very difficult to accomplish due to the proprietary nature of the funding information within private companies. (Gallagher et al. 2006, 216) The access to information is limited starting from early stage angel investing and continuing through mature venture capital contributions, though, as detailed in the numbers above, there are market reports that quantify the venture capital and private equity portions of private sector investment. (can we check how much cias are investing? For example X % to R&D…even if it is not clear what “R&D” they are doing? Maybe in the market reports? We should try to interview people ate cias urgently)

Since 2007, Cleantech companies have begun negotiating strategic alliances with Fortune 100 companies like Chevron Texaco Technology Ventures - which invested in BrightSource Energy Inc., a developer of utility-scale solar plants - Konarka Technologies, Inc., a developer of photovoltaic materials, and Southwest Windpower, a producer of small wind turbines. The alternative energy sector is experiencing a more competitive commercial environment due to non-financial drivers such as regulation, political will, and fears over energy supplies, which present unique challenges for technologies such as wind energy, solar energy, and biofuels. (Ward et al. 2008, 243)

In the first quarter of 2009, venture capital (VC) investment in alternative energy technologies, which drives a disproportionate amount of financing in new energy technologies, retracted drastically. There was only $154 million of VC investment in 33 young companies, a drop of 84 percent from the last quarter of 2008 when, according to PricewaterhouseCoopers and the National Venture Capital Association, they invested $971 million in 67 start-ups. This was the lowest level of VC investment in alternative energy since 2005, before these technologies became a popular new trend in the Silicon Valley. [60] Venture capital professionals note that the credit crunch has been a major factor in this precipitous drop-off. Private funding in onshore wind technology has been focused more recently on marketing and growth as opposed to technology R&D. This is due to wind technology’s maturity and the fact that it has become the least-cost renewable technology, spurring increased development of new wind farms. Offshore wind technology still presents a developing technology sector that requires significant private and public R&D investment. Market analysts have expressed their opinion that most of the private sector investment in alternative energies is coming from VC firms followed by private equity firms, banks, brokers and finally institutional funds. In 2007 there were at least 100 VC firms investing in alternative energies. (Capello 2007)

The Role of Government in providing information for technology development and diffusion


In certain cases the government is providing free open access to information that is helpful to individuals and businesses interested in renewable energy, energy efficiency and sustainability. A few of the most well known resources are listed below with explanations of the resource and its uses. These sources are of interest to us as they are examples of open access information and the US government's attempts at openness rather than enclosure.

This site provides free renewable energy resource maps that provide measures of potential energy in particular regions of the country. The maps consist of wind, solar, geothermal and biomass resource maps.[61] These maps are of the entire US and typically will provide detail down to 1km x 1km squares that rank the level of sun insolation in that area, the speed and consistency of wind in that area, the presence of biomass materials for harvest, or the existence of geothermal heat wells. This information is critical to developers or individuals who want to assess the viability of installing alternative energy technology in a particular location. The government believes that by providing this information for free it is encouraging the development of new alternative energy plants. This type of information informs which regions in the US are appropriate for alternative energy developments, but the level of detail is fairly general. There is a burgeoning consultant market for more detailed regional analysis, especially for wind and geothermal resources which can require specific tools - and in the case of wind, measurements over time - to determine the best location for certain alternative energy technologies.

Wind Powering America provides high-resolution state wind maps and estimates of the wind resource potential that would be possible from development of the available windy land areas after excluding areas unlikely to be developed. Here you will find an 80-meter wind resource map for the contiguous United States with links to individual state wind maps and a chart showing the wind resource potential for the contiguous United States. Some of the following documents are available as Adobe Acrobat PDFs. Download Adobe Reader.

The OpenEI website states its mission as: "Open Energy Info is a platform to connect the world’s energy data. It is a linked open data platform bringing together energy information to provide improved analyses, unique visualizations, and real-time access to data. OpenEI follows guidelines set by the White House’s Open Government Initiative , which is focused on transparency, collaboration, and participation. OpenEI strives to provide open access to this energy information, which will spur creativity and drive innovation in the energy sector."

This website is the first substantive effort by the US government to encourage open access to energy information, and is backed by the Obama Administration's pledges for increased transparency in the federal government. The government hopes OpenEI will drive innovation (as stated in the mission), and encourage the private sector and individuals to come up with novel solutions to problems that the US government does not have the time, budget or staff to address.

The Open Labs are an offshoot of the OpenEI wiki, which state their mission as the following: "Recognizing the need for comprehensive technical assistance to support clean energy pathway development across the globe, the U.S. Government is establishing a network of U.S. National Laboratory experts to provide both targeted and cross-cutting technical assistance to developing country partners. The goal of this effort is to ensure that U.S. technical resources can be readily accessed to support global efforts to combat climate change.

In its full implementation, this U.S. Government initiative will employ a multi-Agency approach to providing needed technical assistance to developing countries on clean energy and responding to new and emerging global climate change policies, priorities and commitments."

"Established in 1995, the Database of State Incentives for Renewables & Efficiency (DSIRE) is an ongoing project of the North Carolina Solar Center (based at North Carolina State University) and the Interstate Renewable Energy Council (IREC). It is funded by the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy (EERE), primarily through the Office of Planning, Budget and Analysis (PBA). The site is administered by the National Renewable Energy Laboratory (NREL), which is operated for DOE by the Alliance for Sustainable Energy, LLC. DSIRE is a comprehensive source of information on state, local, utility, and federal incentives and policies that promote renewable energy and energy efficiency."

The DSIRE site is the primary information hub for all federal, state and local policies, and is offered as an open access resource free to the public. It also includes maps that identify policies by regions and states, and many helpful sources of information that allow individual and business investors and citizens in general, make educated decisions on the purchase and use of renewable energy and energy efficiency technologies and upgrades.

End-user initiatives

There are numerous examples of user driven technology, or more specifically, individual innovations that provide alternative energy solutions to situations where lack of electricity is a hindrance to development or adequate living conditions. Examples include the following:

Build it Solar is an online information commons where plans and ideas on various energy conservation, water conservation, solar electric, solar thermal, bio-fuel, and assorted other solar projects are shared for individuals with an interest in building the technologies. The site focuses on residential scale developments, and is similar to sites that cater to people with other technological hobbies that share technical know-how. Sites like these can be most helpful to those in rural areas who are not tied to the electrical grid, people in states that do not offer competitive rebate or subsidy programs for alternative energy adoption, or those who do not have access to these types of technology through local businesses.

Discover Solar Energy defines itself as: "a comprehensive resource of more than 9,000+ renewable energy links to relevant websites of individuals, governments and organizations. The links are cross-referenced to help homeowners, engineers, hobbyists, teachers and students find quick answers to issues relating to alternative energy."

Similar to Build it Solar, this site can be defined as an online information commons where individuals share information about do-it-yourself alternative energy projects that run the gamut from solar projects to wind, hydro, and bio-energy.

William Kamkwamba is a popular example of an inventive solution for a lack of interconnected electricity in the developing world. At the age of fourteen he built a small electric producing wind turbine from scraps he found in his village in Malawi. He followed the information he found in a library book called Using Energy, and was able to successfully generate enough electricity to run four lights and two radios in his family's home. His story caught the attention of TEDGlobal Conference Director Emeka Okafor, who found William and has since invited him to speak at multiple TED conferences and has helped William find a school where he can build on his talents and help others.

While the feasibility of this invention has been questioned, it was reported in September of 2009 that a teenager in rural Nepal had invented a solar panel that used human hair, rather than silicon, to convert the sun's energy into electricity. The individual price was estimated at ₤23 per panel, but it is believed that economies of scale could reduce the price significantly given the ubiquity and affordability of human hair.

Co-op Power is an example of numerous other co-ops in the US and abroad that rely on the strength of communities to install and pay for alternative energy infrastructure. By creating their own financing structures, raising their own capital, and doing their own installations, these co-ops are able to construct collaboratively owned alternative energy facilities that provide electricity to numerous people. While the network affect is more localized than and online network, the results impact many people.


China’s Market Share

China now ranks among the top countries in respect of the number of its patents for renewable energy technologies. The Government of China had to implement diverse policies to overcome such barriers to renewable energy development as: (a) the high cost of developing renewable energy; (b) the difficulty of connecting renewable energy to the grid; (c) institutional impediments; (d) the lack of international investment; (e) a weak legal and regulatory frame- work; and (f) an uncertain level of future demand and thus of prices for renewable energy. (UN-WESS2009 p.121)

The New York Times reported recently that China’s solar PV industry is growing rapidly led by Suntech Power Holdings Ltd., the leading producer of PV panels in China and fourth largest global producer. (Bradsher 2009; Capello 2008) Currently, China is backing their solar industry with significant subsidies, which are enabling Suntech to sell their panels on the American market for less than the cost of the materials, assembly and shipping. (Bradsher 2009) While the Obama administration plans to give $2.3 billion in tax credits to cleantech manufacturers in the U.S., it may be too late. China is able to produce the technology at a much lower cost in large part due to the cheap labor they can hire, paying recent engineering graduates around $7000 a year. In addition to Suntech there are a number of Chinese companies ready to enter the solar market backed by the governments deep pockets. (Bradsher 2009) However China still faces trade restrictions, but this can change if they achieve the plan of building assembly plants in the US.

The emerging competitive threat presented by China may provide some insight into Secretary Chu’s push for US/China energy technology collaboration. While a vast number of developing countries will contribute to carbon emissions, China is now the largest global carbon emitter (See Figure 13). It also has an enormous brain trust devoted to the cleantech field. It will benefit the US to create collaborative partnerships with China to encourage their adoption of these technologies, and to ensure that the US doesn’t fall behind in the development of new innovative technologies.

Figure 14

Global Carbon Emitters.png
Source: [62]

There is no panacea to the climate change issue, and a broad spectrum of technologies must be used to address carbon emissions reductions. The particular technologies that are appropriate for certain countries are specific to the needs of that country based on their overall emissions, their pace of growth, their natural resources, and their alternative energy resources (sun, wind, tides, rivers, etc.), among other factors. It can reasonably be argued that for the least developed countries that produce far less carbon emissions than developing countries or the emerging economies like China, India and Brazil, the most economically efficient way to meet their carbon emissions reduction targets would be through non-IPR protected means such as re-forestation or reduced de-forestation plans. (Copenhagen Economics & The IPR Company 2009)

More from here:

The Sino - American Energy Geopolitical Relationship

The US and China have a tenuous political relationship and their current battle over the appropriate policies and technological innovations for climate change action has added new complexity. While the US has been a long-term leader in global carbon emissions, China doubled their energy consumption from 2000 to 2007, and surpassed the US claiming the top global carbon emitter mantle at 24% of global emissions. These two countries are now responsible for roughly half of the world’s yearly carbon emissions. The culprit is coal, which provides 80% and 50% of China and the US’s energy respectively. It is the cheapest fuel available - cheaper than oil, natural gas, or any of the commercially available renewable energy sources - and the US has 27% of global coal reserves while China has 13%. As the countries discuss their role in climate change mitigation and the carbon reductions they will agree to, China has held a firm stance that the reductions and policies must be led by the US. This is based on the fact that the US per capita carbon emissions are five times greater than China’s and, when calculating the total carbon emissions since the beginning of the industrial revolution, the US is responsible for 28% while China can claim only 8.5%. (Schell 2009)

While their is ample focus on the alternative energy markets in the US and China throughout this paper the following figures (XXX and XXX) are meant to provide points of comparison to the similar graphs in the sections on Europe and Japan.

Notable points in Figures XXX and XXX include the relatively small percentage of electricity that the US and China are generating with alternative energies, despite their large total amounts of wind generation capacity as measured globally. This can be easily explained by the vast quantities of energy that each country consumes. They hold the top two global spots for energy consumption, and therefore, as pointed out in Figure 14, the top two spots for carbon dioxide emissions due to burning fossil fuels, since the vast majority of their energy comes from fossil sources.

