Actas con Acuerdo.

4.1.1

Researchers have developed numerous alternative and radical solutions to the problems of a degrading environment, the scarcity of natural resource and unsustainable economic activity and life-styles. There are now many examples of eco- innovative technologies, products, services, organisations and business models. While people, companies and governments may applaud these examples, they have yet to be widely diffused and disseminated. Most of the eco-innovations have a very slow journey to market or they may even simply remain as prototypes, experiments or pilot projects. This is due to a lack of understanding about how these practices might achieve economic and business success.

There is also a growing recognition that in order to be economically viable many of these eco-innovative solutions require systemic or transformative changes, along with changes in consumer attitudes and a greater overall awareness on the part of the general public and the business community. However, there is still a great need for a better understanding of how to promote these transformations, and of how eco- innovations, especially radical and transformative innovations, can achieve economic sustainability, marketability and a wider application so that they might replace existing, non-sustainable practices. Business has to bring novel products and services to market and business strategies and entrepreneurial innovativeness are important factors in the commercial success of such novel products and services.

In this regard, an analysis of real-life examples of eco-innovations and business strategies associated with them can be very helpful. In contrast to the conceptual and theoretical discourse, learning through case studies can provide deeper insights into how and why eco-innovation has succeeded or failed and the nature of factors that have facilitated or hindered this process. Such a bottom-up approach can help to detect peculiarities in the business models that have been applied and the various local cultural and social factors that cannot really be explained by theoretical models. Insights from practical examples will enable a judgment to be made on both the supportiveness of the general regulatory regime and the effectiveness of specific policy instruments, and also help in drawing out policy lessons and recommendations. Thus, this report relies on empirical case studies of eco-innovations in its attempt to provide lessons for policy-makers, which will enable them to establish a supportive regulatory regime for eco-innovations, as well as for businesses and entrepreneurs.

Within its project on Sustainable Manufacturing and Eco-Innovation, OECD has been collecting case studies of eco-innovation. The methodology of business case studies follows that adopted in earlier studies on open innovation and nanotechnology. The case study activities were planned as face-to-face interviews with company representatives using a questionnaire as a detailed guide for discussion. Cases were nominated by the OECD member countries, each of which subsequently nominated a country expert(s) who conducted the questionnaire survey and interviews and wrote the case studies. A total of around 100 examples of case studies were selected in consultation with delegates and nominated experts. This selection took into account a national and sectoral balance and the capacity of countries to conduct the case studies. The reporting template for the case study includes the following five sections each of which had an extended list of guiding questions:

1) General features of eco-innovation covering information on types, functions, innovativeness/novelty, target users and business model);

2) Impact and benefits including diffusion level, environmental, social and economic impact now and in the future, as well as negative impacts;

3) Innovation process covering stages of idea generation, R&D, testing, business development and commercialisation;

4) Factors that influence the innovation such as market conditions, organisation and networks, knowledge and skills, finance and resources, polices, IPR, value chains, enabling technologies and infrastructure;

5) Overall lessons including determinants, future policy support and plans.

The sections below describe how the analysis of the empirical information from the cases studies is handled.

4.1.2

The methodology proposed for the analysis of the case studies will follow the conceptual framework developed in Chapter 3. The analysis will start with an overview of the eco-innovation case and focus on the business model and market solution applied in the eco-innovation. This exercise involves the following three components: 1) Imposing a typology and grouping the cases according to the business model

considered in each eco-innovation case;

2) Analysis of each identified business model and the system as it is described in the proposed “canvass” framework;

3) Analysis of the implications of each type of business model from the value chain perspective and from the perspective of facilitating systemic change.

By screening the available cases, subsections from different parts of the case studies’ framework, have been identified which will provide relevant information and data. To various degrees, the information in the case studies captures several aspects, such as types and novelty of business models, target users, marketing efforts, resource, enabling technologies and infrastructure.

Some aspects such as value creation and proposition were not explicitly addressed in the case descriptions. However, the information about the type of business model and the eco-innovation, combined with the background knowledge of the researchers will enable a value proposition to be developed for each specific case.

4.1.3

The overall approach has been to discuss and decide on the effectiveness of policy instruments using the information that has been acquired from the case studies, as well as insights from the literature review. This approach was based on the conceptual framework, presented in Chapter 3, to analyse the potential role of policies for supporting business models for eco-innovation. This combines the policy typology of eco-innovation policy measures and the main elements of the business model. The policy typology is based on the OECD typology featuring framework conditions such as macro-economic policies and scientific education, market-based instruments or “getting prices right” and targeted innovation and environmental policy.

An initial analysis of the role of various policy instruments was carried out for each type of eco-innovation identified below. This was based on the information acquired from the case study template. The section in the case study addresses this issue by indicating the five most important policy instruments and assigning a priority using a 1-5 scale, with 1 = the most important and 5 = the least important.

The list of the policy instruments covers the following categories:

• Market based instruments, including eco-tax, carbon tax, cap and trade schemes

• Supply side measures, which are R&D funding and support, business development

funding and support, support for testing and demonstration, education and training, information brokering and advisory services;

• Demand side measures, including the provision of enabling infrastructures,

regulations on harmful substances and activities, performance standards, labelling, certification, public procurement, consumer subsidies and pricing, support for technology transfer and standardisation of technical elements;

• Cross-cutting measures, such as support for networks, partnerships and

matchmaking, foresight, road-mapping and scenario development.

