Is public R&D in energy efficiency really effective? – a case in Japan and its implications

Panel: Panel 2. Policy implementation: learning from the past, improving the future

Author:
Osamu Kimura, Central Research Institute of Electric Power Industry, Japan

Abstract

In order to achieve an energy-efficient economy, the government has been intensifying investment in research and development (R&D) of energy-efficient technologies. But, are public R&D programs really effective in developing innovative energy-efficient technologies? How many technologies developed in these programs have succeeded in commercialization? What are the key factors for successful commercialization and diffusion in the market? This paper tries to answer these questions by examining Japanese experiences, focusing on two major R&D projects in energy-efficient technologies that were conducted from 1984 to 2000 by the government. The analysis found that of the 34 technologies developed in the two projects only seven have been commercialized so far, four of those seven have only a very limited number of installations, and only one has a growing market. Based on the analysis the paper shows that: while public R&D investments have high risk of failure, they can bring new technologies after a certain lead time at a reasonable probability of success; the governmental R&D support should be stable and long-term to enable continuous private investment in risky technology; and technology-specific support by the government can be effective when designed to support each stage of technology development from basic research to wider diffusion.