A Growing R&D Gap

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“I don’t know what the future may hold, but I know who holds the future”

Ralph Abernathy

We ended the previous blog by outlining why investing in green energy is so urgent: because it is us who decides the future of our planet. One important aspect needed for the continuation of the green revolution is a research structure that can regularly spur innovation. This week, we are transitioning away (no pun intended) from Clean and Affordable Energy to Industry Innovation and Infrastructure.

Bottlenecks in the global supply chain inhibit clean energy’s transition in the short-term but accentuate the innovation gap’s long-term effects. This massive reshaping of the world economy requires new technology to be developed and diffused through economies of scale. However, in order ensure a smooth transition, more resources must be channeled towards research and development (R&D), while institutions foster an environment for increased investment.

For almost two decades, spending on R&D as a percentage of global GDP has stagnated, creating the gap we see today. As of 2019, OECD nations spent 2.4% of global GDP on R&D, compared to 2.1% in 1985 (Figure 1, OECD 2021). In 2011 The United States, the second largest producer of carbon emissions in the world, spent a measly $2.7 billion on energy research (Augustine 2011). Some of the most impactful technologies have yet to materialize, such as carbon-capture technology or microbial fuel cells, for this reason exactly. R&D is so important because it creates a self-building platform towards the future.

A growing research gap only leads to delayed modernization. Renewable energy consumption is only 18% of all total energy consumed (Figure 2, World Bank 2021), while the transition to a carbon-neutral world is only 10% finished (The Economist 2021). Growth within a sustainable economy will require continuous investment in R&D as well as a broad framework for inter-institutional knowledge-sharing.

How do we diminish this R&D gap? The clearest and obvious answer is more investment, particularly from the public sector. However, complex issues require multifaceted solutions. Governments, universities, and corporations must work more closely in order to better distribute knowledge (Rand 2017). Performance-based investment is also key to ensure efficient allocation of resources. Early results of this implementation in the EU look promising. Financial incentives could play a role as well. Giving small tax breaks to firms investing in R&D has a minimal impact on tax revenues and an exponential effect on innovation (Rand 2017).

For centuries, societies have evolved through tinkering and experimentation with the technology of their era. Innovation has guided civilizations through times of transition and development, from the iron age to the industrial revolution. There is no doubt the transition to a green future will be challenging, but success could unlock sustainable growth for decades. Solutions must be broad and forward-thinking to not only tackle current issues but also mitigate future ones. It is up to the international community to harness our current technology’s positive impacts. The power to continue this evolution is in our hands, will we take it? 

Works Cited

Augustine, Norm. “The Research and Development Gap.” The Hill, 2 Sept. 2011, thehill.com/blogs/congress-blog/technology/179367-the-research-and-development-gap.

“Bunged Up.” The Economist, 12 June 2021.

OECD (2021), Gross domestic spending on R&D (indicator). doi: 10.1787/d8b068b4-en (Accessed on 15 June 2021)

United States, Congress, Directorate General, et al. Research, Innovation and Economic Growth, European Commission, 2017, pp. 6–47.World Bank. “Renewable Energy Consumption (% of Total Final Energy Consumption).” The World Bank, 2021, data.worldbank.org/indicator/EG.FEC.RNEW.ZS?view=chart.