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Innovation, growth and the transition to net-zero emissions

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  • Nicholas Stern
  • Anna Valero

Abstract

The climate crisis and the global economic impact of the Covid-19 crisis occur against a background of slowing growth and widening inequalities, which together imply an urgent need for a new environmentally sustainable and inclusive approach to growth. Investments in "clean" innovation and its diffusion are key to shaping this, accompanied by investments in complementary assets including sustainable infrastructure, and human, natural and social capital which will not only help achieve net-zero greenhouse gas emissions, but will also improve productivity, living standards and the prospects of individuals. In this article, we draw on the theoretical and empirical evidence on the opportunities, drivers and policies for innovation-led sustainable growth. We highlight the importance of a coordinated set of long-term policies and institutions that can enable and foster private sector investments in clean innovation and assets quickly and at scale. In doing so, we draw inspiration from Chris Freeman's work on the system-wide drivers of innovation, and his early vision of achieving environmental sustainability by reorienting growth.

Suggested Citation

  • Nicholas Stern & Anna Valero, 2021. "Innovation, growth and the transition to net-zero emissions," POID Working Papers 008, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:poidwp:008
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    References listed on IDEAS

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    3. Gabriel R. G. Benito & Klaus E. Meyer, 2024. "Industrial policy, green challenges, and international business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 55(9), pages 1093-1107, December.
    4. Katinka Holtsmark & Katinka Kristine Holtsmark, 2024. "Can Revenue Recycling Kill Green Technology?," CESifo Working Paper Series 11510, CESifo.
    5. Li, Haichao & Su, Yuqi & Ding, Chante Jian & Tian, Gary Gang & Wu, Zhan, 2024. "Unveiling the green innovation paradox: Exploring the impact of carbon emission reduction on corporate green technology innovation," Technological Forecasting and Social Change, Elsevier, vol. 207(C).
    6. Shwetlena Sabarwal & Sergio Venegas Marin & Marla Spivack & Diego Ambasz, 2024. "Choosing Our Future," World Bank Publications - Reports 42098, The World Bank Group.
    7. Zhao, Ziyi & Zhao, Yuhuan & Shi, Xunpeng & Zheng, Lu & Fan, Shunan & Zuo, Sumin, 2024. "Green innovation and carbon emission performance: The role of digital economy," Energy Policy, Elsevier, vol. 195(C).

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