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Measuring Eco-Innovation


By René Kemp
OurWorld 2.0
December 9, 2008


“The markets of the future are green,” Prince Hassan of Jordan
declared back in 2006 whilst he was president of the Club of Rome, an
international non-profit think tank focusing on innovation and initiative.
With this statement the prince was expressing a belief that the major markets
would one day have a strong ecological dimension because natural resources would
be valuable, energy won’t be cheap, and because we will value environmental
amenities (e.g., open space, clean air, clean water) more than we do now.

The quote accurately reflects a way of thinking that has begun informing
business strategies and government policies. Shifting attention from costly
end-of-pipe pollution control devices, this ‘new think’ focuses on environmental
gains through cleaner production processes and products, and the closing of
material loops through recycling. The motivation is largely economic — to save
costs on resources, pollution control, waste management or to increase sales.
Concrete data is scarce about the magnitude of eco-innovation activities
undertaken by business, but it is estimated that the market for eco-technologies
was between 500 billion and 1,000 billion Euros in 2005, compared to a global
market for chemicals of 925 billion Euros that same year. Roland Berger
consultants predict a global market for eco-innovations of 2,200 billion Euros
by 2020.

Source: market studies, expert interviews, Roland Berger Strategy Consultants
2006Better and more extensive data

The existing data on green technologies do not include in-house efforts by
manufacturing companies to be more resource efficient nor quality improvements
on products to make them more environmentally benign. Actually, the knowledge
base on eco-innovation is poor. The main sources of information are sales data
on environmental goods and services, case studies and one-off surveys. We lack
comprehensive information about the eco-innovation behaviour of companies, the
macro-effects of eco-innovation activities and the micro-macro link.

To address this information gap, the European Commission’s Directorate General
on Research recently funded two projects to explore ways of measuring
eco-innovation: Measuring Eco-Innovation (MEI) and ECODRIVE. The MEI research
project is being coordinated by a small research team at UNU-MERIT in
Maastricht, the Netherlands.

Defining eco-innovation

A key challenge we faced was to develop a useful definition that would focus on
environmental performance rather than broad objectives. We opted for following
definition of eco-innovation:

“Eco-innovation is the production, assimilation or exploitation of a product,
production process, service or management or business method that is novel to
the organization (developing or adopting it) and which results, throughout its
life cycle, in a reduction of environmental risk, pollution and other negative
impacts of resources use (including energy use) compared to relevant alternatives.”

It is thus understood that to eco-innovate is to go beyond the adoption of
environmental technologies. In developed countries this is characterized by the
transition from investing in pollution control technologies to addressing
cleaner production processes, recycling systems, and products. In developing
countries, sustainable water management and efficient use of resources are
critical issues requiring attention. World wide there is a need for transitions
to low-carbon energy systems and sustainable mobility.

How to measure eco-innovation

Our research investigated the usefulness of three methods for measuring eco-innovation:

- Survey analysis
- Patent analysis
- Digital and documentary source analysis

The overall conclusion is that, although some methods are better than others, no
single method or indicator is ideal. One should apply different methods for
analyzing eco-innovation — to see the “whole elephant” instead of just a part.
In particular, more efforts should be devoted towards direct measurement of
innovation output using documentary and digital sources. The advantage is that
they measure innovation output rather than innovation inputs (such as R&D
expenditures) or an intermediary output measure (such as patent grants).
Innovation may also be measured indirectly from changes in resource efficiency
and productivity. These two avenues are underexplored and should be given more
attention — to augment the rather narrow knowledge basis.

The central question is “why measure eco-innovation?” The answer is simple.
Eco-innovation looks likely to be an increasingly important driver for economic
development across the globe as we respond to the huge climate, energy and other
environmental challenges. So it is essential that we start tracking more
effectively these patterns of innovation, because so much depends upon them and
at present our knowledge is lacking.Download the paperMeasuring eco-innovation
About the authorRené Kemp is senior research fellow at UNU-MERIT in Maastricht
with research positions at ICIS and DRIFT. He is an expert on eco-innovation.
Together with Jan Rotmans he developed the model of transition management, which
is adopted by the Dutch national government as the model for its sustainability
policy. He is member of the programme committee of the interdisciplinary Energy
research programme of the Dutch research council NWO (since 2003), editor of
Research Policy, and editor of the Springer book series "Sustainability and
Innovation". He is member of scientific board of RIDE (Sweden) and ARTEC (Germany).

He believes that eco-innovation holds great promise for companies. It is driven
by economics of resources costs, waste management costs, and environmental
demand from society. There are great opportunities in eco-innovation. If the US
car industry would have eco-innovated more they would have been in a better
position.

 

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