It should also be noted that while our research has indicated that there is a great deal of innovation happening in alternative energy development in China, the patent totals displayed in Figure XXX below, do not seem to support this conclusion. The report which published these patent totals was from 2008, and all the most recent articles and reports on China that have discussed their increasing innovation have been from 2009. We assume that given this time difference, and the time lapse in the patent application process, that the total patent application numbers would be higher today than when these numbers were assembled.

Figure XXX

US RE table.png
Source: (REN21 2009; SEIA 2008; WIPO), [63] [64] [65]
* These patent numbers are reported from the US Patent & Trademark Office.

Figure XXX

China RE table.png
Source: (REN21 2009; SEIA 2008; WIPO), [66] [67] [68]
* These patent numbers are reported from the Chinese Patent Office.

Other Countries

In this section we aim outline the role each of our focus countries has played in the development and diffusion of alternative energy sources, as well as the patent application activity that has taken place among our focus technologies. Under the name of each country analyzed, we present a table with the generation capacity of each alternative energy technology, the consumption of electricity, consumption of renewable electricity and the number of patent application for each technology. The patent statistics are measures of the number of patent applications by technology by patent office. It should be noted that the patent applications may not be exclusively from nationals. Other sections of the paper may present the data on the top applicants around the world in regard to a specific studied technology.

European Countries: Denmark, Germany and Spain

The US and China may eventually play the most prominent roles in addressing global GHG reductions due to their high levels of greenhouse gas emissions and the growing political momentum supporting emissions reductions. Historically though, the role of the US and China in the development of critical GHG reduction technologies has not been as prominent or impactful as other countries. As noted in the section above, A Rapidly Growing Market, Germany, Spain and Denmark, three countries which have used demand-pull policies called feed-in tariffs (described in footnote 12) to build markets for alternative energy technology, have become homes for some of the globe's most successful alternative energy technology companies. As exemplified in figures 3 and 7 the top global wind and solar companies are commonly found in these particular European countries. While Germany has been a dominant player in the wind energy market, both in terms of the total amount of installed wind capacity in the country and the number of top global companies based in Germany that are manufacturing wind turbines, Denmark's Vestas is the top global wind turbine manufacturer and as detailed in the wind technologies history above, Denmark and Vestas were the first innovators in the modern wind industry, holding many critical patents. As of 2008 though, Germany had moved ahead in wind patenting activity accounting for 39% of the wind technology patents received by the European Patenting Office (EPO). The United States was in second place with a 16% share of patent applications, and Denmark was third with 9% of patent applications.[69]

As noted in Figure XXX below, Germany, Denmark and Spain have a good deal of wind energy capacity and solar PV capacity, and while Denmark's wind capacity is dwarfed by Germany and Spain, as a percentage of total energy consumption within the country, it far outweighs Germany and Spain. Spain is the only country of the three that is generating electricity from solar CSP plants, and none of the countries have tidal or wave installations generating commercial energy, despite the fact that each country has ocean coastline. It should be noted that Denmark has several wave energy pilot plants that may produce commercial electricity in the future. (Jensen et. al. 2009)

Figure XXX

Europe RE table.png
Source: (REN21 2009; SEIA 2008; WIPO), [70] [71] [72]
* These patent numbers are the combined total reported from the European Patent Office (EPO) and do not represent patent applications in each individual country.

Overall, Europe still dominates the global alternative energy market with $49.7 billion of new investment in 2008 as compared to $30.1 billion in North America (As shown in Figure XXX below). These totals represented a 2% increase over 2007 in Europe and an 8% decrease in North America. (SEFI 2009, 19) Developing countries showed increases in alternative energy investment as well. Not surprisingly, the leader in this group was China with an 18% increase in alternative energy investment to a total of $15.6 billion. South America was led by Brazil's sugar cane ethanol production and rose 63% over 2007 to $12.3 billion. India also showed steady gains with a 12% increase over 2007 to $3.7 billion. (SEFI 2009, 19)

Figure XXX
Global energy investment 2008.png
Source: Authors illustration with data from (SEFI 2009, 19)

Distributed Innovation in Alternative Energy Technology: Denmark's offshore wind industry

As mentioned earlier in the paper, Denmark's wind industry developed as one of the first and most successful in the world and in those early years, they relied on practical hands-on approaches to innovation rather than more formal R&D practices. The result was a stepwise and distributed process of innovation, which differed from the US approach where the focus is on large technological breakthroughs. The design and production of various wind turbine components were undertaken by numerous small to medium enterprises and dedicated research institutes, which enabled the Danish wind industry to benefit from collaborations in a distributed innovation network. (Andersen & Drejer 2005, 3) It has been observed that the dominant market position of the Danish wind industry is not accompanied by increased patent activity, in fact their patent activity is quite low in comparison to other countries that rely on patents, like the United States, signaling that the appropriability regime is different in Denmark. (Andersen & Drejer 2005) argue that contrary to more common systems of innovation, Denmark may focus on the importance of local customs and the necessity of alliance formation and collaboration in order to preserve the political trust in the wind industry as coordination mechanisms in their wind industry (P. 8 and p. 18). Using case studies from various offshore wind companies in Denmark, they observed the collaboration practices and appropriability regimes of a group of complimentary wind turbine component manufacturers. Among other findings, it became clear in their discussions with these companies that patents were not the preferred form of appropriation, as they were a form of individual appropriation which was regarded as an attempt to profit on the shared competencies of the industry. Patenting could lead to collective sanctioning within the industry to exclude that company from future learning possibilities and damage the individual company's reputation. Sharing of information and design principles enables the various component part companies to work together on solutions to the complicated design of offshore wind turbines. In addition, many of these companies have experience gained from complementary industries such as the automobile industry or the oil industry, and the knowledge developed to create solutions in the offshore wind turbine industry is formed from these complementary business experiences. Specifically, the reasons for collaboration as observed by (Andersen & Drejer 2005) were:

  • Need of knowledge economies - communities spanning across organizational borders, where knowledge is continuously embedded in practice (p. 17) - in order to foster the new industry of off-shore wind. In this case, the innovation became much more "team oriented" than company owned.
  • Need for solving specific problems no one could solve alone. (p.18)
  • Need for testing new concepts which could be too risky to be tested alone, but whose solution would benefit the industry as a whole.
  • Need for development of new technology and solutions through annual conferences and meetings.

The authors pointed out that the knowledge companies obtained in the wind industry could be appropriated in "complementary branches of the industry"; In other words, "the knowledge obtained solving specific problems related to offshore wind turbine plants was useful in other settings as well" (p. 21) This facilitated collaboration and innovation among companies in the off-shore wind industry.


Japan has historically been the global leader in installed solar PV due to it's residential subsidies from 1999 - 2005. During this period, their boom in installations allowed Japanese solar manufacturers like Mitsubishi, Sharp, Sanyo and Kyocera (See Figure 3) to grab significant portions of the global market. In 2006 Japan lost its top spot for installed solar PV capacity to Germany due to the generous German FIT. In 2008 Germany fell to second place after Spain's generous FIT pushed their installed solar PV capacity to 2.6 GW, which represents half the global installed capacity. (REN21 2009, 11) In 2008 Japan unveiled a $9 billion solar subsidy program that is designed to get them back on top, help them meet their 2012 Kyoto Protocol goal of greenhouse gas emissions 6% below their 1990 level, and help them solve their energy security issue by reducing fossil energy imports. (SEFI 2009, 19-20)

In Figure XXX below it is clear that Japan does not have the same amount of alternative energy generation capacity as the European countries, the US or even China, but their patent application totals, which are tabulated from the Japanese Patent Office, are much higher than any other country. Also see Figure 3 for an example of the strong positioning of Japanese solar manufacturers in the global market. These examples show how Japan's R&D investments and high patenting rates have led to their global leadership in the solar market.

Figure XXX

Japan RE table.png
Source: (REN21 2009; SEIA 2008; WIPO), [73] [74] [75]
* These patent numbers are reported from the Japanese Patent Office.

Political Economy of Intellectual Property in Alternative Energy

IP and Alternative Energy Technologies

As global climate change continues to dominate international negotiations around capping carbon emissions, as evidenced by the contentious discussions leading up to the UNFCCC[18] Copenhagen Summit, the Intellectual Property rights of the technologies that will facilitate the carbon reductions and how those impact in innovation diffusion process and technology transfer, have become a hotly debated topic.

Patents represent the most significant IP tool involved in this field, and until recently, the IP factor did not parallel the usual IP debate found elsewhere in regards to access, sharing or balance. Many IP issues emerging from the Climate Change debate did not come to the center of attention of the traditional IP observers or civil society. This may be because the debate over clean and renewable technologies has been politicized and linked to long-term discussions around climate change, but not linked to innovation and IP as in other fields such as pharmaceuticals, software, and cultural works (Carol: insert footnote expanding this comparison?). Additionally, the public good perceived by innovation in renewable energy (energy efficiency and low carbon emissions to mitigate climate change) is less immediate and tangible than the specific need of access to an AIDS related medicine.

In this sense, political strategies from cleantech and alternative energy industry associations were much more focused on policies to foster the adoption of these technologies such as supply-push and demand-pull policies as explained in this paper - over fossil fuel-based energy. Thus, it appears that few in the international IP community have paid attention to the crescendo of patents in the alternative energy market as evidenced in Figure 4 and its effects into innovation and tech transfer.

State of Technology: measuring innovation in Alternative Energy

The concept of Innovation has disputed meanings. For Schumpeter, in his Theory of Economic Development, innovation is “the commercial or industrial application of something new—a new product, process or method of production; a new market or sources of supply; a new form of commercial business or financial organization.” The Advisory Committee on Measuring Innovation in the 21st Century Economy states that innovation is “[t]he design, invention, development and/or implementation of new or altered products, services, processes, systems, organizational structures, or business models for the purpose of creating new value for customers and financial returns for the firm.” (ACMI, 2008, 1)[19] The direct effect of this dispute around innovation concept is also translated in the absence of common public measures of the scope of innovation or even agreement on its source. [20]As presented by the 2008 OECD Report Environmental Innovation and Global Markets:

Innovation has been defined as the introduction of new products, processes, or services into the market. The innovation process is commonly divided into three stages: invention, innovation, and diffusion, though, in practice, the process is not linear. Two models dominate the academic technology innovation literature. According to the ‘technology push’ view, technological change occurs mostly as the result of autonomous trends and public policy. The proponents of this view emphasize the need for governmental support for the development of technologies, most commonly through publicly-funded R&D programs. The ‘market-pull’ view holds that technological change comes primarily from the business sector and depends mostly on corporate investments in response to demand. This view emphasizes the importance of government policies such as technology-based regulatory limitations, emission caps, or charges. The recent literature and the case studies developed in this report lend support to the idea that, in practice, both push and pull factors affect technology development. (OECD, 2008a, 6)

It is also important to consider that innovation is meaningless if not considered in the larger context of growth and capacity of growth, which together should point to the innovation capacity of a certain country. In this sense, [t]he great majority of energy innovation worldwide takes place in industrialized countries, although many developing countries – such as Brazil, China and India – also have active efforts to develop and deploy new energy technologies. (Gallagher et al. 2006, 214)

More recently, other stages were added (Grubb, 2006; Foxon and Carbon Trust, 2003) in the innovation chain: basic research, applied research, development, mark demonstration, commercialization and diffusion, resulting in the following figure, which correlates policy and innovation phase. This division of the innovation value chain into several steps helps to organize the discussion in regard to the emergency or not of commons-based models in Renewables, but in practice the process is not linear.

