Battery and energy supply and storage technology (B|ESST) is a core system integration technology needed to effectively mitigate environmental risk. Electrochemical energy storage has been identified as a critical enabling technology for advanced, fuel-efficient, light and heavy-duty vehicles (USABC, 8/31/15). Battery energy productivity, however, remains an anomaly in the tech cycle (McCann, 5/03/14). It is a technically vexing gap between the present and a low-carbon future (Loh, 5/01/15). Advances in battery technology have not been able to keep up with Moore’s Law of computing power doubling every two years, which has defined technological development for the past 40 years (Day, 5/03/14). The energy density of rechargeable batteries has risen only six-fold since the early lead–nickel rechargeables of the 1990s (Van Noorden, 3/05/14). Battery storage capacity currently doubles only every 10–15 years. Getting it down to every five years is the aim (Cleevely, 5/03/14).

The battery, like the light bulb, is at its heart an archaic device (Levine, 10/12/12). Rudimentary batteries were in use over 2000 years ago in Mesopotamia (Day, 5/03/14). The basic chemical process in batteries has not changed significantly since then. Today’s battery production process also uses more energy than the battery itself will stock and return during its use (Lewis, Park, and Paolini, 4/23/12). Then there are the polluting by-products of the battery production process and battery recycling, as well as unwanted reactions (i.e., discharge, self-discharge, and re-charge rates) that affect battery efficiency.

Lithium is the lightest solid and has a power density and energy density per unit mass equivalent to gasoline. But it is also highly reactive and unstable and inefficient in terms of the cycling (Coulombic) efficiency required of rechargeable batteries. This suggests significant, perhaps, inordinate risks in launching such technology in battery and energy supply and storage chemistry. Lithium-ion (Li-ion) batteries, with their flammable liquid electrolyte, never overcame its original flaws (Martin, 4/14/15). The incidence of Li-ion battery (LiB) “thermal runaway” causing fires to break out in aircrafts, busses, cars, handheld electronic devices, computers, and even electric motor-assisted bicycles illustrate the very low thermal stability and riskiness of this existing metal-based battery technology. There are also safety risks in the battery production and disposal process, as illustrated by the case of the fire at the Nihon Gaishi Kabushikigaisha (NGK Insulators) Sodium-Sulfur battery factory in Tsukuba, Japan, in September 2011. Adding further uncertainty is the cost and ready and sustained supply of Lithium and some of the transition metals currently used in LiBs—Cobalt, Vanadium, Nickel, and Titanium (Nitta, Wu, Lee, and Yushin, 11/24/14: 252–3). Battery and energy storage markets need to cut the cost of technology, the levelized cost of technology (LCOT), as soon as the technology is developed and scaled up for manufacture and sale. Battery companies whose cost per unit storage does not drop by a factor of two in the next five years will go out of business (Fallows, 4/16/14).

Today’s battery researchers are operating without a map (Levine, 10/12/12). The constraints of the laws of chemistry and physics on energy storage and supply means researchers have to rethink battery technology from “materials science scratch” (Day, 5/03/14). A cursory count of the number of elements in the periodic table used in battery, fuel cell, and other energy storage and supply materials research, according to Nitta, Wu, Lee, and Yushin (11/24/14: 253) among others, is about 40 of the 103 elements or 39 percent of the periodic table. The development of battery materials is a “punctuated evolution,” first by large jumps that occur with the discovery of a new class of material, then followed by an optimization phase to improve its basic structure and composition (Fultz, 7/08/14). The big jumps come from experimentation, often by serendipity or “Edison testing,” the stuff of basic research (Fultz, 7/08/14). Research and development (R&D) in this field therefore goes beyond innovation into the realm of discovery. Developing batteries from renewable and sustainable resources is the biggest challenge (Hardin, 8/11/11). Such a breakthrough could come from any number of avenues or not at all (Levine, 10/12/12).

