Innovation in green technologies is critically important to sustainable development. IP is important in creating incentives for such innovation; a lack of IP protection in any country will discourage innovation and will deter investors from bringing their needed technologies to the country for fear of IP theft. IP protection that is too powerful, on the other hand, will inhibit innovation by raising the costs of needed technologies, and by preventing innovators from building on existing patented technology.

Getting the balance right is thus important for fostering an innovative green economy; innovation and protective patents are playing an increasingly important role in the clean technology landscape, including smart grid, energy efficiency, lighting, electric transport, solar, energy storage and wind technologies. Patent provisions that encourage the development of new plant varieties that are adapted to local climatic conditions can also spur environmentally important innovation.

The balance point will be different for different countries, and will vary within each country from sector to sector. Stronger IP protection will generally benefit countries in sectors where there is strong existing capacity to innovate while, for those sectors and countries with low innovative capacity, stronger IP protection will generally mean additional costs. Weak IP protection, on the other hand, may deter investment that would bring innovative goods and techniques to the country. And if employed as industrial policy, weak IP protection is incomplete; it is only one of a suite of tools that would have to be used in complementary fashion to stimulate domestic innovation.