Technological change is crucial for reducing emissions of greenhouse gases. Some of the technologies necessary to reach a low carbon society are ready to implement now, while others need further development and cost reductions to become scalable alternatives that can reduce emissions. Investing in new ‘clean’ technology has received significant political and media attention, as new technologies are often associated with growth and progress, where other measures (such as efficiency or conservation) may be associated with restrictions.

Nevertheless, the technological shifts and the innovations needed are not happening fast enough. Change and innovation is necessary in several sectors. However, the electricity sector is particularly important as it is responsible for about 40 per cent of global CO2 emissions, and as electricity is used throughout the economy. However, the electricity sector also presents challenges for achieving and implementing innovations. Old, long-lived fossil-fuel technologies dominate; private sector R&D is relatively low; and markets are not easily formed. Where policy has attempted to stimulate technical change, progress has been limited by risks, as capital intensity and long investment cycles leave investors exposed to political change.

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