Investing in and then commercializing B|ESST seems to be an almost foolhardy undertaking. Despite its constraints, battery R&D and production is still the rage in clean energy technology (CET) (Dikeman, 1/18/13). Never has the promise of CET been so great (IEA, 5/04/14: 4). The burgeoning array of B|ESST suggests overcoming the risks associated with battery (electro) chemistry is a challenge researchers find irresistible. Indeed, nowhere is innovation-driven, dynamic international competition more evident than in the drive for CETs (Porter and van der Linde, 1995). The stakes are high for CET businesses. For battery manufacturers they are particularly high as incidences of battery and capacitor price fixing indicate. Demand for high-performance batteries for electric and hybrid vehicles capable of matching the range and power of combustion engines encourages scientists to develop new battery chemistries that could deliver more power and energy than batteries with liquid Li-ion conductive electrodes, currently the best performing in the marketplace (Chen, 11/19/13). High-density energy storage technologies, scalable over a wide range of sizes, are emerging as the greatest game changer for a new era of energy based on smart electricity distribution and the use of renewable sources (IBM Research, 8/27/09). Developing the technology to store electrical energy so it can be available to meet demand whenever needed would be a major breakthrough in electricity distribution (DOE (US), 9/15/14). The Internet of Things (IOT), for example, is not without batteries and plugs (Thibodeau, 12/22/14: 1).

The value that ground-breaking innovation in these areas would create is immeasurable. Environmental standards and other incentives have triggered innovation (Porter and van der Linde, 1995: 98). For some policymakers it is a matter of national security. National security concerns about the geopolitical availability of fuels have been a major driver for a number of countries to consider renewable energy (RE) (IPCC, 5/09/11: 191). Today, governments are aware of the role of RE supply and RE technologies have to play, not only as a tool for improving energy security, but also as a way to advance national development, mitigate greenhouse gas (GHG) emissions and provide direct and indirect social benefits (REN21, 6/04/14). Competition from new technologies can also be disruptive to any industry (REN21, 6/04/14: 80). Namely, most mitigation scenarios could devalue fossil fuel assets and reduce revenues from coal and oil trade for major exporters (IPCC, 11/02/14: 27, 128). In this regard and also in terms of market creation, it is important to keep in mind that state-owned enterprises (SOEs) including national oil companies (NOCs) own more than 70 percent of global oil and gas reserves (80 percent of proven-plus-probable oil reserves and 60 percent of natural gas reserves), about half of the world’s power generation capacity, and have prominent positions in the coal industry and in many pipeline networks and transmission grids (IEA, 5/19/14: 12, 31, 53, 95). NOCs also invest 40 percent of global investment in upstream exploration, drilling, and mining in oil, coal, and gas supply chains. The International Energy Agency (IEA) expects the reliance on oil from countries that restrict access to their resources will grow from the mid-2020s onward, as output from North America plateaus peaks and then declines (IEA, 5/19/14: 12, 53).

The resources required to produce batteries, in addition to those not needed for their use, could cause a shift in the global power structure (Lewis, Park, and Paolini, 4/23/12). While investment in technology such as B|ESST is a key driver of future economic growth and international competitiveness in today’s interdependent world, there is still no viable market mechanism in place (Kim, 3/04/14). In other words, the development–application trajectory has not been continuous or smooth. Non-market driven research that meets long-term environmental sustainability needs and the “innovation-driven competitiveness paradigm” (Porter and van der Linde, 1995) notwithstanding, these endeavors have to be market viable and eventually profitable. This is where industry provides the best barometer of what advanced technologies the marketplace is likely to need in the short- and mid-term (Littlewood, 5/07/14).

Keeping in mind the open-ended nature of B|ESST and uninterruptable energy supply R&D, what is required for a viable, value creating, revenue generating, ample margin market for new ways to store and reuse energy? Where is the market frontier in the battery and energy storage industries? Who undertakes the risk of seeking such game-changing technology, much of which has originated in the electronics industry but increasingly in the IOT, transportation and electric utilities industries, the discovery of which is seemingly open-ended? Can it come out of nowhere as so many of the world’s discoveries have in the past? How heavily does government subsidize and/or guarantee B|ESST investment? How long is the investment time horizon of frontier R&D in an area such as this? Can it be as open-ended as is needed at the frontier of scientific discovery (Wineland, 11/29/13)? Does it extend into the production phase of new technology? How important is the risk- and cost-sharing, the public-private interface, especially the business-government-finance nexus, and the coordination needed to quickly implement the production of RE and other CET technologies in what amounts to a shake-out phase of new technology as it goes into the pilot and production phases? Does a country’s energy dependence strengthen its resolve to succeed in this emerging industry? And, perhaps, most importantly and crucially, how does the benefit of environmental sustainability fit into product pricing and development and production cost considerations? In other words, how much does the “triple bottom line” of environmental, societal, and financial sustainability, more commonly referred to as environmental social and corporate governance, figure into private sector companies’ strategy to develop “green” (i.e., sustainable) industries and to create and construct a “green” economy.

