Lead-Market-Driven Innovation and System Resources in Direct Air Capture

According to the IPCC, Carbon Dioxide Removal (CDR) is essential to achieve global climate goals in almost every modelled scenario. In comparison to carbon offsets (e.g. CCS), CDR solutions source carbon from the atmosphere and store it permanently, thus helping to decarbonize hard-to-abate sectors as well as addressing legacy emissions. Direct Air Capture (DAC) is an especially high-tech CDR solution, that offers a high potential of scaling but also comes with high costs and is therefore often described as a high-quality CDR solution.

Even more than other novel climate technologies, DAC’s future development will depend on coordinated policy action. This policy action will not be geographically homogenous – instead different nations or regions come with different potentials, capabilities and motivations for promoting a specific technology. Coming from this perspective, the notion of lead markets argues that a nation (or region) can build long-term competitiveness in a technological field by building up national market structures at an early stage. Yet, while this idea is very much intriguing, it lacks a clear conceptualization of terminology and functional effects. Still, it points towards the need of better understanding the role of national and regional markets in the global diffusion of innovations, as well as how early policy action can shape later spatial ecosystem configuration.

This brings us to the following research questions:

1. What internal dynamics and external synergies and conflicts shape the current development of the DAC global ecosystem?
2. What is the role of individual nations and regions in the global diffusion of DAC technology?
3. How can a nation or region affect and contrive its strategic position in the global ecosystem?

To address these questions, we are employing the framework of Global Innovation Systems, which departs from a linear innovation perspective and instead argues that four system resources are responsible for the development and diffusion of technologies: knowledge, markets, legitimacy and capital. These system resources are typically not spatially ubiquitous but can be situated at different spatial scales and locations. Applying the GIS framework allows us to better distinguish the role of different actors in the DAC ecosystem, as well as allocate them to specific geographic entities.

During the course of the three-year research project, three academic papers will be developed to discuss the research questions above extensively. Empirically, the research will be based largely on expert interviews with relevant stakeholders from DAC companies, industry groups, consultancies, certification agencies, NGOs, public organizations, and academia. Moreover, the research will be based on extensive desk research and descriptive statistical analysis of secondary data, such as patents and company directories.