How green innovation can stimulate economies, curb emissions – IMF
Making low-carbon technologies cheaper and more widely available is crucial to reducing harmful emissions, International Monetary Fund (IMF), has said.
The Fund, acknowledged that initial momentum about green innovations have slowed with promising technologies not spreading fast enough to lower-income countries, where they can be helpful to curbing emissions.
Green innovation peaked at 10 percent of total patent filings in 2010 and has experienced a mild decline since. The slowdown reflects various factors, including hydraulic fracking that has lowered the price of oil and technological maturity in some initial technologies such as renewables, which slows the pace of innovation.
“The slower momentum is concerning because, as we show in a new staff discussion note, green innovation is not only good for containing climate change, but for stimulating economic growth too. As the world confronts one of the weakest five-year growth outlooks in more than three decades, those dual benefits are particularly appealing. They ease concerns about the costs of pursuing more ambitious climate plans. And when countries act jointly on climate, we can speed up low-carbon innovation and its transfer to emerging market and developing economies,” the Fund said.
The Bretton Woods Institute noted that climate policies even help spread the use of low-carbon technologies in countries that are not sources of innovation, though trade and foreign-direct investment.
According to the Fund, countries that introduce climate policies see more imports of low-carbon technologies and higher green FDI inflows, especially in emerging market and developing economies.
The global lender noted that more protectionist measures would impede the broader spread of low-carbon technologies. According to the Fund, lowering tariffs on low-carbon technologies can further enhance trade and FDI in green technologies.
This is especially important for middle- and low-income countries where such tariffs remain high, it said.
“In addition, and given evidence of economies of scale, protectionism—with ultimately smaller potential markets—could stifle incentives for green innovation and lead to duplication of efforts across countries.
“The risks of protectionism are exacerbated when climate policies, such as subsidies, do not abide by international rules. For example, local content requirements, whereby only locally produced green goods benefit from subsidies, undermine trust in multilateral trade rules and could result in retaliatory measures,” it further said.