“Coaxing a market” that affords environmental risk mitigating ventures, such as those that rapidly adopt viable, new CETs, is also a conceptual exercise. Environmental risks are integrated and systemic. In competitive markets, mitigating environmental risk requires a rethink of the fundamental basis of those markets, such as the notion of value creation, risk taking, and benefit-seeking investment incentives. It also relies on the acceptance of a broader notion of capital that includes financial, natural, and human capital. These concepts are developed and incorporated here into a number of cases that offer some “ways forward” to coaxing environmental risk mitigation markets.

The focus of this research is the market for environmental risk mitigation. Mitigation is the process of reducing the emissions and enhancing the sinks of GHGs, so as to limit future climate change. The aim here is to address questions of how low-carbon CET R&D and manufacturing production, in particular, B|ESST are being developed, deployed, and diffused, in order to strengthen existing efforts to mitigate environmental risk. In the spirit of system integration, it ties together disparate parts of the energy market, in order to depict its organization and structure within the context of mitigating the systemic risks of climate change. Some of the information included here therefore has been widely cited elsewhere.

This discussion of the ability of technology to help to mitigate environmental risk through energy system decarbonization offers a nuanced understanding of environmental risk, its causes and effects, the utility of the CET market and CET financing, and the composition of markets and the policies that underpin them and that also meet the needs of environmental risk mitigation. It highlights the centrality of sustainability in its multiple, interrelated forms and the role of clean energy techno-economic growth and development in reversing the anthropogenic causes of environmental risk that increasingly delimit natural systems, which, in turn, affect the national security of more and more countries and the livable communities and human health and well-being of people around the world. The focus of the empirical analysis is on seven countries with the largest and most technologically advanced economies—China, France, Germany, Japan, Korea, the UK, and the USA.

The theoretical basis is the actor- or agent-driven path creation process of socio-technical economic growth and development that begins with CET R&D (Brown and Sovacool, 8/31/11; Simmie, et al, 4/26/12). It retains the distinction between innovation and development, in order to test the degree to which technological innovation, in this case CET, together with energy and CET policy and patent regimes, is able to coax or spur the capital formation, price flexibility, value creation, and risk analysis needed for the competitive market development that can deliver the sustainable economic growth needed to effectively mitigate environmental risks and increase socio-environmental resilience. It focuses on the accuracy of the comparative costs or prices of energy and technology, whether or not they are derived from information symmetry and market efficiency. Where there is evidence of this, such as in micro-level and region-specific B|ESST and other CET-driven markets, it allows for the introduction of the notion of path networks and path interdependence and even path “widening into avenues.” In this regard, markets are based on an expansive definition of capital that includes productive, financial, natural, and human capital; value assessment and creation that include what have been the intangible benefits of environmental and societal and community sustainability; and an expansive, indeed holistic approach to risk taking that includes a discussion of risk recognition and comprehensive risk analysis. In terms of market governance, the emphasis is on the role of regulators to “coax” markets by “nurturing and shaping emerging technology” (Karnøe and Garud, 4/26/12: 750), something market actors welcome and even call for at the early stages of market development. Risk-taking market actors take it from there.

The discussion begins at the macro- or systemic-level to identify the problem of environmental risk by depicting its sources and its threats to environmental sustainability. Next is the discussion of the relationship between economic growth and environmental risk, and efforts to subsequently mitigate this risk. In this regard, the focus is on the energy market, energy system decarbonization, and CETs in the information and communication technology (ICT), transportation, and electric and natural gas utilities industries. The R&D of these new technologies is performed in academic, government research institutes, as well as in business. The discussion of the composition of R&D in the seven countries mentioned above confirms the importance of business or corporate R&D. The next chapter describes the public policies and incentives supporting these efforts. The success of these policy measures is tested by describing the financial markets for RE and CETs. In order to get a better look at market design, a B|ESST frontier of originators of innovative technologies and developers of them, including funders and industrial producers (i.e., manufacturers), is constructed. Also included in the discussion of the B|ESST frontier of new and alternative energy supply and storage technologies is the crucially important “development – application trajectory”, which explains how well-connected B|ESST frontier developers are to the industry strategists and production engineers who scale up new technology into viable manufactured products and the market efforts that successfully introduce them to consumers and other businesses. This is, in essence, the development phase of R&D. The phrase “research, development and diffusion” is also sometimes used to describe it. The discussion concludes with the introduction of environmental-societal-financial (E-S-F) sustainability interfaces that take include any number of “co-located” systemic variables, in order to identify how well-established are the constituent parts of this formative market and how well they are functioning in within the so-called green economy. E-S-F sustainability interfaces are the signposts, if you will, along the way of new paths that are constructing the markets that mitigate environmental risks. They allow us to better identify and recommend ways to lower CET policy uncertainty and increase the risk taking needed for the greater internationalization of environmental risk mitigating markets.

