Total rankingWorldwide Asia (excl. China) Australia and New Zealand China East Asia East Asia and Pacific Eastern Asia Europe Europe and Central Asia Latin America Latin America and the Caribbean Middle East and Africa Middle East and North Africa North America Northern America Other South and South-Eastern Asia South Asia Sub-saharan Africa United States
This module assesses the level of Research & Development (R&D) investment in mitigation-relevant (low-carbon) technologies relative to overall company capital expenditure. R&D is defined as activities in connection with innovation; for example, work directed towards the innovation, introduction, and improvement of products and processes. However, deployment of new renewable capacity is not included.
Spend on non-mature (emerging) technologies (i.e. carbon reduction technologies, except the mature technologies of hydro and nuclear fission) is rated twice as useful as spend on mature technologies, because more R&D investment is needed to develop and scale-up immature technologies. The expectation is for companies to spend an amount on low-carbon R&D equivalent to at least 5% of overall capital expenditure.
46 companies score less than 20% of the available points. By contrast, Engie spend 2.8% on non-mature carbon mitigation. It has developed an ‘innovation ecosystem’ and has global partnerships with universities, laboratories, manufacturers and start-ups.
Figures for 26 companies for total mitigation R&D spend could not be found. Currently, financial and environmental reporting standards do not require companies to report a figure for R&D and so it is typically only reported when a company has another reason to do so, e.g. a high rate of R&D spend or an expectation that it will be disclosed in some markets. Even more rarely is a split between mature and non-mature technologies reported. Of the 24 companies with a publicly available figure for climate-mitigating R&D spend, only 14 provided sufficient information to work out R&D spend on non-mature technologies.
Of the companies with publicly available figures for non-mature R&D spend, the mean average spend was 0.8% relative to overall capital expenditure (but a median of just 0.3%). The main areas of spend are low-carbon generation, battery storage, carbon capture and storage (CCS), energy efficiency & smart grids, hydrogen and synthetic/biogas.
Considering the importance of CCS to the electric utilities sector and to many company’s plans, it is concerning that only Uniper, Exelon Corporation, Duke Energy & Chugoku explicitly mention research into this technology. Companies in the countries with largest coal capacity (China – 50%; USA – 12%, India – 12%) make no mention of CCS, except Exelon and Duke (both headquartered in the USA).
This lack of disclosure on R&D investments is compounded by the issue of confidentiality, which discourages reporting on this important area. Where companies do disclose R&D it is often split by the categories which the electric utilities sector uses to understand its business e.g. generation; transmission; systems; and customer facing. As the sector decarbonises a more useful split would be between fossil fuel and low-carbon energy sources.