The Valley of Death, the Technology Pork Barrel, and Public Support for Large Demonstration Projects

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractMoving non-incremental innovations from the pilot scale to full commercial scale raises questions about the need and implementation of public support. Heuristics from the literature put policy makers in a dilemma between addressing a market failure and acknowledging a government failure: incentives for private investments in large scale demonstrations are weak (the valley of death) but the track record of governance in large demonstration projects is poor (the technology pork barrel). We reassess these arguments in the literature, particularly as to how they apply to supporting demonstration projects for decarbonizing industry. Conditions for the valley of death exist with: low appropriability, large chunky investments, unproven reliability, and uncertain future markets. We build a data set of 511 demonstration projects in nine technology areas and code characteristics for each project, including timing, motivations, and scale. We argue that the literature and the results from the case studies have five main implications for policy makers in making decisions about demonstration support. Policy makers should consider: 1) prioritizing learning, 2) iterative upscaling, 3) private sector engagement, 4) broad knowledge dissemination, and 5) making demand pull robust.

Neither crowding in nor out: Public direct investment mobilising private investment into renewable electricity projects

“…Seen through an innovation perspective, direct investment by state-controlled actors has also been recognised as being key for RET deployment (Anadón 2012;Mazzucato and Semieniuk 2017;Nemet et al 2018;Polzin 2017). An additional challenge in the power sector is the particularly high capital intensity of RET assets and the large scale of individual projects (Lester 2014;Tietjen et al 2016), which must compete not by putting a new product on the market, but by supplying the same product already produced by fossil-powered incumbents (all produce electricity), which have until recently been cheaper.…”

The transition of energy intensive processing industries towards deep decarbonization: Characteristics and implications for future research

“…Many radical innovations are perceived as very risky, costly, hard to integrate, unable to compete with the economies of scale of established technologies, and therefore unable to overcome the valley of death that characterizes the early stage of scaling up in the technology life cycle [38]. Radical innovations have however developed historically, driven by enhanced productivity [39,40], better feedstock [41] or demand-pull supported by regulation [42,43]; contemporary examples include thin slab casting (iron and steel) and oxy-fuel gas firing (glass).…”

“…So although government supports deep decarbonization throughout the R & D and pilot stage, support for upscaling through a stronger demand-pull and effective regulations are lacking [38]. Such support and regulations are also underdeveloped in some other sectors, like agriculture [78], but seem to be applied more in the automotive and energy sectors, where they form important drivers to sustainability transition [64,79,80].…”

Emergence of floating offshore wind energy: Technology and industry

“…However, while private actors have weak incentives to invest in early large scale demonstrators to overcome the "valley of death," governments have a poor track record in financing large demonstrations (technology pork barrel, i.e. picking the wrong winners promoted by vested interests) and therefore decisions at this level need to be carefully balanced [42]. In practice, the innovation process is not linear but marked by feedbacks between stages, like the performance of R&D to solve problems encountered in demonstrations.…”