I do not have a super strict definition of the ITN framework, but we are inspired by 80k’s ITN methodology. The arguments and findings from the ITN analysis, sometimes serve as inputs to the fermi estimate.
Tractability for instance we mention several times throughout the report:
“Public clean energy R&D is neglected: only $22 billion is spent per year globally. Many advanced economies such as the US could unilaterally increase this substantially i.e. even without international coordination—which makes this policy uniquely politically tractable. ”
“Increasing public clean energy R&D does not necessarily require strong multilateralism or harmonized national policies. This makes it very tractable politically and uniquely positioned in the space of all climate policies as a decentralized approach (see Figure 4).”
Or:
“Political tractability of carbon pricing approaches
Carbon pricing is becoming increasingly unpopular and politically difficult to implement.[173] One commentator writes that “the carbon tax’s fading appeal, even among groups that like it in principle, shows the difficulties of crafting a politically palatable solution to one of the world’s most urgent problems”.[174] It might be an even larger political challenge to increase the carbon tax to reflect the social cost of carbon (i.e. the true price of the externalities).[175] The political feasibility of a carbon tax is further decreased by the seemingly endless debates on how high it be should be (although it would make sense to set the carbon price to the marginal abatement cost, which is easier to estimate than the marginal social cost of carbon,[176] or use the lower bound of the social cost of carbon,[177] and/or simply err on the side of overestimating externalities, while reducing other non-Pigovian taxes).
On the positive side, carbon pricing might face less industry pushback and regulatory capture than many might assume: Major fossil fuel companies are advocating for carbon pricing.[178] This might be a case of ‘Bootleggers and Baptists,’[179] a phenomenon in which profit-driven corporations cause externalities (bootleggers) to align politically with socially motivated governments (baptists) trying to reduce externalities, as pushing for tighter regulation of their own industry (e.g. alcohol, carbon) gives them an advantage by making it harder for new competition to enter the market. On the other hand, the fossil fuel companies have invested over $1 billion on misleading climate-related branding and lobbying.[180]
In the appendix, we list two different ways of measuring national efforts to price carbon. The first is the country’s environmentally-related tax revenue as a percentage of GDP (e.g. gas taxes etc.). The second measure takes into account both carbon taxes and emission trading systems to calculate the effective carbon rate.”
“Cheaper clean energy technology might save the world a lot of money and might reduce both emissions and poverty. Many people also suggest that this would make a carbon tax more politically palatable.”
“Theoretically, a perfect global carbon pricing regime implemented early might have been the only policy needed to prevent climate change.[143] Leading economists agree that carbon taxes are a great policy intervention.[144] Increasingly, advanced economies do price or tax carbon emissions. A global carbon price would lead to lower emissions and incentivize the private market to build cleaner energy technology. Although there are proposals and increasing public support for a global carbon tax,[145] the biggest challenge still is that they do not seem politically palatable enough.[146] Some countries, such as Russia, derive a substantial part of their GDP from fossil fuels[147] and it might thus be in their interest not to adopt a carbon price.”
On neglectedness:
“Public clean energy R&D is neglected: only $22 billion is spent per year globally compared to $140 billion spent on clean energy deployment subsidies and trillions spent on energy.”
“But is public spending on clean energy R&D really neglected? Is it effective to spend more? We think so. Consider that, globally, only $22 billion in public funds are spent on clean energy R&D annually—this is only 0.02% of World GDP.[18] For comparison, world energy expenditure was 6% of the World’s GDP. This means we spend about 300 times as much on energy than on making energy better.
Why is there so little investment in clean energy innovation?
Generally, basic R&D is under-supplied at both the private and public level. There are several theoretical reasons for this:
On a global level, basic clean energy R&D is under-supplied by both governments and the private sector. Why? Because it suffers from the free-rider problem, as all basic R&D and public goods do. Countries and firms can just let others do the basic research and then reap the benefits because knowledge is hard to protect internationally. Private R&D cannot be protected perfectly because patents expire or industry know-how diffuses to other firms and not all rents from investments can be captured. This results in a socially suboptimal investment. In other words, additional public investment through basic R&D funding and subsidies increase social surplus, because private capital can only capture a fraction of the social surplus pie.
Generally, venture capital and the market neglect capital-intensive, high-risk, high-return, long time-horizon investments.
Clean energy R&D, in particular, is under-supplied because externalities of carbon are not priced adequately, leading to insufficient commercial applications for clean energy R&D.”
“First, generally,clean energy innovation is neglected by philanthropists. US philanthropists gave only $115,000 in grants to promote government clean energy R&D spending and only $20,000 to promote the role of government in fostering innovation annually on average from 2011-2015.[52] This suggests that there are likely still increasing returns to scale.”
“Climatechangeis relatively non-neglected
Climate change is a high-profile topic that many people work on. It is funded by both governments and big private foundations. Thus, even though clean energy innovation in particular has been relatively underfunded within the climate policy space, it is conceivable that in the future ITIF might receive grants for their clean energy innovation program from other funders, which lowers the counterfactual impact of donating to this project. In other words, comparatively, climate change is not very neglected. For instance, the risks and expected losses of pandemics are of a similar magnitude than those of climate change, yet the area is more neglected by other funders.[75]”
I do not have a super strict definition of the ITN framework, but we are inspired by 80k’s ITN methodology. The arguments and findings from the ITN analysis, sometimes serve as inputs to the fermi estimate.
