POINT OF VIEW/ Andrew Wyckoff: Innovation is the key to 'green growth'

With the 15th session of the Conference of Parties (COP15) to the United Nations Framework Convention on Climate Change over and the COP16 already planned, world leaders will have to work out concrete ways to reduce greenhouse gas emissions despite the fragile accord adopted in Copenhagen, while still working hard to get the economy back on track. To realize such "green growth," long-standing links between economic growth and environmental impact need to be broken.

The key to achieving this is strong and sustained innovation. We therefore welcome the vision of "Green Innovation," which was placed at the heart of the recently outlined Japan's New Growth Strategy that ambitiously aims for an average economic growth rate of 2 percent while simultaneously cutting greenhouse gas emissions by 25 percent by 2020.

But, how precisely can innovation respond to the dual challenges of economic growth and environmental protection? A new OECD publication, "Eco-Innovation in Industry: Enabling Green Growth," launched at the COP15, explores the crucial linkages between innovation and green growth.

While innovation tends to be translated as "technological revolution" in Japanese, innovation in firms encompasses a wide range of changes aimed at improving performance, including design, marketing and organizational changes. Radical innovation, which enables breakthrough technologies to be successfully introduced to the market through providing new types of solutions or business models, will be increasingly needed along with incremental technological advances that slowly chip away at the problem.

One example of green innovation that is both radical and incremental is the smart application of information and communication technologies (ICTs). ICTs have the potential to vastly improve efficiency, allow constant monitoring, and enable the practical application of market-based solutions such as congestion charges or the real-time pricing of electricity.

These technologies will help usher in behavioral changes in the way people live and businesses operate through the intelligent control of transport or energy use and the substitution of resource-intensive needs like travel. Many leading firms already show that a comprehensive search for innovative solutions can simultaneously improve the environment and strengthen the firm's bottom line.

The realization of such advanced innovation would require the government to articulate and apply an effective combination of innovation policy instruments that can support one another. It will be particularly important to recognize that the benefits of innovation for growth and the environment only emerge when it is taken up by users and the market.

Greater attention to fostering attractive markets for investment in green technologies is needed, on top of the conventional focus on the generation of new technologies through research and development

In addition, investment in new green infrastructures, such as smart electricity grids and intelligent transport systems, are fundamental, as these will determine future production and consumption patterns.

In June 2009, the OECD was mandated by member countries to develop a Green Growth Strategy, where innovation will play a key role. We welcome the opportunity to work with Japan on the promotion of green innovation as part of the shift to a greener world economy, and will keep hopeful eyes on the further development of the New Growth Strategy. As past crisis periods have served as a springboard for change, we believe the current crisis provides a great opportunity for the global economy to shift its track--toward stronger, cleaner and fairer growth.

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Andrew Wyckoff is director of the OECD Directorate for Science, Technology and Industry.