Tracking innovation via green patent classification systems: Are we truly capturing circular economy progress?

Abstract

The transition to a circular economy (CE) is integral to the European Green Deal, where green technologies improve circularity across the supply chain. Emerging green patent classification systems can be used for finding and identifying trends in green technologies, as well as for tracking CE progress. The lack of harmonization in these systems for green and CE patents is reflected in differences within the emerging literature and what constitutes a CE framework, where metrics are overly-narrow. This creates challenges for strategic patent management in fostering CE innovation.This study evaluates how well patent classifications can be used to measure innovation in green technologies at the global level, and to indicate CE progress via these technologies at the European Union level. By comparing the International Patent Classification (IPC) system’s Green Inventory with the Cooperative Patent Classification (CPC) system, particularly the Y02W class (Climate Change Mitigation Technologies related to wastewater treatment or waste management) used by the EU, we first qualitatively establish the CPC has advantages in comprehensiveness, granularity, and lower risk of misclassification. Next, through an analysis of 1,634 patent abstracts within CPC Y02W filed from 2015-2021, we empirically assess the alignment between each of the 25 patent classes and the EU's 9 CE indicators, using Jacquard similarity index scoring (SIS) and ANOVA statistical tests for significance. We finally subsequently compare these abstracts with the 10 R-imperatives as a CE framework, also using keyword extraction.We identify gaps in the representation of certain CE indicators, and find that that some non-technological R-initiatives, such as repair and remanufacture, may be better captured by other CPC Y02 classes not currently included in EU monitoring. The study concludes that while the CPC Y02-tags provide a more detailed measure of green technology innovation globally and CE progress within the EU, further research is needed to refine the classification systems and ensure comprehensive monitoring of CE progress, particularly regarding non-technological innovations.