Learn from the experience of fighting the epidemic to deal with the climate crisis

  Despite the pain and socioeconomic burdens of the Covid-19 crisis, it has also shown how targeted cooperation between states and businesses can accelerate innovation. Similar creative collaborations could also be used to tackle the climate crisis.
  Less than a year after the outbreak, the first Covid-19 vaccines received emergency use authorizations in both the United States and the European Union. A mature innovation system and sufficient manufacturing capacity are important factors. But rapid development of a Covid-19 vaccine would simply not have been possible without long-term collaboration between private and public institutions, as well as government promotion and funding of research projects.
  For example, the German vaccine development company BioNTech and the American company Moderna, which are spin-offs from universities, have received large amounts of public funding during important stages of their research and development. The former had received around 17 million euros in research and start-up funding from the German Federal Ministry of Education and Research before the Covid-19 pandemic; Moderna, founded in 2010 by a group of Harvard professors, received funding from the U.S. government’s Defense Advanced Research Projects Agency. $25 million in funding.
  It is also important that research institutions such as Oxford University in the United Kingdom and the National Institutes of Health in the United States have directly or indirectly participated in the development of new crown vaccines. Research institutions in certain middle-income countries, such as Brazil’s Fiocruz, also played an important role.
  Building on existing capabilities, the government then provided targeted support to accelerate vaccine development and reduce investment risk in alternative vaccine platforms. First, government-funded agencies provided grants. In the development of the BioNTech-Pfizer combination vaccine, the German Federal Ministry of Education and Research has provided a landmark funding of EUR 375 million, of which nearly EUR 240 million has been disbursed in 2020 alone. The funding was equivalent to about 25% of the two companies’ research and development costs when the vaccine was approved. Meanwhile, Moderna received nearly $1 billion in U.S. government funding for vaccine research and development in 2020 and is working closely with the National Institutes of Health on clinical trial activities.
  In addition, the “pre-government procurement” agreement guarantees that the necessary production facilities can be built “in parallel”. The contract “guarantees” the purchase of pre-agreed doses if the research and development company obtains regulatory approval for its Covid-19 vaccine.
  Complementing the simultaneous boost to supply and demand, each jurisdiction has accelerated its vaccine licensing process. Public authorities review available data immediately after each clinical trial phase, rather than waiting until the overall trial is complete, as is often the case.
  So how do all of this matter for work on climate change? First, demand-side funding in the form of pre-purchase agreements can also be used for climate-related innovation. In the United States, for example, public procurement is now an important part of innovation policy and a key driver of financing. The U.S. government spends about $50 billion annually on innovation procurement, equivalent to nearly one-third of federal R&D spending.
  Other important components include mission-oriented innovation agencies such as the U.S. government’s Defense Advanced Research Projects Agency, the Energy Advanced Research Projects Agency, and the Biomedical Advanced Research and Development Agency. US President Joe Biden plans to create a new agency to drive climate innovation. At the state level, agencies such as the New York State Energy Research and Development Authority are experimenting with models designed to attract investment in innovative projects to support the green transition.
  But policymakers must develop new policies to achieve an appropriate distribution of costs and benefits between private and public actors. Given the huge investment by the German government in the development of the BioNTech-Pfizer vaccine, one might ask, why can’t the government influence its subsequent distribution, patent use, or even get some of the resulting profits?
  Like the Covid-19 vaccine, new climate technologies and innovations adapted to local conditions are still insufficient and still concentrated in a few countries. The transfer of technology and financial resources is currently far from meeting demand. At the same time, the pandemic has accelerated rising debt levels in developing and emerging economies that began with the global financial crisis. Private debt in these countries now averages more than 140 percent of their GDP, a 50-year high and more than double the pre-2008 rate.
  Addressing today’s growing climate challenges requires innovative forms of cooperation between the public and private sectors and countries, with the right policy mix of targeted government financing and procurement, to shape new windows of opportunity for markets and industries.

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