{(INSERT FIGURE 1 PG 14 OECD 2008a)/INSERT/COMPARE WITH FIGURE 1, P201, Gallagher et al. (2006)}

While innovation is difficult to quantify, some aspects related to key dimensions of inputs and outputs can still be measured (Smith 2006, in Oxford Handbook of Innovation). Measuring innovation is even more important for emerging industries, such as the renewable energy sector, receiving large amounts of governmental spending both for research and development (R&D) as well as for market expansion.

Innovation can be captured through quantitative and qualitative metrics. For instance, quantitative metrics include spending or investments for innovation; the number of programs and partnerships; the number of technical publications; the number of patents filed, granted, and cited; and the use of life-cycle or S-curves; the number of process innovations; the number of new technology generated; the calculation of learning rates, etc. (Gallagher et al., 2006) Specifically, within the renewable energy, innovation has been caputered through the growth of patents (WIPO, 2009; Cleantech Group at Heslin Rothenberg Farley & Mesiti P.C.; Waltz et al., 2008; Lee el all, 2009; and the Brazil Patent Office’s Technology Alerts 2009); using bibliomethric technics and focusing on the Solar sector (Vidican et al., 2009); mesuring investment, including R&D investment (public & private) and venture capital (VC) investment (SEFI 2009); and the success in international trade (Waltz et al., 2008) and success international competition (Brunnermeier and Cohen 2003). Additionally, within specific types of renewable energy technology it is also correct to affirm that better efficiency comes from some grade of innovation, as Watanabe et al. (Watanabe et al, 2000) have discussed in regard to the development of PV technology in Japan. In a similar sense, the raise of the Capacity Factor may demonstrates efficiency within Wind technology originated from possible incremental innovations (Nemet, 2006).

Over the past few years, all of the above indicators have been pointing toward increasing innovation within the renewable energy industry. However, as Gallagher et al. (2006) have pointed: “There are numerous ways to measure Energy Technology Innovation, but unfortunately no metric adequately encompasses the processes of innovation, spanning basic research to broad commercial deployment. Some metrics capture efforts on basic energy R&D, for example, whereas others serve as better indicators of technological deployment. Still, it is worthwhile to consider the different ways that innovation can be assessed through indicators, so long as one is explicit about what each indicator actually measures without taking liberties and assuming that a given indicator is indicative of innovation more generally.” (p. 210) It is also clear that none of these metrics capture new modalities of innovation, such as distributive innovation, open innovation or common-based arrangements for innovation. Or also other innovation inputs such as open databases, open access publications, inputs from clients and so on. As specifically pointed by the ACMI (2008) report, for instance, when commenting the role of patents on measuring innovation, asserts: “But, in many firms and industries, significant amounts of investments in innovation are made outside of these categories - patents and others [21] - and go consistently unmeasured or unconnected by the current statistical system.”

Innovation Input Metrics

“Input metrics try to measure both tangible and intangible contributions to the innovation process. For the earlier stages of innovation, these inputs include, but are by no means limited to, financial investments into energy RD&D, existing scientific and knowledge (“old stock”), and the practical problems and ideas from which new inventions arise. In later stages of innovation, inputs include funding for demonstration and deployment programs, materials and fuels to run demonstration projects, and the developed inventions that are moving into the phases of demonstration and deployment. Human resources are essential to the inputs because many of the tacit contributions to innovation are embedded in people’s minds owing to education, training, and learning from past innovative efforts.” (Gallangher et al., 2006, 210)


The obvious benefit of using investment to track potential innovation is that government spending data tend to be readily available and can be tracked year by year, however this is true in general when the data being tracked is government spending in early R&D phases on research on renewable. There is no comprehensive data for later stages such as demonstration or deployment. When investment data are inclusive of the later stages of innovation, it is frequently impossible to ascertain how they are allocated among the different stages. It is also exceedingly difficult to obtain detailed data about private sector spending because such information is usually considered proprietary. (Gallangher et al., 2006, 210)

In other parts of this discussion we have already pointed to the patterns of government spend in R&D in the past of USA. It worth noticing, however, the policy changes occurred with the 2009 Recovery Act. A recent White House Report affirms that “the energy components of the Recovery Act represent the largest single investment in clean energy in American history and are leveraging private investment and fostering American innovation and ingenuity. The Recovery Act investments of $80 billion for clean energy aim to produce as much as $150 billion in clean energy projects. Existing investment programs could produce up to $90 billion in additional clean energy projects. These investments are designed to accelerate investment in clean energy projects and pull private investment off the sidelines.” [[Alternative Energy/Bibliography by Research Question| (White House, 2009)] These investments include growth in the generation of renewable sources of energy, enhanced manufacturing capacity for clean energy technology, advanced vehicle and fuel technologies, and smart electric grids.

Specifically, Obama committed to the target of 3% of GDP on research and development, including a major commitment to energy projects – such as ARPA-E - the Advanced Research Projects Agency for Energy - and doubling the budgets for the National Science Foundation and the National Institute of Standards and Technology, among other agencies. Particularly, between 2009 and 2016, the enacted and proposed budgets would add $42.6 billion to the 2008 budgets for these basic research agencies, with a special emphasis on encouraging high-risk, high-return research and supporting researchers at the beginning of their careers.

Because of these investments made through the economic stimulus bill, Vice President Joe Biden believes that the United States is on track to double renewable energy generation by 2012 and that, additionally, USA also will double its capacity to manufacture wind turbines, solar panels and other clean energy components in three years, according to the report. One of government motivation is cutting carbon emissions 80% by 2050. The current level of research spending in the U.S. amounts to about 2.6%, compared to 4% in Japan and 1.4% in China. The European Union has a target of 3% by 2010. [[Alternative Energy/Bibliography by Research Question| ( BBC, 2009)] Examples of investment policies to foster deployment and public-private partnerships are the case of the Japanese program for dissemination of PV technology (US$ 200 million in subsidies, from 1993-1998, stimulated market actors to invest $300 million) and the German “100/250” wind power program the government gave subsidies of DM330 million (1995DM), and market actors provided another DM650 million (1995DM). (Gallangher et al., 2006, 219)

Later in this paper, we will discuss the specific case of USA in regard to how R&D investments have impacted in the number of patents in alternative-energy related areas, specifically in regard to PV solar technology. In this sense, to metrics will be correlated, an input metric, investments, and an output metric, patents.

Human Resource

“Measuring human resources is the other frequently used input metric for innovation in general. Human resources are often measured in terms of the number of scientists and engineers in aggregate, by sector, or on a per capita basis. Data are often collected in terms of the highest degree attained (e.g., bachelor’s, master’s, doctorate). This measure of R&D personnel is useful in a number of ways. The main drawback to using data on the number of people engaged in R&D activities is that this metric does not account for the quality or efficiency of the work. Also, when comparing the number of people engaged internationally, one must be especially careful because there can be many more people employed in a developing-country setting where the cost of labor may be cheap, but the research infrastructure may be much poorer. This input metric is difficult in an energy context because it is hard to ascertain when scientists and engineers are working purely in the energy domain.” (Gallangher et al., 2006, 211)

In regard to Alternative Energy, David Cahen comments “We face, after over two decades of not-so-benign neglect, a serious deficit of alternative-energy (AE)-oriented basic science researchers. Indeed, a major problem in meeting the global energy challenge may well be the paucity of top scientists pursuing AE-related research problems. This deficit has the potential to self-proliferate, because a limited core of experienced researchers will encourage a limited group of talented students and post-docs to seek research opportunities in AE research in the future.” (Cohen, 2008)

Obama tries to change this reality with major efforts of creating new jobs. In this sense, the Recovery Act investments in renewable generation and advanced energy manufacturing of $23 billion will likely create 253,000 jobs and leverage over $43 billion in additional investment that could support up to 469,000 more job, putting us on track to meet the goal of doubling our renewable energy generation, including solar, wind and geothermal, in just 3 years.

Innovation Output Metrics
Bibliometric Mesures

Vidican et al. (2009), in a novel research, analyzed information and trends in the publication of text documents seeking to explore the relationship between joint publication patterns and trends, R&D funding, technology development choices, and the viability and effectiveness of industry-university collaborations with emphasis on the solar photovoltaic (PV) sector in the U.S. By doing that, they aimed to elucidate patterns and trends in technological innovation and the role of public research institutions (research universities and national laboratories) in the development of new industries in order to inform policy-making.

Before Vidican et al. (2009), Zimmerman et al. (2009) used bibliometrics to examine national research collaborations. Tsay (2008) traced the evolution of hydrogen energy literature worldwide. Godo et al. (2003) covered national and international collaboration patterns in the fuel cell technology in Norway, and Larsen (2008) outlined co-authorship networks in the area of nanostructured solar cells using bibliometric and also social network analysis.

Vidican et al. (2009) observed that, generally speaking, the number of publications started off high with peaks in the early to mid-80s'. However, as we move into the 90s', there was a marked decline in the number of papers, which continued until around 1995, after which publication counts were observed to increase again. The authors, however, point out that this trend acquire specificities when they analyze specific combination of publication coming out of collaborations between national-laboratories and universities; national-laboratories and companies; and universities-companies. They also see a tendency of decentralization of publications over the decades from two core centers – California and Massachusetts – to other regions of USA, due, in their opinion, to the localization of NREL in Colorado [22], and the specialization of those initial areas in IT and biotechnology, after the decrease of funding to research in energy. Related, the authors also observe that the publication pattern follows the public investment in R&D in USA.

Finally, they observe that, despite of the Department of energy (DOE) has initiated several funding schemes to foster research collaborations between public research institutions and the private sector, such as the PV Manufacturing Technology Project (in 1991) [23], the Thin-Film PV Partnership (in 1994) [24], or the Industry Alliance Project (in 2007).

They authors conclude that: “using bibliometrics offers valuable insights for understanding the outcomes of government research expenditures, the institutional players involved in the emergence of an industry, the technological trajectories over the years, and in general the level of interest in a particular domain of knowledge. The results from our analysis point to the close association between federal investment in R&D and knowledge production, as measured by number of publications. Especially in the early stages of industry development, 1970s and 80s, R&D funding programs proved to be critical for advancing science in solar photovoltaic technologies.” (Vidican et al. 2009, p.11) However, the authors were not able “to identify the impact that publications are having on the field of solar technologies as a whole”. (Idem, p.12)

International Trade and Competition

Waltz (2008) develop an interesting exercise of analyzing innovation based on comparisons of patent and international trade data, and comparing the relative competition position of countries internationally, and finding which countries are innovating and on what they are specializing.

In aggregated terms, and with date from 1991-2004, the author finds that “Germany has emerged as a leader in patents, while Japan leads in exports [of renewable energy technologies]. The US is now trailing behind Germany and Japan. The other major OECD-countries, such as UK, France, and Italy, each only account for less that 5% of world trade of international patents of renewable energy technologies. The ten OECD countries most active in renewable technology together account for 80% of all international patent in the world.” (Waltz, 2008, p. 11) However, the grade of specialization on renewable energy in comparison to other technologies varies immensely by country.

The author then finds that “among the 6 largest OECD economies, both Germany and Japan have been specializing on renewable energy technologies. The US, UK, France and Italy, on the other hand, have been specializing on other technologies. Both their patent activity and export performance is below average for renewable energy technologies”. (Waltz, 2008, p. 11) Finally, the author also points to his findings that even among the specialized countries, the specialization varies among renewable energy technologies. Thus, while Japan is highly specialized in Photovoltaics and very below average in regard to wind technologies, Germany is highly specialized in wind and close to average in PV. (Idem, p. 11) The author concludes that there are clear differences and clear specialization patterns among the leading countries, which have been changing over time. Furthermore, there are clear differences within countries in regard to levels of specialization within different renewables. The author believes that these differences are consequence of the different regulations adopted in each country.

Intellectual Property and Alternative Energy

As global climate change continues to dominate international negotiations, the Intellectual Property rights of alternative energy technologies (and climate change related technologies) and its impact in innovation diffusion have become a recent hotly debated topic.

