capital by governments and businesses around the world. R&D works, but it is
not enough. Nurturing risky new industries requires support, subsidy and longterm commitments to manufacturing and markets as well. Governments must also
confront the reality that for most developed nations, the deployment of clean
technologies is occurring within a well-developed infrastructure. The clean slate
approach is not possible, meaning that investment is intended to manage a transition
to clean technology, a transition that threatens fossil and other energy industries
that have the benefit of a longer development period and significant sunk costs.
Not all in the business community are shy about calling for an active government
role in clean technology. The time is overdue to begin discussing what the real
role of business is in technological development beyond funding R&D. The clean
technology revolution is at a crossroads. Contrary to conventional wisdom, R&D
is not enough, VC is not so risk loving and small is not necessarily always beautiful.
In order for the crossroads to be decided and green transformations to be generated,
government policies must overcome these naive perspectives.
Innovation cannot be pushed without the efforts of many, and it cannot proceed
without a long-term vision that sets the direction and clarifies objectives. When
government policies fail, public dollars can be wasted and promising technologies
may fail to meet their potential, because politicians or taxpayers refuse to commit
more resources. When businesses fail, thousands of jobs can disappear, investors
lose confidence and the reputations of the technologies are scarred. Uncertainty
and stagnation can prevail, while the potential for promising new solutions vanishes.
With government and business activities so intimately linked, it is often impossible
to point blame accurately. At the root of it, there is only collective failure.
What should be clear is that the green energy revolution that has been experi -
enced so far is a result of a complex, long-term, multi-decade-long technological
development and diffusion process that unfolded on a global scale. The process
has benefited from major government investments that encouraged the establish -
ment of new firms and supported their growth by creating market opportunities.
The variety of policies was meant to produce technological development, market
efficiency, scale and efficient regulation. Overarching this process is a broad call
to accelerate economic growth through innovation in clean technologies that
mitigate climate change and promote energy diversity. The long-term vision is to
transform our current productive system into a sustainable green industrial system.
That is a mission set on producing long-lasting benefits to the public while
delivering on a promise of superior economic performance. Key to future green
transformations taking off will be the building of innovation ecosystems that result
in symbiotic public–private partnerships rather than parasitic ones. That is, increased
investments by the State in the ecosystem should not cause the private sector to
invest less and focus its retained earnings on areas like boosting its stock prices,
rather than on human capital formation and R&D.
The challenges of developing clean technologies go far beyond establishing
risky public sector energy ‘innovation hubs’. Governments must reduce the risk
of commercializing energy innovations while establishing and managing the
150 Mariana Mazzucato
not enough. Nurturing risky new industries requires support, subsidy and longterm commitments to manufacturing and markets as well. Governments must also
confront the reality that for most developed nations, the deployment of clean
technologies is occurring within a well-developed infrastructure. The clean slate
approach is not possible, meaning that investment is intended to manage a transition
to clean technology, a transition that threatens fossil and other energy industries
that have the benefit of a longer development period and significant sunk costs.
Not all in the business community are shy about calling for an active government
role in clean technology. The time is overdue to begin discussing what the real
role of business is in technological development beyond funding R&D. The clean
technology revolution is at a crossroads. Contrary to conventional wisdom, R&D
is not enough, VC is not so risk loving and small is not necessarily always beautiful.
In order for the crossroads to be decided and green transformations to be generated,
government policies must overcome these naive perspectives.
Innovation cannot be pushed without the efforts of many, and it cannot proceed
without a long-term vision that sets the direction and clarifies objectives. When
government policies fail, public dollars can be wasted and promising technologies
may fail to meet their potential, because politicians or taxpayers refuse to commit
more resources. When businesses fail, thousands of jobs can disappear, investors
lose confidence and the reputations of the technologies are scarred. Uncertainty
and stagnation can prevail, while the potential for promising new solutions vanishes.
With government and business activities so intimately linked, it is often impossible
to point blame accurately. At the root of it, there is only collective failure.
What should be clear is that the green energy revolution that has been experi -
enced so far is a result of a complex, long-term, multi-decade-long technological
development and diffusion process that unfolded on a global scale. The process
has benefited from major government investments that encouraged the establish -
ment of new firms and supported their growth by creating market opportunities.
The variety of policies was meant to produce technological development, market
efficiency, scale and efficient regulation. Overarching this process is a broad call
to accelerate economic growth through innovation in clean technologies that
mitigate climate change and promote energy diversity. The long-term vision is to
transform our current productive system into a sustainable green industrial system.
That is a mission set on producing long-lasting benefits to the public while
delivering on a promise of superior economic performance. Key to future green
transformations taking off will be the building of innovation ecosystems that result
in symbiotic public–private partnerships rather than parasitic ones. That is, increased
investments by the State in the ecosystem should not cause the private sector to
invest less and focus its retained earnings on areas like boosting its stock prices,
rather than on human capital formation and R&D.
The challenges of developing clean technologies go far beyond establishing
risky public sector energy ‘innovation hubs’. Governments must reduce the risk
of commercializing energy innovations while establishing and managing the
150 Mariana Mazzucato