currency and credit in a private information economy in an environment with private information spatial separation and limited communication a currency like object and more standard named credits can be distinguished the credit objects can be used among agents in an enduring relationship that is among agents with known trading histories whereas the currency like object must be used among relative strangers in this environment collectively determined pareto optimal rules make the level of the currency like object and the mix of currency to named credits responsive to individual needs and to economywide states total indebtedness is determined by the number of lenders that is by preference or demand shocks and the mix of currency to credits is determined by transaction patterns among the agents

an analysis of feed in tariff remuneration models implications for renewable energy investment recent experience from around the world suggests that feed in tariffs fits are the most effective policy to encourage the rapid and sustained deployment of renewable energy there are several different ways to structure a fit policy each with its own strengths and weaknesses this paper presents an overview of seven different ways to structure the remuneration of a fit policy divided into two broad categories those in which remuneration is dependent on the electricity price and those that remain independent from it this paper examines the advantages and disadvantages of these different fit models and concludes with an analysis of these design options with a focus on their implications both for investors and for society

prospective exploration of future renewable portfolio standard schemes in china via a multi sector cge model abstract the shortage of traditional energy sources and environmental pollution caused by the consumption of fossil fuels have become increasingly prominent and many countries regard the development of renewable energy as important for ensuring energy conservation and emission reductions in addition renewable portfolio standard is important for china to achieve energy transition the chinese government is actively promoting the construction of a renewable portfolio standard system considering different renewable energy development targets for renewable portfolio standards this paper establishes a dynamic computable general equilibrium cge model to research the impacts of achieving various policy targets the main simulation results are as follows promoting renewable sources would have a slightly negative impact on macroeconomics for each additional percentage point in the share of renewable energy generation in 2030 the loss of gdp would increase by approximately 9 11 billion rmb a renewable energy policy could be also conducive to carbon emission reduction and energy structure adjustment certainly the proportion of renewable energy in the total power generation should be approximately 34 to achieve the government target for non fossil fuels to account for approximately 20 of the primary energy consumption by 2030

trade credit in a monetary economy abstract this paper examines the importance of financial and technological stochastic trends in the context of a stochastic dynamic general equilibrium monetary economy with multiple means of payment in contrast to earlier empirical work we find support for both a long run substitution condition between money trade credit and interest rates as well as a long run transactions demand for alternative payments media consistent with real business cycle frameworks

inventory control and investment policy abstract the idea underlying this paper is to consider inventory control as part of a wider class of economic problems namely financial risk management only discrete time models are investigated here in the framework of the cox ross rubinstein model of a financial market a combined inventory replenishment and investment policy is obtained company solvency is studied as well

cost competitive incentives for wind energy development in china institutional dynamics and policy changes abstract this paper presents an overview of the development of wind power in china the factors that affect the directions of wind power development are analyzed it examines the economics of windfarm development and compares it with conventional energy sources the major constraints in wind technology development and defects of the current policies are discussed it points out that wind power development should be subject to rational policy change and institutional adjustment it discusses the incentive mechanisms and institutional frameworks for future development particular importance is attributed to market incentives for wind power to reach the objectives of industrialization and commercialization a number of cost competitive incentive measures and policies are recommended i introducing market based mechanisms through standard power purchase agreement ii establishing effective investment policies and regulations to attract private investment iii promoting localization of wind turbine production iv adjusting tax and subsidy policies and v reforming governmental institutions to make clear rules and responsibilities for policymaking and enhancing communication coordination between relevant government agencies in order to formulate uniform and effective policies

why does the combination of the european union emissions trading scheme and a renewable energy target makes economic sense abstract the european climate and energy mix of targets and policies has been criticised by many economists in particular it is often argued that the renewable energy targets do not make economic sense because they represent an expensive option to reduce co2 emissions within a cap and trade scheme such as the european union emissions trading scheme eu ets in addition it has also been claimed that support for renewable electricity deployment negatively interacts with the eu ets having a dampening effect on the co2 price which favours the dirtiest technologies and is detrimental for the greener ones in this article we argue that this mainstream economic view is short sighted and that a multidisciplinary economic analysis of the climate and energy policy mix is required mainstream economic analysis is based on a narrow approach for the assessment of instrument combinations and neglects relevant insights from several economic disciplines including innovation economics and political economy approaches in reality economic theory supports the combination of an ets and renewable energy targets the existence of different policy goals and market failures the demand pull influence of renewable energy policies on innovation a political economy approach and the different risk exposure of renewable energy technologies call for a policy mix although policy combinations are not a panacea and bring problems on their own the aforementioned negative interaction between renewable energy deployment and the carbon price in the eu ets can be mitigated through appropriate coordination and or instrument choice and design

the renewables portfolio standard in texas an early assessment texas has rapidly emerged as one of the leading wind power markets in the united states this development can be largely traced to a well designed and carefully implemented renewables portfolio standard rps the rps is a new policy mechanism that has received increasing attention as an attractive approach to support renewable power generation though replacing existing renewable energy policies with an as of yet untested approach in the rps is risky early experience from texas suggests that an rps can effectively spur renewables development and encourage competition among renewable energy producers initial rps targets in texas were well exceeded by the end of 2001 with 915 mw of wind installed in that year alone rps compliance costs appear negligible with new wind projects reportedly contracted for well under 3 us cent k wh in part as a result of a 1 7 us cent kwh production tax credit an outstanding wind resource and an rps that is sizable enough to drive project economies of scale obliged retail suppliers have been willing to enter into long term contracts with renewable generators reducing important risks for both the developer and the retail supplier finally the country s first comprehensive renewable energy certificate program has been put into place to monitor and track rps compliance c 2002 published by elsevier science ltd less

money barter and the optimality of legal restrictions we examine a decentralized monetary economy in which households can use a means of exchange barter or gold other than fiat money the alternative means of exchange may drive out money even if monetary exchange pareto dominates legal restrictions prohibiting other means of exchange may therefore be necessary with stochastic preferences households may use barter to supplement monetary purchases when they have an unexpectedly high demand however this may drive down the value of money in all states so low that households are again better off with fiat money alone the paper provides both stochastic and nonstochastic examples in which eliminating markets for goods or assets that compete with fiat money improves welfare

