Patents and Climate Change: A Skeptic's View

Abstract

Climate change poses a major challenge to humanity. In order to deal with our rapidly changing environment, there is a need for a broad range of new technologies that could assist in mitigating or adapting to climate change. Unsurprisingly, intellectual property (IP) scholars and policy makers have relied extensively on patents to provide incentives for the development of climate change technologies.

This Article casts doubts over the prospect of relying on patent incentives to adequately promote innovation in this domain. It explores the manner by which patents foster innovation in a variety of settings— from upstream research to end-product development—and reveals that the patent system is far from an optimal incentive mechanism in the environmental field, and thus cannot be trusted to adequately promote the development of climate change technologies. The likely failure of patents to effectively incentivize environmental innovation stems to a large extent from the major role assigned to market demand in directing innovation under the patent system. As market demand for environmental technologies tends to underrepresent their social value, patents cannot serve as an effective mechanism in this domain.

Considering the patent system’s apparent shortcomings in the environmental field, this Article recommends looking beyond IP and increasing the use of other incentive mechanisms, including prizes and research subsidies, in order to promote the development and diffusion of climate change technologies. In addition, the analysis explores the possibility of integrating into innovation policy certain measures that may increase demand for climate change technologies and thereby enhance the effectiveness of patent incentives in this domain. Such policy tools may include, for instance, command-and-control regulation, market mechanisms such as cap-and-trade programs and carbon taxes, and information dissemination to increase public awareness

Keywords: patents, intellectual property, ip, cliamte change, environment, innovation theory