“Governments are a vital source of long-term, patient finance.” Political measures are used to support risky projects. “As a result, much innovation by the private sector builds on publicly funded programmes for early-stage, higher-risk research” (Mazzucato, 2011).
The appropriate combination of policy instruments and funding sources differs for different technologies and industrial partners (Box 2.3). Direct support for RD&D (e.g. grants, loans, tax credits) and non-RD&D support for business innovation (e.g. support for venture capital and assistance for starting up entrepreneurial activities) need to be balanced with targeted policies that foster demand and markets for clean energy (e.g. pricing mechanisms, public procurement, minimum energy performance standards, energy efficiency labels and mandatory targets).
In the United States, SBIR provides seed funding to small innovative businesses, and a portion of its funding is awarded by the government’s Office of Energy Efficiency ; Renewable Energy. In many countries, governments are active in public–private partnerships, loan guarantees, incubators and business networks that facilitate early-stage investment in clean energy entrepreneurship.