the role of transnational dimensions in emerging economy technological innovation systems for clean tech the technological innovation system tis framework and its system functions have become a popular analytical tool for the study of clean tech innovation there is increasing attention for the role of emerging economies in global clean tech innovation but the applicability of tis to emerging economies cases is not entirely straightforward a key issue is the limited geographical considerations in particular transnational dimensions in tis whereas earlier perspectives on innovation in emerging economies have stressed the role of such transnational dimensions this paper elaborates transnational tis actor networks and institutions categorizes these in relation to tis functions and describes their potential to induce or block tis development in emerging economies we draw on insights from the perspectives of national learning systems international technology transfer and global production networks for this purpose we conclude that the potential effects of these transnational dimensions may be accurately grasped by the existing list of system functions lending credence to its further application of the tis framework on emerging economy case studies policy makers in emerging economies should recognize these transnational dimensions and seek to optimize their potential effect on domestic tis development taking in to consideration a realistic assessment of its role in the global tis

government funded renewable energy innovation in china abstract with the rapid development of the economy china is facing pressures caused by traditional energy deficiency and environmental pollution in recent years which has forced the chinese government to start to pay attention to the development and utilization of renewable energy re this article based on data and statistics available up to 2008 studies features of china s re technology innovation and problems thereof it finds that national science and technology programs are the main aspect of china s re technology innovation and most of r d funds for the re technology come from china s three main national programs besides the overall expenditures on re technology innovation constitute only a small proportion of china s total domestic r d funding and seem not enough this paper also finds that compared with research and development stages of re technology the demonstration and diffusion of re technology in china are given less attention and thus are relatively less sufficient furthermore influenced by china s traditional scientific research system there appears lack of sufficient incentives and opportunities for private sectors to fully participate in re technology innovation because most national programs are undertaken by universities or research institutes

the innovation impact of the eu emission trading system findings of company case studies in the german power sector abstract this paper provides a detailed analysis of how the european emission trading system eu ets as the core climate policy instrument of the european union has impacted innovation towards this end we investigate the impact of the eu ets on research development and demonstration rd d adoption and organizational change in doing so we pay particular attention to the relative influences of context factors policy mix market factors and public acceptance and firm characteristics value chain position technology portfolio size and vision empirically our qualitative analysis is based on multiple case studies with 19 power generators technology providers and project developers in the german power sector which were conducted in 2008 09 we find that the innovation impact of the eu ets has remained limited so far because of the scheme s initial lack of stringency and predictability and the relatively greater importance of context factors additionally the impact varies significantly across technologies firms and innovation dimensions and is most pronounced for rd d on carbon capture technologies and organizational changes our analysis suggests that the eu ets on its own may not provide sufficient incentives for fundamental changes in corporate innovation activities at a level which ensures political long term targets can be achieved

comparing systems approaches to innovation and technological change for sustainable and competitive economies an explorative study into conceptual commonalities differences and complementarities this paper makes a distinction between three theoretical frameworks that have been highly influential in the discourse on innovation competitiveness and sustainability sectoral systems of innovation ssi technological innovation systems tis and socio technical systems st systems these frameworks share a common systems approach to innovation but are often positioned as different bodies of literature that correspond to different epistemic communities this paper is explorative and conceptual in nature it presents a systematic comparative review of ssi tis and st systems based on the following analytical dimensions 1 system boundaries 2 actors and networks 3 institutions 4 knowledge 5 dynamics and 6 policy approach in the concluding section commonalities and differences of the three approaches are presented and suggestions for complimentarily are made c 2010 elsevier ltd all rights reserved

performance evaluation of renewable energy support policies applied on flanders tradable certificates system abstract the article is composed as a diptych first a general framework of criteria to evaluate the performance of renewable energy support systems is elaborated it is built around the main criteria effectiveness efficiency and equity all three are multi layered and specifying the contents of the various layers is case dependent second the framework is applied on detailed data about the flemish tradable certificates support system several salient conclusions confirm observations from research in other countries causing growing awareness first most crucial is a careful and detailed qualification of renewable energy sources and technologies without even effectiveness is not reliably measurable second nearby targets of renewable energy output must follow from a clearly designed transition trajectory towards a sustainable electricity sector such transition is intertwined with an industrial technological policy for bringing the necessary technologies to development and maturity third if the above two prerequisites are overridden certificates systems abound of excess profits predominantly reaped by incumbent power companies being not the best agents of real change to a sustainable energy future

financial incentives to mobilise local citizens as investors in low carbon technologies a systematic literature review abstract mobilising greater levels of private finance through local citizen investment in low carbon technologies can help bridge the capital shortfall to meeting climate objectives while also building societal support for the low carbon transition within this context we undertake a systematic review of literature assessing the impact of technology specific economic and financial incentives promoting greater levels of investment in low carbon technologies from local citizen investors both individuals and community groups we focus in particular on the impact of feed in tariffs compared to quota schemes grants tax incentives and soft loans the analysis suggests that local citizen investors do not necessarily act in an economically rational manner in response to these incentives it underscores the importance of understanding the preferences of target demographics the local context as well as the characteristics of the technologies in question and suggests interventions should be considered as part of wider policy packages while identifying challenges to be overcome through instrument design we find that feed in tariffs grants and tax incentives can be successful in mobilising greater levels of investment from local citizen investors but that soft loans tend to be less effective as a stand alone instrument the review identifies areas meriting further exploration in this emerging field of research

transforming the energy sector the evolution of technological systems in renewable energy technology this paper analyses the development and diffusion of technologies that utilize renewable energy sources in germany sweden and the netherlands the analysis enlarges the life cycle model of industry evolution to one where the focus is on the formation and evolution of new technological systems particular focus is on explaining success and failures in shifting from a formative phase into one characterized by positive feedbacks a set of challenges is identified for policy makers attempting to influence the process of transforming the energy sector

prospects for global market expansion of china s wind turbine manufacturing industry abstract emerging economies are increasingly contributing to global innovation including clean tech innovation the development of china s wind power sector has often been used to illustrate this point china s domestic wind power market is the largest in the world and is largely supplied by domestic manufacturers competition for market share in the domestic market may pressure firms to innovate which consecutively improves prospects for global expansion this paper reviews developments in china s domestic wind turbine market using the technological innovation system framework we analyze the pressure to innovate arising from market competition and assess the prospects for global expansion of chinese wind turbine manufacturers we conclude that domestic customers are not pressured or incentivized to perform with respect to power output such that turbine manufacturers are not pressured to perform with respect to turbine efficiency or maintenance needs pressure to innovate is further reduced by formalizing connections between wind farm developers and turbine manufacturers chinese turbine manufacturers cannot yet compete with leading global brands in technological leadership the prospects for exports are improved however by the preferential supply of project financing from institutional investors such as the china development bank from chinese utilities that seek global expansion and from the manufacturers themselves

