Driving Technological Innovation for a Low-Carbon Society

The report assesses the innovation systems of solar PV and CCS, finding that while solar PV is rapidly declining in cost and expanding globally, CCS remains stuck in a 'valley of death' requiring large-scale demonstration. It contrasts the European preference for 'market pull' policies (like feed-in tariffs) with the US emphasis on 'technology push' (R&D funding), arguing that a balanced approach is necessary to meet global climate goals.

• Solar PV costs are decreasing rapidly, with grid parity expected in high-insolation areas of the USA and EU within a decade, though further innovation is needed for 'balance of system' components to ensure competitiveness.
• European solar PV deployment has been primarily driven by 'market pull' policies, specifically feed-in tariffs, which were effective for deployment but may have been too generous to sufficiently incentivize rapid cost reductions.
• The USA focuses more on 'technology push' initiatives and R&D support for solar PV and CCS; while it invests the most in absolute dollar terms, its solar R&D as a fraction of GDP is lower than that of Germany, France, Italy, and Spain.
• Carbon Capture and Storage (CCS) is currently in a 'valley of death' where component technologies are mature, but large-scale integrated demonstration is required to prove commercial viability and reduce investment risks.
• In the USA, CCS development is primarily driven by the market for Enhanced Oil Recovery (EOR) rather than climate mitigation, as there is no national carbon price or comprehensive climate policy to drive a mitigation market.
• European CCS progress is hindered by high uncertainty regarding the timing and ambition of carbon pricing and underdeveloped legal frameworks for long-term carbon storage, leading to a negative outlook for commercial viability by 2020.
• China has become the world's largest solar PV manufacturer, with its industry growing rapidly due to low production costs and strong demand from European markets, though it has historically lacked core technologies and raw materials.
• India's Jawaharlal Nehru National Solar Mission (NSM) sets ambitious deployment targets (up to 20 GW by 2022), but these are conditional on international financing and face challenges from a less mature manufacturing sector.
• The solar PV innovation system is increasingly international, which benefits cost reduction through competition but creates challenges for policymakers attempting to grow domestic industries.
• Effective climate technology governance requires a balanced approach combining both 'technology push' (R&D) and 'market pull' (demand creation) measures throughout the development path, rather than sequentially.

APA

Varnäs, A., Fahnestock, J., Nykvist, B., Chandler, C., Erickson, P., Nilsson, M., Han, G., Lazarus, M., & Hallding, K. (2012). Driving Technological Innovation for a Low-Carbon Society. Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/SEI-ResearchReport-Varnas-DrivingTechnologicalInnovationForALowCarbonSociety-2012.pdf

Chicago

Varnäs, Annika, Jesse Fahnestock, Björn Nykvist, Chelsea Chandler, Peter Erickson, Måns Nilsson, Guoyi Han, Michael Lazarus, and Karl Hallding. Driving Technological Innovation for a Low-Carbon Society. Stockholm Environment Institute, 2012. https://www.sei.org/mediamanager/documents/Publications/SEI-ResearchReport-Varnas-DrivingTechnologicalInnovationForALowCarbonSociety-2012.pdf.

Wikipedia

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BibTeX

@techreport{varns2012driving, author = {Varnäs, Annika and Fahnestock, Jesse and Nykvist, Björn and Chandler, Chelsea and Erickson, Peter and Nilsson, Måns and Han, Guoyi and Lazarus, Michael and Hallding, Karl}, title = {{Driving Technological Innovation for a Low-Carbon Society}}, institution = {Stockholm Environment Institute}, year = {2012}, url = {https://www.sei.org/mediamanager/documents/Publications/SEI-ResearchReport-Varnas-DrivingTechnologicalInnovationForALowCarbonSociety-2012.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }