Professor Mazzucato’s work on mission-oriented innovation policy begins with the fact that innovation has both a rate and a direction. The direction can be chosen passively by the market’s invisible hand, which is often sub-optimal. Or it can be chosen deliberately by policy-makers acting in bold ways to shape new futures, solving public problems and creating new markets. It was direction setting policies that sparked major breakthroughs around the Internet, biotechnology, nanotechnology and today is paving the way towards a potential green revolution. In Mazzucato’s work with Carlota Perez, Innovation as Growth Policy, the authors argue for green to become a new direction for the entire economy, affecting production, distribution and consumption--similarly to how suburbanization provided a direction for mass production.
As was the case with the IT revolution, battling climate change requires transformation across the entire innovation chain: on the supply side through investments in innovation, and on the demand side through procurement policies as well as policies that affect consumption and investment patterns. Both are critical, with demand side policies important for diffusion and deployment, so that new technologies increase productivity across the economy.
In her book, The Entrepreneurial State: debunking public vs. private sector myths, and recent work on the Green Entrepreneurial State, Mazzucato has looked at the roles of public and private actors engaged in the green tech sector, finding similar patterns to those in biotech and ICT: a network of decentralized public actors supplying the long-term patient finance required for high-risk innovation to get off the ground. From US Department of Energy agency ARPA-E to Germany’s development bank KfW, public finance has been and is leading the way. Her work has attracted the attention of international policy-makers, private investors and philanthropists, including Bill Gates who has echoed Mazzucato’s call that the state must lead the way in a green energy revolution.
Mazzucato is currently working with Dr Gregor Semieniuk, a Research Fellow at SPRU, on how different sources of finance influence the pace and direction of renewable energy innovation. They are using different data sources – particularly the Bloomberg New Energy Finance (BNEF) database – to document which types of finance are doing what in the climate finance landscape. Their work examines who the key funders of renewable energy are world wide, and how the portfolio decisions they make influence the direction of green innovation (see Emerging Findings below).
A recent high-level workshop organized by Mazzucato and Semieniuk at Bloomberg New Energy Finance brought key actors in the sector together with academics to consider emerging findings. The workshop papers and presentations can be found here.