POWER December 2013 - 6

SPEAKING OF POWER
The When, Where, and
Why of Energy Patents
N
ew research conducted by Massachusetts
Institute of Technology
and Santa Fe Institute researchers
finds that the number of energy patents
is increasing faster than patents overall.
However, the trend lines are strikingly different
for different energy technologies.
The results, published as " Determinants
of the Pace of Global Innovation in Energy
Technologies, " included several surprises.
The researchers examined datasets including
more than 73,000 energy-related patents
issued in more than 100 countries
between 1970 and 2009 and found that
the number of energy patents rose dramatically
over those four decades, especially
for solar and wind. In contrast, patents involving
fossil fuels increased only slightly
during the period studied, while filings in
nuclear technology were flat.
Money Plus Markets
The researchers found investment in alternative
energy technologies surged during
the 1970s energy crises but was followed
by decades of little R&D investment when
oil prices fell. " The observed correlation
between total (public and private) R&D
and patenting in the US over the period of
1970-2003 suggested that this slowdown
in innovation was the direct result of disinvestment
in research, " they write.
However, more recently, something
changed. The researchers note that " The
empirical evidence points to a pronounced
increase in patenting in energy technologies
over the last decade . . . despite traditional
investment-private and public
R&D-not rising commensurately. " Clearly,
money isn't the only driver of innovation.
Markets also play a role.
The team said the trends over time and
across technologies can only " be accounted
for by the combined effects of public investments
in R&D and a fast rate of growth in
markets for these technologies. " So it should
come as no surprise that " Renewable energy
technologies-especially solar and wind-
are growing most rapidly while patenting
in nuclear fission has remained low despite
sustained high levels of public investment. "
6
So why not leave innovation up to markets
alone? As the researchers found, early-stage
markets for new technology are
typically very small, so public R&D investments
are needed to spur new approaches.
As markets develop, market growth, sometimes
driven by public policy, attracts
investment. " Public R&D investments in
innovation and those driven by market expansion
have effects that are multiplicative,
with each providing a base multiplier
for the other. Any public R&D investment
is highly leveraged by market driven investments
as technologies develop towards
stage B, as is presently occurring
with several energy technologies such as
solar and wind. "
Fossil Sector Falling Behind
Carbon capture and sequestration (CCS)
for power plants is one of those earlystage
markets. Although CCS has been
used commercially, its success to date (for
enhanced oil recovery) is highly locationdependent.
CCS for power plants is effectively
a new market.
As the researchers note, " It is important
to emphasize that the growth of markets
for low-carbon energy technologies, which
improve on an aspect of performance (carbon
emissions) not commonly captured by
market price . . . has depended strongly
on public policy. We also note that policies
are likely needed to fund research and
incentivize market growth further until
these technologies become cost-competitive
and can take off on their own. "
Without innovation for CCS, the outlook
for fossil-fueled generation is bleak, and
not just in the U.S. In late October, the
U.S. Treasury Department declared the nation
would no longer support multilateral
development bank funding for new overseas
coal projects-unless they employ
CCS. Meanwhile, a report issued earlier in
October by the Global CCS Institute found
that progress toward large-scale CCS has
stalled, particularly for projects involving
power generation (see p. 10).
Even a major lobbying group, the World
Coal Association, has called for the develwww.powermag.com
opment
of CCS to enable the future use of
coal. So why has CCS R&D been so slow?
The Global CCS Institute blames weak
policy support: " Without sufficient policy
incentives to attract private funding, it is
difficult to create the economic or market
conditions required for broad-based CCS
demonstration (and deployment). "
U.S. Is Not No. 1
Why should you care what patents are filed
and where? Because, as the study authors
note, " Patents provide an unparalleled
measure of the location and intensity of innovative
activity. " And when it comes to
energy-related patents, the U.S. is not in
the lead. Japan issued the most patents
for all energy technologies other than coal,
hydroelectric, biofuels, and natural gas over
the study period. China is now issuing the
most coal patents, surpassing both the U.S.
and Europe, and China is running a close
second to Japan for total wind patents.
However, those rankings don't tell the
whole story. The researchers point out that
they approached their quantitative analysis
at a global level because " It is common
for a technology to be, for example, developed
by a US firm, patented and manufactured
in China, and sold and installed
in Europe. " Nevertheless, patent location
is an indication of where that intellectual
property is likely to be used, and the biggest
market for new generation of all sorts
is clearly not in North America.
Remember, the researchers looked at
patent filings, not commercial technologies.
But patents are often a leading indicator
of market growth or revitalization.
Without them, industries reinforce the
status quo and can eventually die. At the
very least, this study should show both
industry and government leaders what it
takes for any country hoping to capture
market share for tomorrow's energy technologies.
As the researchers noted, a dollar
invested today in R&D is likely to have
ripple effects far into the future. ■
-Gail Reitenbach, PhD is editor of
POWER. Follow her on Twitter @GailReit
and the editorial team @POWERmagazine.
POWER | December 2013
http://www.powermag.com
POWER December 2013

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