Innovation and the transition to a low carbon future

Publication date: July 2021

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We need to transition — fast

The current pace of change is not fast enough to avert the worst effects of climate change, and we cannot afford to wait for unproven technologies to mature.

The good news is that low-carbon solutions are already available, and able to provide similar (or even better) services instead of fossil fuels. We also already know how to use our energy more efficiently, and less wastefully.

Here is what needs to happen and how we could make it happen together.

The link between transition and innovation

The transition depends on large scale adoption of innovations.

Transitioning to a low-carbon society means learning new sustainable ways to solve all the problems we are used to solving with fossil fuels.

A broad array of innovations needs to spread at pace and at a large scale across the whole economy to meet the massive decarbonisation challenge.

Technology and innovation defined

Time is running out. We need to focus on innovations available now - and accelerate their adoption.

Innovation takes time – especially for new energy technologies

The fastest energy-related examples from the last decades include consumer products like LEDs and lithium ion batteries, which took 10-30 years from the first prototype to mass market. In addition, these examples required massive support from governments of the largest economies in the world.

"Here and now" is better than an uncertain potential

An emission reduction strategy relying on technologies not already commercially available will not deliver at scale.

The rate and pace of adoption of commercially available emissions reduction technologies is insufficient. The timeframe for action is closing.

  • Transitioning to a low emissions economy requires a major upscaling of firms' "absorptive capacity" of innovations. GHG emissions reduction will occur with projects on the ground and changes in the use of resources.
  • Non-technical innovation, such as innovative business models, policy, or social innovation, is as important as new technologies. When there are no clear technological solutions, the adoption of new ways of doing things, from production processes to consumers' behaviours, is required.

Commercially available low emission innovations have the greatest potential to reduce emissions by 2030 and beyond

Even by 2050, these technologies are projected to continue to account for the majority of emissions reductions on an annual basis.

This is shown in the graph below from the International Energy Agency, where 'mature' and 'early adoption' can be classed as commercially available.

IEA, Global energy sector CO2 emissions reductions by current technology readiness category in the Sustainable Development Scenario relative to the Stated Policies Scenario, 2019-2070, IEA, Paris

Innovation should not be confused with invention

The barriers to an economy-wide transition are not the same as the barriers to scientific discovery or technology development. This is about application of technologies, not about where the technologies are coming from.

If an innovation reaches the stage of early commercialisation, it will face market barriers limiting its uptake, such as supplier availability, capacity, and capability. It is through multiple demonstrations that these market barriers are addressed, and lessons and information is shared within the market, resulting in the wider diffusion of the innovation.

Today, there is a significant lack of capital to bridge that diffusion chasm in New Zealand.

Addressing the diffusion chasm is the biggest priority when it comes to emissions reductions in New Zealand.

We need to facilitate proven innovations to cross the diffusion chasm


What does innovation need to deliver?

The driving forces that technology and innovation need to influence

Every innovation with a potential to reduce emissions acts on one (or several) of these three levers.

  • Emissions intensity: Switching to low-carbon fuels will reduce the emissions from each unit of energy used.
  • Efficiency: Increasing the efficiency of processes will increase output per unit of resources consumed.
  • Consumption/practices: Put simply — doing more with less.

When analysing at the New Zealand level, pulling only one lever is not enough to stay within the carbon budget.

Therefore, any technology and/or innovation policies should consider these three levers to maximise emissions reduction potential.

A methodology for achieving impact

  • List and define the problems. Start with the crosscutting ones.
  • Use the three levers framework to identify options available for each problem.
  • Assess the options based on technology readiness, emissions reduction potential, and specific barriers to wider diffusion.
  • Where there are clear winners, set a direction and develop support mechanisms to increase the rate of adoption.
  • Where there are not clear winners to solve a specific problem, focus on behaviour and practice change.
Category of products to solve
Emissions intensity
Consumption and practices
Electricity Increase rate of renewable energy Energy efficient appliances

Artificial intelligence

Energy storage

Transport EV, hybrid vehicles

Public transport, rail

Driver assistance

Tyre pressure monitoring systems

Lighter vehicles

Car sharing

Improved logistics

Urban form

Buildings Switch from fossil fuel to electricity Building retrofits

Use of low carbon building materials

Changes in use practices

Food production

Methane inhibitor/vaccine for ruminants

Low emissions feeds

Production per unit of inputs (milk/cow feed)

Waste reduction

Reduced Nitrogen fertiliser use

Low emissions feeds


There is no time to be lost in tackling climate change, and placing our hopes in technologies that haven’t been proven will only delay action.

A collective agreement to scale up the innovations we have available now, with existing low-carbon technologies and ways of working, will enable us to embrace the transition, rather than suffering the consequences of climate change.

Read the full report