This chapter shows the urgency of the need for a new policy approach to leverage the potential of research and innovation to tackle climate change in a challenging context. It then sets the study within the context of recent OECD work.
Mission‑Oriented Innovation Policies for Net Zero
How Can Countries Implement Missions to Achieve Climate Targets?
Abstract
Persisting deviations from scenarios that would keep the world within an acceptable level of global warming combined with greater awareness that traditional policy and governance frameworks are inadequate to close this gap are making it increasingly urgent to find solutions to this global challenge. This study assesses the potential of mission-oriented policies to help countries meet their net zero commitments.
It becomes clearer every day that “change-as-usual” is no longer an option to tackle systemic societal challenges such as climate change. Aside from the slowdown caused by the COVID-19 pandemic and current uncertainties due to geopolitical tensions, clean energy transitions have accelerated in recent years, driven by bold policies (IEA, 2024[1]). An increasing range of country-specific innovation support measures has helped drive the costs of low-carbon technologies down and increase their performances, allowing significant progress in areas such as buildings or transportation (IPCC, 2023[2]). However, in a great majority of countries, meeting 2030 and 2050 greenhouse gas (GHG) emissions reduction targets will require progress that is of a greater order of magnitude and on a much broader sectoral scope than what has been achieved in recent decades. What is at stake to achieve net zero in due time is not accelerating countries’ current GHG emissions reduction trajectories but transforming current socio-economic systems. Figure 1.1 shows the logic behind this argument. The remainder of this section will develop this idea.
1.1.1. Ambitious but insufficient and ill-defined commitments
Since the Paris Agreement in 2015 and as of March 2024, 110 countries have pledged a net zero target; of these 96 are aiming to reach this target by 2050 or before, accounting for 85% of global carbon emissions (OECD, 2024[3]). However, in most cases, these formal commitments do not meet the minimum level of operational requirements for these strategies to be credible or effective (Net Zero Tracker et al., 2023[4]) and are not binding (OECD, 2023[5]). Most are missing crucial information, not least regarding how these targets are intended to be met and which main pathways and solutions are envisaged (Jeudy-Hugo, Lo Re and Falduto, 2021[6]).1 Furthermore, even in the unlikely case that all countries implement their pledges and continue at the same pace until 2100, global warming is likely to be around 2.4°C (OECD, 2023[5]).
1.1.2. Climate actions (and results…) are not aligned with commitments
Having set their commitments and targets, most countries are currently turning to the task of translating their net zero commitments into concrete actions that involve immediate decisions. However, current climate actions fall significantly short of what would be needed to achieve these targets (World Resources Institute, 2023[7]). OECD work highlights the decline in the rate of innovations related to emissions reductions since 2012,2 as measured by patenting trends (Cervantes et al., 2023[8]). This decrease is concomitant with a stagnation of concrete climate policy measures across OECD countries since 2011, following a strong increase from 2000 to 2011, as measured by the OECD Environmental Policy Stringency index (Kruse et al., 2022[9]). While the amount of public investment in research and development (R&D) in low-carbon energy has increased since 2015 and represents the bulk of public spending in energy R&D (IEA, 2022[10]), this spending is still far below that consented by governments after the 1974 and oil shocks (OECD, 2023[11]).
1.1.3. Transition pathways towards net zero require technological and societal changes
While currently available technologies can achieve the needed emissions reduction targets of the 2030 commitments (45% reduction from 2010 levels), the net zero objective for 2050 will require significant new advances and a scaling up of technologies that are still in laboratories or at prototype or demonstration stage (IEA, 2021[12]).3 Research and innovation activities will, therefore, be of paramount importance for all net zero pathways that aim to contain global warming while preserving some level of economic and social progress.
However, the needed changes span far beyond the technological realm and concern user and consumer behaviours (e.g. commuting, eating), manufacturing and maintenance skills, modes of production, infrastructure and equipment, new sourcing of materials, regulatory change, and ways of organising social systems at different levels (buildings, cities, regions, countries). Against this backdrop, rapid progress in the last decade, notably in energy technologies (for instance, in advanced battery technologies – after centuries of rather slow advances punctuated by some rare breakthroughs), can be misleading, as it supports the idea that technical change alone will bring the needed solutions.
1.1.4. Different net zero pathways are still available for a few years, but they will all involve deep national and sectoral system transformations
Changes in a wide range of domains will, therefore, have to co-evolve in a coherent way and toward similar objectives if countries are to transition towards net zero economies. Despite the continuous avalanche of bleak evidences – including regarding the likelihood of crossing climate tipping points even at a lower level of warming (Lenton et al., 2019[13]; OECD, 2022[14]), experts from the Intergovernmental Panel on Climate Change still affirm that different pathways in relation to a 1.5°C global warming scenario are still available.
