Abstract
Research and Innovation (R&I) are a key part of the EU strategy towards stronger growth and the creation of more and better jobs while respecting social and climate objectives. In the last decades, improvements in costs and performance of low-carbon technologies triggered by R&I expenditures and learning-by-doing effects have increased their competitiveness compared to fossil fuel options. So, in the context of ambitious climate policies as described in the EU Green Deal, increased R&I expenditures can increase productivity and boost EU economic growth and competitiveness, especially in countries with large innovation and low-carbon manufacturing base. The analysis captures the different nature of public and private R&I, with the latter having more positive economic implications and higher efficiency as it is closer to industrial activities. Public R&D commonly focuses on immature highly uncertain technologies, which are also needed to achieve the climate neutrality target of the EU. The model-based assessment shows that a policy portfolio using part of carbon revenues for public and private R&D and development of the required skills can effectively alleviate decarbonisation costs, while promoting high value-added products and exports (e.g., low-carbon technologies), creating more high-quality jobs and contributing to climate change mitigation.
Highlights
Research and innovation (R&I) forms a key component of the EU’s strategy calling for the delivery of stronger, lasting economic growth and the creation of more and higher quality jobs while respecting and promoting social and environmental objectives
To reflect increasing climate policy stringency, the global carbon price increases over time to about
GEM-E3-FIT can provide a rigorous assessment of interlinkages between the various mitigation options, i.e., interplay between RES expansion and electrification, competition between advanced biofuels and EVs etc., and can assess the complex dynamics related to energy demand and supply, technology innovation and uptake of low-carbon technologies
Summary
Research and innovation (R&I) forms a key component of the EU’s strategy calling for the delivery of stronger, lasting economic growth and the creation of more and higher quality jobs while respecting and promoting social and environmental objectives. The constant creation of new ideas and their transformation into technologies and products forms a powerful cornerstone for the 21st century society, with universities, research institutes and innovative companies cultivating this process. R&I strategy ensures that innovative ideas are turned into new products and services in an effort to create growth, quality jobs and address societal challenges. R&I investment directed to research organisations, universities and innovative technology companies are key component of the EU’s strategy, complemented with appropriate framework conditions, market regulation and the supply of the required skills and low-cost capital. Guided by the goals of the Innovation Union flagship initiative, the EU aims to radically change the way public and private R&I sectors cooperate, remove bottlenecks (like expensive patenting, market fragmentation, limited access to capital and skill shortages) that prevent the market development of innovative ideas and increase R&I investments to 3% of EU GDP.
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