prospective analysis of technological innovation systems identifying technological and organizational development options for biogas in switzerland abstract in this article we put forward a concept for the identification and analysis of future development options of technological innovation systems the key element of our approach the so called variation analysis is a methodology to identify coherent socio technical and organizational variants within a specific innovation field consistent combinations of these two dimensions may be interpreted as nuclei for alternative future developments of innovation systems the method may be used in discursive foresight processes to inform strategy formulation of firms or policy makers who see a utility in furthering the innovation field the paper has a focus on developing the theoretical background and the analytical structure of the methodology empirically we illustrate the method for the innovation system of biomass digestion in switzerland

identifying barriers in the diffusion of renewable energy sources abstract rapid diffusion of renewable energy sources res in the electricity power sector is crucial if the eu wants to fulfill its 2050 co2 reduction commitments for this reason identifying and alleviating all barriers that hinder the development of res is necessary to the successful deployment of these technologies this paper discusses the main barriers in the diffusion of wind and photovoltaic pv solar power in the greek electricity sector by drawing on the literature of technological innovation systems and system functions furthermore we provide an explanation of the different diffusion rates between the two technologies inadequate financial resources low grid capacity delays in the issuance of building permits opposition from local communities to the construction of wind farms and the lack of a stable institutional framework are among the most important barriers that inhibit the diffusion of the wind and pv solar power the nature of the barriers identified in this study calls for policy intervention

money and growth an alternative approach this paper takes an alternative approach to the topic of money and growth by developing a model in which the effects of sustained capital accumulation on an evolving system of payments in addition to the conventional effects of sustained inflation on growth are examined while the effects of inflation on growth are small the effects of growth on the monetary system are substantial the results are consistent with ideas about money and growth contained in work that predates that of james tobin and miguel sidrauski as well as with evidence that money and asset demands vary systematically within economies as they develop copyright 1994 by american economic association

eu renewable energy support policy faith or facts the recent eu commission proposal for promoting the supply of power from renewable energy sources was originally based on a pan european harmonised tradable green certificate tgc scheme we suggest on the basis of a multi disciplinary analysis that a pan eu tgc system is not the way forward for europe it is vital that the commission and the majority of member states avoids implementation of such policy designs put forward by a coalition of vested interests they should instead look at and act upon the available evidence from those countries that have experimented with tgcs e g flanders uk and sweden and design policies that stand a better chance of meeting the criteria of effectiveness efficiency and equity in particular the policies must enable eu to meet the immense innovation industrialisation challenge by inducing the development of a capital goods industry that can eventually diffuse a broad range of technologies that use renewable energy sources only then we can acquire an ability to implement an industrial revolution in the energy system in a way that broadly meets the criteria of effectiveness and dynamic efficiency

financial management in inventory problems risk averse vs risk neutral policies abstract in this work we discuss the effect of risk measure selection in the determination of inventory policies we consider an inventory system characterized by the loss function of luciano et al 2003 var as a risk measure for multi period static inventory models international journal of production economics 81 82 375 384 we derive the optimization problems faced by risk neutral quadratic utility mean absolute and cvar decision makers results show that while the global nature of the optimal policy is assured for risk coherent and risk neutral decision makers the convexity of the quadratic utility problem depends on the stochastic properties of demand we investigate the economic and stochastic determinants of the different policies this allows us to establish the conditions under which each type of decision maker is indifferent to imprecision in the distribution families finally we discuss the numerical impact of the choice of the risk measure by means of a multi item inventory the introduction of an approach based on savage scores allows us to offer a quantitative measurement of the similarity discrepancy of policies reflecting different risk attitudes

an economic perspective on experience curves and dynamic economies in renewable energy technologies this paper analyzes dynamic economies in renewable energy technologies the paper has two contributions the first is to test the robustness of experience in solar photovoltaic solar thermal and wind energy to the addition of an explicit time trend which has been done in experience studies for other industries but not for renewable energy technologies estimation is carried out on the assumption that cumulative capacity industry production average firm production and electricity generation affect experience and thus the fall in price the second contribution is to test the impact of r d on price reduction in general cumulative experience is found to be highly statistically significant when estimated alone and highly statistically insignificant when time is added to the model the effect of r d is small and statistically significant in solar photovoltaic technology and statistically insignificant in solar thermal and wind technologies

basic concepts for designing renewable electricity support aiming at a full scale transition by 2050 abstract renewable electricity supply is a crucial factor in the realization of a low carbon energy economy the understanding is growing that a full turn over of the electricity sectors by 2050 is an elementary condition for avoiding global average temperature increase beyond 2 c this article adopts such full transition as europe s target when designing renewable energy policy an immediate corollary is that phasing in unprecedented energy efficiency and renewable generation must be paralleled by phasing out non sustainable fossil fuel and nuclear power technologies the double phasing programme assigns novel meaning to nearby target settings for renewable power as share of total power consumption it requires organizing in the medium term eu wide markets for green power a highly demanding task in the present context of poorly functional markets in brown power the eu commission s 2007 2008 proposals of expanding tradable certificates markets were not based on solid analysis of past experiences and future necessities the keystone of sound policies on renewable electricity development is a detailed scientific differentiation and qualification of renewable electricity sources and technologies for measuring the huge diversity in the field we provide but structuring concepts about such qualification because implementation requires extensive research resources support for renewable electricity development is organized via feed in prices or premiums and via quota obligations connected to tradable green certificates green certificates are dependent on physical generated renewable power but separable and no joint products contrary to conventional wisdom we argue their separation in cost analysis but firm linking during trade a few graphs illustrate the importance of assigning qualities to different renewable power sources technologies feed in systems based on an acceptable qualification perform generally better than certificate markets imposing uniform approaches on a very diverse reality for a similar reason uniform and undifferentiated taxation of non sustainable energy sources cannot replace renewable energy support schemes capable of differentiation

green electricity market development lessons from europe and the us this study compares the development and implementation of green electricity policies in germany the netherlands sweden and the united states a set of countries applying a range of policy instruments to encourage electricity from renewable energy sources a general tendency is identified that policies shift emphasis from r d stimulation towards dissemination and market application of renewable energy technologies we argue that in light of the long term nature of policy goals on energy security mitigation of climate change and environmental protection the applied range of policy instruments may be lacking in providing incentives for the long term development of new technologies clarifying policy objectives would allow careful selection of policy instruments including support for r d improved capacity building for policy implementation is also important

