Recent Research: Public-sector partnerships help fuel cleantech innovation

As the technology behind renewable energy continues to advance, recent research finds that the public sector plays an important role in catalyzing innovation. This can be seen in three main ways: by funding basic research on renewable energy in all 50 states; by partnering with cleantech startups; and by supporting cleantech clusters through networks, commercialization assistance, and access to capital. Taken together, this recent research suggests that public-sector partnerships can complement industry’s role in growing the green economy at the federal, state and local levels.

At the federal level, one way that the public sector supports cleantech innovation is through funding for basic research, according to a new report from the National Resource Defense Council (NRDC). This is especially true at the Department of Energy, which was appropriated $2.7 billion in funds for clean energy research through its Office of Energy Efficiency and Renewable Energy (EERE) and the Advanced Research Projects Agency–Energy (ARPA-E). Of these funds, more than $1 billion went to the federal labs directly, while more than $860 million went to private sector and academic researchers. Notably, all 50 states received some form of funding through these offices in 2017, and all but three received some in both 2017 and 2018. DOE R&D funding helps drive down the costs of clean energy innovation, which in turn increases the rates of adoption, according to the report.

However, funding for basic research has been threatened by the Trump administration’s proposed budgets, especially in clean energy: the budget would reduce EERE funding by 86 percent, and completely eliminate ARPA-E, according to NRDC. This is despite growing support for clean energy among Congress and the general public. Congress has continued to grow funds for the EERE and ARPA-E offices in each of the last three fiscal years, according to an SSTI analysis last fall. Meanwhile, a recent Gallup poll found that the vast majority of Americans want more emphasis placed on the production of renewable energy sources, especially solar power (80 percent) and wind (70 percent).

Beyond funding R&D on renewable energy, the public sector can also promote innovation in this space by collaborating with startups. In Governments as partners: The role of alliances in U.S. cleantech startup innovation, authors Claudia Doblinger, Kavita Surana, and Laura Diaz Anadon use a unique dataset of 657 startups and 2,015 alliances with governments and other partners. They find that the patenting activity of a cleantech startup increases by more than 73 percent, on average, each time they collaborate with a government agency on a cleantech development. Furthermore, each time a cleantech startup licensed a technology developed by a government agency, the company secured, on average, more than twice the number of financing deals when compared to similar startups.

Notably, the authors also find that partnerships with government can help boost cleantech growth in tech hubs outside of places like Silicon Valley. Although co-location in technology hotspots might be important for IT or biotech startups, they suggest that cleantech firms are more dispersed, and as a result, more likely to resort to collaboration.

These findings complement those presented by Vanderbilt University sociologists David Hess and Magdalena Subibjo in Supporting regional cleantech sectors in North America, an article published late last year in the journal of Sustainability: Science, Practice, and Policy. In the article, the authors explore how governments can support cleantech development beyond strong energy-transition demand policies such as renewable portfolio standards or environmental regulation. Instead, they review regional cleantech policies, with a focus on the role of governmental assistance for cleantech-business development.

Their research identifies four main policy instruments: clean-energy and high technology funds; commercialization and incubation support; research, development, and testing facilities; and assistance to business networking organizations such as cluster initiatives. These findings are echoed by research released earlier this year by the Information Technology and Innovation Foundation (ITIF), which highlights the numerous opportunities for policymakers and elected officials at the state and local levels to encourage clean energy innovation.

In particular, Hess and Subibjo find that support for networking organizations to build cleantech clusters is worthy of additional attention from researchers and policymakers. Although business development policies seeking to promote clean energy startups are used across North America, they are mainly deployed in more liberally leaning states. The authors identify opportunities for more conservative states to include cleantech development in broader technology-based economic development policies. Because conversations regarding clean and renewable energies have become politicized, the authors suggest that shifting the frames from greenhouse gases and sustainability toward job creation, economic development, and innovation clusters may ease some of these tensions.  

Ultimately, these three studies point to three roles for the public sector to support clean energy innovation: by investing in basic research in all 50 states, by collaborating with startups in areas such as licensing, and by supporting business development policies at the state level, as well as promoting organizations that offer networking, mentoring, career development, and information sharing.