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A pivotal moment in the renewable energy shift

Business Trends

G. AINSCOW, Reddie & Grose, London, England

Governments worldwide have pledged to limit global temperature increase to 1.5°C, hoping this will stave off the most severe consequences of climate change. As the biggest single contributor to global warming, the energy sector has a huge role to play in reducing carbon emissions and helping governments achieve their ambitious climate change commitments. 

Recent data suggests that the European Union (EU) achieved a total energy consumption from renewable sources of 21.3% in 20201, a year that saw greenhouse gas (GHG) emissions in Europe fall to an encouraging 31% below 1990 levels. However, to achieve a 1.5°C cap on global temperature increase, it is thought that GHG emissions will have to be reduced to between 61% and 74% below 1990 levels by 2030. It is clear from these figures that much more is necessary in an ever-shortening time frame. 

Moreover, the geopolitical turmoil following recent events in Ukraine is highlighting the need to reduce dependency on foreign oil and gas and scale up renewable energy sources. The posture of the EU’s biggest economy has changed rapidly during the Ukraine crisis, with Germany committing €200 B to bring forward by more than a decade its goal of 100% renewable energy. 

Advancing the capabilities of energy supply technologies, including wind and solar energy, are central to addressing the climate crisis. However, they will rely on future developments in enabling technology fields like energy storage and grid management. Equally important will be the development of end-use sectors such as electric vehicles and heating, if they are to scale up to a level where they can replace oil and gas. Technological development, particularly in new and emerging areas, requires a large initial investment by firms. Protecting innovation through patents has become increasingly important in maintaining a company’s value and establishing a return on that initial investment. 

This article explores the role of patents in developing renewable energy technologies and provides a snapshot of patent trends across various renewable energy technologies. 

The role of patents. Innovation has a critical role to play in reducing the energy industry’s carbon footprint to avoid climate disasters. However, it is vital that the right commercial and legal frameworks are in place to incentivize and reward those who contribute while ensuring that any successful developments can be made available for global use equitably.

The patent system is designed to stimulate innovation. In return for sharing an invention with the world, patent holders gain exclusive rights to make, sell and use the invention, or to license these rights to others. The promise of exclusivity and financial reward pushes innovators to pursue technological innovation and promotes investment. Concurrently, the requirement for disclosure encourages knowledge sharing, placing others in a better position to make their developments. The patent system also provides a mechanism that allows innovators to work in collaboration with one another to drive forward innovation at a faster pace while also protecting individual parties’ contributions. 

While the patent system works well as a way of stimulating innovation, there are negative implications that cannot be ignored. The exclusivity that brings a financial return for investors can lead to high pricing that limits access to new technologies. In some cases, a player in a dominant position in the market can suppress competition which can, in turn, stifle further innovation. Climate change is too important an issue to be held back by patent rights, especially with the 2030 deadline looming. However, this is not to say that patents should be banned or handed over to the state. 

Such extreme measures would impede progress and remove the incentive to innovate openly that the system creates. In fact, by providing a clear mechanism for identifying technological contributions, the patent system provides a basis for creative solutions and policies that enable the fair use of new technologies. For example, the energy sector could follow the telecommunications model; we have seen policy step in to set fair and reasonable licensing fees for patents pertaining to technology that underpin standards ways of operating within the industry. The potential exists for policymakers to do the same concerning patents for technology deemed essential to combat climate change, or to otherwise ensure an equitable intellectual property (IP) system that rewards inventors and benefits all parties.

The patent landscape. Looking at the subject of patent applications filed worldwide can provide a snapshot of the energy innovation landscape by illustrating increases in activity and predicting the areas that will likely see progress, which is a useful tool for investors and innovators deciding where to target their efforts. 

According to a joint report by the European Patent Office (EPO) and the International Energy Agency (IEA)2, patent applications related to low-carbon energy technologies saw 3 yr of growth to the end of 2019, contrasted with a simultaneous decline of patents in relation to fossil fuels.

However, the drivers behind this growth are not energy supply technologies. For example, patent filings in the wind and solar energy fields dropped in the 5 yr leading to 2019 compared to the preceding 5 yr, despite still being significantly higher than 2000–2009 levels. It appears that these technologies have reached a stage of maturity where, while inventive activity is still prevalent, we cannot expect the radical step changes needed to meet climate change goals. 

For these changes to be realized, we must look to innovation in energy storage and grid management solutions that integrate renewable energy sources into the energy supply more efficiently and at a larger scale. We will also need to look at end-use sectors, such as electric vehicles and heating, where innovation is required to shift reliance away from fossil fuels to renewably sourced electricity. 

Compared to the reduction in inventive activity in energy supply technologies, the EPO and IEA report2 shows increased inventive activity in batteries, hydrogen, fuel cells and smart grids. In terms of end-use sectors, the report identifies electric vehicles as the most powerful driver of innovation in low-carbon energy technologies over the past decade.

Takeaway. While the patent landscape offers hope of significant breakthroughs in the drive to net-zero, it should also be noted that the EPO and the IEA emphasize that a need remains for more rapid innovation for the energy sector to reach net-zero emissions. The radical change that is necessary depends on contributions from additional technologies yet to be invented, let alone patented and successfully brought to market. To encourage this shift, governments would be wise to step in to boost funding for research and development into new technologies and areas that could have the potential to outperform the market leaders. These technologies will not attract large private investment without the initial public sector support to get them off the ground.H2T

LITERATURE CITED

1 Climate Analytics, “1.5°C pathways for Europe: Achieving the highest plausible climate ambition,” October 2021, online: https://climateanalytics.org/media/1-5pathwaysforeurope_2.pdf 

2 European Patent Office, International Energy Agency, “Patents and the energy transition: Global trends in clean energy technology innovation,” April 2021, online: https://iea.blob.core.windows.net/assets/b327e6b8-9e5e-451d-b6f4-cbba6b1d90d8/Patents_and_the_energy_transition.pdf 

GEORGINA AINSCOW specializes in drafting and prosecuting patent applications in electronics and computing. Ms. Ainscow joined Reddie & Grose in 2015, and previously worked as a partner at another London-based firm of patent attorneys for 5 yr. She works on patent cases in physics, engineering, electronics, software and business methods. She has extensive experience drafting and prosecuting patent applications and representing clients at hearings before the UK and the EPO. Ms. Ainscow also advises on invention harvesting, international patent portfolio management and IP strategy.