Two Degrees of Innovation: How to Seize the Opportunities in Low-Carbon Power

This paper offers a strategic framework for those seeking to capitalize on the low-carbon transition. The first section presents innovation as a key strategy to achieve economic development, energy, and environmental goals. The second section explains why the innovation process is unique in the low-carbon power sector and introduces the innovation ecosystem. The third section lays out a stepby- step process to identify and capitalize on the enormous potential and emerging opportunities in this sector.

Key Points

• A global transformation of the energy infrastructure is urgently needed to meet the need for modern energy services while avoiding a climate disaster.

• There is a large and growing global market for utility-scale, low carbon power technologies as this transformation begins. Both developed and emerging economies can benefit from it but competing in the global value chain will require explicitly building innovation capacity.

• Innovation—improvements in price and performance—will close the gap between low-carbon technologies today and the low-cost, high performance technologies that are needed.

• Innovations include new products, processes, or policies that reduce costs or improve performance and can happen at any point in a technology’s lifecycle—from design through manufacturing through operations and maintenance.

• The innovation ecosystem approach captures the complexity, uncertainty, and heterogeneity of innovation processes and identifies the critical services innovators need to thrive. These are the services policymakers need to focus on when investing in innovation.

• The framework provides step-by-step guidance to identify the opportunities in the sector and build a robust innovation ecosystem to capture them.