AI innovation is powering the Net Zero transition

AI is playing a transformational role in strengthening resilience to climate change and supporting the reduction of emissions as businesses and governments continue to execute strategies to meet international climate goals, according to global intellectual property firm Marks & Clerk.

Findings from its latest AI Report reveal that AI innovations tied to green technology are rapidly advancing, with patent publications up 35% in 2023 – despite a slowdown in overall AI filings. To put it in context, while overall AI patent publications continue to grow, they only increased by 3.4% in 2023 compared to 17.6% in 2022. That said, despite the slowdown, growth in AI patent publications in 2023 was still greater than the growth in overall patent publications.

The European Patent Office (EPO) is demonstrating critical institutional support for this sustainable innovation trend, granting green AI patents at higher rates than ever, as innovators increasingly focus on technologies that power the net zero transition. From optimising renewable energy grids to waste management and sustainable transportation, green AI is proving to be a critical driving force behind the world’s transition to net-zero.

When it comes to AI patent leadership, the US continues to lead overall AI applications at the EPO. By contrast, European companies dominate in the green AI space, filing 50% more applications than their US counterparts. Whilst US companies are largely focused on technologies related to climate change adaptation and resilience, Europe has taken the lead in energy conservation, aligning with its strong regulatory and policy focus on energy efficiency. In APAC, the Chinese and Japanese markets remain focused on sustainable transportation, which is perhaps unsurprising given China’s position as a leading battery manufacturer and Japan’s large automotive industry.

Beyond consumer pressure on businesses to embrace innovations that can accelerate the transition to net zero, new regulation will also play a role in the continued prominence of green AI patent filings. The EU AI Act includes provisions that encourage the development and deployment of AI technologies that contribute to sustainability and climate goals. The correlation between the rise in green AI patent filings and the regulatory environment created by the EU AI Act reflects the EU's two-pronged commitment to sustainability and technological innovation.

Mike Williams, lead partner in AI at Marks & Clerk considers how the shifting regulatory environment will impact green AI innovation:

“AI regulations are advancing at pace in several major markets. While companies wait for the exact impact of these regulations to unfold, the importance of IP protection in green innovation is already clear. It is encouraging to see the powerful growth in patent applications for AI green innovations. This demonstrates that companies are increasingly looking to apply the AI advances made in the last two decades to developing solutions to global environmental challenges. This is clearly still a nascent and developing area, but given the scale of the problem, the societal and financial rewards these innovations could offer are unmatched. Both the US and UK patent offices offer favourable treatment for green innovations, which should further bolster growth in this space.”

However, despite the promising uptick, green AI patents still represent just 4% of all AI filings. There are several possible reasons the numbers may be understated, including classification challenges or the fact that many general advancements in AI have wide-ranging applications that extend into green technology.

That said, the rapid escalation of filings in the last year conveys the importance of green AI in the context of the global net zero transition, clearly signalling that the intersection of AI and sustainability is a trend that has enormous growth potential. The grouping together of innovation and sustainability is a trend that is playing out both from a regulatory perspective – but clearly with commercial advantages as well. The data represents an inflection point whereby innovation and sustainability are dovetailing – presenting a huge opportunity for businesses to capitalise on the current direction of travel.

Williams breaks down where the opportunity exists for businesses:

“There is a clear opportunity for companies to increase IP protection in green innovation. It’s surprising that companies aren’t registering a larger share of their IP in green technologies - especially given the global nature of the challenges and the significant rewards for effective solutions. On top of the usual advantages of strong IP protection, many Patent Offices offer favourable treatment to companies’ environmentally friendly innovations. However, our analysis reveals a real gap in companies active in green innovation fully leveraging IP protection in this crucial area.”