The world’s energy systems are undergoing an extraordinary transformation. Driven by a shared commitment to a sustainable future, this rapid evolution relies heavily on technological advancements. From renewable energy sources like solar and wind power, to battery storage, flexible power generation, bioenergy, hydrogen, and carbon capture, utilization, and storage (CCUS), innovation is the key that will unlock a net-zero world.
Governments worldwide are recognising the urgent need to expand clean energy technology manufacturing sectors – they are embracing this challenge with the dual objective of enhancing energy security as well as addressing climate change.
According to analysis conducted by Wood Mackenzie, electrification plays a central role in global decarbonisation efforts. However, it’s important to acknowledge that not all industries can be fully electrified. In such cases, technologies like carbon capture and hydrogen are expected to play a vital role in reducing their carbon emissions. To achieve net zero by 2050, carbon capture technologies must extract at least 5 billion tons of CO2 annually, accounting for 15% of total required removals.
While developed economies are seeing encouraging policy support from governments and other institutions, increased investment in emerging markets is needed to address this critical gap. In addition to renewables and energy storage, reliable and dispatchable net-zero power generation technologies are essential for the widespread electrification of all sectors.
Hydrogen is also poised to play a transformative role in the energy transition, unlocking vast potential as a clean and versatile fuel that enables decarbonisation across multiple sectors. Low-carbon hydrogen applications are rapidly expanding, supported by favourable policies in countries like Japan and Australia.
Intriguing trends emerge when examining global patents related to climate change mitigation and adaptation technologies. China, for instance, has made significant efforts to incentivise patent filings, leading to a five-fold increase since 2014 and an expansion of their global share of patents. The number of applications in the region rose from 200,000 in 2014 to over 650,000 in 2022.
In contrast, other countries have not shown the same level of urgency in terms of public support for patent filings. The United States, Japan, Europe, and South Korea have seen relatively consistent numbers of applications, with less than a 5% annual change.
It’s important to note that quantity does not always equate to quality. Globally, the proportion of patent applications granted has actually declined between 2014 and 2019. This indicates that while there is a significant amount of activity in terms of patent filings, not all of them represent ground-breaking technologies or hold substantial value.
While patent data alone does not provide a complete picture of global investment and innovation, it does offer a valuable indication of the level of activity in the field. For example, a patent can signify a technology with immense potential or, conversely, one with limited value.
Overall, the energy transition presents a once in a generation opportunity for early investors to fund new technologies that will shape the energy landscape going forward.