multi product inventory and auxiliary allocation problem abstract a multi item single level joint replenishment inventory problem is considered it consists in scheduling n items over a finite horizon of t periods demands are given and should be satisfied without backlogging the objective is to minimize the sum of production and inventory holding costs over the horizon in each period the total production and inventory holding costs are represented by nonlinear and linear functions respectively an auxiliary allocation problem is studied some relationship to the inventory problem is given and necessary conditions for optimal schedule of n items are discussed a wagner whitin type condition for nonlinear joint replenishment cost is formulated an application to the dynamic lot sizing problem is presented

money and credit as means of payment abstract a stochastic economic environment is presented in which the mix of cash and resource costly credit used as means of payment is endogenous for reasonable values of the credit cost parameter velocity can be quite variable and sensitive to the nominal interest rate those parameter values also generate larger welfare costs of inflation than have been found previously and a sizable impact of inflation on real interest rates

what lessons have been learned in reforming the renewables obligation an analysis of internal and external failures in uk renewable energy policy abstract despite operating a delivery programme for res e since 1990 uk targets and policy goals have not been achieved in response the government reformed the ro this article re examines uk renewable energy policy by analysing the internal and external failures of the various mechanisms to determine if government has learnt from previous experience in reforming the ro government did not learn from their own actions during the nffo ro transition evidenced by high levels of similarity in internal external failures the reformed ro is expected to significantly increase deployment has provided a renewables package by comprehensively addressing both internal external failures but major internal failures price financial risk still remain resulting in contiguous failures over two decades and two mechanism changes nffo ro ro reformed ro success will again be heavily dependent on a select few technologies and new untested measures to combat external failures mechanism extension to 2037 is probably the single most important factor underlying potential deployment increases however introducing a fit like system via the sheer number of bolt on reforms to counter policy failures indicates loss of direction and clarity overall although government appears to have learnt some of its lessons from the past two decades significant doubt remains whether renewable energy policy objectives will be met via the latest mechanism change

analyzing the functional dynamics of technological innovation systems a scheme of analysis various researchers and policy analysts have made empirical studies of innovation systems in order to understand their current structure and trace their dynamics however policy makers often experience difficulties in extracting practical guidelines from studies of this kind in this paper we operationalize our previous work on a functional approach to analyzing innovation system dynamics into a practical scheme of analysis for policy makers the scheme is based on previous literature and our own experience in developing and applying functional thinking it can be used by policy makers not only to identify the key policy issues but also to set policy goals

lead markets and regulation a framework for analyzing the international diffusion of environmental innovations abstract environmental regulations are often intended to stimulate the generation and adoption of eco efficient innovations an important argument in the public debate is also the creation of new markets for environmentally benign products processes and services in other countries and the generation as a result of export opportunities for the pioneering country lead markets research on lead markets has not however focused on environmental innovations to date we therefore extend the lead market model to environmental innovations and take particular account of the peculiarities of such innovations in particular the public good character of environmental benefits and the role of regulations this approach is applied to two case studies wind energy and fuel efficient passenger cars in both cases the innovation was initially adopted in one country other countries subsequently adopted the same innovation design favored by the lead market which in turn developed into a large exporter in the wind generation and car industries respectively we discuss the regulations employed and the reasons for the international success of the innovations induced by them our findings demonstrate that when supported by global demand or regulatory trends strict regulation results in the creation of lead markets finally we provide recommendations on how our model could be used for further research and in the development of a coordinated environmental and innovation policy

effects of policies on patenting in wind power technologies abstract this paper explores the effects of policies and other factors driving innovation in wind power technologies in twelve oecd countries over more than two decades patent counts are used as an indicator for innovation the factors considered are generally derived from the systems of innovation literature count data econometric model were used for the estimations the suggest that patenting in wind power technology is positively related to public r d in wind power reflecting supply side policy the stock of wind capacity reflecting learning effects the number of patents per capita reflecting a country s innovative capacity and the share of green party voters reflecting the legitimacy of the technology in particular the presence of production or capacity targets for wind power or renewable energy sources and a stable policy environment reflecting policy process appear to be favourable for patenting wind power technologies these results are robust to various model specifications distributional assumptions and alternative classifications of wind power technologies in the patent search

a review on promoting share of renewable energy by green trading mechanisms in power system abstract in order to promote the development of renewable energy power generation many countries have issued corresponding policies meanwhile some green trading mechanisms have been implemented in power industry and this paper has mainly presented a review on promoting share of renewable energy by green trading mechanisms in power system with a focus on promotion effects of three mechanisms feed in tariff renewable portfolio standard and emission trading scheme apart from a review summaries comparisons and an outlook for future study are also presented our review suggests that feed in tariff and renewable portfolio standard can effectively increase the share of renewable energy power and lead to renewable resource diversity in addition emission trading also provides stimulus for development of renewable energy besides mitigation of carbon emission

envisaging feed in tariffs for solar photovoltaic electricity european lessons for canada abstract while it is widely agreed that support schemes need to be put in place to promote the use of renewable electricity there is less consensus as to what are the best kinds of strategies to use what is attracting increasing attention in canada is a system of renewable portfolio standards in this all power suppliers are under an obligation to ensure that a certain percentage of the electricity they generate is from renewable resources they can either generate that electricity themselves or purchase green certificates from those who have used renewables to generate electricity recent experience from europe however suggests that a whole hearted commitment to this single strategy could be premature and potentially damaging for the development of all kinds of renewable electricity in canada solar photovoltaics included on the other side of the atlantic ocean the use of so called feed in tariffs that is an obligation for utilities to purchase at a set price the electricity generated by any renewable energy resource is widely credited with accelerating the development of renewable electricity in many countries the purpose of this article is to reflect upon this european experience with feed in tariffs to stimulate discussions regarding what promise they might hold for the development of solar photovoltaic electricity in canada the article is divided into three main sections in the first section policies to promote renewable electricity presently in place in different parts of canada are reviewed attention is then focused more specifically in the second section of this article upon feed in tariffs after defining and describing this alternative system experiences in the countries of the european union are reviewed the main strengths and weaknesses of feed in tariffs in the european experience are also examined the focus then moves back to canada in the third section of the article in this a system of feed in tariffs is proposed for the province of ontario in order to provide just one example of the kind of support that could be forthcoming