The window of opportunity to enable climate resilient development is however rapidly narrowing, calling for rapid and deep greenhouse gas emission reductions (IPCC, 2023[2]).The commonality of all pathways and scenarios to transition towards net zero is that they can be realised only at the price of profound transformations of existing systems, be they at the sectoral (IEA, 2021[12]) or national level (The Shift Project, 2022[15]).
1.2.1. Established national policy mixes are too fragmented to lead to net zero
Since the 1980s, science, technology and innovation (STI) policies have primarily focused on correcting individual market failures, despite their variations due to national contexts and political configurations. This emphasis on fixing market failures was influenced by New Public Management’s impact on political and administrative spheres, which has led to policy devolution and specialisation, resulting in a fragmented policy landscape (Mazzucato, 2016[16]). In several areas, government intervention frameworks consist of multiple policy instruments, each with different objectives, functions, funding sources and executive organisations (ministries, agencies) with specialised professional staff. This approach has resulted in increased efficiency and effectiveness, with gradual improvements of these instruments through evaluation, learning and exchange among policy makers. It has also benefitted from the expertise accumulated by beneficiaries, such as research organisations and firms, on how to best operate and use these instruments (Peters, 2018[17]).
However, policy fragmentation also greatly hinders innovation systems’ ability to co-ordinate in a consistent way the multiple changes that are needed to address complex societal challenges such as global warming. It is widely acknowledged that the societal transformation that conditions the achievement of net zero will require a combination of different types of interventions for any given sociotechnical option (D’Arcangelo et al., 2022[18]).
1.2.2. The renewal of proactive innovation and industrial policies: Mission‑oriented policies
Awareness of the limitations of prevailing governance and policy frameworks has grown, even among the most traditional policy makers and think tanks. Combined with the urgency to address mounting societal challenges, in the past 10-15 years this has led to a renewed focus on proactive and voluntary innovation policies (Aiginger and Rodrik, 2020[19]).4 However, this renewal differs from the previous wax and wanes of industrial policy. As the understanding of sustainability crises improved, experts and policy makers increasingly advocated for a new policy approach to address related challenges, which would go beyond a “greening” of traditional industrial policies.
During the first ten years or so, policy experts and practitioners devoted their attention to developing the “terms of reference” of this new policy approach. Among the key genetic traits of the sought-after new policy approach were its purposive and integrated features, in relation to the scale and systemic dimensions of the challenge to be tackled:
purposive to allow gathering willingness, administrative and political power, skills, and financial resources towards some commonly agreed-upon objectives related to a broad challenge
integrated to closely interconnect the different interventions and activities that are needed to address the different complementary facets and components of the challenge.
Pre-empting the traditional critics of top-down policy making stemming from previous experiences such as the US and Japanese pre-competitive consortia or the French “grand programmes”,5 additional requirements were that the new policies avoid targeting pre-selected sectors and picking winners and are flexible, agile and clearly linked to potential markets.
Although a few had already identified the shift towards a new “mission-led paradigm” by the end of the 2000s (Gassler, Polt and Rammer, 2008[20]), it was only in the mid‑2010s that this quest for a new policy approach crystallised around what became known as mission-oriented innovation policies (MOIPs), named after the popular defence and space missions of the 1960s and 1970s. Relying upon a growing body of literature led by the star economist Mariana Mazzucato, an increasing number of countries have embarked on such an approach under different (often experimental) manners in the last five years. The OECD defines MOIPs as a co-ordinated package of policy and regulatory measures tailored specifically to mobilise STI to address well-defined objectives related to a societal challenge, within a defined time frame. These measures possibly span different stages of the innovation cycle, from research to demonstration and market deployment; mix supply-push and demand-pull instruments; and cut across various policy fields, sectors and disciplines (Larrue, 2021[21]).
1.3.1. Previous OECD work on mission-oriented innovation policies
The OECD started working on MOIPs in 2019 under the aegis of the CSTP. It developed a typology of MOIPs and identified a series of design principles for this policy approach. These analytical inputs were then used to scan the main MOIPs identified at that time (about 40 MOIP initiatives in 2020) in all challenge areas and systematically review and categorise the practices and processes leading the development, co-ordination and implementation of missions. In parallel, more in-depth investigations were performed through “national MOIP studies” in Austria, Japan, Korea and Norway. The results of this work were presented in various reports and an online database structured along the same analytical framework.
Building upon these results, this report focuses on one challenge area to provide a more detailed understanding of the underpinning processes that condition the launch and evolution of these policies and their first results. Box 1.1 presents the rationales for selecting climate change as the focus challenge area.
