Hope and Concern: What CFR’s Index Tells Us About Global Energy Innovation

CFR’s Global Energy Innovation Index assesses national contributions to energy innovation worldwide. It also provides a window into global progress. Trends in private investment in early-stage venture capital (VC) and public investment in research, development, and demonstration (RD&D) offer grounds for hope of a global trend toward clean energy innovation and deployment. Clean energy consumption trends don’t provide a clear signal, however, while data on patenting is alarming.   

One positive sign is that global early-stage VC investment in clean technology start-up companies grew by 82 percent between 2020 and 2024, according to data provided to CFR by the Cleantech Group (figure 1). That is on top of roughly threefold growth in the previous five year period. Start-ups are more likely to drive technological breakthroughs than established firms, because they are willing to take greater risks. VC is cyclical; it peaked in 2022. But each peak and trough in the available data is higher than the previous one, even taking inflation into account. In addition, these investments are becoming more widely distributed over time, with the European Union’s share growing particularly quickly relative to China’s and the United States’. That means the world is not only taking more shots on goal, but taking these shots from a wider variety of angles, raising the chance of success.  

Figure 1

Global spending by governments on energy RD&D did not grow as quickly as early-stage VC investment, but nonetheless provides some ground for hope. The increase was 41 percent between 2020 and 2024, after growing 24 percent between 2015 and 2020 (figure 2). (These figures are not adjusted for inflation, so the apparent acceleration should be taken with a grain of salt.) RD&D is a major driver of innovation, enabling technologists to create new devices and software and to ready them for commercial deployment. This indicator, too, shows greater diversity, with China’s share growing particularly rapidly relative to the US and EU. This trend is likely to accelerate as China pours funding in, while the United States pulls back. 

Figure 2

Clean energy consumption, which helps create markets that drive the adoption of innovations, tells a more ambiguous tale. The share derived from nuclear and renewable resources has grown from 11.6 percent in 2018 to 13.4 percent in 2024 (figure 3). The share is small, and growth is slow. Its intransigence has led some observers to despair. Yet, it is worth remembering the titanic scale of the global energy system. Any change is bound to be slow. Moreover, these figures conceal rapid growth in solar and wind power, which comprise the vast majority of new generation capacity installed in recent years. More hopeful observers therefore anticipate an acceleration of growth in the coming years. 

Figure 3

The biggest cause for concern raised by the Index is patent data. The Index measures high-quality patents, those that were granted for the same invention in the European Union, Japan, and United States. (Registering a patent in multiple jurisdictions is a costly exercise, suggesting that the companies expect the innovation to produce significant value.) This indicator is more backward-looking than the others, because patents take a long time to grant. The data covers 2016 to 2020, and it shows an essentially flat trend, continuing a lull that dates back to at least 2011. China’s patenting is growing, offsetting a contraction in the United States (figure 4).  

Patented inventions, moreover, are generally not commercially-viable innovations. Gaining patent protection is just the first step in a long process. Inventions must be refined, integrated into larger systems, and brought to scale before they can affect the global energy system. The lack of growth in high-quality patents globally suggests a similarly sluggish pace for progress in real-world applications. 

Figure 4

The task of transforming the global energy system is vast. Like the blind men touching the proverbial elephant, no single indicator provides a clear picture. Unfortunately, many indicators taken together don’t necessarily clarify things that much. In the end, concern is warranted, given the unfathomable costs of climate change. But hope is, too, given the creativity and ingenuity of our unique species.