Innovation lessons from the COVID-19 pandemic for the climate crisis
While the COVID-19 crisis has brought much suffering and socio-economic burdens, it has also shown how targeted state-business cooperation can accelerate innovation. Addressing the climate crisis requires equally creative collaboration.
In both cases, accelerating innovation and experimenting with local solutions is necessary but not sufficient. Critical technologies – whether vaccines or renewable energy – need to be released globally.
The first COVID-19 vaccines won emergency use authorizations in the United States and Europe less than a year after the pandemic began. Established innovation systems and adequate manufacturing capacity were important factors. Without long-standing cooperation between private and public institutions, and without government promotion and funding of research, the rapid development of a vaccine against COVID-19 would not have been possible.
For example, vaccine developers BioNTech and Moderna are academic spin-offs that received substantial public funding during significant phases of their development. BioNTech, which spun out of Johannes Gutenberg University Mainz, received around 17 million euros ($18.2 million) in research and seed funding from Germany’s Federal Ministry of Education and Research before even the COVID-19 pandemic. Moderna, founded in 2010 by a group of Harvard professors, secured $25 million in funding from the US government’s Defense Advanced Research Projects Agency.
Research institutions such as the University of Oxford in the UK and bodies like the National Institutes of Health in the US, both of which have been directly and indirectly involved in the various stages of COVID-19 vaccine development , were equally important. Research institutes in some middle-income countries, such as Fiocruz in Brazil, have also played an important role.
Building on this existing capacity, governments then provided targeted support to accelerate vaccine development and reduce the risks of investments in alternative vaccine platforms. First, government funding agencies provided grants. For the development of the joint BioNTech-Pfizer vaccine, the German Federal Ministry of Education and Research provided €375 million in milestone funding, of which almost €240 million was disbursed in 2020. This corresponds about 25% of the development costs of both companies until the time the vaccine has been approved. Moderna, meanwhile, received nearly $1 billion in funding from the U.S. government for vaccine development in 2020 and has worked closely with the National Institutes of Health to conduct clinical trials.
Shortly before that, Moderna had received $1 million from the Coalition for Epidemic Preparedness Innovations, a public-private initiative created in 2017 to promote the development of vaccines to fight epidemics. It has also provided over $500 million in funding to different organizations in 2020 for the development of the COVID-19 vaccine. Over 90% of funding was public, with at least 40% coming from the UK and Germany.
Demand-driven financing in the form of advance purchase agreements could be applied to climate-related innovation.
Antonio Andreoni and Rainer Quitzow
In addition, advance purchase agreements from the government ensured that the necessary production facilities could be built in parallel. In the event that a developer obtained regulatory approval for its COVID-19 vaccine, these contracts included a guaranteed supply for an agreed number of doses.
Complementing the parallel promotion of supply and demand, jurisdictions have accelerated their approval processes for licensing vaccines. Public authorities reviewed available data immediately after each clinical trial phase rather than after the overall trial was completed, as is usually the case. They also supported the preparation and implementation of independent monitoring studies.
So how important is the effort to fight climate change?
Tackling the climate crisis will also require a rapid acceleration of innovation and the associated scaling up of production capacities under a mission-driven innovation policy. Demand-side financing in the form of advance purchase agreements could also be applied to climate-related innovation. In the United States, for example, public procurement is now an important component of innovation policy and a key driver of funding. The US government spends about $50 billion a year on innovation-based procurement, which is equivalent to nearly one-third of federal spending on research and development.
Other important building blocks include mission-oriented innovation agencies such as the Defense Advanced Research Projects Agency, the Advanced Research Projects Agency – Energy, and the Biomedical Advanced Research and Development Authority. US President Joe Biden plans to create a new agency to promote climate innovation. At the state level, agencies like the New York State Energy Research and Development Authority are experimenting with models to attract investment into innovative projects to support the green transition.
The articulation of research and development funding and public procurement has been central to the success of US innovation agencies, including with COVID-19 vaccines, and this model is also expected to be integrated in the coming years into the European Green Deal and associated sustainable recovery programs. But policy makers need to develop new approaches to achieve an appropriate distribution of costs and benefits between private and public actors. Given the significant investments of the German government in the development of the BioNTech-Pfizer vaccine, one might wonder why it was not possible to influence its further distribution, the use of patents or even to secure a share of the resulting benefits.
As with COVID-19 vaccines, the diffusion of new climate technologies and local innovations is still not sufficient and they remain concentrated in a few countries. The rich world is calling on low- and middle-income countries to play their part in mitigation and adaptation, but transfers of technology and financial resources – including debt relief and restructuring – are currently well underway. below requirements. At the same time, the pandemic has accelerated the rise in debt levels in developing and emerging economies that began with the global financial crisis. Private debt in these countries now averages more than 140% of their gross domestic product – the highest level in 50 years and more than double the ratio before 2008.
Addressing today’s growing climate challenges – much like the development of safe and effective COVID-19 vaccines – requires innovative forms of cooperation between the public and private sectors, as well as between countries, designed to channel resources towards a new sustainable technological and economic paradigm. Shaping markets and industries through the right mix of targeted government funding and procurement policies promises to open new windows of opportunity and accelerate the green transition.
• Antonio Andreoni, Associate Professor of Industrial Economics and Director of Research at UCL’s Institute for Innovation and Public Utility, is Visiting Associate Professor on the Fourth Industrial Revolution at the Research Chairs Initiative South Africans from the University of Johannesburg.
• Rainer Quitzow is a research group leader at the Institute for Advanced Sustainability Studies.
© Syndicate Project
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