In April 2021, a report ‘Patents and the energy transition: global trends in clean energy technology innovation’ was published by the European Patent Office (EPO) and the International Energy Agency (IEA).
Countries around the world are pledging to the goal of net-zero by mid-century. However, the energy transition needed to achieve this presents huge challenges. As the global energy sector moves to renewable energy sources, many of the technologies needed to replace fossil fuels and cut greenhouse gas emissions are not yet fully mature. The message of this latest report is that the net-zero goal cannot be achieved without further efforts in clean energy innovation. Policy makers and business decision makers can gain valuable insights by analysing trends in low carbon energy (LCE) innovation. With this in mind, the EPO-IEA report provides a comprehensive study on innovation trends across the energy system, in particular low-carbon energy (LCE) technologies.
Patent information provides robust statistical evidence of technical progress. Drawing on the EPO’s Y02 patent classification scheme for climate mitigation technologies, the data in the report shows the latest trends in high-value inventions, by looking at inventions for which patents have been filed in more than one national or regional office. These are termed “international patent families”, or “IPFs”.
Here, we highlight a number of key messages delivered from the report and summarise important innovation trends in LCE technologies guided by patent information.
Highlight 1 – Technology roadmap to a decarbonised economy
The report highlights a general trend towards innovation in LCE technology compared with fossil fuel technology. Patent activity in LCE technology has been continuously growing since 2017, despite a slump between 2014 and 2016. This trend contrasts with a simultaneous decline in patent activity observed in the field of fossil fuel technology, which experienced a four-year decline.
However, the annual growth rate in LCE was only 3.3% since 2017, more than three times lower than the impressive 12.5% growth in the period 2000-2013. This indicates that there is still a need to accelerate innovation and related patenting activities to make up for the lost years. It has been found that most of the reductions in CO2 emissions through 2030 come from technologies already on the market today. For the new technologies which are currently at the prototype stage, much more innovation efforts are expected to take place this decade to bring these new technologies to market in 2050.
Highlight 2 – A shift from energy supply to end-use and enabling technologies
Looking in more detail, the report states that most of the patenting activity for LCE technologies in recent years is related to end-use technologies, rather than the supply of low-carbon energy. Figure 1 shows energy supply, vs. enabling and end-use technologies in 2010 and 2019, respectively. The percentage of IPFs in energy supply, including renewables (e.g. wind, solar, hydro and geothermal energy) and other LCE supply technologies, has decreased from 27% to 15% among the three categories. This can be correlated to the similar decline observed in the case of fossil fuel exploration and extraction technologies in recent years.
In contrast, IPFs covering end-use applications has maintained an overall stable trend with 52% in 2010 and 54% in 2019. Patenting activity for enabling technologies has risen from 21% in 2010 to 31% in 2019. Enabling technologies have helped the energy system to become more flexible and exploit synergies between related sectors. This is reflected by their increasing overlap with patenting activities in energy supply and end-use technologies. Enabling technologies, such as batteries, smart grids, and carbon-capture, utilisation and storage (CCUS), now have clear market value for the resilient operation of electricity networks with higher levels of variable renewable power. And we believe that this is a trend that is set to continue, as countries around the world take steps to implement the infrastructure necessary to make more effective use of existing renewable energy supply technologies.
Trends in energy supply technologies: Solar energy generated the largest volume of patenting activity with 46,500 IPFs between 2000 and 2019, followed by wind energy with 17,000 IPFs and alternative fuels with 10,000 IPFs. The report highlights the latest trend in solar PV technologies which has expanded dramatically over the past decade. Specifically, solar PV cells are still the most technology-intensive element and continued to generate the largest proportion of solar PV patenting activities (48% in the period 2010-2019). Another rising trend is found in mountings and tracking which have helped to reduce the total cost of power generation from solar PV. Europe and the US are dominant in mounting and tracking technologies, which are increasingly focused on smart, flexible applications allowing for solar tracking.
Trends in enabling technologies: Batteries dominated in this area especially in the recent 10 years, which alone generated 57.6% of the IPFs in 2015-2019 as shown in Figure 2, with an average annual growth rate of 13%. This reflects to the importance of electricity in the whole energy system. The active patenting in batteries is driven by the increasing use of batteries of personal devices and tools, and in particular the rapid development and industrialisation of lithium-ion battery technologies for electric mobility.
Another active category is hydrogen and fuel cell which has nearly doubled from 2000-2004 to 2005-2009 and are expected to grow continuously. In contrast, there was significantly less patenting activity in smart grids with a stable average of about 1,000 IPFs per year during 2010-2019. However, it is expected to grow further, supported by new digital platforms such as IoTs, 5G communication networks, cloud computing and artificial intelligence. CCUS accounted for less than 5% of patenting activity in enabling technologies across the whole period of 2000 and 2019.
Trends in end-use technologies: Transportation shows the highest level of patenting activity among the different types end-use technologies. In the report, electric-vehicle (EV) related patenting is separated from other road vehicles to emphasise its importance. EV related IPFs have been growing significantly faster and are expected to develop continuously due to the high demand of zero-emission vehicles. Reducing the emissions and energy intensity of industrial production is another major area of innovation, accounting for nearly a third (30%) of all the IPFs recorded in end-use technologies between 2000 and 2019. This area includes heavy industries such as the chemical and oil sector and metal and mineral processing sector.
Highlight 3 – Automotive companies and their suppliers dominate the top applicants in LCE technologies
The report summarised the top 15 applicants which generated more than a third of all IPFs related to LCE technologies in 2000-2019. Automotive companies and their suppliers largely dominate, reflecting how EVs and their related enabling technologies have acted as a prime mover in energy transition. The ranking includes six automotive companies (Toyota, GM, Ford, Honda, VW, Hyundai) and six of their main battery suppliers (Samsung, Panasonic, LG, Robert Bosch, Hitachi, Toshiba). The remaining three top applicants are GE and Siemens which are two conglomerates directly involved in the energy sector, and US company Raytheon which shows a strong specialisation in LCE for aviation.
Highlight 4 – Geographical distribution of LCE innovation
Overall, Europe, Japan and the US dominate the global LCE innovation landscape, together accounting for more than three quarters of all IPFs generated from 2000 to 2019.
Europe has consistently led patenting activities related to clean energy since 2000, generating 28% of all IPFs in LCE technologies between 2010 and 2019. It ranks first in most renewable energy fields. Japan followed closely behind, with around 25% IPFs between 2010 and 2019. Japan leads in batteries and hydrogen, which reflects an advantage in EVs. The US came a more distant third, with 20% of all IPFs. The US shows a technology advantage in low-carbon combustion and related end-use sectors such as aviation.
The Republic of Korea and P.R. China remain modest innovation centres in the domain of LCE technologies, with 10% and 8% respectively from 2010 to 2019. However, both countries have experienced a sustained increase of patenting activities in these technologies.
We have seen an increasing trend in LCE technologies particularly in the latest three years, which is particularly encouraging when compared with the simultaneous decline of patenting in fossil energy. The new technology drivers now are shifting from energy supply technologies to enabling and end-use technologies, such as batteries and hydrogen. EVs related patenting is growing rapidly as one of the leading categories in the end-use technology sector. The importance of EVs is also reflected by the top applicants in LCE. The geographical distribution of LCE technologies are also analysed which shows that Europe , Japan and the US dominate in the field.
This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking any action in reliance on it.