Imperial researcher reveals clean technologies are good for growth

06 Nov 2014

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"Clean technologies" could generate more growth in innovation and the economy than fossil fuel-based technologies, researchers report. Clean technologies include smart devices including iPhones, renewable energy such as wind power and green transportation including electric cars. Fossil fuel-based technologies include combustion engines, which currently power anything from vehicles to electricity generation.

 
"Clean technologies" could generate more growth in innovation and the economy than fossil fuel based technologies, researchers report.  

In an effort to reduce emissions by at least 80 per cent by 2050, the UK aims to move to a more energy efficient and low carbon economy.  The government has introduced legislation that supports innovative businesses that make products and services that are more environmentally friendly.  However, some businesses and politicians have claimed that these policies disadvantage the UK, forcing companies to countries that have less stringent climate regulations.

The researchers from Imperial College Business School and the London School of Economics and Political Science (LSE) set out to determine whether climate policies had a detrimental effect on the economy and innovation. They found that policies aimed at encouraging innovation in businesses by using clean technologies, while displacing polluting ones, has a positive impact on economic growth.  This is because clean technologies lead to more knowledge ''spillovers'', which is when knowledge and research generated by one firm also benefits other firms.

The researchers say an example of where clean technology created by one company has created a knowledge spillover comes from the development of smart phones. Apple first introduced the now common ''candy-bar'' design, which has the screen and keypad on a single face. However, other manufacturers  benefitted greatly from Apple's research and soon sold smart phones with similar designs. The team says that while spillovers may not be welcome by the companies involved, it can have a positive effect on growth, because it creates healthy competition, and is good for consumers, giving them more choice, which drives prices down.

The report shows that knowledge spillovers are more likely to happen in industries that are developing clean technologies.  This is because these relatively new industries have more scope and opportunities to explore, innovate and develop new business models.

Dr Ralf Martin, the lead researcher from Imperial College Business School, says, ''Our research paper shows that clean technologies are not only environmentally friendly but they have the potential to make businesses more innovative , which can lead to economic benefits, especially if support is targeted at radical clean technologies that avoid fossil fuels altogether.  Clean technologies are a relatively untapped source of wealth for countries all over the world. They could have a transformative impact on the global economy in a similar way that Information and Communications technologies did.''

The research also found that clean industries that are clustered in the same region benefit more from knowledge spillovers. The researchers speculate that being physically close one another enables these industries to exchange information, which may stimulate spillovers. The researchers suggest that climate policies that encourage clean technology clusters may stimulate knowledge spillovers, which could lead to greater economic growth, instead of the previously predicted exodus of companies to countries with fewer climate regulations.

Maxine Myers caught up with Dr Ralf Martin to talk about the findings in an audio interview.  The pair discusses the report findings and what lessons government can learn in the run up to next year's general election.

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