During its first phase (2019-20), the Committee for Scientific and Technological Policy’s (CSTP) project on mission-oriented innovation policies (MOIPs) focused on MOIP initiatives irrespective of the challenges they pursued, from reducing cancer fatalities to reducing greenhouse gas (GHG) emissions. Building upon this work, this report focuses on “net zero missions”, i.e. missions that aim directly or indirectly to mitigate or adapt to climate change. This approach seeks to refine the understanding of their challenges and opportunities, their practices (related to mission definition, governance and the unfolding of activities) and, as much as possible, their results and the way these are monitored and evaluated.
As the scope of analysis is narrower and consistent, it allows more analytical depth and granularity. In particular, fieldwork and analysis can be conducted at the level of missions, rather than at the upper level of MOIP initiatives (which often include several missions addressing different societal challenges, such as climate change, health, biodiversity, water management, etc.).* This lower level unit of analysis is particularly relevant since MOIPs are expected to create a dedicated (meso-)system of innovation around a specific challenge, with a strategic agenda, a governance structure and a package of interventions that are tailor-made for this challenge.
Furthermore, it enables exploring the influence of a challenge’s specific features on the dynamics of the MOIPs to tackle it. These features comprise notably the breadth and intensity of the challenge, its complexity (in relation to its systemic character, whereby potential solutions rely on the interactions between different types of change in various organisations, sectors and disciplines), its contestability (when the problem and/or the solutions at stake are subject to diverging claims, values and framings, conflicts of interest – as defined by Wesseling et al. (2018[22])), and its level uncertainty (when the state of knowledge does not offer clear paths to a solution (Nelson, 2011[23])). This analysis complements previous CSTP work that explored the influence of countries’ specific institutional settings (Larrue, 2021[24]; 2021[25]).
Following discussions with the OECD MOIP steering group and in agreement with the CSTP, it was decided to focus on the challenge of global warming. This challenge combines several features that make it a perfect candidate to investigate the added value of the MOIP approach. As argued in the OECD horizontal project “Net Zero+: Climate and Economic Resilience in a Changing World” (OECD, 2023[26]), to fully harness the critical contribution to the net zero challenge, “governments will need to do more than just redirect their science, technology and innovation policies, shifting instead towards a mission-oriented approach to technology development and deployment to ensure that efforts are streamlined across policy areas”.
Among the main criteria for choosing the net zero challenge area were notably:
its level of urgency to find new solutions, as climate change’s impacts on people’s lives are already significant and rapidly growing
it is systemic, requiring a combination of several types of changes and innovations
it lends itself very well to a mission-oriented approach since most countries have adopted clear net zero targets with milestones.
Note: The bulk of the academic work on MOIPs is undertaken at the level of initiatives, not specific missions, which does not allow opening the substantive and political dimensions of these endeavours. The Fraunhofer Institute for Systems and Innovation Research’s work on the 12 missions of the German HTS2025 (Roth et al., 2022[27])) is a notable exception.
Objectives of this report
This report aims to assess the added value of an MOIP approach to support countries’ efforts to meet their GHG emissions reduction commitments compared to traditional STI policy approaches.
The report lays out conclusions, lessons learnt and recommendations that inform policy makers and their partners about:
the extent to which and under which conditions MOIPs are better suited than other policy approaches to support countries’ efforts towards net zero
how to design, co-ordinate and implement MOIPs to effectively reduce GHG emissions.
A better understanding of the potential and limitations of this policy approach as well as its enablers and barriers are particularly needed at a time when:
Countries are actively searching for effective ways to govern and implement their commitments for reducing GHGs as the consequences of climate change become more tangible and devastating every day (extreme climatic events such draughts and floods, deadly heat waves, loss of land space due to rising seas, loss of biodiversity, etc.);
MOIPs are reaching a pivotal time. While most of these policies are still at an early stage, there is already strong political demand to demonstrate results. These initiatives are often highly visible and have raised high expectations (and sometimes larger budgets), which have attracted public and political attention;
As MOIPs receive an increasing number of criticisms from both research and innovation actors and some academics, there is now more than ever a need for systematic, robust, non-ideologically biased evidence on missions.
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← 1. For instance, only 60% of commitments include interim targets and 62% are associated with a reporting mechanism.
← 2. For all climate-related technologies (but batteries) and almost all major innovating countries.
← 3. The International Energy Agency estimates that 50% of the emissions reductions in 2050 would need to come from technologies that are still currently under development, in particular solid-state batteries, hydrogen electrolysers and direct air capture technologies. This ratio is even higher in heavy industry and long‐distance transport applications (IEA, 2021[12]).
← 4. See also The Economist (2022[28]).
← 5. See notably Branstetter and Sakakibara (2002[29]) and Sakakibara (1997[31]) on research consortia and Larrue, P. and M. Rebuffet (2008[30]) on the French grands programmes.