Policy implications

“Improvement of innovation performance is a long-term target that requires continuous and systematic efforts, since many policies that affect the system interrelate with the national, economic, institutional and social environment” (Samara et al., 2012, p. 637). This statement proves to be key to regulators. If they want the transition to a green economy, they have to foster green innovation. This effort has to be guided with strategic foresight and be as reliable and transparent as possible. Several policy measures have proven to be conducive to green technologies. A suitable policy mix which is not leading to overshooting or contradicting results is the goal for accelerating green innovation (Flanagan et al., 2011a; Lerner, 2002).

Chapter 2 suggests to observe phenomena that have direct influence on market growth. Policy measures connected with the right communication strategy can induce private capital and start entrepreneurial activity. The “Green Wave Initiative” of California’s public pension system led to the emergence of a prosperous clean technology industry connected with innovation and job creation (nonetheless, the initiative’s specific configuration might have contributed to overshooting phenomenon). Understanding and thoughtful regulation of private capital markets is thus needed to accelerate green innovation.

Chapter 3 recommends policy makers to obtain a holistic and informed view of the actors and interactions in the regulated green innovation field. Conflicting objectives between innovation policy and finance policy have to be balanced. Imbalanced and competing economic-political targets have to be prevented. The goal to stabilize the financial market in the aftermath of the financial crisis was in contrast to the goal of accelerating green innovation. Thus, prioritization of goals and possible exclusion of adversely affected competing policy targets can help to save welfare losses. Exemptive provisions for risk capital providers during the downturn could have saved the clean technology industry or prevent needed public stimulus packages. In addition, an informed perspective in regard to demand/supply characteristics of supported industries when engaging in the decision-making process for support programs could prevent from oversupply or underfunding. Oversupply of funding or support may lead to overshooting - meaning a boom market with a subsequent drastic downturn or market downturns.

The findings of chapter 4 demand technology specific policies, taking into account the actual market conditions and the position of the technology in the technology lifecycle.

The most relevant policy measures for investors are monetary/fiscal and economic incentives. These directly impact the risk/return profile of RE projects and, thus, their attractiveness. Market based incentives also have strong influence on investments by institutional investors. These measures support the need of investors for a highly reliable environment, best accompanied by a diminished risk exposure. Supportive regulatory measures such as codes and standards accelerate the diffusion process of RE technologies by further reducing technological and regulatory risk associated with investments in RE projects. Thus we recommend a supportive policy mix. The results of chapter 4 suggest the establishment of a reliable framework with a clear vision and long-term policy objectives regarding the sustainability transition.

When regulating clean technologies throughout industry development policy makers should keep all actors in mind as stated in chapter 5. Finance and innovation are usually separately regulated actors but as already found in chapter 2 largely interconnected. Thus, policy makers should regard immediate consequences and feedback mechanisms in their process. The rightly adjusted attention towards topics at the right point in life-cycle helps to support the growth trajectories of an industry. Thus, observing media is a possible way to recognize industry maturity and possible legitimacy of technologies.

 
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