Clean Energy Technologies
Clean energy technologies that cost more than fossil fuel technologies require support through research and development (R&D). Learning-by-doing relates historical cost decreases to accumulation of experience.
A learning investment is the amount of subsidy that is required to reach cost parity between a new technology and a conventional technology. We use learning investments to compare the relative impacts of two stylized types of R&D. We define curve-following R&D to be R&D that lowers costs by producing knowledge that would have
otherwise been gained through learning-by-doing. We define curve-shifting R&D to be R&D that lowers costs by producing innovations that would not have occurred through learning-by-doing.
We show that if an equal investment in curve-following or curve-shifting R&D would produce the same reduction in cost, the curve-shifting R&D would be more effective at reducing the learning investment needed to make the technology competitive. The relative benefit of curve-shifting over curve-following R&D is greater with a high starting cost and low learning rate.
Our analysis suggests that, other things equal, investments in curve-shifting R&D have large benefits relative to curve-following R&D. In setting research policy, governments should consider the greater benefits of cost reductions brought about by transformational rather than incremental change.
1. Shayegh S., Sanchez D. L., Caldeira K. “Evaluating relative benefits of different types of R & D for clean energy technologies”, Energy Policy, 2017
2. Shayegh S., Sanchez D. L.
curve-shifting R&D works better than curve-following R&D for technologies with low learning rates and high costs.