wind farm investment risks under uncertain cdm benefit in china abstract china has set an ambitious target to increase its wind power capacity by 35 gw from 2007 to 2020 the country s hunger for clean power provides great opportunities for wind energy investors however risks from china s uncertain electricity market regulation and an uncertain energy policy framework mainly due to uncertain clean development mechanism cdm benefits prevent foreign investors from investing in china s wind energy the objectives of this paper are to 1 quantify wind energy investment risk premiums in an uncertain international energy policy context and 2 evaluate the impact of uncertain cdm benefits on the net present values of wind power projects with four scenarios this study simulates possible prices of certified emissions reductions cers from wind power projects project net present values npvs have been calculated the project risk premiums are drawn from different and uncertain cer prices our key findings show that uncertain cdm benefits will significantly affect the project npvs this paper concludes that the chinese government needs revising its tariff incentives most likely by introducing fixed feed in tariffs fits and re examining its cdm granting policy and its wind project tax rates to facilitate wind power development and enable china to achieve its wind energy target

optimal diversity increasing returns versus recombinant innovation abstract choices regarding diversity play an important role in economics and innovation management but often remain implicit once made explicit the objectives of efficiency and diversity are usually posed as in conflict as efficiency relates positively and diversity negatively to various increasing returns to scale in markets such a perspective however neglects the benefits of diversity in terms of realizing system improvements through recombinant innovation or spillovers the latter implies a contribution of diversity to long term efficiency dominant economic approaches that address diversity such as option value and real options theories regard benefits of diversity as exogenous this paper proposes a simple model of variable endogenous diversity to analyse the optimal balance between increasing returns to scale and recombinant innovation it is discussed under which conditions one of four solutions is optimal complete specialization regardless of which option complete specialization in one specific option symmetric diversity perfect balance and asymmetric diversity the results give rise to a number of policy insights

policies and market factors driving wind power development in the united states abstract in the united states there has been substantial recent growth in wind energy generating capacity with growth averaging 24 percent annually during the past five years about 1700 mw of wind energy capacity was installed in 2001 while another 410 mw became operational in 2002 during 2003 development activity has remained strong with an estimated 1600 mw of capacity installed with this growth an increasing number of states are experiencing investment in wind energy projects currently about half of all states host at least one wind power project this paper explores the key factors at play in the 12 states in which a substantial amount of wind energy capacity has been developed or planned some of the factors that are examined include policy drivers such as renewable portfolio standards rps federal and state financial incentives as well as market drivers such as consumer demand for green power natural gas price volatility and wholesale market rules

implication of risk adjusted discount rates on cycle stock and safety stock in a multi period inventory model inventory management is a major area of study in the field of production management and applications often result in major efficiency gains and service level improvements economists believe that inventory levels play a pivotal role in the onset of economic recessions nevertheless financial theories have given only cursory attention to inventory factors the goal of this research is to apply tools of financial economics to address basic issues in inventory management a capital asset pricing model is developed and applied to determine lot size and reorder points from minimizing present value of total cost subject to risk adjusted discount rates

valuing risky projects option pricing theory and decision analysis in the academic literature and professional practice there are a number of alternative and apparently competing methods for valuing risky projects in this paper we compare and contrast three different approaches risk adjusted discount rate analysis option pricing analysis and decision analysis focusing on the last two we show that in contrast to some of the claims made in the real options literature when both option pricing and decision analysis methods are correctly applied they must give consistent results we also explore ways in which option pricing and decision analysis methods can be profitably integrated in particular we show how option pricing techniques can be used to simplify decision analysis when some risks can be hedged by trading and conversely how decision analysis techniques can be used to extend option pricing techniques to problems with incomplete securities markets

economic modelling of price support mechanisms for renewable energy case study on ireland abstract the irish government is considering its future targets policy and programmes for renewable energy for the period beyond 2005 this follows a review in 2003 of policy options that identified a number of different measures to stimulate increased deployment of renewable energy generation capacity this paper expands this review with an economic analysis of renewable energy price support mechanisms in the irish electricity generation sector the focus is on three primary price support mechanisms quota obligations feed in tariffs and competitive tender schemes the green x computer model is utilised to characterise the res e potential and costs in ireland up until and including 2020 the results from this dynamic software tool are used to compare the different support mechanisms in terms of total costs to society and the average premium costs relative to the market price for electricity the results indicate that in achieving a 20 res e proportion of gross electricity consumption by 2020 a tender scheme provides the least costs to society over the period 2006 2020 but only in case there is limited or no strategic bidding considering however strategic bidding a feed in tariff can be the more efficient solution between the other two support mechanisms the total costs to society are highest for feed in tariffs fit until 2013 at which point the costs for the quota system begin to rise rapidly and overtake fit in 2014 2020 the paper also provides a sensitivity analysis of the support mechanism calculations by varying default parameters such as the interim 2010 target the assumed investment risk levels and the amount of biomass co firing this analysis shows that a 2010 target of 15 rather than 13 2 generates lower costs for society over the whole period 2006 2020 but higher costs for the res e strategy over the period 2006 2010

which renewable energy policy is a venture capitalist s best friend empirical evidence from a survey of international cleantech investors governments around the world have adopted ambitious targets to increase the share of renewable energy and reduce greenhouse gas emissions they pursue a variety of policy approaches to achieve these targets it has been a popular theme for contributions in energy policy to investigate the effectiveness of such policies this article adds a new perspective to the debate namely looking at the policy preferences of private investors in innovative clean energy technology firms we surveyed 60 investment professionals from european and north american venture capital and private equity funds and asked them to assess the effectiveness of various policies in terms of stimulating their interest to invest in innovative clean energy technologies in addition to quantitative rankings we use qualitative interview data to capture additional information on why investors prefer some policies over others the combined analysis compensates for the inherent limitations of a quantitative ranking using generic policy types the results of this exploratory analysis demonstrate that all other things being equal investors in our sample perceived feed in tariffs to be the most effective renewable energy policy the overall preference for feed in tariffs is even more pronounced among investors based in europe and with higher exposure to clean energy

