Corporate Investment in Climate Innovation

Abstract

As the majority of technological innovation is generated in the private sector, albeit supported by government funding, it is broadly accepted that climate change mitigation depends on corporate decision-making (Newell and Paterson, 2010). What incentives would persuade firms to generate the necessary incremental and radical technologies? The answer is usually along the lines of ‘getting the prices right’ by taxing greenhouse gas (GHG) emissions; introducing market-based systems to trade GHG emission rights; and subsidizing the creation and diffusion of new low-emitting technologies. Such policy prescriptions spring from a particularly liberal conception of capitalism in which markets solve economic coordination problems, and this is evident in both Australia and the US. In Australia, market mechanisms were the main policy option for GHG emission reductions debated for over a decade before a price on carbon, or a ‘carbon tax’, was ultimately introduced in 2012 (Crowley, 2013; Christoff, 2013). In the US, a strong undercurrent of neoliberal ideology similarly frames all social, environmental, or economic challenges in terms amenable to market solutions (see also McGee’s analysis in Chapter 8).