UK: Will European IP Be The Key For Overseas Countries In Meeting Their Net Zero Targets?

Technological advancement is unquestionably supporting the increased adoption of offshore wind; and as organizations race to achieve Net Zero, many are highlighting the important role of innovation. Measuring innovation and technological advancement is not straightforward but one effective way to overcome the challenge is through careful analysis of patent filing data: Patentable inventions often indicate successful R&D activities. A joint report by the European Patent Office (EPO) and International Energy Agency (IEA) analyses global trends in clean energy technology innovation and provides some useful insight into innovation in the wind energy sector.

The "revealed technological advantage"

The EPO-IEA report discusses the "relative technology advantage" of certain countries or regions over others, derived by a greater level of technological innovation and specialism. The EPO-IEA report defines a metric to measure this level of specialization of a region in a certain technical field - the revealed technological advantage (RTA). The RTA is defined as a country's share of international patent filings in a particular field of technology divided by the country's share of international patent filings in all fields of technology, over the period of 2010-2019. Any value above 1 indicates a relative specialization for a country in a given technology. For example, a value of 2 for a given technology indicates that a country's share of patents for that technology is twice as high as the country's overall share of patents over all technologies. For example, if a country accounted for 1% of global filings for all technologies, but accounted for 2% of global filings in offshore wind technology, then that country would have an RTA of 2 for offshore wind technology, and would be understood to specialize in that technology.

It is true that not all patent applications are granted equal, and that these measures do not take into account the quality or value of individual patent filings. Nonetheless, given the typical expenditure required for international patent filings, and the size of the numbers considered, this metric appears reasonable as a first order indication of a country's relative focus and technology advantage in specific technical fields.

European advantage in wind energy IP

Europe has historically been the leader in offshore wind both in terms of installed capacity and in terms of technological specialization. Given Europe's comparatively long history of investment in wind energy technology, and its commitment to increasing offshore wind capacity it is no surprise that Europe has the highest technological specialization out of the key territories.

Europe's RTA value is 2.07, meaning Europe's global share of wind technology patents is over twice as high as its share across all technologies. This demonstrates the level of technical specialization and expertise in Europe in this sector. This supports the reputation Europe has as leading in this field and why many countries are looking to learn from European technology companies.

Such a level of established technological specialization and advantage is likely to put European manufacturers and operators in a strong position moving forward, especially given the opportunities provided by the increasingly ambitious targets being put in place in many countries that do not have the same level of specialization. IP (intellectual property) holders can not only take action to stop third party infringing their rights, but they can also look to generate revenue through the sale or licensing of IP rights, or use such rights as leverage in other ongoing negotiations.

In 2021, China built more offshore wind capacity than every other country built in five years. By many metrics, China is now the largest offshore wind market. Despite this, the share of China's electricity provided by wind is still much lower than that of Europe and China's specialization in wind energy technology is low, with an RTA of 0.64. This is likely due to a number of factors, including China's relatively late move towards wind energy, as well as a possible reluctance for Chinese companies to invest in international patent portfolios.

This comparatively low technological specialization has led to Chinese manufacturers and operators learning from European expertise. This is evident, for example, when tracking increasing turbine sizes in Europe and China, and China following Europe's example of adopting direct drive and medium speed drive trains. Given China's rapid growth in this sector, and more Chinese companies becoming increasingly international, it is likely that any existing technological advantage will be short-lived and that China's technological specialization in this sector will increase. Despite this, established European international patent portfolios are likely to affect Chinese companies for some time, for example by limiting their freedom to operate in certain territories without licenses or other agreements.

In terms of wind energy, Japan and Korea are often seen as emerging markets, having historically had a relatively low focus on offshore wind generation. This is reflected in their technological specialization: Japan and Korea's RTA values are 0.40 and 0.44 respectively – Japan and Korea's relative share of international wind technology patent families is less than half of that for all technologies as a whole. Despite this, both countries are setting ambitious capacity targets for the coming years and this is likely to provide opportunities for European companies who are effective in leveraging their IP.

The RTA values for selected territories are provided below.

*European Patent Convention member states (https://www.epo.org/about-us/foundation/member-states.html)

Europe in focus

As discussed above, based on RTA values, Europe has the greatest technological specialization compared to the other key jurisdictions outlined above. However, the level of expertise varies greatly within Europe, and comparing countries within Europe highlights a number of trends within the industry.

Denmark has by far the greatest specialization in wind energy technology with an RTA value of 28.91. This is aligned with an energy ecosystem that is much more reliant on wind energy, with almost half of the country's share of electricity production being from wind. Spain, the UK and Germany also have high RTA values of 5.65, 1.82 and 1.83 respectively. Again, these high technological specializations are aligned with policy-driven focuses on wind energy generation and correspond to relatively high shares of national power originating from wind.

Sweden is setting increasingly ambitious offshore wind energy targets without an underlying national technological specialization. Despite having one of the largest market operators and a high proportion of its power provided by offshore wind, Sweden does not have the technical specialization in the form of international patent filings, with a RTA value of only 0.72. This may place a reliance on the technical expertise of overseas contractors in growing offshore wind capacity and developing national technological expertise.

Conclusion

Patent filing data can be used to indicate the underlying technological expertise of countries in certain fields. This data therefore provides an insight into the relative strength of a country's technical know-how, and their likely reliance on overseas expertise or support. Given Europe's – and in particular Denmark, Spain, the UK and Germany's – strong technological specialization in this sector, it is likely that overseas countries and companies will increasingly look to partner, purchase from or work with technology companies from these countries, in order to meet increasingly challenging Net Zero targets. This therefore provides an opportunity for companies in these countries with established patent portfolios. IP-savvy companies may be able to take advantage of this opportunity to establish additional revenue streams or partnership opportunities in countries looking to increase their offshore wind capacity over the coming years.

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