New Nexus Times issue: Innovation

02 October 2018

Innovation plays an important role in policy-making. Sometimes, however, innovation cannot meet the needs of all sectors of the water-energy-food nexus at the same time, causing various tradeoffs. In such situations then, how can policymakers reconcile diverging policy goals? And how can decision-makers analyse and account for the possible adverse effects of certain policies in other areas, for example the effects of agricultural policy in the water and energy sectors?

In the MAGIC project we analyse the role of innovations in the policy-making process and in the emergence of “nexus policies”. In this latest September issue of The Nexus Times, we invite you to take a look at some of our case studies and the core theoretical issues surrounding the role of innovations.

In our first article we analyze the classic energy-food nexus issue, bioenergy. While it may be seen as a policy solution towards meeting climate goals, bioenergy also increases demand for land, water and agricultural inputs. Land and water resources are already heavily exploited in Europe, both directly and indirectly. In the European Union an important proportion of biomass is imported (for example through animal feed). Upscaling bioenergy production would thus raise new sustainability concerns: would Europe have enough land and water to meet its bioenergy use? To what degree does Europe depend on biomass from outside the EU? Would sustainability in Europe come at the cost of sustainability elsewhere?

Our second article explores hydraulic fracturing for shale gas extraction (fracking). This technology exemplifies some of the major challenges of the water-energy nexus. From a bio-economics viewpoint, shale gas is only viable if gas prices are high, making it a risky investment. From a geopolitical standpoint, shale gas may help increase energy security in countries that depend on natural gas imports, thus reducing risk. This case study illustrates the difficulty of assessing technological innovations, amid political and economic complexity when contrasting judgements can be made.

The third article takes a deep dive into green bonds, an increasingly popular option to finance climate and sustainable development policies. However, this policy solution may raise more questions than answers. If nation states act as issuers of green bonds, new debt may be created. If nation states act as regulators, questions arise with regard to what constitutes “green”, especially in the context of the nexus in which different factors, and the interactions between them, must be taken into account.

The issue closes with a more theoretical discussion of the issue of trust in the use of innovations as a policy solution. Scientific research and innovation do not necessarily translate into clear policy solutions. Innovations should thus be assessed not only as a solution to a practical problem, but also with regard to social impacts, political interests, and power asymmetries. The current erosion of trust in policy solutions points to the need to take into account potential benefits and uncertainties alike.