Beyond Funding – Critical Factors for Success in Low Carbon Energy Innovation ⚙️🌐
Jerome Gosset, Ph. D.
R&D-Innovation and development of new activities in the low-carbon energy sector - Hydrogen industry expert
Beyond 2030, CO2 emission reductions envisioned by 2050 in international scenarios will require the deployment of technologies which are still in development or still lack commercial competitiveness.
In its 2023 report, the International Energy Agency (IEA) highlights the escalation of spending on innovation, through public and corporate energy R&D as well as through venture capital (VC) investments in clean energy start-ups.
Public Investments in Energy R&D
In 2021 and 2022, China has been the country investing the largest amounts in public energy R&D spending. Meanwhile, Europe and North America experienced a downturn in public energy R&D spending.
Private Investments in Energy R&D
According to the IEA, listed companies increased their Energy R&D spending by 10% in 2022 relative to 2021, reaching an impressive USD 131 billion.
Noteworthy growth sectors included automotive, batteries, hydrogen and fuel cells, along with renewables.
Engineering Research and Development (ER&D) services providers report an 85 % projected uptick in ER&D budgets across all domains (including but not limited to energy) over the next three years.
VC Investments in Energy Start-Ups
In 2022 as energy technology start-ups raised USD 6.7 billion of early-stage VC funds, a new record high, with start-ups specializing in CO2 capture, energy efficiency, nuclear and renewables doubling or more their 2021 funding levels.
Insights and Considerations
While digitization and connected products remain top investment R&D priorities, sustainability and circular economy are driving forces behind increased R&D spendings too.
Watch out for competition, particularly from China. Evident in their expanding market shares in water electrolyzer production for example.
R&D Spending Isn’t the Sole Metric
Most jurisdictions offer attractive public support for R&D and innovation, and companies must actively pursue these funding sources.
Yet, R&D spending level alone isn’t the sole determinant for success for innovative low carbon energy companies.
Rapid and excellent execution, developing relevant partnerships, and leveraging existing technology development platforms, are a few critical components.
Embarking on this path requires expertise in R&D-Innovation management to maximise the potential of teams with diverse skills and technical expertise within a given R&D budget.
IEA’s report