Patents represent the most significant Intellectual Property (IP) tool involved in this field. “Patents are intended to act as incentives for innovation – providing exclusive rights to the use of particular inventions for a fixed period. The expectation is that the exclusivity will enable the firm holding the patent to charge a price above the marginal cost of production and thus to recoup the investment. In return, inventors are required to disclose sufficient information in their patents, so that society can benefit from the increased knowledge about technologies. Traditional economic analyses have frequently taken for granted that patents are liquid and tradable goods, and have not explored intersectoral differences in how they are used in practice.” (Lee et al., 2009, 5) In this sense, “In addition to attracting VC, a patent portfolio is also a currency for use in strategic alliances and protection against litigation, as well as in opportunities for mergers and acquisitions. The interplay between financing and access to patents is a critical issue for the new entrants – in developed and developing countries alike.” (Lee et al., 2009, 8)

Until recently, the debate around the effects of IP in innovation in Renewables did not parallel the usual IP debate found elsewhere in regard to access and sharing of knowledge. Consequently, until very recently (2009-2010), you did not use to see much of the traditional IP observers, civil society or the Access to Knowledge Movement focusing on this topic or the incredible growing rate of patents within this technology field. This may be because the debate over clean and renewable technologies has been politicized and linked to long-term discussions around the environmental movement, climate change and the need of dependency reduction of fossil fuels, but not linked to new modes of innovation and access such as in fields like pharmaceuticals, software, or cultural works. Other causes of this thematic disconnection may be (a) the fact that the public good perceived from innovation in renewable energy (climate change mitigation) is less immediate and tangible than the specific need of access to an AIDS related medicine and (b) that the role played by cleantech and alternative energy industry associations were much more focused on policies to foster the adoption of these technologies such as supply-push and demand-pull policies over fossil fuel-based energy, than in explicitly increasing IP standards for renewable and cleantech technology.

However, (i) the conclusion of the 4th Assessment Report of the IPCC that for the rise in average global temperatures to keep within 2oC above pre-industrial levels, global emissions must peak before 2020 and be reduced to 50–85 per cent below 2000 levels by 2050 and (ii) the increasing data showing a great concentration of patents and R&D investment within the world richest nations have changed this scenario, since “in all cases these proposed targets far exceed the current rate of deployment and in most cases they will require a rate far higher than the greatest ever annual deployment of the particular technology” (Lee et al., 2009, 10) The understanding of this reality has caused a domino chain reaction: a crescent international pressure for technology transfer is taking place and saw its peak just before Copenhagen 2009 with the pressures for compulsory license and proposals from least developed countries (LDCs) to be exempted from patent protection of climate-related technologies for adaptation and mitigation.

a.The growth of patents

Patents provide an attractive way to measure inventive activity, since they provide a wealth of information of the invention and the applicant, reflecting the innovative performance of a firm or an economy (Johnstone et al, 2008, 6). However, is important to acknowledge that studies have revealed that patent counts are an imperfect way to represent the rate of invention. For instance:

“Patents provide an attractive way to measure inventive activity for several reasons: comprehensive data is publicly available, the technical characteristics are described in detail, the definition of what constitutes a patent in the U.S. has changed little for over 200 years, and every patent is categorized by experts using a standard classification scheme (Griliches, 1990; Watanabe et al., 2001; Jaffe and Trajtenberg, 2002; Hall et al., 2005; Popp, 2005). Studies have revealed that patent counts are an imperfect way to represent the rate of invention. All patents are not equally important, not all inventions are patentable, firms use alternative means to protect their intellectual property, and sometimes they patent strategically (Harhoff et al., 1999; Bessen, 2005).” (Nemet, 2006, 16)


“Patents filed, granted, or cited are another metric of innovation in general and also for ETI more specifically. As with R&D investments, the main advantage of measuring patents is that data tend to be readily available, at least in industrialized countries. It is important to note that patents filed and granted are usually considered to be an output indicator of R&D (or invention) activity, not of wider innovative success because the invention might not be widely deployed. As noted by Archibugi & Coco, international comparisons in patents are problematic because the quality of patents varies substantially across countries, as does the propensity to patent in foreign countries. The same problem one encounters with respect to defining an energy technology when considering which patents are energy related and which are not (and when patents filed in a nonenergy sector might have implications for the energy sector) occurs in the patent realm. In addition, certain industries tend to patent more frequently than others and thus will vary in the energy context, depending on which industry is doing the innovation.” (Gallagher et al. 2006, 214)

Additionally, specifically in regard to alternative energy, one might encounters problems with respect to defining an energy technology when considering which patents are energy related and which are not (and when patents filed in a non-energy sector might have implications for the energy sector). In addition, certain industries tend to patent more frequently than others and thus will vary in the energy context, depending on which industry is doing the innovation. ((Gallagher et al. 2006, 214). Likewise, as pointed by (Reichman (2008), another barrier to studies of patents in green technologies (defined by Reichman those to cover technologies that facilitate carbon abatement, both energy supply and energy efficiency technologies) is that the U.S. Patent and Trademark Office (PTO) does not recognize green technology as a class, making it difficult to assemble quantitative information about patents in the sector. Waltz also point to the same problem remembering that renewable anergy technologies are neither a patent class nor a classification in the HS-2002 classification of trade data from the UN-CAMTRAD DATABANK. (Waltz, 2008)

This realization posed a great challenge to the present research, since the review of the literature bringing data on the growth of patents if far from unified in regard to the types of patented technology the literature covers. This problem is not just caused by the lack of specific classes, but actually to the core characteristic of multidisciplinary of innovation process within alternative energy technologies. “Most energy technologies are part of complex technology systems. Individual companies may specialize in manufacturing one or several components, or in their assembly and operation, while companies from other industries may try to adapt existing technologies to novel applications.” (Lee et al., 2009, 21)

In any case, and independently of the methodologies in use [25], firstly, all literature covered points to a crescendo of patents since the 90s, and secondly, the goal of bringing data on patents in this section is actually to provide us insights in regard to the trends of a culture of enclosure within the renewable energy technology field and where this is mainly happening, and not to be precise in regard to how many patents within the technologies we analyze actually exists.

An interesting and recent WIPO report [26] found that overall patenting activity in alternative energy technologies has risen from the 1970s to the present, as evidenced by applications filed at the USPTO, JPO, EPO, KIPO and SIPO and also through the PCT system. Specifically, the total patent filings have increased at a rate of 10 percent per year starting in the 1990s and at a rate of 25 percent from 2001. (WIPO, 2009) Taking this data into consideration, KIPI (2005) would affirm that the alternative energy technology appears to be in a growth phase, and for many of the specific technologies, in a “maturity period”[27].

However, this increasing number of patents filled does not always reflect adoption or deployment rates of the technology they cover, since “many of the innovations that began in the 1970s and 1980s are only now coming onto the market.” (Lee et al., 2009, 12)

b. Relation between oil prices and growth of patents

Some studies also try to relate changes in oil prices to patent activity. “Changes in the price of oil and increasing awareness of the issue of climate change can be considered significant factors in driving patenting activity during (certain) periods. During the late 1970s, the price of oil increased dramatically, increasing the impetus for alternative energy technologies. This momentum subsided in the 1980s, when the oil price dropped down again to around 20 dollars a barrel. In the 1990s, worries over global warming led to the conclusion of international environmental agreements calling for the restriction of greenhouse gas emissions into the atmosphere. OECD countries in particular focused on alternative energy research as a means of reducing their greenhouse gas emissions. The late 1990s heralded the beginning of a new surge in oil prices, which a number of major countries addressed by establishing national energy strategies as part of which energy research and development budgets were strengthened.” [[Alternative Energy/Bibliography by Research Question|(WIPO, 2009, 13)]


However, this relation should not be considered immediate or direct. As observed, it is true that the sensitiveness of governments in regard to the need of renewable energy technology innovation and diffusion raises in times of oil prices peaks. But the immediate effect is much more related to the development or broadening of a series of policies on the supply and demand side of renewable energy value chain, then a peak of patents. No study, however, try to measure the times of these cycles.

c.Relation between regulation/policy and growth of patents

In other sections of this paper, we have analyzed the effect of specific policies and regulation in regard to innovation and diffusion of the renewable energy technologies. In this part, we develop a brief literature review of a couple of authors who developed a high level analysis of how policies impact in innovation in renewable energy, in general using data on patent (positive or negative) growth.

For instance, Waltz et al. (2008), taking patents as an intermediary measure for innovation and international trade (exports) as a final measure for innovation, analyze the impact of regulation in generating innovation. The author use the term “regulation” in a broad sense, to include subsidies on the supply side of the technology markets, such R&D subsidies, but also various instruments used on the demand side, such as feet-in-tariffs or tax subsidies. He identifies a triple regulation challenge in regard to fostering innovation within renewable energy technology: what Waltz call “traditional aspects of regulation” (such as standardization, intellectual property, spillover effect of R&D), affirming these are not specific to Renewables; economic and antitrust issues (such as access to the grid and monopolist behavior); and environment and safety issues. To deal with those, the author focus on regulation in the supply side, specifically R&D investment, and demand side, related to diffusion of technology and affirms “the level of diffusion of renewable technologies in different countries also serves as a rough proxy on the stringency of demand regulation”. (Idem, p.16).

Waltz et al. (2008) then bring a clean classification of what he called “promotion strategies” and separate countries among those policies:

Promotion strategies.png Source: (Waltz et al. 2008, p 19-21)

PoliciesandCountries.png Source: re-elaborated by authors from (Waltz et al. 2008, p 21)

The author concludes that all the regulations above plus R&D subsides are an important to justify growth in patents and technology diffusion. Waltz et al. then attempt to use econometrics to classify those policies into an “innovation friendless” index.

Other authors, opted, however, to develop specific case studies to understand the correlation among a certain policy and the growth of patents. Margolis (2002), for instance, go deeper into this and present a PV case study, comparing cases of USA, Japan and Germany.

d. Patent Trends by technology
  • Wind

Wind power is a mature technology and as evolved into a mainstream multi-billion-dollar market, with the emergence of highly specialized companies such as Vestas and Enercon, in parallel to global equipment manufactures such as General Electrics, Siemens and Mitsubishi. The field of onshore wind power has slowed in development and barriers to innovation largely remain at the development stage due to complex public policy and permitting involved with constructing power plants based on wind technologies. The field of offshore is a faster growing and more innovative field than onshore wind. Developments in adjustable blade angle and composite technologies have been crucial to the development of near shore wind. Deep-water wind is the most experimental area of wind. Deep-water installations take advantage of powerful winds and avoid NIMBY problems but they also require sophisticated moorings, which are currently being developed and tested (Walter Musial of the National Renewable Energy Laboratory speaking at the renewables-UMaine-V2.pdf Power of the Gulf Conference June 12, 2008 in Northport, Maine). Another advantage of offshore is that it allows the turbines to be larger due to fewer transportation limits. The larger turbines are more economical. "Reliability problems and turbine shortages have discouraged early boom in development."

As mentioned before, there is not one credible source of patent data, but many. However, due to the lack of uniformity in terms of methodology, each study or report bring different counts of patents.