increasing synergies between institutions and technology developers lessons from marine energy abstract this paper describes innovation activities in the marine energy sector across ten european countries in 2011 intense knowledge creation occurred in the uk and northern european countries while european research networks encouraged public private partnerships facilitating knowledge diffusion an analysis based on a technological innovation system tis has identified challenges for the system to evolve from one phase of development to another i e from pre development to take off phase in order for marine energy to pass successfully through the commercialisation valley of death entrepreneurial experimentation and production is crucial entrepreneurial initiatives were developed mainly in the united kingdom denmark norway and ireland whereas france germany and sweden were active through venture capital initiatives additional system builders such as the authorities in charge of energy policies could offer guidance for research ensure legitimacy and effectively mobilise resources for system development although public support was efficient in stimulating private investment national targets seemed less efficient in creating a long time horizon for private investors due to consecutive unexpected changes in contrast positive interactions between technology developers and policy makers could empower market formation ultimately the creation of a policy community also involving local communities could foster a positive environment for the development of innovation activities

do economic instruments matter wind turbine investments in the eu 15 abstract this paper analyses how governments in the eu 15 countries have succeeded in stimulating investments in wind turbines between 1985 and 2005 i use four different evaluation criteria tobin s q euler equation estimation investment accelerator model and the effective marginal tax rate to describe the observed investment patterns after a period of rapid growth in capital stock 1985 2000 a period of modest growth 2001 2005 can be observed even though the economic attractiveness of investing increases modestly this pattern cannot be explained by the evaluation criteria unless we accept economic attractiveness is a necessary condition and not a necessary and sufficient condition when analysing which policy has worked best the policies of germany denmark and spain stand out their early and consistent support has been based on feed in tariffs combined with subsidies

money and interest in a cash in advance economy the authors analyze an aggregative general equilibrium model in which the use of money is motivated by a cash in advance constraint applied to purchases of a subset of consumption goods the system is subject to both real and monetary shocks which are economy wide and observed by all they develop methods for verifying the existence of characterizing and explicitly calculating equilibria copyright 1987 by the econometric society

factors influencing the likelihood of regulatory changes in renewable electricity policies abstract the renewable electricity literature has expanded in recent years from the analysis of policies focused on research and development rd the coherence of the policies the size and variety of the coalitions supporting and opposing renewable electricity and the brussels effect the importance of these factors is evaluated in the case of three major markets of renewable electricity germany the netherlands and denmark

comparing the innovation effects of support schemes for renewable electricity technologies a function of innovation approach abstract the aim of this paper is to provide a comparative assessment of the innovation effects of instruments which support the diffusion of renewable electricity technologies with a functions oriented technological innovation system perspective the paper provides a link between two major streams of the literature the functions of innovation systems and the literature on renewable electricity support schemes we show that when a functional perspective is adopted feed in tariffs are likely to be superior to other policy instruments quotas with tradable green certificates and tendering although they still need to be complemented with other instruments most importantly direct r d support furthermore those innovation effects are affected by the specific design elements of the instruments chosen

alternatives to coal and candles wind power in china china is in a unique position to be able to exploit her vast wind resources to satisfy both the rapidly growing energy demand which fuels her economy as well as needs of approximately 72 million people who live in rural areas and have no access to conventional electricity services china mainly through the e orts of the inner mongolia autonomous region has already successfully disseminated over 150 000 small scale wind electric generators which power households in rural areas through a well coordinated combination of local research and development technology transfer industry support end user incentives and an infrastructure for information dissemination and technical training in this paper we review china s utilization of wind energy and discuss how it can be increased for both rural electri cation and the rapidly growing power sector we nd that novel approaches in technical implementation of wind power use may help to better meet china s needs use of hybrid systems may help to provide higher quality more reliable power for rural households and villages than is currently provided through wind only systems grid connected wind power which currently is more costly and less reliable than coal power can become cost competitive and more reliable through local mass production of wind turbines combined with storage systems we examine governmental support through policy infrastructure development and nancial incentives that have fostered the successes of dissemination of small scale wind turbines and also the support or lack thereof that has hindered commercial development of large scale wind power we nd that a better policy and regulatory framework is the most important measure that china can take to increase the use of this indigenous clean resource 2000 elsevier science ltd all rights reserved

learning from experience the development of the renewables obligation in england and wales 2002 2010 abstract the uk has enviable renewable resources both onshore wind and offshore wind wave and tidal the offshore valuation group 2010 the government has had policy mechanisms in place since 1990 to encourage these resources to be developed the current mechanism the renewables obligation ro was specifically designed to emphasise competition and therefore to fit in with the uk s overall strategic approach to energy policy however as yet it has not delivered the capacity that it was designed to do and as a result the uk faces a difficult challenge in attempting to meet european wide renewable energy targets for 2020 as well as longer term decarbonisation targets this paper explores some of the major reasons why the ro has performed so poorly to date and considers the prospects for improvement up to 2020 it concludes that the strategic emphasis on competition in the support mechanisms has played a key role in limiting renewables development but that the mechanism has changed significantly since it was introduced however these changes together with proposals for electricity market reform still do not address important elements of risk in comparison with a standard feed in tariff

when outcomes are the reflection of the analysis criteria a review of the tradable green certificate assessments abstract the tradable green certificates tgc framework is a prevalent policy support scheme enacted to stimulate investments in electricity from renewable energy sources res e in several countries including sweden and norway the tgc framework is currently under reevaluation in this process academic literature plays a crucial role in reflecting the outcomes of this policy framework the outcomes however are often limited by the analysis criteria which reflect what has been accounted for or disregarded when assessing the performance of the tgc framework the analysis criteria also stress what is considered as a successful outcome given the importance of such criteria this paper presents an extensive and systemic literature review of academic publications assessing the performance of the tgc framework the findings are to provide an overview of the publications analysis criteria and outline their outcomes we also provide descriptive statistics for the publications and examine the average citation record of the publications that use various analysis criteria in order to explore their relative impact on later studies these findings can help policymakers put the assessments into perspective when reevaluating a country s tgc system they also suggest several intriguing directions for future studies in this field

innovation system strengths and weaknesses in progressing sustainable technology the case of swedish biorefinery development based on the combination of economic challenges and uncertain policy conditions in the united states european union and elsewhere the development of advanced biorefineries has progressed slower than anticipated this has delayed the transition to a more sustainable and less carbon intensive economy in this article we adopt the technological innovation system tis approach to analyze advanced biorefinery development in sweden a front runner country in current development the analysis highlights a number of system strengths e g long term research funding significant research infrastructure strong actor networks that have contributed to developing the swedish tis but also important system weaknesses e g weak coordination among ministries lack of industrial absorptive capacity unclear roles inhibiting it the article highlights a combination of four policy measures that build on the system strengths to address the system weaknesses a the implementation of a deployment policy for creating domestic niche markets b improved policy timing and more structured coordination among different governmental agencies c the provision of stronger incentives for mature industries to invest in rd and d improved organization and financing of existing research infrastructure in addition to the empirical contribution the article contributes with novel insights into the tis framework by highlighting the dynamics between system strengths and weaknesses and suggests that system strengths should be better emphasized in future tis studies

