‘Nudging’ economies is not conducive to igniting a real green transformation.
Those nations that cling to the bogus idea that government investment has some
sort of a natural balancing point with the business sector will miss their opportunity
to seize on an historic energy transition or be forced to import it from elsewhere.
In reality, government and business activities frequently overlap. Clean technology
businesses, like most businesses, are apt to call for subsidy and government-led R&D.
Venture capitalists and technology entrepreneurs respond to government support
in choosing technologies to invest in, but are rarely focused on the long term.
Getting to much-needed green transformations presents a serious problem: given
the risk aversion of businesses, states need to sustain funding for the search for radical
ideas that push a green industrial revolution along. Governments thus have a leading
role to play in supporting the development of clean technologies past their
prototype stages through to their commercial viability.
Real courage exists in those countries that use State resources to give a serious
‘push’ to clean technologies, by committing to goals and funding levels that
attempt seemingly impossible tasks. Courage is China’s attempt to build a US and
European electric grid-sized market for wind turbines by 2050 and to increase its
solar PV market by 700 per cent in just three years. Courage is also development
banks stepping in where commercial banks doubt, promoting development, growth
of the firm and a return on investment to taxpayers that is easier to trace. It is
important that tax money is traceable in its promotion of technologies and genera -
tion of returns. Success makes support for another round of risky investments more
likely and creates better visibility for the positive role that government can play in
fostering innovation (Lazonick and Mazzucato, 2013).
If some European countries have demonstrated the value of long-term policy
support for R&D and market deployment, the United States has in contrast
demonstrated how maintenance of a state of uncertainty can lead to missed
opportunities. The US failed to adopt a long-term national energy plan that places
renewables at the forefront, while also refusing to reduce or abandon support for
other, more mature energy technologies, leaving the task of direction setting with
its states.
Nurturing green technologies
Historically, different types of government policies have played important roles in
the origins of many green technologies. This section looks at the history of two
renewable energy technologies: wind turbines and solar PV modules.
As characteristically ‘intermittent’ and ‘diffuse’ sources of energy, wind and solar
power have benefited from what Madrigal (2011, p263) describes as ‘throwing
software at the problem’: increasing the productivity and reliability of wind and
solar projects with advanced computer modelling, management of power pro duction
and remote monitoring. Investments in a ‘smart grid’ are meant to digitize modern
energy systems to optimize the flexibility, performance and efficiency of clean
144 Mariana Mazzucato
Those nations that cling to the bogus idea that government investment has some
sort of a natural balancing point with the business sector will miss their opportunity
to seize on an historic energy transition or be forced to import it from elsewhere.
In reality, government and business activities frequently overlap. Clean technology
businesses, like most businesses, are apt to call for subsidy and government-led R&D.
Venture capitalists and technology entrepreneurs respond to government support
in choosing technologies to invest in, but are rarely focused on the long term.
Getting to much-needed green transformations presents a serious problem: given
the risk aversion of businesses, states need to sustain funding for the search for radical
ideas that push a green industrial revolution along. Governments thus have a leading
role to play in supporting the development of clean technologies past their
prototype stages through to their commercial viability.
Real courage exists in those countries that use State resources to give a serious
‘push’ to clean technologies, by committing to goals and funding levels that
attempt seemingly impossible tasks. Courage is China’s attempt to build a US and
European electric grid-sized market for wind turbines by 2050 and to increase its
solar PV market by 700 per cent in just three years. Courage is also development
banks stepping in where commercial banks doubt, promoting development, growth
of the firm and a return on investment to taxpayers that is easier to trace. It is
important that tax money is traceable in its promotion of technologies and genera -
tion of returns. Success makes support for another round of risky investments more
likely and creates better visibility for the positive role that government can play in
fostering innovation (Lazonick and Mazzucato, 2013).
If some European countries have demonstrated the value of long-term policy
support for R&D and market deployment, the United States has in contrast
demonstrated how maintenance of a state of uncertainty can lead to missed
opportunities. The US failed to adopt a long-term national energy plan that places
renewables at the forefront, while also refusing to reduce or abandon support for
other, more mature energy technologies, leaving the task of direction setting with
its states.
Nurturing green technologies
Historically, different types of government policies have played important roles in
the origins of many green technologies. This section looks at the history of two
renewable energy technologies: wind turbines and solar PV modules.
As characteristically ‘intermittent’ and ‘diffuse’ sources of energy, wind and solar
power have benefited from what Madrigal (2011, p263) describes as ‘throwing
software at the problem’: increasing the productivity and reliability of wind and
solar projects with advanced computer modelling, management of power pro duction
and remote monitoring. Investments in a ‘smart grid’ are meant to digitize modern
energy systems to optimize the flexibility, performance and efficiency of clean
144 Mariana Mazzucato