“The just transition is the real challenge”

Barely a generation ago, “geoengineering” was the stuff of science fiction – and in many ways it still is. Shorthand for large-scale technological interventions in the earth’s natural systems, geo-engineering falls into two camps: on the one hand, greenhouse gas removal (GGR) such as planting forests and capturing carbon; on the other, solar radiation management (SRM) such as marine cloud seeding and stratospheric aerosol injection. 

These mega projects promise the world, but divide opinion. The UK’s Climate Change Committee says GGR innovations will be “essential” for achieving its national net zero emissions target by 2050. Some scientists claim they are little more than distractions from the central task of cutting emissions, while others fear the unexpected consequences of tampering with complex climate systems. 

The biggest problem seems to be the untested nature of these innovations, not least because 35 percent of emissions cuts under the Paris Agreement depend on technologies that are either prototypes or not yet fully deployed, says the International Energy Agency (IEA), while a further 40 percent of cuts rely on technologies that are not yet commercially available at mass-market scale. 

This has to be put into real-world perspective: “The fastest energy-related examples in recent decades include consumer products like LEDs and lithium ion batteries, which took 10-30 years to go from the first prototype to the mass market,” says the IEA. “These examples must be the benchmarks for building the array of energy technologies to get to net-zero emissions.” Which rather begs the question: If it took decades to roll out energy-efficient lightbulbs, how long will it take to get geo-engineering off the ground? 

Driving mission innovation 

Professor Andreas Klasen, Director of the Institute for Trade and Innovation at Offenburg University in the deep south of Germany, is an avowed optimist – but also a realist and an expert on innovation systems. He says that innovation is not a silver bullet for climate change, but that real improvements in the coordination of innovation systems could be “a game changer for the environment by 2030”. 

“International coordination,” says Klasen, “allows for managing risks across borders, enhancing knowledge flows and leveraging economies of scale in innovation. Cross-border networks have the ability to bring together likeminded individuals, as well as those from opposite ends of the spectrum, to disseminate knowledge and innovation methods. Put simply, co-governance drives interaction and alignment.” 

International cooperation, also known as “mission innovation”, has paid dividends in recent years for clean-energy research, development and demonstration (RD&D), says a new report led by researchers at the University of Cambridge in the UK. Between 2000 and 2018, clean energy RD&D funding shot up across major economies in Europe, Asia and the USA by an impressive 936 percent, 247 percent and 127 percent respectively. What is less encouraging, however, is the real-world impact on offer: “While we have seen the creation of a lot of new energy innovation agencies since 2000,” says co-author Esther Shears, “they experimented only marginally with designs that bridge lab to market and manage only a fraction of total energy RD&D funding.” 

Keeping billions afloat 

To be truly game changing, therefore, we need to go beyond national institutions and even high-level international partnerships. The international community will need to come together and redraw the global playing field, while persuading billions of people to learn and play by new rules. To adapt, as humans do, to new physical environments and even, given the speed and scale of climate change, to a new social contract. 

Says Klasen: “We know what the primary sources of greenhouse gas emissions are in emerging economies, for example: transportation, electricity production and industrial processes. What has most potential in terms of impact is a stronger innovation ecosystem, integrating technologies and processes, business models and infrastructure, regulatory frameworks – but also culture and values. If societies, governments, businesses and individuals understand the strength of system innovations, we can generate an ‘innovation movement’ that brings together many actors who share the benefits and risks of change.” 

What do these big ideas and all the constructive “systems thinking” in reality mean to the billions of people on the crossroads of climate change and poverty? How can we empower what economists call the “Base of the Pyramid” (BoP), the poorest two-thirds of humanity – 4 billion people – and give them a stake in the environmental, economic and social changes to come? The answer is largely in their hands, says Klasen, so long as the international community is able to stomach the risk and deliver the funding. 

“Despite their unfortunate conditions, the poor are a vast source of innovation, driven to be creative in solving problems of their economies and societies. The ‘BoP method’ is an excellent approach for tackling poverty and leveraging the opportunities that exist in emerging markets and developing economies. There are many examples: Long-lasting insecticide-treated nets against malaria, accessible water purification, mobile technology for the poor, as well as flexible payment options to access basic services. 

“Above all I should highlight innovative financing solutions, particularly finance to scale-up corporate BoP initiatives with an outcome-based contracting approach, which draw closely on recent advances in social and development impact bonds. Here the outcome payers (i.e. the providers of concessionary capital) protect the risk investors (i.e. the providers of commercial capital) by agreeing to repay a principal and a certain financial return, so long as pre-agreed and independently verified outcomes are achieved. For example, a total number of rural entrepreneurs, trained in line with impact benchmarks, adhering to climate friendly agricultural practices. 

“From my point of view, that’s a very efficient way to combine different BoP innovations because it’s not only a technical process or product innovation regarding carbon emissions, but combines sustainable agricultural practices with innovation in financing. It’s when you bring these things together then you have the biggest potential for scaling-up in the Global South.” 

On the shoulders of innovation 

“Innovation is a friend of climate action and resilience,” declares Klasen. “If we think about new solutions, about more efficient ways to combine the SDGs such as poverty reduction and climate action leading to a just transition and sustainable economic growth, innovation must be our friend. 

“There are numerous examples: Let’s think about mangrove forests – successful approaches for conservation efforts globally because cost-effective and low-maintenance trees are natural alternatives for storing carbon dioxide. Let’s think about agriculture franchise models in Nigeria that seek to sustainably improve the lives of smallholder farmers through the provision of comprehensive farming services, focusing on climate change mitigation initiatives and building farmers’ resilience to climate-related shocks. Or smart meter technology that enables more reliable grid operations by reducing utility inefficiency and making it easier for utilities to collect large numbers of small electricity payments from customers. 

“The just transition is the real challenge, i.e. greening the economy in a way that is fair and inclusive for everyone concerned, creating decent work opportunities and leaving no one behind. For a just transition, we need innovation across so many different dimensions: technologies, products, processes, new production systems, the right legal and regulatory frameworks, as well as innovative financing instruments to finance innovation.” 

Ultimately, the smart money for climate resilience is less on geo-engineering or high-level international cooperation. It is on building bridges over critical sectors like agriculture, environment, energy and technology in a way that brings real-world impact to billions of people, giving them a stake in scaling-up major climate and development innovations – as part of a new and global social contract. 

Factfile: Dr. Andreas Klasen 

Dr. Andreas Klasen is professor of International Business and Director of the Institute for Trade and Innovation (IfTI) at Offenburg University in Germany, focusing on innovation, climate action, global trade and sustainable leadership. In addition, he is a visiting scholar in the Blavatnik School of Government at the University of Oxford, UK.