In the patent landscape exercise performed by Lee et al. (2009) – who used data from ThomsonReuters in addition to publicly available databases from US, EU, Germany, Japan, and the WIPO-PCT and recognized that critical areas of innovation may be missing from the study (Lee et al., 2009, p. 62-63) – investigated the increasing number of patents concluding that: “The early focus of innovation in wind was in blades (harnessing mechanical energy from the air), the generator (efficient conversion of mechanical energy into electricity) and the gearbox, a frequent cause of breakdowns. These three sub-spaces continued to dominate patent trends after the rapid growth in patenting in the late 1990s. In recent years, wind has become a conventional energy source – placing a greater premium on effective integration with the grid, accurately modeling wind patterns and building in more difficult locations with high wind speeds. Investment in innovation has spread to software and control systems, short-term energy storage and offshore technologies. Across the whole technology space there has also been a trend towards larger-scale turbines.” (Lee et al. 2009, p 23)

Figure31.png Source: (Lee et al. 2009, p 23)

It is also interesting to observe that, in wind, the top 20 players are assignee of an average of 25% of patents in all related technologies and that are concentrated in OECD countries. Specifically, the top four wind patent owners, which are also leading manufactures, collectively own 13% of all wind patents and have a 48% share of the global wind turbine market. Exceptions are the increasing role played by China in wind in the last 5 years and a multinational company with origin in India – Suzlon – which the key strategy has been to acquire European companies. (Lee, 25)

BOX: GE x Mitsubishi over next generation wind turbine technology

General Electric Company (GE) is the U.S. leader in installed wind capacity and biggest maker of wind turbines in the US, and patent enforcement plays a part in this success.

GE Wind Power promoted five key innovations: variable speed control, unique wind volt-amp-reactive ("WindVAR") technology, low voltage ride-thru technology, advanced electronics, and active damping [28]. The technologies represent innovations that are refinements on a mature technology. Most of these technologies aim to increase efficiency or adapt to current electrical grid constraints.

In 2008-2010, the variable speed control technology, which allows maximize energy collection while keeping minimizing the load on the drive train, was focus of a dispute in its matter and of its components and thereof, 337-641, at the US International Trade Commission. Annalists see this situation as a great example of the high competitiveness within the wind sector, and wonder that this competitiveness through the enforcement of patents in courts is not as much seen in other areas, such as hybrid patents. “Within hybrid patents, for instance, Toyota – which has been developing and acquiring a great number of technology in the field, what makes some suspect of the configuration of patent ticket in this field - seems to prefer to enter into commercial agreements such as licensing, and its 2008 annual report states that it has an ‘open licensing policy’.  It has licensed hybrid technology to the likes of Nissan and Ford.”

GE filed the complaint in March of 2008, accusing Mitsubishi - Mitsubishi is one of the largest importers, - of infringing certain claims of U.S. Patent Nos. 5,083,039 (’039 Patent) and 6,921,985 (’985 Patent). GE later amended the complaint to include U.S. Patent No. 7,321,221 (’221 Patent). The complaint cites the sale and installation of Mitsubishi’s turbines at the Penascal and Gulf Wind wind farms in Kennedy County, Texas as infringing activities.

On Aug. 7, 2009, an ITC administrative law judge (ALJ) issued an initial determination that, for some (not all) asserted claims in two of three GE patents, Mitsubishi was infringing and violating § 337 of the Tariff Act of 1930 by importing and selling its accused turbines and components. This decision had the potential of excluding Mitsubishi from the US market.

The GE obtained initial favorable decision from the U.S. International Trade Commission (ITC) was overruled on January 8th, after Mitsubishi petitioned the full commission to review the adverse initial determinations. As part of the order for review, the commission noted that, if it were to contemplate some form of remedy against Mitsubishi, it would have to consider the remedy’s effect upon the public interest. The commission opened the case for public comments and at least 17 members of Congress and Arkansas Gov. Mike Beebe weighed in on the case. Gov. Beebe commented: “depend upon the resolution of the Section 337 case currently under review by the commission ... an impermissibly broad reading of the patents in this case would have significant adverse effects on employment and wind energy development in my state and the nation.”, while other senators commented that “promoting a diversity of technologies in the wind energy sector” was critical to meeting federal wind energy goals, and that “a combination of design innovations” was necessary.

ITC’s notice terminating its investigation of GE’s complaint issued on January 8th found Mitsubishi did not violate any claims of the three patents asserted by GE. However, the ITC also declined to rule on Mitsubishi's challenge to the validity of the GE patents.

The January ruling clears the path for Mitsubishi to import certain wind turbine components into the U.S., where at least two companies and the U.S. government — through American Recovery and Reinvestment Act stimulus funds — have invested hundreds of millions of dollars in infrastructure for wind farm developments using its turbines to meet the demand for wind power created by the White House's goal of doubling renewable energy output over the next three years

This favorable finding for Mitsubishi may also allow the company to fulfill hundreds of millions of dollars in wind farm development contracts it holds with Iberdrola SA and Edison Mission Group, a subsidiary of Edison International.

GE is planning to continue the fight, both in an appeal to the U.S. Court of Appeals for the Federal Circuit and in a pending suit in the U.S. District Court for the Southern District of Texas.

GE-Mitsubishi ITC case could be a taste of what's to come in the increasingly high-stakes renewable energy sector. [76]

  • ‘‘‘Solar’’’

Photovoltaic power has developed rapidly with active government support policies, reductions in costs, and improvements in technology. The size of the world market for photovoltaic technology has increased strongly, at an average rate of over 30 percent, led by countries such as Japan, Germany, and the United States. Worldwide solar power capacity has increased from 110MW in 1992 to 1809MW in 2003, out of which Japan, Germany, and the United States accounted for 85 percent of the total (IEA 2006).

By 2008, global installed capacity of solar PV grew up to 15.2 GW and this growth has also been accompanied by the growth of patents and portfolio complexity, patent litigation and patent licensing in regard to 2nd and 3th generation of PV technology. Interesting to observe that 1st generation technology has not been patented as heavily as the emerging thin-film PV technologies. (Lee 2009, 28)

Some of the identified innovation hotspots within Solar PV based on its patent counts are (Lee, 2009, 21): Nano-related innovations, High temperature tolerance, Solar concentrators, Integration with buildings, fabrics and other materials; while within CSP we find: High Temperature Collectors, Convergence between CSP and Concentrated Photovoltaic, Heat transfer liquids (air, hydrogen, molten salt), Heat storage (molten salt), batteries, plus hydrogen as a by-product. Second and third generation technologies are focused on using emerging non-silicon technologies to improve thin film efficiency.

Today, there are different and competing technology approaches to next generation PV, and none has gained dominance or full market acceptance. While some of these technology approaches may end up dominating the next phase in PV deployment, as yet the key players in these subsectors do not appear in the overall top 20 patent ranking. For instance, in clear contrast to wind, only two of the top 10 manufacturers of PV modules7 (Sharp and Kyocera) are among the top 20 patent holders. (Lee, 2009, 27)

The United States and Japan are leading locations for patent filing in solar PV energy, followed by WIPO and the EPO. In the USA, for example, solar patents went up sixty percent in 2009 in comparison to 2008. (CEPGI, 2009). While the trend broadly reflects current markets and R&D capacity, emerging markets such as China are also seeing increasing patenting rates.

Specifically, Japanese companies led the field in terms of applications for solar energy technologies, with Canon (leader within the US since 2002 (CEPGI, 2009), Sanyo Electric, Sharp, Matsushita Electric, and Kyocera holding top positions. (WIPO, 2009, 77)

Based on data from the USPTO, Solar patents may be the most evenly distributed with 20 percent of patents in the top one percent of patent owners, fifteen percent in the next 4 percent, twenty two percent in the next 15 percent and forty four percent of patents in the bottom 80 percent of patent owners. (CEPGI, 2009)

    • The case of Solar in Japan

Japan has taking a leading role in PV power generation. Watanabe et al. (2000) argue that Japan’s Ministry for International Trade and Industry (MITI) played an essential role is securing this position to Japan due to the R&D policies implemented since the 1974 Sunshine Project and increased with the New Sunshine Project from 1993, specifically: encouraging the broad involvement of cross-sector industry (from textiles, chemicals, petroleum and coal products, ceramics, iron and steel, non-ferrous metals, electrical machinery, and public institutes have participated in PV development in Japan), fostering inter-technology developments, and inducing vigorous industry investment in PV R&D, which lead to a great knowledge stock.

Wata1.pngSource: Watanabe et al (2000), p. 301 and 303
Wata2.pngSource: Watanabe et al (2000), p. 301 and 303

Watanabe et al. (2000) demonstrate a “double boost effects” of the virtuous cycle to solar cell production coming from both increased technology knowledge stock of PV R&D and decreased solar cell production prices. Similar “double boost effects” can be observed in PV R&D, which is the source of technology knowledge stock, coming from both increased solar cell production and MITI’s PV R&D budget. (Idem, p.310)


    • ‘‘‘Tidal/Ocean’’’

Peter Asmus, President of Pathfinder Communications, affirmed “Consider these simple facts: waves, tides and ocean currents are 800 times more powerful than the thin air that is wind. Tides can be predicted decades in advance, while the wind resource shifts so suddenly, forecasts are good for only a few hours at a time. The sun never shines at night.”

However, as pointed before in this paper, ocean energy has a great potential[29]but still is a small portion of the current renewable energy market - the total installed capacity of emerging “second generation” marine hydrokinetic resources (a category that includes wave, tidal stream, ocean current, ocean thermal and river hydrokinetic resources) was less than 10 MW at the end of 2008.

The sector presents relative high patent activity with strong presence of start-ups and universities, but also traditional oil companies, such as Shell and Chevron. [30] However, the patent activity does not equal to advanced states of development of the hundreds of technologies conceived and documented.

Specifically, tidal power plants currently in operation include installations in Rance in France (completed in 1967 with a capacity of 400 kilowatts), Kislaya Guba in the Russian Federation (completed in 1968 with a capacity of 800 kilowatts), Annapolis in the United States (completed in 1986 with a capacity of 20 000 kilowatts), and Jiang Xia in China (completed in 1980 with a capacity of 3000 kilowatts) (KEMCO 2007).

One of the key technical challenges for these are the unknown operations and maintenance (O&M) costs, which can reach almost 40% of total project costs in Tidal and Ocean technologies and also technical issues of energy transfer from offshore to onshore. For Peter Asmus “the next five years will be 'make or break' for ocean energy business”, adding “each of five major marine energy technologies remains unproven beyond small pilot projects”.

Wave and tidal technologies, our focus, have been object of major research and development from the1970s, decreased on the1980s and start to raise again in the 1990s with the focus on generators and turbine design. The WIPO 2009 report shows that the patent trends on this field have followed this movement. Patent applications for wave power technologies are larger in number than applications for tidal power, accounting for 61 percent of the combined total. (WIPO 2009)


Top applicants in this field are Mitsubishi, followed by Ocean Power Technologies[31]- which, is supported by the US Navy, developing R&D on the PowerBuoy 40 (a wave energy converter that is 16 meters high and 14 meters in diameter, most of which is submerged in the ocean), the Hitachi Zosen Corporation, Mitsui Engineering and the NKK Corporation. Northeastern University, from USA, holds the largest number of triad patent families in the field. This University is followed by Energetech Australia, mainly in the field of tidal power.

The growth of patents in USA


The correlation between investment and patents in the USA


The case of wind in the USA


The Case of PV Solar in the USA


The growth of patents in China


Stakeholders Intellectual Property Discourse

However, this lack of attention from the IP community changed dramatically in the spring and summer of 2009 with the advent of the Obama administration making public statements about sharing technology related to energy. (Revkin & Galbraith 2009) In late March during a speech at Brookhaven National Laboratory, Secretary Chu was asked by a reporter whether he thought there should be more international collaboration in some areas of energy research. Secretary Chu replied:

Since power plants are built in the home country, most of the investments are in the home country. You don’t build a power plant, put it in a boat and ship it overseas, similar to with buildings. So developing technologies for much more efficient buildings is something that can be shared in each country. If countries actively helped each other, they would also reap the home benefits of using less energy. So any area like that I think is where we should work very hard in a very collaborative way - by very collaborative I mean share all intellectual property as much as possible. And in my meetings with my counterparts in other countries, when we talk about this they say, yes, we really should do this. But there hasn’t been a coordinated effort. And so it’s like all countries becoming allies against this common foe, which is the energy problem.