4.1.4

In the collection of empirical cases of eco-innovations, there are now 32 case studies from nine countries that cover a wide range of eco-innovations (please see Annex 2 for the full list). There are three main ways of classifying these eco-innovation cases and related business models:

1) By their functionality, including improved mobility and better use of resources; 2) By their distinctive processes, including changed customer relations, new partners

or shift from goods to services; and

3) By their focal organisation, such as individual company models versus multi-actor network models.

The approaches based on functionality are more common in green business models. They are normally case-based and focus on specific areas rather than offering a systematic framework (please see FORA, 2010; EPA, 2011). In relation to the classifications based on the nature of processes or products, the PSS literature suggests a typology based on the role of the product and service in the model and includes a systematic range of models starting from one based purely on the product and ending with one based purely on the service (please see Tukker, 2004).

In order to reflect the diversity of cases in the sample, the study applies a pragmatic approach to the classification of the business model types. The cases were divided according to both their functional and key processes. Thus, the analysis of the cases studies resulted in the following typology of business models as shown in Figure 11 . These are presented along with the relevant application areas, type of innovative process, and the potential focal organisational that is pursuing the business model. Figure 11 Classifying Business Models for Eco-innovation

Type Application _Area Innovative Process Focal _Organisation

Greener product/process based models

Pervasive (any function or

service) Product and process innovation

Single or multi- actor

Waste regeneration

systems Waste re-use and recovery Product and process innovation Single or multi-actor

Alternative energy-based systems

Alternative energy generation and

provision Product and process innovation

Single or multi- actor

Efficiency optimisation by

ICT Pervasive Product and process innovation Single or multi-actor

Functional sales and

management services Pervasive

Customer relations and channels (organisational and marketing innovation)

Single or multi- actor

Innovative financing

schemes Pervasive

Customer relations and channels (organisational and marketing innovation)

Single or multi- actor

Sustainable mobility

systems Mobility Product and process innovation; Customer relations and channels Single or multi-actor

Industrial symbiosis Waste re-use and _recovery Organisational innovation Multi -actor

The business model types that were analysed are described as follows:

• Greener products/processes based business models provide the buyer

with economic and environmental benefits during its use. This group contains a very diverse set of innovative products and processes applied in companies that have better environmental performance as, for example, they save resources and minimise emissions and waste;

• Waste regeneration systems, which are based on waste, re-use or recycling as

new products. The business model here is focused on valuing waste, or using it as an input for producing a product to be sold in the market;

• Alternative energy-based systems represent a wide variety of applications,

products and systems based on renewable energy deployment. Business models using these systems can be focused on sales or offer a technical service;

• Efficiency optimisation by ICT - ICT technologies provide a wide range of

solutions for energy and resource use control, establishment of smart grids, cloud computing, as well as teleconferencing and online shopping. ICT solutions based models generally can be of two types - ICT service-based models, which include companies ensuring the monitoring of the consumption or redistribution of resources and ICT products-based models, which are basically the ICT systems or software and hardware packages that are offered and sold to customers. Once the system is installed, customers learn to use it to monitor their resource use;

• Functional sales and management services model is a generic model with

common characteristics for all service based business models. In general, in all models there is a focus on providing the functions and benefits of the product instead of the physical product as such. The simplest models are based on delivering services using the environmentally superior materials and techniques. In the more developed models, instead of paying for the product per se a part of the transaction is a payment for the functions of the product. The service provider takes over the control of the use-phase of the product. By improving the control of use-phase of the product, the producer has an incentive to improve the output yield and to extend the life-span of the product by making the product more durable, reducing the need for spare parts, making it more energy efficient and improving the maintenance of the product. These models can also encourage the remanufacturing and re-use of the product;

• Innovative financing schemes represent long and medium-term investment

arrangements often focused on the improvement of environmental performance, which is also linked to economic performance. The best known example is ESCO which provides energy-efficiency-related and other value-added services and assumes performance risk for its project or product. The compensation and profits are tied to energy efficiency improvements and savings in energy costs. The DBFO model is similar type of scheme. It is a contractual relationship between a customer and a private contractor that is used in construction projects that require long-term investments;

• New sustainable mobility systems are alternative transportation schemes

with a lower environmental impact. Examples can include more efficient and cleaner public transport systems, car or bike-sharing/renting models and schemes for increasing the application of electric or bio-gas based vehicles;

• Industrial symbiosis - The core of industrial symbiosis is sharing the use of

resources and by-products amongst industrial actors on a commercial basis through inter-firm recycling linkages. In industrial symbiosis, traditionally separate industries engage in an exchange of materials and energy through shared facilities. The waste of one company becomes another’s raw material;

• Green neighbourhoods and cities are a complex and geographically wide

actors. Green neighbourhoods and cities are designed with a consideration of environmental impact, inhabited by people dedicated to the minimisation of inputs of energy, water and food, and waste outputs of heat, air, water and other pollution. Such a city can feed itself with minimal reliance on the surrounding countryside, and power itself with renewable sources of energy. The crux is to create the smallest possible ecological footprint and to produce the lowest amount of pollution possible, to efficiently use land, compost used materials, recycle them or convert waste to energy.