Too Early to Pick Winners: Disagreement Across Experts Implies the Need to Diversify R&D Investment

28 Pages Posted: 19 Mar 2016

See all articles by Laura Diaz Anadon

Laura Diaz Anadon

Harvard University, Harvard Kennedy School (HKS), Belfer Center for Science and International Affairs (BCSIA) ; Harvard University - Harvard Kennedy School (HKS)

Erin Baker

University of Massachusetts at Amherst - Mechanical and Industrial Engineering Department

Valentina Bosetti

Bocconi University; CMCC - Euro Mediterranean Centre for Climate Change

Lara Reis

Fondazione Eni Enrico Mattei (FEEM)

Date Written: March 18, 2016

Abstract

Mitigating climate change will require innovation in energy technologies. Policy makers are faced with the question of how to promote this innovation, and whether to focus on a few technologies or to spread their bets. We present results on the extent to which public R&D might shape the future cost of energy technologies by 2030. We bring together three major expert elicitation efforts carried out by researchers at UMass Amherst, Harvard, and FEEM, covering nuclear, solar, Carbon Capture and Storage (CCS), bioelectricity, and biofuels. The results show experts believe that there will be decreasing returns to R&D and report median cost reductions around 20% for most of the technologies at the R&D budgets considered. Although the returns to solar and CCS R&D show some promise, the lack of consensus across studies, and the larger magnitude of the R&D investment involved in these technologies, calls for caution when defining what technologies would benefit the most from additional public R&D. Indeed, the wide divergence of opinions suggests that it is still too early to pick winners and that a broad portfolio of investments may be the best option.

Keywords: R&D Investments, Energy Technology, Expert Elicitation, Risk and Reward, Low-carbon Innovation

JEL Classification: Q40

Suggested Citation

Diaz Anadon, Laura and Baker, Erin and Bosetti, Valentina and Reis, Lara, Too Early to Pick Winners: Disagreement Across Experts Implies the Need to Diversify R&D Investment (March 18, 2016). FEEM Working Paper No. 22.2016. Available at SSRN: https://ssrn.com/abstract=2749585 or http://dx.doi.org/10.2139/ssrn.2749585

Laura Diaz Anadon

Harvard University, Harvard Kennedy School (HKS), Belfer Center for Science and International Affairs (BCSIA) ( email )

79 JFK Street
Cambridge, MA 02138
United States

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Erin Baker

University of Massachusetts at Amherst - Mechanical and Industrial Engineering Department ( email )

Department of Operations and Information Managemen
Amherst, MA 01003
United States

Valentina Bosetti (Contact Author)

Bocconi University

Via Gobbi 5
Milan, 20136
Italy

CMCC - Euro Mediterranean Centre for Climate Change

via Augusto Imperatore, 16
Lecce, I-73100
Italy

Lara Reis

Fondazione Eni Enrico Mattei (FEEM) ( email )

C.so Magenta 63
Milano, 20123
Italy

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