Exploring the effects and implications of green innovation within the sustainable transition

Climate change, one of the most pressing societal challenges of our time, represents a profound and far-reaching transformation of the Earth’s natural systems. Primarily through emissions of greenhouse gases (GHG), human activities such as fossil fuel use, deforestation, and industrial processes, have lead to an increase in global average temperatures by more than 1°C since the pre-industrial era (IPCC, 2023). In addition, we are currently on a path towards 3°C of global warming (UNEP, 2023). This phenomenon has triggered a cascade of environmental, social, and economic consequences, from more frequent and severe weather events to rising sea levels and disruptions in ecosystems. Therefore, fighting climate change is not just an environmental issue, but a global crisis with implications for public health, food security, and political stability. Addressing climate change requires collective action, innovation, and a profound shift from current production and consumption patterns. Scientific assessments are ever clearer and more certain on climate change, its impacts and future risks and option for adaptation and mitigation (IPCC, 2023; UNEP, 2023). A green industrial transition of economies is needed, involving a radical change of current industrial systems towards more sustainable production methods. Several actions must be adopted to reduce GHG emissions and adapt to climate change. These are available now, but they need to be scaled up and mainstreamed through policies and increased financing: among them, the development and uptake of environmental innovations, also referred to as green and sustainable technologies or eco-innovations, is a key pillar. These innovations span from renewable energy technologies for replacing fossil fuels to the adoption of adaptation practices against adverse climatic events. Efforts towards large-scale adoption of these innovations have led to concrete results, such as sustained decreases in the cost of renewable energy (Lazard, 2023). Recently, various studies support the feasibility of a shift to energy systems relying 100% on renewable sources that can limit global warming to 1.5°C (Breyer et al., 2022). However, a rapid and massive development of green technologies also entails risks, which may require policy intervention in order not only to ensure the completion of the green transition of economies, but also to make it socially sustainable. An important aspect is related to the dependence of green technologies on specific materials that are needed for their realisation. Examples are lithium used to make batteries implemented in electric vehicles and to store energy from renewable sources, rare earths used to make magnets employed in wind energy, and silicon used in the manufacturing of solar panels, among others. These raw inputs have a number of related concerns, such as risks of future shortages resulting from future supply not being able to meet the growth in demand driven by green technologies, or geopolitical tensions as well as risks of exacerbating existing inequalities resulting from their geographical distribution. Adding to this picture the economic importance, and often the absence of viable alternatives that characterise these resources, makes the dependence on raw materials a serious threat to slow down, if not completely undermine, the scaling up of eco-innovations. These are complex phenomena, characterised by intricate challenges that cannot be effectively addressed by analyzing individual aspects separately or relying on conventional economic models designed to internalize climate-related externalities. Instead, a multidisciplinary approach is imperative, taking into account the complexity of climate change characteristics and of the possible strategies to cope with it. Climate change, with its global causes and consequences, long-term and potentially irreversible impacts, and significant uncertainties regarding future scenarios (Stern, 2007), requires nuanced solutions. Recognising the need for comprehensive strategies is essential, acknowledging the inherent complexity of both the challenges and solutions required to address climate change (Foxon et al., 2012). Against this background, this thesis focuses on the analysis of multiple aspects connected to green technologies, and particularly bringing novelty to the effects and implications derived by their development. Specifically, two major issues will be explored. The first one, investigated in Chapter 1 – “The trickle down from environmental innovation to productive complexity”, regards the study of the effects that environmental innovation has on industrial production, looking at which sectors are the most affected by green technological areas by applying techniques from the Economic Complexity framework. The second one regards the investigation of the material content of green innovation exploring multiple directions, which span from the comparison with non-green counterparts, discussed in Chapter 2 – “The Critical Raw Materials content of Innovation”, to the construction of the geographical network juxtaposing countries where green technologies are adopted with those where materials are produced, which is explored in Chapter 3 – “Mapping Critical Raw Materials in Green Technologies”.