The United States Patent and Trademark Office (USPTO) issued a press release on March 6th 2023 announcing green energy inventions as the newest category within their ‘Patents for Humanity Program.’ Patents for Humanity recognizes inventors whose inventions provide aid in addressing global humanitarian challenges, including development of medicines, access to nutrition, or improving global living standards. The newest category now recognizes inventions that aid in climate change mitigation efforts. These can include technologies dealing with hydrogen, hydropower, and biofuels, as well as wind, geothermal, and solar energies.
One of the most prominent pathways for fighting climate change is the adoption of environmentally sustainable technology (ESTs). The trend over the last decade or so has seen ESTs becoming one of the fastest growing industries. Patent protection plays a large role in these conversations as it is the primary regulatory mechanism for the promotion of technological innovation.
Nowadays, most patents, green and otherwise, are not held by individuals, but by large corporations. Since a large part of the value of a corporation is captured in its intangibles such as intellectual property rights, the number of patents a corporation has plays a large part in attracting investors. This in turn becomes an incentive to obtain as many patents as possible, effectively creating an arms race across industries to chase this metric for corporate value. Thus critics of the patent system claim that patents are increasingly used agents for commercial gain rather than a spur for creativity.
This post will offer a critique of the current landscape for incentivizing the creation of environmental technologies. The decline in green patents over the last decade calls into question the current solution of IP offices to merely offer more patents faster. The complexities inherent in effective global climate action demand more action than the current incentives being offered.
The Slowing Interest in Green Patents
In recognition of the climate crisis and the crucial role of green technology for mitigating global warming, patent offices across the world have been creating incentives for corporate actors to generate innovation in this area. So-called “green patents” are specialized patents designed to streamline the application process for environmental inventions in areas such as wind, geothermal, and solar energy production. As of 2020, the leading countries for filing green patents are Japan, the USA, Germany, Korea , China, France, and the UK, with energy and transportation representing the largest sectors for patent filings.
The UK Intellectual Property Office was the first to introduce such a program back in 2009; their “Green Channel”, to fast track the patent application process for inventions with an environmental benefit. Since the program’s creation, fewer than 3,500 total patent applications have been submitted through this program over the past 14 years – a relatively small number especially when compared to the number of their annual patent applications which average around 20, 000 per year.
Similar scarcity appears across North America. The United States launched its Green Technologies Pilot Program in 2009, for similar accelerated application benefits, though capped the number of applications it would accept at 3500; once the number was reached in 2011, the program ended. Since Canada’s introduction of their Green Patent program in 2011, there have been a total of 127 Green Patent grants.
Globally, there has been a downward trend in clean technologies over the decade of the 2010s; in the power generation sector, there were 1,256 applications in 2011 but 2018 only saw 285 applications, marking a 77% decrease. Similar findings were noted for buildings and manufacturing in cleantech as well. Notably, this decrease was only restricted to climate change technologies and absent in other sectors of invention.
The fast-tracked incentives for green patents, however, may not be the most desirable pathway for corporate patent seekers. Antoine Dechezleprêtre, a senior economist at the OECD claims that, “from an economic perspective, there is not a lot of reason in fast-tracking patents for green tech,”. He states that the fast-track may be useful for start-ups who are in search of funding, hoping to use patents to lure investors, but in reality, for larger corporations, there is necessary time needed for research and development before the patent is finalised which thus favours a slower course for patent approval.
Humbler Green Patents Falling on Deaf Ears?
In their 2020 working paper, “The ESG-Innovation Disconnect: Evidence from Green Patenting” Umit Gurun, the Ashbel Smith, Professor of Accounting and Finance in the Naveen Jindal School of Management, and his co-authors found that a large percentage of green patents in the US are being acquired, not by ESG firms, but instead by traditional oil and gas producing companies – companies that are normally excluded from ESG investment endeavors.
The study notes that these firms are currently leading on environmentally sound innovation. They found that “consistent and robust markers that the quantity and quality of green patenting is higher for energy firms” and that “these firms are precisely those to which capital is often restricted by mandates and campaigns whose directive is to solve the important problems linked to green innovation.” Patterns in their findings further showed that companies with higher green patent ratios were significantly more likely to be producing products with lower carbon emissions.
Christopher Hamer, a partner at Mathys & Squire LL.P. in London claims that “There is some good [intellectual property] that is going by the wayside because it’s not seen as pushing the frontiers”. As an example, he states that while a soot suppressant for diesel engines is not really seen as “a sexy technology to take to market”, it still may be well worthwhile to invest in some of the shorter-term climate aids as diesel will not become obsolete overnight.
Merely relying on the image and ‘wow-factor’ of certain environmental technologies to attract both investors and users is limiting. Even more troubling, Hamer notes, is the fact that it may close certain doors to helpful solutions that aren’t wrapped in a greener package, so to speak.
Barriers for Technology Transfer to the Developing World
While more robust patent protection for green technology may serve to bolster a company’s value and incentivize investment, it does not necessarily facilitate the deployment and implementation of the technology itself. This is half the battle concerning climate change mitigation efforts.
Developing countries are both the most vulnerable to the impacts of climate change and the least well-positioned for access to and implementation of ESTs. The lack of financial resources to purchase licensing for patented green technologies poses barriers, but also the R&D capabilities to build a self-sufficient system for continuous development and implementation of new technologies.
Global agreements such as TRIPS attempt to incentivize trade and encourage technology transfer by strengthening global intellectual property regimes even more. By setting minimum standards of patent protection for its members, the hope lies in swaying developed countries to license more technology in the developing world and invest resources in their projects, knowing that they can capitalize on the IP rights from the agreement. However, for developing countries that are not generally granted licensed technologies or benefit from foreign direct investment, scholars still cast doubt on the ability of the agreement to answer their needs in technology transfer.
Looking Past Green Markets to Answer the Climate Crisis
Professor of Comparative Law at Colombia Law School, Katharina Pistor, casts doubt on the reliability of markets as mechanisms to answer the complexities of climate change and notes, “Lacking the political will to confront our own behavior, we are simply assuming that climate change can be addressed with a minimally disruptive and financially neutral – or even profitable – update to the current operating system.”
Such social costs were extremely salient in the context of the COVID-19 pandemic. Global access to critical technologies such as vaccines and therapeutics was of the utmost importance for saving lives and slowing the rate of infection to prevent further viral mutations. Negotiations at the WTO for an agreement on waiving IPRs for these technologies lasted more than a year, resulting in the loss of many lives and the prolongation of the pandemic itself. Relying on patent incentives to spur the creation and deployment on critically important technologies places a lot of faith in systems that evidently have come up short in times of crisis.
Climate change presents yet another troubling crisis, coloured by the same ugly effects of privatization. The Executive Director of the International Energy Agency (IEA), Fatih Birol, declared in 2021 in response to a study done by the IEA and European Patent Office that “around half the emissions reductions to get to net zero by 2050 may need to come from technologies that are not yet on the market,”.
Looking to the future as the ongoing impacts of climate change are ever present and as net-zero target years approach, it appears doubtful as to whether green patents are the answer for incentivizing innovation and adopting clean technologies. While they have no doubt spurred some interest in environmental innovation over the last decade or so, leaving the odds so heavily reliant on market incentives is a gamble that may have irreversible global consequences.