Developing countries including the Philippines should act now to leverage the new opportunities presented by the booming market for renewable and other green technologies, which is expected to reach a market size of up to US$2 trillion in 2030, according to a new United Nations report.
The UN Conference on Trade and Development (UNCTAD) in its “Technology and Innovation Report 2023” published late last month says those able to strategically position themselves to catch the green technological revolution early stand to reap tremendous economic benefits.
“We are at the beginning of a green technological wave in which early adopters of new technologies can rapidly move ahead and create lasting advantages in related economic sectors,” the publication says. “Therefore favourable conditions to catch up technologically and economically are available only for a short time.”
Countries that miss these early stages will face gaps that are hard to close later, the report warns. Not being part of the green technological revolution would mean missing opportunities in a market expected to grow fast in the coming years.
Green frontier technologies alone are expected to have a fourfold increase compared to what they are valued today, reaching a market size of up to $2.1 trillion in 2030. The overall market for frontier technologies is projected to become far larger, reaching $9.5 trillion by the end of the decade.
Unfortunately, UNCTAD observes that developing countries have been lagging behind developed nations in tapping the market for green technologies.
One example is the exports of green technologies related to renewables and electric vehicles. Between 2018 and 2021, developing countries’ exports grew by about 32% only, from $57 billion to $75 billion, while those of developed economies more than doubled, from $60 billion to $156 billion.
Most top suppliers are firms from the United States, a few other developed countries and China. Also, China and the US dominate knowledge creation, accounting for about 30% of global publications and almost 70% of patents.
The paper examines possible national strategies and recommends a set of international support measures that can help developing economies.
Highlighted is the importance of implementing proactive and strong governmental efforts. Overall, policies should be mission-oriented, going beyond fixing market failures.
In addition, coordination is key, especially regarding energy transition, as sustainable development is a cross-cutting issue that involves several governmental sectors. Environmental and industrial policies must be aligned, the research says.
Moreover, national governments should proactively incentivize green sectors and innovation to diversify their economies and move towards more complex products that are also greener.
In the Philippines, initiatives are currently being undertaken to promote green technologies. The Strategic Investment Priority Plan, for instance, provides incentives for the production of green technologies including green metals, assembly of electric vehicles (EV), and manufacture of EV parts and components.
The Department of Energy is looking to update the Philippine Energy Plan (PEP) 2020-2040 to hasten the country’s renewable energy usage, strengthen energy resiliency, and reduce dependence on importation.
The department also plans to revise the PEP’s proposed 10% EV penetration rate in road transport by 2040 in view of the passage of the Electric Vehicle Industry Development Act.
The UNCTAD report covers 17 frontier and green technologies, ranging from artificial intelligence and the Internet of Things to green hydrogen and EVs.
It also includes a frontier technology readiness index that gives insights about specific actions that countries can take to perform better in the race to catch this wave of technological change.