Mexican President Enrique Peña Nieto opens the Don Alejo solar plant in January 2016, touted by planners as the largest and most modern solar plant to date in the Latin American region.

Despite pioneering success in niche areas like biofuels and ocean energy, most Latin American countries trail other regions of the world in important indicators of clean energy innovation, such as filing fewer patents, investing less in technology research and development and receiving far lower royalties, according to a report released in March by the Inter-American Dialogue. What steps can Latin America take to scale up clean energy technology development? What do countries of the region stand to gain from improving these metrics? What more can government agencies and legal systems in Latin America and the Caribbean do to encourage higher rates of patent applications, both domestically and abroad?

Jesús Alarcón, senior researcher at the Mexican Institute for Competitiveness (IMCO) in Mexico City: "A historical trend for Latin America is that we do not develop and innovate in new technologies, but rather we import the knowledge from other markets. This is due to our low annual investment in science and technology, now at about 0.76 percent of our GDP. In contrast, the European Union has an average of 2 percent, while Korea and Japan invest between 3.5 and 4 percent of their GDP. Investing in clean energy is a first step toward reversing this situation, as Latin America’s geographical position is beneficial for harnessing and promoting the development of new technologies. However, we must carry out some actions first: (1). Creating public policies that foster the use of clean technologies (for example, renewable energy certificates or feed-in tariffs schemes). Another approach could be the use of financial incentives for anyone who either generates or uses clean energy. For example, in Colombia those who build a clean energy plant can recover up to 25 percent of their initial investment depending on the project’s environmental impact. (2). Improving the legal conditions that protect the intellectual property of researchers and developers of science and technology. In this field, government programs sometimes forget to assist entrepreneurs and startups in the registration process of patenting. (3). Enhancing financing schemes by creating a guarantee program for entrepreneurs in order to promote the diversification of the financial products offered by commercial banks. Investing in clean technologies not only helps to diversify the energy matrix by minimizing its reliance on fossil fuels (including natural gas), it also protects our natural assets by reducing GHG emissions."

Jonathan Pinzón, independent consultant on energy and innovation: "Most Latin American countries have recently opened up markets to clean energy with very interesting results. Unfortunately, public utilities and energy companies have shunned the opportunity to become important players in their emerging innovation ecosystems (with notable exceptions, including EPM). The region’s private-sector giants, mostly in natural resource and low-tech content goods and services, provide few natural exits for technological solutions and innovative ventures. Governments can increase the market for cleantech through regulations and market mechanisms. But they can also provide the seeds for economic transformation. A recent discovery in the region is the notion of the ‘entrepreneurial state’ and the possibilities of mission-oriented finance. With it comes a growing interest in public research and development funding, through levies on extractive industries. Absent, though, have been the needed partnerships with large corporations. In their quest to transition to an innovation-based economy, many governments have supported the creation of Silicon Valley-style venture capital funds, but corporate venture is practically non-existent. By opening up markets for clean solutions, implementing environmental standards and carbon taxes, increasing smart investments in energy problems and incentivizing the involvement of corporations, the region can become a leader in clean energy innovation. Last December in Paris, Brazil, Chile and Mexico all committed to doubling public R&D efforts in energy. But absent were the region’s billionaires and corporations that are needed to bring those technologies to market. Without them, the region’s proliferating venture capital will continue to fund what they hope will be the next acqui-hire and not the cleantech breakthrough we are looking for."

Lisa Viscidi, director, and Rebecca O’Connor, assistant, of the Energy, Climate Change and Extractive Industries Program at the Inter-American Dialogue: "Governments can play an important role in increasing both overall innovation and clean energy innovation by increasing R&D spending as a percentage of GDP. The region spends only 0.82 percent of GDP on R&D compared to 1.84 percent in Asia and 2.84 percent in the United States. Directing even a small percentage of this R&D spending toward engineering-based innovation will boost research capabilities in energy-related fields. Governments can also strengthen policies to boost domestic demand for indigenous clean energy technologies and create a domestic market for companies to sell their patented technologies and test their prototypes. For example, Latin American governments could create public procurement programs that require minimum levels of domestically developed technology inputs. Finally, to commercialize more technologies, Latin American countries need to expand industry-academia ties and connect researchers with foreign private sector players that have more experience in marketing and exporting technologies than domestic firms. Latin American researchers also need to patent more of their technologies in larger foreign markets to increase their exposure to foreign companies and increase royalties. Links with international industry and markets will also help Latin American start-ups gain access to international capital."

Alexandre Szklo, associate professor at the School of Engineering of the Federal University of Rio de Janeiro: "Latin American countries (LAC), especially Brazil, have improved their scientific indicators related to number and impact factors of scientific papers. Moreover, in deepwater petroleum upstream activities, Brazilian research centers ( such as CENPES, BG and GE) established fruitful partnerships with universities to develop technological pilot studies. Some of these studies provided patents. On one side, this shows that partnerships between energy companies and universities are possible in LAC. On the other side, it also shows that these partnerships have been carried out in Brazil, and even in other countries (Argentina, Peru, Mexico, Colombia) with national oil companies—fully state owned or not—as the driving force behind them. Lessons learned from OECD countries indicated that to overcome the ‘death valley’ related to scientific developments made at universities, the presence of a third party is relevant. In academic studies, usually all results are public, and scholars are not prone to risk activities from the market side. Patents mean that a company will benefit from a temporary monopoly of a technological development, but also mean that this development will not be fully public for a while. Therefore, LAC lacks a developed market for clean energy innovation, which would include small innovation companies prone to risk (start-up or not), a well-developed financial market (not only based on commodity assets) and a revision of the roles that universities and research centers can assume in helping the cleantech market in LAC."

David Bradin, counsel, and Sean Wooden, partner, at Andrews Kurth: "Latin America and the Caribbean have rapidly growing populations and ever-increasing energy demands, but also have considerable untapped renewable energy potential, with plentiful arable land, favorable climates for growing energy crops and access to low-cost labor. However, limitations associated with switching to clean energy include access to capital, access to technology, lack of government incentives, difficulties in obtaining patents on new technology and competition from relatively inexpensive crude oil. First-generation biofuels, like biodiesel and sugar cane ethanol, are limited by the amount of available feedstock. Second-generation biofuel technologies have higher capital costs, and, even in developed countries, have seen little commercial success, despite decades of research. Assuming an economically viable second-generation biofuel technology is discovered, it is necessary to have effective ways to fund commercial development and to protect intellectual property. With respect to funding, Latin American governments have several tools at their disposal, including tax incentives, public/private partnerships, grants and government-backed loans. With respect to intellectual property, less than 3 percent of global patent applications in renewable technologies are filed in Latin America and the Caribbean. Additional filings could be encouraged, for example, by adopting a regional patent system such as is used in Europe, Eurasia, and Africa. In these regions, far more applications are filed regionally than are filed in individual member states. In the process of negotiating a regional patent system, Latin American and Caribbean nations should also consider negotiating trade agreements that favor regional clean energy development."

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