Creating Markets for New Energy Technologies

(Paris) — 24 January 2003

Have government policies successfully addressed the issue of greenhouse gas emissions and reduced energy intensity? The development of markets for cleaner and more efficient energy technologies plays a key role in deriving a better balance between economic growth and environmental protection, and contributes to energy supply security. Clean energy technologies could be the pillars of a sustainable energy system, but only if they can be made to perform at a level and at a cost that society deems acceptable.

A new publication from the International Energy Agency (IEA), Creating Markets for Energy Technologies, examines the design and implementation of policies and programmes that encourage the use of cleaner and more efficient energy technologies. The technological and market developments required to transform the energy system and to make it more sustainable will be conceived and implemented largely in the private sector. However, market forces alone will not guarantee their success.

The report studies 22 cases of successful government support programmes for the creation and expansion of markets for clean energy technologies. Between them, these programmes represent an investment of more than €20 billion. Creating Markets for Energy Technologies highlights the benefits of this expenditure and draws lessons from the programmes.

The 22 case studies are analysed from the research, development and deployment perspective to more fully understand the nature of the innovation and learning process, from the perspective of market barriers, to better deal with market failures, and from the market transformation perspective.

The key findings and messages for policy makers are:

  • Invest in niche markets and learning in order to improve technology cost and performance
  • Remove or reduce barriers to market development that are based on instances of market failure
  • Use market transformation techniques that address stakeholders' concerns in adopting new technologies and help to overcome market inertia that can unduly prolong the use of less effective technologies.