“We need a smart innovation policy”

When we meet Tobias Schmidt in his office on Clausiusstrasse in Zurich, the climate conference in Glasgow is already well into its first week. Schmidt has long been familiar with the machinations and manoeuvrings at these kinds of major events. The first one he attended was in 2008, when he was still a doctoral student. Over the years, he has witnessed major disappointments – such as the failure of the 2009 Copenhagen conference – as well as the excitement of positive moments such as the 2015 Paris conference, where the heads of state and government agreed on a new architecture to combat climate change.

“My expectations for these conferences are a lot less naïve now than they used to be!” Schmidt says. The doctoral student from back then is now Professor of Energy and Technology Policy at ETH Zurich – and also a realist. He argues that the fate of the global climate depends less on the results of individual summits and much more on how ambitious individual countries decide to make their climate policies in the years ahead. This is primarily influenced by one key factor, Schmidt says: the cost of zero-emission technologies for all economic activities.

“When climate action becomes cheaper and more profitable,” Schmidt says, “it’s easier for politicians – trapped as they are in their short-term election cycles – to be ambitious.” This places him firmly in the group of those who believe that the main solution to the climate crisis lies in radical technological transformation. The best way in which he can help combat climate change, he says, is by exploring which political and financial conditions are required to enable this transformation to succeed in the energy sector.

Early interest in technology and environmental issues

Schmidt grew up in a village to the south of Munich as the son of an engineer and a materials scientist, and his enthusiasm for technology was evident from a young age. It wasn’t long before he discovered his father’s workshop and began tinkering with his own ideas. But his parents were firmly of the belief that children should also participate in cultural and musical activities. As a result, Schmidt spent many years in a boys’ choir – and he is still a keen singer today.

He began to take an interest in environmental issues while he was still at school, largely in response to his mother’s promptings on the importance of sustainability. As part of his school-leaving exams, the 18-year-old Schmidt wrote his dissertation on a waste separation system that he designed himself. His school still uses the system, and his pride at having created something meaningful and sustainable is still evident when he talks about it today.

With his university entrance exam under his belt, Schmidt struggled to decide which course of study to pursue. In the end, he opted to study electrical engineering at the Technical University of Munich, though he also chose to attend courses in economics and history. Even then, he was driven by an urge to look beyond the boundaries of his own discipline.

From engineer to public-policy researcher

The 26-year-old soon became frustrated with the one-sided nature of a traditional engineering programme. Keen to learn why certain technologies succeed in the energy sector while others fail to get off the ground, he wrote a thesis on the economic merits of renewable technologies in developing countries. At that time, Volker Hoffmann was already Professor for Sustainability and Technology at ETH Zurich, and Schmidt was lucky enough to have him as his supervisor. Like Schmidt, Hoffmann is an engineer who studies innovations in the energy sector from an interdisciplinary standpoint.

Schmidt enthusiastically embraced this approach and, in 2008, he decided to pursue a doctorate in the Department of Management, Technology, and Economics (D-MTEC) at ETH Zurich. Over the four years that followed, he studied the impact of international climate policy on cleantech innovations. He was surprised to discover that the first phase of the European Union Emissions Trading Scheme had actually led to more, not fewer, investments in coal-fired power plants.

This finding – and his realisation that innovations are heavily dependent on the underlying policy framework – encouraged Schmidt to see technological change from a different perspective. Slowly but surely, the engineer was turning into a public-policy researcher.

An interdisciplinary research programme

The year 2015 marked a turning point in Schmidt’s career. Following a series of consulting assignments for the United Nations Environment Programme (UNEP) and a research visit at Stanford University, he was offered a position at ETH Zurich. “It was only the third time I had applied for a full-time position. I immediately realised that it was the chance of a lifetime.” For Schmidt, it was a dream come true – and an opportunity to set up his own energy policy research group.

Based on the course his own career had taken, the newly appointed professor put together a research programme that focused on issues at the interface between climate-friendly technologies, the finance sector and policymaking. One of the key questions it raised was how technological innovations emerge in the energy sector. Schmidt argued that this question is impossible to answer until we understand the technologies themselves, because there is no one standard template for innovation in the energy sector.

“It’s the technology itself that defines whether the key to success lies in product innovations or process innovations,” he says. For example, innovations in photovoltaic technology mainly stem from improvements in the production process, since this leads to reduced costs. In the case of wind turbines, however, product innovations are the essential factor, since better designs are more likely to succeed in the market. “To promote climate-friendly technologies efficiently, you need to identify the point at which innovation is actually taking place,” Schmidt says.

Effective climate policy relies on a smart innovation policy

Using the examples of solar power, wind turbines and battery technology, Schmidt explains that the only way to an efficient energy and climate policy is through a smart innovation and industrial policy. He argues that the first step is to provide comprehensive research funding for climate-relevant sectors. But that’s only the start: “The more complex new technologies are, the more important it is to test them in pilot plants at the earliest possible stage,” he says emphatically. “When you’re dealing with very expensive but highly promising technologies, the only way to get their cost down is by enabling market access through policies.”

The best framework for these policies once again depends on the actual technology, he says, pointing to the striking example of how photovoltaic technology has evolved in China: “Chinese manufacturers drew on cheap government loans to buy cutting-edge production equipment. That was how they achieved cost leadership and took an ever greater share of the market,” he says.

This strategy wouldn’t work in the case of wind turbines, since their development requires complex design expertise that is held only by experienced engineers and is not easily transferable. What’s more, Schmidt says, wind turbines must be tested and optimised under real-life conditions. In this case, it is more important to provide incentives to those involved in building and operating wind farms, Schmidt argues. With that in mind, it is not surprising that it took China 20 years to become a market leader in wind power as opposed to the two years it took the country to dominate solar.

Life on the tenure track

From the time of his appointment at ETH Zurich, Schmidt had five years to make the jump to an indefinite appointment, a so called tenured professorship. Publications are the most important criterion on the tenure track, and Schmidt was certainly delivering plenty of those: between 2015 and 2020, he published 41 articles in a number of prestigious journals. The topics of his research ranged from the drivers of national climate policy and the financing of low-carbon technologies to innovation processes in specific fields of technology.

This extraordinary productivity was, in part, simply a result of hard work and many Saturdays spent working in the office. But it also stemmed from his ability to recruit motivated and highly skilled young researchers from a variety of disciplines to publish with him. He also benefited from the launch of a whole series of new journals that matched his interests and quickly became more and more relevant.

When Schmidt submitted his tenure dossier in the autumn of 2019, his daughter was just six months old. “My daughter does an amazing job of keeping me grounded and bringing more balance into my life,” he says. His weekends are now reserved for his family, but becoming a father also shifted his views on climate change: “Suddenly I found myself asking what kind of world my daughter will be living in when she’s 40. How high will summer temperatures be in big cities? And will there still be a secure supply of food?”

Dialogue between scientists and government

In the summer of 2021, Schmidt was appointed to head up the Institute of Science, Technology and Policy, or ISTP. The ETH professor’s interdisciplinary background made him the perfect choice to meet this challenge, especially since ISTP’s study programmes and continuing education programmes are aimed at students with a background in science or engineering who wish to specialise in the field of public policy.

“Our goal is to make research at ETH more relevant to policymakers,” Schmidt says. That calls for scientists and engineers who have some appreciation for policymaking, he argues, but it also requires a constant dialogue between government and the scientific community that aims to foster mutual understanding and trust. Determining what organisational structures need to be in place to shape the most productive kind of dialogue is a lengthy task, and one that is likely to keep both Schmidt and ETH occupied for some time to come.