Quarterly research and innovation literature review: R&I and the green transition

In July 2021, the Commission adopted the ‘Fit for 55’ package, which includes proposals to make the EU's climate, energy, land use, transport and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030. This package is crucial for making the European Green Deal a reality, with research and innovation (R&I) playing a central role. Against this backdrop, this edition covers papers that focus on the role of R&I for the green transition.

A new environmentally sustainable and inclusive approach to growth is urgently required, and investments in low-carbon innovation are central to this. Empirical evidence shows that demand-pull forces, such as general energy prices, carbon prices, targeted market-creating interventions, seem to boost R&I activities related to green technologies.

The selected papers underpin the importance of designing climate policies with innovation at the forefront. They also make a case for coordination of policies and designing them in a way to influence the volume, direction and pace of R&I. In economies where fossil fuel technologies are initially prevalent, an optimal policy should include R&I subsidies specifically targeted at low-carbon and clean R&I.

This review also highlights the role of consumers and society in pushing innovation in the “clean direction”. Changing social values can support structural change towards predominantly green technologies and politics can play a key role in this, empowering scientists and climate activists, and departing from brown lobbies.

Two recently published flagship reports are also presented in this edition. The European Innovation Scoreboard 2021 shows that EU innovation performance has continued to increase, with Sweden, Finland, Denmark and Belgium featuring as innovation leaders. The OECD SME and Entrepreneurship Outlook 2021 stresses how SMEs operations were affected by the pandemic, as well as the importance of government support in this context.

Contributors: Ana Correia, Océane Peiffer-Smadja and Julien Ravet.