The Economics of Energy Innovation and System Transition (EEIST) consortium recently launched their flagship report entitled “THE NEW ECONOMICS OF INNOVATION AND TRANSITION: EVALUATING OPPORTUNITIES AND RISKS” at COP26.
Meeting the goals of the Paris Agreement requires unprecedented, policy-led transformations in multiple technologies and sectors. The greatest successes achieved so far in the low carbon transition happened in ways that few people expected, using approaches that economic analysis generally did not recommend. To better assess the new opportunities brought by new energy technologies and the risks of inaction, the report proposes Risk-Opportunity Analysis(ROA) to inform policy-making to accelerate transformational innovation. Instead of only counting identified costs and benefits, ROA involves mapping both risks and opportunities. That means shifting away from the traditional cost-benefit analysis for policy-making. Instead of only comparing the expected outcomes of policies, Risk-Opportunity Analysis also considers processes of change in the economy. With a series of historical and forward-looking case studies, the report reviews evidence and theory to explain the limitations of traditional appraisal methods and the rationale for the ROA.
The report was mentioned by a number of news outlets, including the Daily Mail and Guardian.