Climate Change Opportunity

We regularly hear of the “climate change challenge”. Yes it is. But it also presents an opportunity. With the policy objective of reducing emissions, the Garnaut Review 1 recommended that this is most efficiently achieved by the implementation of an emissions trading scheme (ETS), rather than an emissions tax (often referred to as a “carbon tax”). The introduction of an ETS in Australia, from 2010, will create a new “emissions market” in which government created “permits” may be exchanged between sellers and buyers. According to Garnaut, this trading of permits “enables their movement about the economy to their highest value (or most economically efficient) use, while ensuring the integrity of the volumetric control (the emissions limit) imposed in order to satisfy climate change mitigation policy objectives”. 2 Under the proposed scheme, the market would establish the price of “permits”. These permits will no doubt impose a cost on traditional, coal-based electricity generation but will present a significant opportunity to the renewable energy industry, most prominently wind and solar in Australia but also including tidal power, biomass and geothermal energy.

Wind power has been the world’s fastest growing energy source for several years, with an annual growth rate of about 30% over the last decade. Most of the growth, according to a 2006 Global Wind Energy Council report, has been in Europe (three-fifths of the world’s installed wind power), North America (one-sixth), and the Asia Pacific region (one-seventh).

Significant sums have clearly been spent over the past decade, particularly in Europe, on research and development relating to wind power technologies. One indicator of such research is the number of patent applications filed. An inspection of the records of the World Intellectual Property Organisation reveals a dramatic increase in International patent applications filed under the Patent Cooperation Treaty (PCT) for wind turbine technology3 from about 1999 onwards. For example, in the decade prior to 1999 there were less than 30 applications published each year. In 2000 there were 69, in 2005 there were 143 and in 2007 there were 252. It is also worth noting that, since 1999, 21% of published PCT applications have originated from Germany, 13% from Denmark, 13% from the US, 9% from Japan, 5% from the United Kingdom and 5% from Spain. Australia is presently in 14th place at 2%.

Wind turbines began to grow, both in physical dimensions and power output, about 10 year ago such that the largest turbines now have rotor diameters of over 120 meters and power outputs exceeding 5,000kW. Their impact on the electric grid thus started to become more significant, leading to increased pressure on wind turbine generators to conform to the power quality and grid connection standards normally imposed on large, conventional power generators. Indeed, many of the patents now being accepted by the European and Australian Patent Offices relate to methods of operating wind turbine generators to meet those standards. Not surprisingly, given the financial implications of such patents, their validity is being hotly contested in opposition proceedings in many countries including Australia.

The number of wind turbine patents granted in Australia shows a similar growth pattern to the number of PCT applications filed. Prior to 1999 only a few patents were granted each year. Since 2004 the average is more than 30. At the time of writing, 224 wind turbine patents are pending in the Australian Patent Office, in addition to many PCT applications which have not yet entered the Australian "national" stage4.

Whilst the focus of European research has been on large wind turbines, often for off-shore use, research in Australia focuses on small turbines, having power outputs up to 50kW and rotor diameters of up to about 8 meters. These turbines have, to date, primarily been used in rural and remote locations but are beginning to gain greater acceptance (especially in the 1-3m range) within urban environments. Australian inventors are now filing patent applications throughout the world and, within this segment of the wind industry, are challenging the Europeans.

With an emissions trading scheme almost upon us, businesses and inventors are already starting to apply for and secure patents for innovative methods of trading emissions, as well as for clean, energy-efficient technologies. In the US, for example, several patents5 have already been granted for ways to trade residential emissions. We can expect similar patents to be granted in Australia.

So, whilst climate change does indeed present a challenge to industry, and the community generally, Australian innovators are well placed to seize the opportunities presented.

References/Notes:

1. Garnaut Climate Change Review, "Interim Report to the Commonwealth, State and Territory Governments of Australia", February 2008.
2. Garnaut Climate Change Review, "Emissions Trading Scheme Discussion Paper", March 2008, page 12.
3. As defined by class F03D of the International Patent Classification.
4. There can be up to 30 months delay from PCT filing date to AU filing date.
5. See for example US patents 7343341, 6904336 and 7133750.