public policy influence on renewable energy investments a panel data study across oecd countries this paper examines the impact of public policy measures on renewable energy re investments in electricity generating capacity made by institutional investors using a novel combination of datasets and a longitudinal research design we investigate the influence of different policy measures in a sample of oecd countries to suggest an effective policy mix which could tackle failures in the market for clean energy the results call for technology specific policies which take into account actual market conditions and technology maturity to improve the conditions for institutional investments advisable policy instruments include economic and fiscal incentives such as feed in tariffs fit especially for less mature technologies additionally market based instruments such as greenhouse gas ghg emission trading systems for mature technologies should be included these policy measures directly impact the risk and return structure of re projects supplementing these with regulatory measures such as codes and standards e g rps and long term strategic planning could further strengthen the context for re investments

price volatility and banking in green certificate markets there is concern that prices in a market for green certificates gcs primarily based on volatile wind power will fluctuate excessively leading to corresponding volatility of electricity prices applying a rational expectations simulation model of competitive storage and speculation of gcs the paper shows that the introduction of banking of gcs may reduce price volatility considerably and lead to increased social surplus banking lowers average prices and is therefore not necessarily to the benefit of green producers proposed price bounds on gc prices will reduce the importance of banking and even of the gc system itself

mobilizing private finance for low carbon innovation a systematic review of barriers and solutions this paper analyses the field of innovation studies regarding barriers to low carbon innovation and consequences for finance investment and divestment and contributes to a more holistic understanding of the underlying mechanisms a combination of technological barriers combined with economic barriers institutional and political barriers contribute to sub optimal low carbon investment all along the innovation cycle policy makers need to take a systemic approach to enable the redirection of diverse private financial sources instruments range from cutting dirty r d subsidies and support for clean technology innovation and diffusion levelling the institutional playing field and making risks of high carbon and low carbon technologies transparent to providing a consistent but adaptive long term transition strategy this would allow financiers to gradually shift their investments away from high carbon mainstream markets and scale low carbon technology niche markets however financiers also need to sharpen their competencies with regard to new clean technologies and markets

real business cycles in this paper we demonstrate how certain very ordinary economic principles lead maximizing individuals to choose consumption production plans that display many of the characteristics commonly associated with business cycles our explanation is entirely consistent with i rational expectations ii complete current information iii stable preferences iv no technological change v no long lived commodities vi no frictions or adjustment costs vii no government viii no money and ix no serial dependence in the stochastic elements of the environment we also provide a completely worked out example of the type of artificial economy we have in mind the time series properties of the example exhibit some major features of observed business cycles although this type of model may not be capable of explaining all of the regularities in actual business cycles we believe that it provides a useful well defined benchmark for assessing the relative importance of factors e g monetary disturbances

financial innovation price smoothing and monetary policy financial innovation price smoothing and monetary policy i introduction in a monetary economy the volume of nominal transactions fluctuates with the level of economic activity empirical evidence suggests that the supply of nominal transaction assets such as currency and bank deposits also fluctuates with the level of economic activity some researchers have attributed these observations to the phenomenon of money endogeneity 1 one explanation for this endogenous supply response is a systematic monetary policy as described by black 1972 under which the central bank passively adjusts the money supply to accommodate the changes in money demand alternatively king and plosser 1984 and saving 1979 stress the role of the private banking system in producing this endogenous response they argue that exogenous changes in real activity elicit sympathetic changes in the demand for transaction services that may be partially or fully accommodated by the banking system through its supply of inside money in either case this endogenous supply response tends to mitigate the price adjustment that accompanies a real supply shock 2 in the long run however the price level is ultimately determined by the central bank in the market for the nominal quantity that it controls e g currency bank reserves when deposit accounts are subject to reserve requirements or the monetary base 3 this suggests that if the private banking system does not fully accommodate the real shock and if the shock exhibits a well defined persistence then endogenous price adjustments that are fully anticipated may be further damped by a passive supply response by the central bank in addition if price expectations affect real interest rates then current period price level smoothing via a passive monetary policy may also be possible 4 in addition to employing transaction assets currency and checkable bank deposit accounts to meet their transaction requirements agents may purchase non deposit transaction services directly for firms these services include the tools available to the modern corporate cash manager such as lockbox collection systems repurchase agreements and zero balance accounts in the household sector they take the form of atms debit and credit cards and overdraft privilages on checkable accounts among others these non deposit transaction services represent an increasingly important medium of exchange their supply by the banking system is not directly controlled by the central bank and also offers another avenue by which the economy may respond endogenously to fluctuating transaction requirements associated with real shocks thereby further mitigating the price adjustment 5 the production of non deposit transaction services is subject to technology shocks in the form of financial innovations these innovations alter the economy wide demand for currency and checkable bank deposit accounts and prices adjust as with the introduction of new technology into the production of goods financial innovations are not fully adopted immediately due to the fixed costs of adjusting individual cash management practices but are instead assimilated over time this implies that their effects on transaction asset demands persist if the rate of adoption has a forecastable component the central bank can smooth expected prices by passively accommodating these innovations as with aggregate productivity shocks this persistence may also enable the central bank to damp the disturbances to the current period price level that these innovations create through the impact of price expectations on real interest rates this paper examines a non deposit transaction services market in a model economy that is developed in section ii it has the following features transactors can meet their transaction requirements by allocating wealth to currency or to bank deposit accounts that pay a market determined interest rate or by purchasing non deposit transaction services directly at a market determined price

fostering a renewable energy technology industry an international comparison of wind industry policy support mechanisms this article examines the importance of national and sub national policies in supporting the development of successful global wind turbine manufacturing companies we explore the motivations behind establishing a local wind power industry and the paths that different countries have taken to develop indigenous large wind turbine manufacturing industries within their borders this is done through a cross country comparison of the policy support mechanisms that have been employed to directly and indirectly promote wind technology manufacturing in 12 countries we find that in many instances there is a clear relationship between a manufacturer s success in its home country market and its eventual success in the global wind power market whether new wind turbine manufacturing entrants are able to succeed will likely depend in part on the utilization of their turbines in their own domestic market which in turn will be influenced by the annual size and stability of that market consequently policies that support a sizable stable market for wind power in conjunction with policies that specifically provide incentives for wind power technology to be manufactured locally are most likely to result in the establishment of an internationally competitive wind industry