Tractability for instance we mention several times throughout the report:
“Public clean energy R&D is neglected: only $22 billion is spent per year globally. Many advanced economies such as the US could unilaterally increase this substantially i.e. even without international coordination—which makes this policy uniquely politically tractable. ”
“Increasing public clean energy R&D does not necessarily require strong multilateralism or harmonized national policies. This makes it very tractable politically and uniquely positioned in the space of all climate policies as a decentralized approach (see Figure 4).”
Or:
“Political tractability of carbon pricing approaches
Carbon pricing is becoming increasingly unpopular and politically difficult to implement.[173] One commentator writes that “the carbon tax’s fading appeal, even among groups that like it in principle, shows the difficulties of crafting a politically palatable solution to one of the world’s most urgent problems”.[174] It might be an even larger political challenge to increase the carbon tax to reflect the social cost of carbon (i.e. the true price of the externalities).[175] The political feasibility of a carbon tax is further decreased by the seemingly endless debates on how high it be should be (although it would make sense to set the carbon price to the marginal abatement cost, which is easier to estimate than the marginal social cost of carbon,[176] or use the lower bound of the social cost of carbon,[177] and/or simply err on the side of overestimating externalities, while reducing other non-Pigovian taxes).
On the positive side, carbon pricing might face less industry pushback and regulatory capture than many might assume: Major fossil fuel companies are advocating for carbon pricing.[178] This might be a case of ‘Bootleggers and Baptists,’[179] a phenomenon in which profit-driven corporations cause externalities (bootleggers) to align politically with socially motivated governments (baptists) trying to reduce externalities, as pushing for tighter regulation of their own industry (e.g. alcohol, carbon) gives them an advantage by making it harder for new competition to enter the market. On the other hand, the fossil fuel companies have invested over $1 billion on misleading climate-related branding and lobbying.[180]
In the appendix, we list two different ways of measuring national efforts to price carbon. The first is the country’s environmentally-related tax revenue as a percentage of GDP (e.g. gas taxes etc.). The second measure takes into account both carbon taxes and emission trading systems to calculate the effective carbon rate.”
“Cheaper clean energy technology might save the world a lot of money and might reduce both emissions and poverty. Many people also suggest that this would make a carbon tax more politically palatable.”
“Theoretically, a perfect global carbon pricing regime implemented early might have been the only policy needed to prevent climate change.[143] Leading economists agree that carbon taxes are a great policy intervention.[144] Increasingly, advanced economies do price or tax carbon emissions. A global carbon price would lead to lower emissions and incentivize the private market to build cleaner energy technology. Although there are proposals and increasing public support for a global carbon tax,[145] the biggest challenge still is that they do not seem politically palatable enough.[146] Some countries, such as Russia, derive a substantial part of their GDP from fossil fuels[147] and it might thus be in their interest not to adopt a carbon price.”
On neglectedness:
“Public clean energy R&D is neglected: only $22 billion is spent per year globally compared to $140 billion spent on clean energy deployment subsidies and trillions spent on energy.”
“But is public spending on clean energy R&D really neglected? Is it effective to spend more? We think so. Consider that, globally, only $22 billion in public funds are spent on clean energy R&D annually—this is only 0.02% of World GDP.[18] For comparison, world energy expenditure was 6% of the World’s GDP. This means we spend about 300 times as much on energy than on making energy better.
Why is there so little investment in clean energy innovation?
Generally, basic R&D is under-supplied at both the private and public level. There are several theoretical reasons for this:
On a global level, basic clean energy R&D is under-supplied by both governments and the private sector. Why? Because it suffers from the free-rider problem, as all basic R&D and public goods do. Countries and firms can just let others do the basic research and then reap the benefits because knowledge is hard to protect internationally. Private R&D cannot be protected perfectly because patents expire or industry know-how diffuses to other firms and not all rents from investments can be captured. This results in a socially suboptimal investment. In other words, additional public investment through basic R&D funding and subsidies increase social surplus, because private capital can only capture a fraction of the social surplus pie.
Generally, venture capital and the market neglect capital-intensive, high-risk, high-return, long time-horizon investments.
Clean energy R&D, in particular, is under-supplied because externalities of carbon are not priced adequately, leading to insufficient commercial applications for clean energy R&D.”
“First, generally, clean energy innovation is neglected by philanthropists. US philanthropists gave only $115,000 in grants to promote government clean energy R&D spending and only $20,000 to promote the role of government in fostering innovation annually on average from 2011-2015.[52] This suggests that there are likely still increasing returns to scale.”
“Climate change is relatively non-neglected
Climate change is a high-profile topic that many people work on. It is funded by both governments and big private foundations. Thus, even though clean energy innovation in particular has been relatively underfunded within the climate policy space, it is conceivable that in the future ITIF might receive grants for their clean energy innovation program from other funders, which lowers the counterfactual impact of donating to this project. In other words, comparatively, climate change is not very neglected. For instance, the risks and expected losses of pandemics are of a similar magnitude than those of climate change, yet the area is more neglected by other funders.[75]”
You might also be interested in the cell notes in this spreadsheet that give the very quick reason for all climate policies scores on the ITN framework.
Does that answer your question?