Integrating uncertainty into public energy research and development decisions

Abstract

Public energy research and development (R&D) is recognized as a key policy tool for transforming the world’s energy system in a cost-effective way. However, managing the uncertainty surrounding technological change is a critical challenge for designing robust and cost-effective energy policies. The design of such policies is particularly important if countries are going to both meet the ambitious greenhouse-gas emissions reductions goals set by the Paris Agreement and achieve the required harmonization with the broader set of objectives dictated by the Sustainable Development Goals. The complexity of informing energy technology policy requires, and is producing, a growing collaboration between different academic disciplines and practitioners. Three analytical components have emerged to support the integration of technological uncertainty into energy policy: expert elicitations, integrated assessment models, and decision frameworks. Here we review efforts to incorporate all three approaches to facilitate public energy R&D decision-making under uncertainty. We highlight emerging insights that are robust across elicitations, models, and frameworks, relating to the allocation of public R&D investments, and identify gaps and challenges that remain.

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Figure 1: Analytic approach to supporting energy R&D decisions using expert elicitations.
Figure 2: Optimal R&D portfolios under different climate stabilization levels.
Figure 3: Optimal R&D portfolios under different total energy R&D budget constraints.
Figure 4: Public investment in energy R&D as a percentage of the total investment in energy technologies.

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Acknowledgements

We are grateful to Nidhi Santen for useful insights and feedback on the description on ADP, to Franklyn Kanyako for assistance with the figures, and to Patricia McLaughlin for her work proofreading it. L.D.A. is grateful to the Climate Change Initiative of the Doris Duke Charitable Foundation and the Science, Technology and Public Policy programme at the Harvard Kennedy School for supporting early work on this paper and to the EU H2020 research and innovation programme under the Grant Agreement No 730403 (INNOPATHS). V.B. is grateful to funding from the European Research Council under the European Community’s Programme ‘Ideas’ — Call identifier: ERC-2013-StG / ERC grant agreement number 336703 — project RISICO ‘RISk and uncertainty in developing and Implementing Climate change pOlicies’. We also acknowledge financial support from the United Nations Environment Program through the Green Growth Knowledge Platform (GGKP) Research Committee on Technology and Innovation for the preparation of GGKP Working paper 01-2016, a report that helped us identify the need for this Review. E.B. acknowledges the NSF-sponsored IGERT: Offshore Wind Energy Engineering, Environmental Science, and Policy (NSF DGE 1068864).

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Anadón, L., Baker, E. & Bosetti, V. Integrating uncertainty into public energy research and development decisions. Nat Energy 2, 17071 (2017). https://doi.org/10.1038/nenergy.2017.71

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