These comments earned a quick response from the United States Chamber of Commerce, a leading lobby representing businesses, which expressed its concern that sharing the intellectual property of new alternative energy technologies with developing countries could erode the IP rights that have driven commercial efforts to innovate for generations. (Green Patent Blog 2009)


Consequently, late in May 2009, the Chamber of Commerce and representatives of General Electric, Microsoft and Sunrise Solar gathered in Washington to launch the Innovation, Development & Employment Alliance, or I.D.E.A. (Green Patent Blog 2009) The initiative is aimed at pressing Congress and the Obama administration to ensure that global climate-treaty talks do not weaken protections on who can profit from new technologies that provide abundant energy without abundant pollution (Burgos 2009) The creation of I.D.E.A. has been widely noted, with some alarm, in the IP “watchers” community, and likely means the status of alternative energy as a less-observed IP sector is finished for good.

Private industry views the patents on these technologies as necessary to ensure a return on their R&D investment. Steve Fludder, the director of the green “Ecomagination” division of General Electric, which plans to invest $1.5 billion next year in research and development, expressed his concern over Secretary Chu’s comments about sharing IP. “Why would we invest $1.5 billion a year in innovation that just slips through (our) fingers? I mean, why would anybody invest in anything that they would have to just give away?” he added “Stifling investments in innovation is going to basically work against the very goal that everyone is trying to achieve.” (Revkin & Galbraith 2009)

The Role of Business Associations in Alternative Energy

While the alternative energy sector is flush with business associations, intellectual property rights do not appear to play a role in the advocacy activities of these associations. The majority of the associations are focused on being advocates for government support for their particular technology, as most alternative energy technologies are reliant of government subsidies, tax credits, and other preferential support to enjoy market competitiveness with incumbent fossil fuel energy sources - as mentioned earlier in this paper. For a partial list of business associations in the alternative energy sector see these Associations. This profile may change with the formation of I.D.E.A..

International Renewable Energy Agency (IRENA)

IRENA is an international alliance of 82 countries that have agreed to collaborate to promote a rapid transition to renewable energy on a global scale. Among the states that have signed the Statute of Agency are 30 African, 27 European, 17 Asian and 8 Latin-American countries. The agency aspires to provide access to relevant information such as reliable data on the potentials for renewable energy, best practices, effective financial mechanisms, and state-of-the-art technological expertise. [77] IRENA will provide advice and support to governments worldwide on renewable energy policy, capacity building, and technology transfer. IRENA will also improve the flow of financing and know-how and collaborate with existing renewable energy organizations. IRENA’s goal is ultimately to increase the share of renewable energy worldwide. A multilateral agency for renewable energy has been missing from the international community, and the founding of IRENA reflects a growing concern among governments around the world of the need to support renewable energy technologies. (REN21 2009, 17) It is still unclear how IRENA plans to address issues involving intellectual property rights.

International Energy Agency

The International Energy Agency (IEA) is an intergovernmental organization which acts as energy policy advisor to 28 member countries in their effort to ensure reliable, affordable and clean energy for their citizens. The IEA runs one of the largest collaborative technology development efforts in the world through their Technology Implementing Agreements. The agreements provide a legal framework for both IEA and OECD member and non-member countries to collaboratively develop technology through coordinated research, development, demonstration and deployment. For over 30 years, this international technology collaboration has been a fundamental building block in facilitating progress of new or improved energy technologies.[78]

In Addition the IEA runs three open databases for free searches of renewable energy, energy efficiency ans climate change policies and measures. These are the Energy Efficiency Policies and Measures, the Global Renewable Energy Policies and Measures, and the Climate Change Policies and Measures databases. These databases are among the most comprehensive amalgamation of national-level policies on renewable energy, energy efficiency and climate change policies and measures in IEA member countries as well as several non-member countries, such as Brazil, China, India, Mexico, Russia and South Africa. [79]

Cooperative Research and Development Agreement (CRADA)

An innovative program designed to facilitate collaboration between the National Renewable Energy Lab (NREL) and outside entities is a CRADA or Cooperative Research and Development Agreement. NREL uses a CRADA when a partner and the lab intend to collaborate on a project. The CRADA protects a company's and NREL's existing intellectual property, and allows the company to negotiate for an exclusive field-of-use license to subject inventions that arise during the CRADA's execution. [80] The CRADA agreements can be:

  • "Shared-resources" which means the research is funded by the government and is part of ongoing research at NREL. In this case no funds change hands.
  • "Funds-in" which means the partner will pay for all or part of the research, but NREL does not provide the partner with any funds.[81]
International Climate Change Information Programme (ICCIP)


The ICCIP is a program based on the partnership among universities and governments with the following stated goals:[82]

  • To disseminate the latest findings from scientific research on climate change, including elements related to its environmental, social, economic and policy aspects in a way that allow them to be understood by the non-specialist audience. This will take place by means of books, book chapters, journal articles and information via the media;
  • To undertake education, communication and awareness-raising projects on matters related to climate change in both industrialised and developing countries in cooperation with UN agencies, universities, scientific institutions, government bodies, NGOs and other stakeholders;
  • To network people and organisations ways to discuss the problems, barriers, challenges and chances and potentials related to communication on climate change.

The site is maintained and run by Hamburg University of Applied Sciences in Germany, and works in cooperation with a wide number of organizations, most notably the United Nations Environment Programme (UNEP).

The ICCIP also strives to help to meet the demand for climate-friendly and climate-neutral events through on-line events, which will be organized on a regular basis. These are not meant to replace conventional, presence events, but rather to complement them; and the ICCIP will encourage more networking and information exchange with an aim to catalyse new cooperation initiatives and possibly new projects.

Technology Collaborations and the role of Intellectual Property

International technology collaborations could hold the key to significant future advances in alternative energy development. International energy technology collaborations are not new, as has been demonstrated by the International Thermonuclear Experimental Reactor (ITER) and the Carbon Sequestration Leadership Forum (CSLF). The first is an international research collaboration on nuclear fusion, and the second is an international climate change initiative designed to improve carbon capture and sequestration technologies with coordinated R&D funds from international partners and private industry. The barriers to international collaboration include the high transactions costs, and perceived difficulties protecting intellectual property rights. (Gallagher et. al. 2006)

As noted above, Secretary Chu has publicly supported collaborating with developing countries - in particular China - and sharing all IP rights of the resulting technologies. (Revkin & Galbraith 2009) He has already pushed forward with a new U.S.-China Clean Energy Research Center, which will provide the financial and infrastructure needs to enable joint research and development of energy efficient and renewable energy technologies between the US and China. The initial five years of the program will be supported with $150 million dollars of funding split equally between both countries. [83] After meeting with the Chinese Science and Technology Minister Wan Gang in the Great Hall of the People in central Beijing, Secretary Chu said: "I know we can accomplish more by working together than by working alone." (McDonald 2009) After US President Barack Obama's visit to China in Mid-November 2009, he and Chinese president Hu Jintao, made joint announcements about a host of other cooperative climate change and renewable energy technology programs. The programs, as announced by the US White House, are [84]:

  1. The US-China Electric Vehicles Program - "The initiative will include joint standards development, demonstration projects in more than a dozen cities, technical roadmapping and public education projects."
  2. The US-China Energy Efficiency Action Plan - "Under the new plan, the two countries will work together to improve the energy efficiency of buildings, industrial facilities, and consumer appliances. U.S. and Chinese officials will work together and with the private sector to develop energy efficient building codes and rating systems, benchmark industrial energy efficiency, train building inspectors and energy efficiency auditors for industrial facilities, harmonize test procedures and performance metrics for energy efficient consumer products, exchange best practices in energy efficient labeling systems, and convene a new U.S.-China Energy Efficiency Forum to be held annually, rotating between the two countries."
  3. The US-China Renewable Energy Partnership - "Under the Partnership, the two countries will develop roadmaps for wide-spread renewable energy deployment in both countries. The Partnership will also provide technical and analytical resources to states and regions in both countries to support renewable energy deployment and will facilitate state-to-state and region-to-region partnerships to share experience and best practices."
  4. 21st Century Coal - "Through the new U.S.-China Clean Energy Research Center, the two countries are launching a program of technical cooperation to bring teams of U.S. and Chinese scientists and engineers together in developing clean coal and CCS technologies. The two governments are also actively engaging industry, academia, and civil society in advancing clean coal and CCS solutions."
  5. The Shale Gas Initiative - "Under the Initiative, the U.S. and China will use experience gained in the United States to assess China’s shale gas potential, promote environmentally-sustainable development of shale gas resources, conduct joint technical studies to accelerate development of shale gas resources in China, and promote shale gas investment in China through the U.S.-China Oil and Gas Industry Forum, study tours, and workshops."
  6. The US-China Energy Cooperation Program - "The program will leverage private sector resources for project development work in China across a broad array of clean energy projects, to the benefit of both nations. "

As mentioned earlier, Secretary Chu is advocating for the development of open-source building energy-efficiency software that will make it cheaper and easier for developers to implement energy saving measures in new buildings, both in the U.S. and in emerging economies like China and India. He said “We should be inventing a new way of designing buildings — just like we engineered airplanes.” He offered an example of software that helps design integrated passive shading into a building, which is similar to other non open-source software applications that are able to pinpoint design elements like the most efficient window orientation for a particular building site, that takes advantage of the sun’s heat to maximize a building’s energy performance. (Garthwaite 2009a) While other open-source energy efficiency software projects have been undertaken in the past, their success has been limited by insufficient development funding. (Garthwaite 2009a)

In reaction to these new developments, I.D.E.A.’s first official act was to back the Larsen-Kirk Amendment (H.Amdt. 187) to the Foreign Relations Authorization Act (H.R. 2410). The amendment calls on the President, the Secretary of State and the Permanent Representative of the United States to the United Nations to uphold the existing international legal requirements for IP rights and avoid any weakening of them for the UNFCCC in the context of energy and environmental technology. The Amendment passed the House with a 432-0 vote. It was described as an amendment to protect U.S. green jobs and U.S. technology innovation. (Larsen & Kirk 2009)

Evidence from the Literature

The existing literature on the IP landscape in clean technology and the debates around the use of compulsory licensing make two points clear. First, there is a need for more research into the effects of IP in the nascent cleantech industry. None of the existing technology innovation models match the complexity of the industry, which involves myriad technologies (as noted earlier) and competitive markets. Second, the literature points to a preliminary finding that IP does not create a barrier to technology transfer - in the case of clean technology as a whole - from developed to developing countries. The weaknesses in these findings are the lack of detailed empirical evidence assembled from the various technologies that comprise the cleantech industry.

In a paper by Prof. John Barton of Stanford Law School (Barton 2007), he argued that the patent and industry license practices are both warranted and crucial to technology innovation. The report focuses on the role of IP in alternative energy technology transfer for solar, wind and bio-mass technologies to China, India and Brazil. He asserts that competition between clean technologies and the competition in the electricity, fuel, automobile, and housing efficiency markets, reduce the ability of companies to charge a premium for their technology leaving manufacturing and capital cost as the greatest costs for clean technologies. Using the wind-turbine manufacturer Vestas as an example, he points out that R&D is only a small portion of overall cost of their turbines, resulting in a mark-up of only 0.20 on the manufacturing cost. This leads to low royalties - on the order of 1% of the sales price for the turbines. Therefore, there is very little wiggle room for differential pricing between the developed world and the developing world, which - he argues - means that compulsory licensing is unlikely to be an effective way to disseminate the clean technologies in developing countries since there will be very little financial benefit. He goes on to discuss the different issues observed in each of his three focus technologies.

