Contributed by Robert Lyman © 2022. Robert Lyman’s bio can be read here.
Almost every day, there is a news story about some development in science and technology that the news media treats as indicating the world – the infrastructure, economy, people’s behavior, etc. – is about to change sharply and soon. This tendency can be especially pronounced when the development concerns some technology that will allegedly change patterns of energy use and reduce greenhouse gas (GHG) emissions. Often, people exaggerate the role that governments can play in accelerating the pace of innovation and technological change or, correspondingly, under-estimate the barriers to change.
In simple terms, the process of innovation and technology diffusion is that it involves six stages:
• Scientific research and development, usually conducted in laboratories
• Testing of discoveries
• Development of practical applications
• Pilot testing and commercial feasibility studies of the applications
• Initial marketing
• Widespread commercial market penetration
There are no predictable timetables for any of these stages and no guarantees that any one will be successful. In fact, the widespread diffusion of new technologies can take anywhere from five to fifty years or, when major public infrastructure is involved, much longer. The rate or “pace” of technology adoption is influenced by certain characteristics of the technology, including notably the degree to which the innovation is perceived to be superior to current practice (e.g., in terms of quality, reliability and cost).
Over at least the last 50 years, governments in OECD countries have sought to accelerate the pace of technology diffusion through policy interventions. In countries that generally embrace market principles, the presumption underlying some government programs to promote new energy technologies is that market action alone is insufficient to develop new energy sources. The results have often been poor. Among other things, programs to accelerate the demonstration and use of specific technologies have amounted to picking winners over losers, and governments have proved again and again that they are remarkably bad at that game.
The emergence of what may be called “climate catastrophism” has led to the broad political acceptance of the thesis that “net-zero” emissions reduction must be achieved by the OECD countries by 2050, if not sooner. We are thus now in a period in which questions of economic feasibility or market acceptance (i.e., based on the free choices of buyers and sellers) increasingly have been subjugated to government dictates.
In Canada, the federal government has not limited itself to targeted subsidies to accelerate the diffusion of low-carbon dioxide technologies. It has used every item in the policy toolbox – subsidies, tax exemptions, regulations, etc. – the works. The most pervasive and ultimately powerful of these tools, however, is probably the carbon dioxide pricing system. The carbon tax, though, arguably works less as an incentive to accelerate the diffusion of new low-carbon dioxide technologies than it does to raise the costs of conventional hydrocarbon fuels and to damage the economic competitiveness of firms that use these fuels.
Technological change is an ongoing process that carries with it both great opportunities and several risks. One of those risks is that governments may be driven by their political alignment with climate campaigners to believe that they can control the speed and direction of change, or even predict the changes in markets and in society that will either facilitate or impede such changes. They cannot.