Getting the big picture, the lay of the land, if you will, is helpful to understanding a global issue such as environmental risk and the role the markets of the green economy have to play in mitigating this tremendous risk in its various forms—vulnerability, exposure, threat, peril, hazard, and so on. The reader will please pardon what may appear to be the hubris of the authors to presume to take such an overarching view. It aims to be a useful tool with which to address complexity and identify market formation and structure. It is primarily an effort to better understand the immensity of the issue and the multiple approaches needed to address it. This approach is in keeping with the notion that agents, acting as some combination of policymaker, strategist, and other employee and member of (civil) society, have dual roles to play in reducing environmental risk. In this regard, it is an aid for the individual person to understand their own place, their own situation, and their own role in mitigating the environmental risks that affect daily life and productivity in some equal measure. The relationship between these roles informs risk perceptions and increases the value placed on a beneficial environment the Earth system affords human existence. Technical data and other information about the Earth system, energy supply and usage, low-carbon CETs and B|ESST are included and duly cited, in order to identify the market’s scale, scope, and frontier.

The backdrop of the development of clean energy technologies (CETs), such as renewable energy (RE) supply, alternate energy vehicles (AEVs), batteries, and other energy storage (ES) technologies is the environmental risks posed by climate change that includes changes in global temperature, precipitation (flooding and drought), sea level, land and polar ice, forest cover and the incidence of forest fires, and weather patterns. According to climate scientists, climate change occurs when the Earth system responds in order to counteract the flux changes and radiative forcing (RF) is a measure of the net change in the energy balance of the Earth system due to an imposed (flux) perturbation (IPCC, 11/02/14: 664). RF, measured in watts per square meter (W m⁻²), quantifies the perturbation (i.e., the deviation of the Earth system from its normal state caused by an outside influence) of energy into the Earth system caused by these drivers (IPCC, 11/01/14: SYR-9).

The natural and anthropogenic substances and processes that alter the Earth’s own energy budget are the physical drivers of climate change (IPCC, 11/01/14: 116). Natural RFs—changes in solar irradiance and volcanic aerosols—have had a slightly cooling effect since 1970 (NOAA/NASA (US), 1/10/15; IPCC, 11/02/14: 43). Indeed, the global mean total aerosol RF has counteracted a substantial portion of RF from well-mixed greenhouse gasses (WMGHGs) (high confidence) (IPCC, 11/01/14: SYR-9; IPCC, 11/02/14: 43).¹ For example, RF increased at a lower rate between 1999 and 2011, compared to 1984–1998 or 1951–2011, due to lower GHG cooling natural RF from volcanic eruptions and the cooling phase of the solar cycle over the 2000–2009 period, as well as lower anthropogenic (human activity generated) emissions during the global economic crisis in 2007–2008 (IPCC, 11/02/14: 41). The benign effects of recent natural RF, however, will not continue if there are new volcanic eruptions and the sun emits more solar flares.

Of the sources of systemic environmental risks, the human or anthropogenic drivers have become very important sources of it. The consensus among 97 percent of climate scientists is that climate-warming trends over the past century are very likely due to human activities (Cook et al., 5/15/13 in NASA, 8/15/15). Anthropogenic GHGs emitted between 2000 and 2010 were the highest in human history (IPCC, 11/01/14: SYR-9; IPCC, 11/02/14: 45). The IPCC reports unprecedented levels of atmospheric concentrations of GHGs (levels not evident in at least 800,000 years) (IPCC, 11/01/14: SYR-9). In the Fifth Assessment Report (AR5) of the Inte...