  • The wind market tends to be quite consolidated with the four top companies controlling 75% of the market. IP issues are not expected to be a big issue here due to the easy access to the technology, though there may be future issues with cartel behavior. Developing countries like China and India have been successful in gaining a foothold in the wind market by buying developed nation firms and acquiring their patents.
  • The PV industry suffers from a difficult market existence due to the high cost of the technology. The market is somewhat consolidated, though there are numerous companies that manufacture various parts of the PV installation, which breeds a high level of competition. Thin film technologies may create a bigger IP barrier for developing nations due to the advanced nature of the technology, and the developed nation control over these technologies at the current time.
  • The biomass industry does not currently suffer from any IP barriers, but the promise of cellulosic ethanol, could create a battle over patents for the enzymes that will break down the lignin for sugar. The biggest barrier in this sector will probably be trade tariffs like the US tariff on Brazilian ethanol.

Barton notes that in all three technology sectors developing nations firm’s have succeeded in entering industry leadership and in some cases patents may have aided technology transfer. Patent disputes have usually been resolved by cross-licenses or product modifications in a pattern common in non-monopoly industries.

In a later paper, Barton (Barton 2008a) takes a closer look at the economic and policy challenges of meeting the emissions reduction targets of the UNFCCC through technology development and dissemination in developed and developing countries. He focuses on renewable electricity sources, carbon capture & storage and other mitigation technologies, biofuels, industrial efficiency, consumer conservation, and nuclear energy; he outlines the emissions reduction potentials, the modes of encouragement for the technologies, and the special issues in international technology transfer, making three points about the process that will be undertaken to disseminate these technologies. First, the financial heart of technology diffusion will be physical investment in the form of subsidies or regulatory incentives. Second, public-sector support for R&D is important. Third, his examples imply that the costs specifically assignable to technology will be very small when compared with the overall capital and investment costs.

There is general agreement within the literature that innovation in cleantech will only happen with appropriate and consistent carbon pricing systems to create a stable market for new technologies. In particular, a report from Chatham House (Reichman et. al. 2008), an independent research organization in the UK, asserts that these market incentives will create an atmosphere where innovation can happen and R&D funds will flow into the clean energy technology industry. The authors believe that the nascent stage of clean energy technology development leaves very little empirical evidence to support the argument that IPR does or does not create barriers. Their report focuses on bio-fuels, solar PV, hybrid cars, fuel-cells and wind energy. Among their observations, the authors report that:

  • Bio-fuels do not seem to have a patent barrier. Small firms working on the enzymes for cellulosic ethanol are collaborating with larger firms and the patents seem to be generating a market for small firms. In the PV sector the authors refer back to Barton’s report (Barton 2007) and note that interchangeable patented technologies that work in the PV modules create a fairly competitive market and reduce any barriers.
  • Hybrid cars, fuel cells and the wind industry all represent incremental innovation, which is to say that the basic technology is off-patent and well known, while new improvements are being patented - but not exclusively - by certain market entities. This means there is competition among the manufacturers of these patented improvements.
  • There is a possible copyright IPR barrier that could develop around microbial agent research for ethanol enzymes, which is protected under EU Database Law.

The report suggests alternatives to traditional patenting and licensing in order to encourage innovation in green technologies.

  • Technology pools (patent pools) - licensing the combination of patents that make up a particular technology in an affordable pool of patents. The Eco-Patent Commons does this in a royalty free manner, but is not currently offering any alternative energy technology patents. This could be the basis of a Global Fund that buys up patent pools for critical carbon-abatement technologies and offers them to developing countries.
  • Prizes - rather than offering grants for R&D research, prizes can be offered for the most innovative solution to a particular problem.

The most current and controversial debates taking place around IP and technology transfer have been connected to the UNFCCC Copenhagen Summit, where developing nations such as China, India and Brazil hope to convince developed nations such as the US and the EU, to include a compulsory licensing option in the next version of the Kyoto Protocol climate change treaty. This model is borrowed from the biotech/pharma industry where governments are allowed to mandate that a company license patents for drugs that are critical to public health, at low or no cost, to generic drug companies in developing nations. The US government and the US Chamber of Commerce, in particular, have been quite unhappy with the idea of loosening IP protections for developing nations and have been vociferous in their objections.

A group of US companies who are concerned about the weakening of IP protections at the Copenhagen Summit have joined forces with the US Chamber of Commerce and created the Innovation, Development and Deployment Alliance (IDEA) asserting that “robust IP protection is needed to encourage investment in clean tech research and development, create green jobs and find solutions to the world’s energy and environmental challenges.” (Green Patent Blog 2009) Members of IDEA include large companies with strong patent portfolios like GE and Microsoft. An article by Josie Garthwaite of Earth2Tech explored the development of IDEA. In interviews for the article a venture capitalist and a lawyer opined that compulsory licenses are unlikely to have any affect on the deployment of critical carbon-mitigation technologies in developing countries due to the comparatively larger economic and infrastructure barriers in these countries. They believe that these issues will trump the assumed patent barrier issue.

In a direct challenge to the US Secretary of Energy, Steven Chu, David Hirschmann, the President & CEO of the Global Intellectual Property Center, asserted his belief of the importance of keeping IPR strong rather than loosening the rights as Secretary Chu had suggested in his speech at Brookhaven National Lab. (Revkin & Galbraith 2009; Hirschmann 2009) In an article he wrote for the Intellectual Property Watch blog, he notes that loosening IP protections could result in lost jobs and points out that this would be counterproductive to President Obama’s mission to create green collar jobs. (Hirschmann 2009)

In a 2008 paper by the International Centre for Trade and Sustainable Development (ICTSD), the authors suggested that compulsory licensing could provide the necessary framework for effective tech transfer to developing countries, while also suggesting other options such as financial mechanisms like a “Multilateral Technology Acquisition Fund,” which would buy IP rights for transfer to developing countries; prizes as incentives for alternative energy technology innovation; and institutional arrangements for open or collaborative innovation similar to the USA-China collaboration recently finalized by the Secretary Chu. (ICTSD 2008) In a partial contradiction, Frederick Abbott, a professor at Florida State University Law School, wrote about the Copenhagen Summit IP debates in a report for the ICTSD in June of 2009 (Abbott 2009). He agrees with the general consensus in the literature that there is insufficient information available on the effect of IPR on clean technology innovation and transfer. His report uses the biotech/pharma industry as a comparison model for the cleantech industry, drawing his assessment of future success in the cleantech industry from the current progress of the biotech industry. He asserts that compulsory licensing has influenced the biotech/phharma industry on the margin, but the structure and behavior in the industry have remained largely constant. He notes that research has shown that the industry has consolidated rather than expanded due to compulsory licensing, and more companies (not less) are located in OECD countries. This evidence leads to his conclusion that compulsory licensing will have a similar impact in the cleantech industry. Abbott suggests that a solution to the tech transfer issues faced by the cleantech industry is patent pooling, which could encourage technology sharing at the R&D and commercialization stages.

In similar support of the use of patent pools, Kevin Closson wrote in the IP Strategist in 2009 (Closson 2009), that the wait time for patent approval is currently too long, and that inventors in the US should use the “petition to make special,” which covers sustainable technologies, and can reduce the time to approval. Making a case for patent pools instead of patent thickets, he argued that while these are not a panacea, they will allow more effective access to the technology since sustainability technologies tend to involve a large number of different technologies combined with many of them being out of patent protection and in the public domain.

Copenhagen Economics and The IPR Company, two independent research companies, were contracted to assemble a report on the role of IPR in technology transfer in the lead-up to the Copenhagen Summit, and tried to assert a definitive conclusion on this complicated issue. The report presented data showing that patent protection in emerging markets has been on the rise. They noted that in 1998, 1 in 20 patents were protected in developing countries, while, by 2008, the number was 1 in 5. Within those developing countries, 99.4% of the patents were in a small group of emerging markets (China, India, Brazil, etc.). The authors determined - based on this trend - that patents are not a barrier to tech transfer to the majority of these developing countries since there are hardly any alternative energy patents registered in these countries. The authors also found that within emerging economies, the country with the largest number of wind technology patents only accounted for about 40% of all wind patents protected in emerging economies and the second, third and fourth largest patent holding countries accounted for only 30% of all wind technology patents protected in emerging economies. This indicates that there is a great deal of competition among wind technology manufacturers in emerging economies, which means that the price mark-up due to a patent monopoly cannot be very high. The authors argue that if wind technology is too expensive for developing nations to buy, it is not due to the IPR protections, but rather, more likely due to the additional cost of alternative energy technologies as compared to conventional fossil-fuel based energy technologies, which are often subsidized to create artificially low prices. They conclude that emerging markets could benefit from greater IP protection regimes since they have the market size and technological capacity to innovate locally, and foreign patent holders would be more willing to transfer technology if they knew their patents were protected. The authors suggest that transferring technology to developing countries could consist of financial support to compensate low-income developing countries for the economic burden of carbon abatement while preserving the countries’ incentive to minimize the costs of that abatement.

Mark Weisbrot of the Guardian Newspaper in the UK, offered his support for compulsory licensing in a short article in May of 2009. (Weisbrot 2009) He discusses the World Trade Organization rules that led to compulsory licensing in the biotech/pharma industry, comparing the mandate to the proposed model in the cleantech industry. The author views the WTO rules as protectionist and supporting a fundamentalist view of IPR, and he asserts that the cost of WTO trade restrictions has been $220bn a year when compared to liberalized trade. The article states that the Doha Declaration is one of the few victories to NGO’s fighting for a loosening of the WTO trade restrictions that keep crucial medicines from the populations in developing nations. Based on this historical background, Weisbrot asserts that compulsory licensing would be a positive policy in the cleantech industry.

So while the literature provides a helpful background on the issue, the relative scarcity of academic articles on this topic and the general assessment among the researchers that more research is necessary, leave an opportunity for others to step in and try to complete a more comprehensive study of the field.

Compulsory Licensing

Since the model for compulsory licensing has been borrowed from the biotech/pharma industry, the broader discussion among IP scholars has been whether the biotech industry is a good model for the IP challenges faced in the cleantech industry and whether compulsory licensing will encourage technology transfer to developing countries (Barton 2007). Since the compulsory license addition to TRIPS was designed to provide developing nations with the ability to produce generic versions of patented drugs that are critical to public health, the comparison to the cleantech industry is appropriate since these technologies can also be critical to the future health of many countries that stand to be negatively affected by climate change. In practical terms, the two industries differ in many ways. While the biotech/pharma industry deals with high R&D and clinical trial costs to develop a cheaply duplicated product (often a drug) that usually has limited competition in the marketplace, the cleantech industry faces numerous more complicated factors. While the cleantech industry also has high R&D and demonstration costs, its products are typically very expensive to reproduce given their size and the amount of materials required to build them (take a wind turbine for example). Cleantech products are sold on a market that is full of other cleantech competitors, as well as competitors from the traditional fossil fuel energy markets, and, in the case of alternative energy technology, the strictly economic market for the least-cost technology based on price per kilowatt hour (kWh) - the demand-pull policies mentioned earlier can change the metrics of this economic market, which is one of the reasons it is so complicated.

The differences between the cleantech industry and biotech/pharma industry are substantial, and point to reasons why a system of compulsory licensing like the TRIPS model may not be effective for clean technologies. It is alluded to above that there are many different cleantech products, and this is yet another reason why the cleantech industry does not resemble the biotech/pharma industry. The cleantech industry includes alternative energy technologies such as the following - biomass & biofuels, geothermal, hydrogen fuel cells, ocean energy (wave, tidal, and ocean thermal), solar PV, CSP, wind (onshore and offshore), and smartgrid technology. Some energy industry members argue that nuclear technologies and high efficiency/low-carbon combined-cycle natural gas turbines can also be considered alternative energy. In the larger cleantech industry, technologies cover energy efficiency, carbon capture and storage, and the automobile industry. Technologies include - hybrid vehicle technology, advanced batteries, solar thermal technologies, energy efficient home appliances, lighting, and industrial machines, building energy efficiency software & hardware, electrical transmission & distribution software and hardware, and myriad energy storage technologies. It goes without saying that the different areas of scientific research involved with these technologies covers the full spectrum from biology to chemistry, engineering, nanotechnology, materials science, optics, etc. The only industry that can come close to matching the complexity of cleantech is the automobile industry, and it is still much more consolidated in its scientific spectrum.

