Biofuels are considered as an essential tool for the de-carbonization of the transport sector and for the reduction of local air pollution. This is especially true for advanced biofuels produced from ligno-cellulosic biomass, which can achieve very low or even negative GHG emissions.
Many processes and technologies are available for the production of advanced biofiels, however many of these technologies are not ready for large scale deployment yet. Even though these technologies are proven at the laboratory level, testing, re-development and demonstration at a larger scale is highly necessary for a successful commercial implementation. Pilot and demonstration plants (PDPs) bridge the gap between basic knowledge generation and technological breakthrough. Considering that in many cases these projects are backed by public financing instruments, for example through the Horizon 2020 and NER 300 programmes in Europe, what is the impact that they generate on stimulating innovation? Understanding of the role of PDPs for technological innovation is important to design appropriate public support for such activities and to realize the potential social benefits generated by them.
A research carried out by K. Backstrom, Economics Unit, Lulea University of Technology (Sweden) provided a quantitative empirical assessment of the impact of PDP activities on innovation in the field of advanced biofuel production technology. The study was conducted by analyzing patent data for eight European countries over the time period 1980-2011, and focusing on the two main types of projects: experimental PDPs made for testing and optimization of technologies and exemplary PDPs, and exemplary PDPs aimed at facilitating the diffusion and commercialization of technologies.
A positive impact on biofuel innovation
The results of the study indicate that the activities in PDP projects have a positive correlation with the patenting activity in the biofuels sector. Moreover, the investments made in both exemplary and experimental PDPs encourage innovation in biofuels. On one hand, the experimental PDPs which have low customer visibility and awareness, are more effective when it comes to technology development. The statistics have shown that avoiding the pressure of the public is helpful in maintaining a working atmosphere where efforts are iterative and development is continuous. The exemplary PDPs, on the other hand, have a different working philosophy of being in continuous touch with the potential adopters of the technology and creating markets by spreading information about the innovations. The creation of these initial markets through market pull support is critical for the evolution of new industries and subsequent technology development, since they provide income streams for investors. Also, it has been proved that the exemplary PDPs have a role in technology development as well. But on an overall impact level, the experimental PDPs have an upper hand in innovation. Therefore, investments need not be confined to domestic developmental activities, since the significant knowledge spillovers generated can drive the innovation in a country by making such similar investments internationally.
Overall, innovations have always been an integral part of the renewable energy field and the current study about the PDPs adds on to it through the facilitation of technology learning and development. The kind of learning taking place in PDPs is dependent on the variety of stakeholders involved and the magnitude of the innovation impacts of PDPs can be explained by the involvement of end users.
This post is based on the paper by K. Bäckström, “What are the Innovation Effects of Pilot and Demonstration Plants? The Case of Advanced Biofuels in the Transport Sector” presented at the 23rd European Biomass Conference and Exhibition.
