Should renewable energy companies give up their IP to save the planet?

Open this photo in gallery:

United Nations Secretary-General Antonio Guterres is calling for what amounts to a wartime mobilization of industry to speed up the transition to cleaner forms of energy in efforts to prevent catastrophic climate change.

He offered his game plan as part of the launch of the World Meteorological Organization’s State of the Global Climate report: Triple capital flowing to green energy to US$4-trillion a year; make more raw materials such as minerals used in batteries available globally; remove red tape impeding wind and solar development; and end government subsidies for oil, gas and coal production.

“We must end fossil-fuel pollution and accelerate the renewable energy transition before we incinerate our only home,” Mr. Guterres said.

A key feature of his Herculean push to decarbonize economies is to make renewable-energy technologies “global public goods” – unrestricted for use by anyone without falling afoul of intellectual-property rights. He called for a new global coalition on energy-storage development involving governments and tech companies. Storage technologies, such as batteries, are seen as the linchpin for mass adoption of renewables.

Any tinkering with IP will get tricky. But those who spend their days dealing with the intricacies of these issues say it’s not an insurmountable hurdle. The energy transition may not be contingent on inventors relinquishing all ownership of their technology.

How to invest in the supercharged renewable energy sector

There are companies that have taken an open-source approach to patents in the name of kickstarting cleantech innovation, notably Telsa Inc. Its CEO, Elon Musk, said when he announced the program in 2014 that he did not want to lay “intellectual-property landmines” to inhibit others. But a lot of green (and other) technology is developed by small companies for which licensing often means revenue, and ownership rights are a major part of their overall enterprise value.

“There are unintended consequences to monkeying around with IP incentive programs,” said Michael Whitt, a lawyer for Bennett Jones who advises technology-based businesses on commercialization and compliance. “Just throwing everything out isn’t going to work. It may actually disincent innovation, or cause people to keep their patent that’s issued for whatever the invention is.”

There are workarounds, however, such as the use of standard-essential patents, where developers pool the intellectual property to be used as part of larger standard technology. This is employed frequently in the telecom industry, for instance. The developers can get royalty payments at a fair rate, rather than prevent the use of their products and services. That could be useful in a mass shift to renewables, Mr. Whitt said.

The UN chief’s warnings about the consequences of slow-walking the energy transition come at a fraught time for energy production and consumption. Russian President Vladimir Putin’s attack on Ukraine, and the subsequent sanctions on Russia’s oil, have disrupted markets, causing price spikes and contributing to the inflation hitting consumers around the world.

There is a growing chorus criticizing Europe’s green shift as poorly thought out in terms of not accounting for risks to industry and consumers for just such a crisis. Now, governments in North America and elsewhere are calling for more oil and gas production in the name of energy security. This will make the transition to cleaner forms of energy all the more difficult. And the timeline keeps getting shorter.

Following on the latest report by the UN Intergovernmental Panel on Climate Change, the WMO’s assessment shows that key indicators – greenhouse-gas concentrations, sea levels and ocean temperature and acidification – all set highs in 2021. The imperative to limit the average temperature gain to 1.5 C above preindustrial levels remains.

Falling back on old arguments and legal wrangling over intellectual property will only get in the way of the need for a concerted effort to solve a problem the world has known about for years, said Dan Wicklum, chief executive of the Transition Accelerator. The Canadian charity helps businesses develop hydrogen, electric vehicle and power-grid infrastructure as part of the goal to get to net-zero emissions by 2050.

Canada is among countries that have invested heavily in clean technology over many years. But the country has stumbled in its efforts to deploy the equipment once it’s developed, he said. Now, what’s required is new ways of looking at how business models and value chains are structured to create markets, while preserving financial prospects for developers.

“Where are the new models where we could take the sentiment that came out of the UN, respect the need for individual investors and companies to make money and deliver value for their shareholders, but at the same time we are achieving these public goods?” Mr. Wicklum said.

“I think the idea of exploring that is almost ignored.”

Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. E-mail him at jeffjones@globeandmail.com.