Within the literature that addresses the issues related to IP in the cleantech industry, there are a number of conflicting views and a clear opinion that, overall, there has not been enough study of the IP factor in this nascent industry. The following is a review of the pertinent reports and their findings.

Topics of Future Research

Through the process of researching and writing this paper we have developed a number of questions that are appropriate topics for further research which will shed greater light on the issues we have chosen to address. Among these questions are the following:

  • While appropriability regimes have been shown to differ between firms operating in different countries, not just between different industries, we wonder if their is a difference in the patenting rate of the same company depending on the country in which their international operations are taking place.

Notes for further development into paper sections


  • Hair based solar panels
  • Wind turbine in Africa
  • Explore patent pool proposals
  • Explore the opposition to compulsory license based on trade issues under the CO2 goals

  • Many governments around the globe have identified the challenge of climate change as worthy of compulsory licenses for critical technologies, which is modeled on the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). TRIPS allows compulsory licensing in critical cases related to issues of public health. (ICTSD 2008) The United Nations Framework Convention on Climate Change (UNFCCC) has been the host of these discussions as member nations are trying to design the Post-Kyoto regime, which will be voted on in December of 2009 in Copenhagen, Denmark. China, India and Brazil have, for example, been advocating for the compulsory license provision in order to provide technologies at a reduced price to developing nations. (Weisbrot 2009) The United States has been divided on the issue and has powerful entities working on both sides.


  1. For the purposes of this paper we will use two different terms for the two similar but different industries addressed in our research. The “alternative energy” industry refers specifically to energy supply technologies like the wind, solar and tidal/wave technologies that are the focus of our larger research project. The “clean technology” or “cleantech” industry refers generally to all energy supply, energy efficiency and carbon abatement technologies.
  2. For instance, wind power dominates the European Renewables Deals (an annual review conducted by PriceWaterhouseCoopers), more so than any other major region, accounting for 60% of total European renewables deal value. Hydro accounted for the largest North American deal value in 2008, but this was almost entirely attributable to one deal. After hydropower, wind and solar power delivered the highest value deal segments, accounting for $1.4 billion and $1.3 billion of deal value respectively. (TFL 2009)
  3. China is developing aggressive market strategies and investing heavily in solar technologies, in an attempt to gain control of the global market. Additionally, they are planning to open new assembly plants in the United States in order to avoid international trade restrictions. (Bradsher 2009)
  4. The majority of the leading large wind turbine manufacturing companies in the market today were, in part, born from the wind power technology research and development that began in the late 1970s, most notably in Denmark, the Netherlands, Germany and the United States. (Lewis, Wiser 2007, 1)
  5. The efficiency rating of solar PV panels is measured by the percentage of the solar energy hitting the surface area of the solar panel that is converted to electrical energy. Panels on the market today tend to be in the 8% - 20% efficiency range. (Hegedus 2003)
  6. Other alternative energy-supply technologies include: biomass and biofuel technologies, geothermal technologies, hydrogen fuel-cell technologies and ocean thermal technologies.
  8. For instance, "Solar cells are relatively inefficient economically relative to conventional thermal power generation, at a price of 3-4 dollars per watt (Smestad 2008). Given that wafer-type crystalline silicon is the most widely used material for producing solar cells and that the supply of high-purity silicon is expected to become increasingly tight, reducing the price of solar power will be a significant challenge." (WIPO 2009, 51) PV solar panel energy conversion efficiencies refer to the percentage of potential energy in the rays of sun hitting a PV panel that are converted into electricity for use by the consumer. The standard test conditions for a solar panel give the sun a potential energy content of 1000W per square meter. This is the sun under perfect conditions hitting the panel directly at high noon. PV panels have standard energy conversion efficiencies of 8% - 17% depending on their design, and the material used in the panel construction. If a PV panel's energy conversion efficiency is 12% then the actual electrical output of a 1 square meter panel will be 120 Watts. [1]
  9. Tax Equity Investing - The government tax credits offered for solar developments can be sold to large banks which apply them to their own tax liability. As a result the bank becomes a partial funder of a solar energy development. Given the drastically shrinking bank profits, they are aren't buying the tax credits from solar developers at the same level they were prior to the economic downturn. This has resulted in a large shortfall in capital investment for new solar developments.
  10. Nevada uses a Renewable Portfolio Standard (RPS) policy, which exists in different forms in about half of the states in the US. Nevada's policy calls for 25% of its electricity to come from renewable sources by 2025, with a 5% carve-out for electricity from solar installations. In congress with this policy are Nevada's aggressive solar and wind access laws, which "disallow the adoption of any covenant, deed, contract, ordinance or other legal instrument which affects the transfer or sale of real property that unreasonably restrict a landowner from installing solar or wind energy systems on their land."[2]
  11. Ocean technologies as a classification, include tidal, wave and ocean thermal power generation. Our research is only focusing on tidal and wave technologies, but not ocean thermal. The following graphs and statistics unfortunately do not differentiate between investments in tidal, wave and ocean thermal, but according to a market report by SBI international (Perez, 2009) there is a great deal more investment and development happening in the market for tidal and wave technologies than for ocean thermal.
  12. The US and China are the two largest GHG producers in the world.
  13. A Feed-in Tariff is a government statute that requires electric utilities to buy renewable energy from producers at a premium per kWh price and guarantees these prices in long-term contracts of 10-20 years. The result is a low-risk investment structure for alternative energy plants since income can be predicted with a high degree of accuracy, and income is guaranteed due to the long-term contract.
  14. The cost of generation for these various types of technology can vary depending on the location of the plant and the local cost of fuel or local quality of the renewable resource.
  15. As a result of the global financial crisis, VC and private equity investment fell to $1.8 billion in the first quarter of 2009, a 22% drop from the fourth quarter of 2008. (SEFI 2009, 28)
  16. The Public Utilities and Regulatory Policy Act of 1978 (PURPA) was the first US policy that gave alternative energy a competitive advantage (Carlin 2004, 351): It required utilities to buy energy from alternative energy producers; It paid premium prices for each kilowatt hour of electricity produced; It guaranteed the prices for the entirety of 20 year contracts; and It was ultimately unpopular because the high prices created windfall profits for alternative energy producers, and the PURPA contracts were paid for by the electric utility, raising the price of electricity for all consumers.
  17. The Valley of Death is the period between technology research and late stage development where many innovations have historically been lost or “fallen” into the Valley, rather than being funded and marketed properly to reach the commercial market. (Weiss & Bonvillian 2009)
  18. See footnote XX
  19. This “definition recognizes that the innovation to be measured is more than simply something new; it has the added component of adding value for both customers and firms. The definition also recognizes that innovation measurement needs to extend beyond simply measuring inputs. While it is important to track inputs to innovation – such as research and development spending – that is not enough. Outcomes of innovative activity need to be tracked and measured to determine fully the impact of innovation on the economy.” (ACMI, 2008, 1)
  20. “Following recognition of the role that technology plays in economic growth (Solow, 1956) and early work characterizing the process of innovation (Schumpeter, 1947; Usher, 1954), a debate emerged in the 1970s about whether the rate and direction of technological change has been more heavily influenced by changes in market demand or by advances in science and technology.” (Nemet, 2006, 5) The core of the science and technology push argument is that advances in scientific understanding determine the rate and direction of innovation, while changes in demand as a source for innovation is justified since it generates opportunities for firms to invest in innovation to satisfy unmet needs. (Nemet, 2006, 5-8)
  21. “Others” here should be understood as research and development spending; number of engineers, scientists, and technicians employed; some other categories of investments, such as expenditures on information technology equipment. (ACMI, 2008, xi)
  22. On September 16,1991 the Solar Energy Institute was designated a national laboratory, and its name was changed to the National Renewable Energy Laboratory
  23. The PV Manufacturing Technology (PVMaT) project begins in 1990. The activity is a partnership between the US Department of Energy and members of the US photovoltaic industry. PVMaT is designed to improve manufacturing processes, accelerate manufacturing cost reductions for photovoltaic modules, improve commercial product performance, and lay the groundwork for a substantial scale-up of manufacturing capacity (EIA). C.E. Witt et al., (1998), Manufacturing Improvements in the Photovoltaic Manufacturing Technology (PVMaT) Project, NREL/CP-520-24923
  24. The Thin Film Partnership Program works within focused research areas: amorphous silicon (a-Si), copper indium diselenide (CuInSe2 or CIS) and related materials, cadmium telluride (CdTe), environment, safety, and health (ES&H), and module reliability. Each of these research areas has an active National Research Team associated with it. The teams of manufacturers, academia, and NREL experts focus their efforts on materials, processes, devices, and manufacturing scale-up, coming together to discuss issues common to a each technology. More at:
  25. Some perform searches with key words in the patent titles, other went deeper and tried to identify key technological concepts and segments.
  26. The report investigates patent filing trends for various alternative technologies across the globe. Changes in the price of oil and increasing awareness of the issue of climate change can be considered factors in driving patenting activity, which is generally increasing. The distribution of applications among different areas of technology appears to be related strongly to the countries’ geographic and resource situation as well as the distribution of research and development budgets and supporting policies.
  27. KIPI (2005) establishes 5 stages of technology development: introduction; rapid growth of R&D, patent applications and patent applicants (maturity period); stable technology renovation or stagnate and decrease of applications and applicants; re-discovery of technology usefulness and returning of increase of patent applications and applicants.
  28. Variable speed control allows maximize energy collection while keeping the minimizing the load on the drive train. Unique wind volt-amp-reactive is a "dynamic power conversion system" used to maintain "defined grid voltage levels and power quality." The technology uses "a voltage controller placed at the point of interconnect measures utility line voltage, compares it to the desired level and computes the amount of reactive power needed to bring the line voltage back to the specified range." This reduces grid impact of wind, which is a variable input technology. Low voltage ride-thru technology is an enhancement to WindVAR. The technology that allows reaction to system events but does not require full system shut down during event recovery. The advanced electronics developed by GE Wind Power allow turbines to continually adjust blade pitch angle to maintain optimum efficiency for every wind speed. Lastly, active damping technology helps to reduce tower oscillation.
  29. The United Nations (UN) estimates that the total “technically exploitable” potential for waterpower (including marine renewables) is 15 trillion kilowatt-hours (kWh), equal to half of the projected global electricity use in the year 2030. Of this vast resource potential, roughly 15 percent has been developed so far. The UN and World Energy Council projects 250 gigawatts (GW) of hydropower will be developed by 2030. If marine renewables capture just 10 percent of this forecasted hydropower capacity, that figure represents 25 GW, a figure Pike Research believes is a valid possibility and the likely floor on market scope. Hydrokinetic and Ocean Energy Renewable Power Generation from Ocean Wave, Tidal Stream, River Hydrokinetic, Ocean Current, and Ocean Thermal Technologies. Research Report. Published 2Q 2009. Pike research Cleanteach Market Intelligence.
  30. “Literally hundreds of technology designs from more than 100 firms are competing for attention as they push a variety emerging marine renewable options. Most are smaller upstart firms, but a few larger players – Scottish Power, Lockheed Martin and Pacific Gas & Electric – are engaged and seeking new business opportunities in the marine renewables space. Oil companies Chevron, BP and Shell are also investing in the sector.” (Pike research, 2009)
  31. Ocean Power Technologies has assumed a leadership position in field of wave-activated turbine power generation, having developed a device for converting wave energy into electric power while submerged one meter below the ocean surface. Patent applications related to this device have been filed in many countries worldwide, and the company is seeking to extend its business into Australia and Spain with the assistance of the US Navy (WIPO 2009) .


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