capital in the payments system capital is required to support the payments system in modern economies with well developed financial markets financial innovations raise the marginal product of capital in this usage this suggests that there are general equilibrium consequences associated with an optimal selection of a payments system that includes barter money and a capital based accounting system in this paper goods are differentiated with respect to the medium of exchange associated with their acquisition which is endogenously determined as a consequence of explicit trading frictions the response of the economy to endowment production and payments system shocks including financial innovations is examined copyright 1992 by the london school of economics and political science

state renewable energy electricity policies an empirical evaluation of effectiveness over the past decade state governments have emerged as us energy policy leaders across the country states are adopting policy instruments aimed at carbon mitigation and renewable energy deployment one of the most prevalent and innovative policy instruments is a renewable portfolio standard rps which seeks to increase the share of renewable energy electrification in the electricity market this analysis evaluates the effectiveness of state energy programs with an empirical investigation of the linkage between state rps policy implementation and the percentage of renewable energy electricity generation across states we use a variant of a standard fixed effects model referred to as a fixed effects vector decomposition with state level data from 1998 to 2006 results indicate that rps implementation is not a significant predictor of the percentage of renewable energy generation out of the total generation mix yet for each additional year that a state has an rps policy they are found to increase the total amount of renewable energy generation these findings reveal a potentially significant shortcoming of rps policies political institutions natural resource endowments deregulation gross state product per capita electricity use per person electricity price and the presence of regional rps policies are also found to be significantly related to renewable energy deployment

are tradable green certificates a cost efficient policy driving technical change or a rent generating machine lessons from sweden 2003 2008 in the european policy debate tradable green certificates tgc have been suggested to be a superior regulatory framework for promoting the diffusion of renewable electricity technologies the purpose of this paper is to assess the performance of the swedish tgc system contributing to the european debate on the suitability of different types of frameworks the expectations of the tgc system were that it would a be effective in terms of increasing the supply of green electricity b do this in a cost effective manner from both a social and a consumer perspective c generate an equitable distribution of costs and benefits and d drive technical change so far it has performed adequately in terms of effectiveness and social cost effectiveness however consumer costs have been substantially higher than expected very large rents are generated and at best it contributes marginally to technical change thus a tgc framework should be selected if the overriding concern is to minimize short term social costs of reaching a certain goal with a high degree of predictability however it cannot be expected to also drive technical change keep consumer costs down and be equitable such trade offs need to be revealed and not obscured by analysts

on the neutrality of inside and outside money outside money and real economic activity are explored using data on checkable deposits m2 excluding currency the monetary base and real income in the united states from 1900 to 1992 this is done by calculating the long run elasticities of real output with respect to inside and outside components of the money stock small but significant deviations from neutrality are detected for inside money over a range of identifying assumptions the evidence suggests however that the source of non neutrality is not the one hypothesized by gurley and shaw 1960

inventor networks in renewable energies the influence of the policy mix in germany technological change and gains in efficiency of renewable power generation technologies are to a large extent driven by governmental support various policy instruments that can broadly be categorized as technology push demand pull or systemic constitute part of the policy mix for renewable energies our goal is to gain insights into the influence of this policy mix on the intensity and organization of inventive activities for wind power and photovoltaics in germany since the 1980s we examine the effect of different instruments on the size and structure of co inventor networks based on patent data our results indicate notable differences between the technologies the network size for wind power is driven by technology push and systemic instruments while in photovoltaics demand pull is decisive for network growth by and large the instruments complement each other and form a consistent mix of policy instruments the structure of the networks is driven by demand pull for both technologies systemic instruments increase interaction especially in the wind power network and are complementary to demand pull in fostering collaboration

the japanese energy sector current situation and future paths abstract as the world s third leading economy and a major importer of fuels the choice of future energy paths and policies that japan makes in the next few years will have a significant influence on the energy security of the world as a whole and of the northeast asia region in particular in this article we describe the current status of and recent trends in the japanese energy sector including energy demand and supply by fuel and by sector we then discuss the current energy policy situation in japan focusing on policies related to climate change targets renewable energy development and deployment liberalization of energy markets and the evolution of the japanese nuclear power sector the final section of the article presents the structure of the japan leap long range energy alternatives planning software system dataset describes several alternative energy paths for japan with an emphasis on alternative paths for nuclear power development and ghg emission abatement and touches upon key current issues of energy policy facing japan as reflected in the modeling inputs and results

dynamics of energy technologies and global change technological choices largely determine the long term characteristics of industrial society including impacts on the natural environment however the treatment of technology in existing models that are used to project economic and environmental futures remains highly stylized based on work over two decades at iiasa we present a useful typology for technology analysis and discuss methods that can be used to analyze the impact of technological changes on the global environment especially global warming our focus is energy technologies the main source of many atmospheric environmental problems we show that much improved treatment of technology is possible with a combination of historical analysis and new modeling techniques in the historical record we identify characteristic l such network e ects yield high barriers to entry even for superior competitors these simple observations allow three improvements to modeling of technological change and its consequences for global environmental change one is that the replacement of long lived infrastructures over time has also replaced the fuels that power the economy to yield progressively more energy per unit of carbon pollution from coal to oil to gas such replacement has d they also include endogenous generation of s we show that doing so can yield projections with lessened environmental impacts without necessarily incurring negative e ect on the economy arriving on that path by the year 2100 depends on intervening actions such as incentives to promote greater diversity in technology and lower barriers to entry for new infrastructures that could accelerate historical trends of decarbonization 1999 elsevier science ltd all rights reserved

uk innovation systems for new and renewable energy technologies drivers barriers and systems failures abstract a better understanding of the systemic processes by which innovation occurs is useful both conceptually and to inform policy making in support of innovation in more sustainable technologies this paper analyses current innovation systems in the uk for a range of new and renewable energy technologies and generates policy recommendations for improving the effectiveness of these innovation systems although incentives are in place in the uk to encourage innovation in these technologies system failures or gaps are identified in moving technologies along the innovation chain preventing their successful commercialisation sustained investment will be needed for these technologies to achieve their potential it is argued that a stable and consistent policy framework is required to help create the conditions for this in particular such a framework should be aimed at improving risk reward ratios for demonstration and pre commercial stage technologies this would enhance positive expectations stimulate learning effects leading to cost reductions and increase the likelihood of successful commercialisation