Is green growth just a fantasy? Knowledge, innovation and the promise of a better life for all

I don't know about you, Steamnocchio, but I have my doubts about this black growth strategy

Steampunk describes a world of airships plying the aether and mechanical computing based on Babbage’s Difference Engine. Artists show great imagination in describing a world where coal is still king, streets are gas lit, and rock oil has not yet been rebranded as petroleum.

They play with the ideas of lock-in and path dependence, a situation where a technology that may be inferior to alternatives still dominates because switching would create too many problems, or be too expensive, or where an early decision limits the options available later, even if the original conditions are no longer relevant.

A new study from the OECD Fostering Innovation for Green Growth looks at these issues too, but with more of a policy focus than say Steamboy or FreakAngels. It may be hard to see what government bureaucracies with their rules and procedures could do to promote innovation other than shut up and leave the innovators to get on with it. In fact, they can do quite a lot. History has plenty of examples of inventions and other innovations that came about thanks to public money.

Traditionally, the means used was to create a prize. For example, hunger and scurvy were provoking more losses than the enemy during Napoleon’s Russian campaign, so the government launched a competition to find a way of preserving food for the soldiers. In 1809 Nicholas Apart came up with the winning entry – canning.

Today, prizes have given way to R&D funding or other systematic efforts to promote innovation, and thanks to public programmes we have the Internet, World Wide Web, and GPS navigation. But you may have noticed I said “inventions and other innovations”. It’s not just about new technologies. Innovation covers new ways of using existing technologies as well as new processes for production and marketing. For example, miniature storage devices and portable music players both existed before they were combined to create MP3 devices, while online music stores represent a marketing innovation.

The paper argues that while “green” innovation is the same as other kinds of innovation in many respects, government policy is needed to address a number of specific issues where the market alone is unlikely to provide a solution. One of the main issues is that if firms and households do not have to pay for the environmental damage they inflict, there will be little incentive to invest in green innovation. Dominant designs can be a barrier too – the costs of supplying the infrastructure needed to replace today’s automobiles with electric or hydrogen-powered vehicles for instance.

Innovation is also the theme of the OECD Global Forum on the Knowledge Economy taking place today and tomorrow. Among all the proposals for unleashing of entrepreneurship, the title of Session 2 is quite innovatively sobering: “Science and innovation policy on a shoestring”.  (You can see a webcast here.)

As the conference presentation says, fostering innovation and scientific breakthroughs is tough even when governments and companies have money to spend. It will be interesting to see what the participants think can and should be done now that budgets are tight, and how developing countries can benefit.

Let’s hope that future audiences of alternative history and fantasy will be as amused or horrified by a world that stayed on the path we’re on just now as we are by steampunk.

Useful links

OECD work on green growth

OECD work on innovation