A cargo cult called innovation

Innovation will answer all our problems won’t it? That seems to be the message we get from government right now.

Somehow introducing carbon pricing equates to innovation. Sounds nice in theory but I don’t think that anyone in government truly understands what innovation actually is other than it is a magical word with which to soothe the public.

Too many years working in project development and technology commercialisation has taught me just how difficult it really is.

Here are a few key points I’d like to share.

1. Innovation needs to be planned for. Just hoping it happens through the invisible hand of the market only works when there is sufficient financial incentive to do so. A sufficient financial incentive to encourage large scale innovation in clean energy would bankrupt our economy.
2. It is industry not universities that are responsible for much of the actual innovation out there. Universities are very important, but it is industry that makes it happen. As a nation we are technology adopters much more than innovators.
3. Promoting large demonstration projects is not innovation. Full stop.  Government funding for large demonstrations is to make up for market failure not to really promote innovation. Much more bang for the buck can be gained from funding R&D in industry and in universities.
4. Schemes such as the Solar Feed-in-tariff are a recognition by government that by putting aside some of the public purse we can help encourage economies of scale in manufacturing to form in certain technologies. That is, we are helping amend the market failure that otherwise exists.
5. The current mantras of ‘user-pays’ and requiring commercially competitive financial returns for government owned corporations (GOCs or GBEs) is a fashion. The reason for their introduction was recognition that the costs of government are going up and that by making these 'businesses' stand on their own two feet was a way of freeing up funds to go towards other things. If we are serious about a genuine lower carbon future then the government should set up its own companies to do just this. After all government can borrow at a lower rate than anyone else and doesn’t need equity returns.

Innovation requires forethought and leadership. It requires willingness to take risks and being prepared to fail. It requires the skill and inputs of many. Most of all, it doesn’t just happen by itself.

Note: I work as a project and energy economist with companies and governments on geosequestration,wind, geothermal, hydro, wave, transmission networks, coal seam gas, coal,and more. The views expressed in this blog are solely my own and do not represent the views of any organisation that I do work for.