Carbon trading drives 'green' patents surge

Global interest in clean energy solutions from carbon funds and technology giants is stimulating a surge in 'green' patents, according to a new study. The report, Carbon Trading: Patently Set for Growth, indicates a strong link between disbursements from the World Bank Carbon Finance Unit and patent filings for clean technologies from 2000 onwards.

The study isolated and analysed 171 relevant families of business method patents that had been generated over the study period. This took in the decade from 1998 to the present, in order to track the effects of the 1997 Kyoto Protocol, which made detailed provisions for carbon trading. Of those patent families, 54 were directly related to carbon trading tools, and 33 to forms of carbon administration. Other relevant categories that emerged from the study were emission measurement and monitoring, policy implementation and software. In the area of carbon trading alone, the upward trend was clear, with six patent families generated in 2000, nine in 2002 and 15 in 2006.

Hard currency
Carbon trading is fast eclipsing more established methods of emissions control, such as direct taxation or regulation, by creating a bona-fide marketplace for carbon credits. Under the system, companies who wish to exceed their agreed emissions caps must purchase credits from companies who keep level with, or below, their own caps. In this way, higher-emission companies are charged for their increases, while lower-emission companies are financially rewarded. The potential to access this stream of hard currency has spurred technology companies to develop clean energy tools, or fund relevant research. It has also encouraged private innovators to hit their drawing boards in efforts to devise solutions that may be missing from mainstream companies' portfolios. The result of this activity is a highly commercial environment that can supplement – or even act independently of – traditional loan or grant-based funding.

The pioneering Chicago Climate Exchange (CCX) – one of the first emissions trading platforms, with over 350 members committed to 6% emission reductions by 2010 – holds the largest number of patents in the carbon trading field, with filings across 11 jurisdictions. Results from the CCX, and fellow carbon traders such as CantorCO2e and Agcert, indicate that the sector is targeting opportunities in India, China and Brazil, where carbon trading is poised to rocket in line with industrial booms.

Govind Kedia – Senior Patent Analyst with leading IP company and publisher of the study, CPA Global – highlighted two major corporations for their green patent performance. 'Hitachi and Toshiba, companies which often make the news indicating commitments to minimise emission levels and adopt environmentally friendly policies, appear to be walking the talk,' he told IP Review Online.

International interests
In the national filing league, the United States has secured the highest number of clean energy patents, followed by Japan and Australia. So, while the US government has not yet ratified Kyoto, the country's placing in the study indicates that corporate America is nonetheless expressing strong, speculative interest in clean energy and carbon trading. Its work on the relevant tools is gathering steam, despite its government's stance on the protocol. This independent development of clean energy solutions also shows that the US has uncommonly high skill levels in clean energy innovation.

While patent filings in the field have seen a dramatic surge since 2000, they are still a nascent part of the overall economic picture. However, Govind said, 'Carbon trading has gained a strong position in the financial market … large companies have announced their entry into emission index trading, such as Hitachi, in conjunction with Nomura Singapore Ltd, and this should positively influence patent filings. According to a World Bank report, an exponential increase could occur in trading volume, with a rise in interest from banks, credit card issuers, private equity funds and others. This should also prompt related innovations.' The financial incentives alone are enticing: 'the value of the carbon trading market grew to €23 billion in 2006 – three times greater than in 2005,' said Govind.

CPA Global launched the study in response to media interest in carbon trading, and as a means of informing its multinational clients of the sector's commercial feasibility.