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026 INNOVATION POLICYthe gap between current emissions trajectories, NDCs and the Paris Agreement’s mitigation goals. There is evidence that current development patterns may be increasing exposure to climate change impacts. The OECD is focusing on how governments might best address this exposure, for example by taking better account of system-wide vulnerability to extreme events and changing climate patterns in infrastructure investment, as well as drawing on best-practice management of contingent liabilities from climate risks.In terms of mitigation, the credibility of climate commitments depends on a clear understanding of whether government mitigation policies match their ambition. The OECD released a report Climate Change Mitigation: Policies and Progress in 2015, providing the first detailed review of progress that OECD countries, key partner economies and the European Union are making towards their climate mitigation commitments and the 2 degree goal.9 The report showed that, based on historic performance, most countries are not achieving reductions fast enough to reach their emissions reduction goals. Another major issue for governments is how to unpick the fossil fuel hard-wiring of our economies. Subsidies and tax breaks to fossil fuels still represent around US$600 billion annually, with support for consumption and production in OECD and key emerging economies at around US$160-200 billion;10 the regulations and institutions that have helped fossil based economies work for well over a century are still alive and well. Left intact, that wiring will hinder even ambitious climate policies. Achieving a low-carbon economy, therefore, requires policy action well beyond core climate policies. The 2015 OECD report Aligning Policies for a Low-Carbon Economy11, developed in co-operation with the OECD’s sister agencies12, sketches the scale of this transformational challenge across investment, taxation, innovation and trade policy, and frameworks governing electricity systems, mobility and land use. In addition, further understanding of how mitigation strategies, policies and regulatory approaches might most effectively be tailored to national circumstances could support accelerated government mitigation action. The OECD will build on the insights from these two landmark reports in its future mitigation work; we will support individual countries in their mitigation efforts by helping to tackle policy misalignments and will launch a major new report in 2018 ahead of the scheduled UNFCCC facilitative dialogue. HARNESSING INNOVATION POLICIES FOR A LOW-CARBON, CLIMATE RESILIENT ECONOMIC TRANSITIONInnovation will be particularly important for a successful low-carbon transition: it can drive the creation of new businesses, restructure old ones and support the development of nascent technologies and innovative business models. The Paris Agreement recognises the importance of accelerating, encouraging and enabling innovation for an effective, long-term global response to climate change and promoting economic growth. But what does that mean in concrete terms?It will not be enough to solely focus upon innovation in the ‘‘green sector’’. Rather, when we talk about green innovation, we need to ensure that we are talking about making all innovation green! To do that requires widespread adoption of the right support frameworks combined with clear and credible government commitments so that green considerations are incorporated into innovation policy settings from the outset. The direction of innovation policies matters as much as the pace of innovation itself. Strong climate policies, for example, can pull innovation in the right direction, but other instruments and polices are also important, and a lack of alignment can inadvertently hamper progress. Where regulations have not caught up with the pace of technological development, this can hinder innovation, particularly with respect to resource efficiency. For example, outdated regulations can restrict the use of waste in industry, thereby reducing the important mitigation potential of using waste as a fuel in industries such as cement. For policy makers this implies a much more horizontal approach to innovation policy.SUPPORTING A SYSTEMS-INNOVATION APPROACH FOR GREEN GROWTH The OECD has recently focused on aligning innovation policy to support environmental objectives within its horizontal green growth work programme. In October 2015, discussions were held at the OECD’s Daejeon Ministerial in Korea entitled “Creating our Common Future through Science, Technology and Innovation”.13 The Ministerial-level Deajeon Declaration on Science, Technology and Innovation Policies for the Global and Digital Age asked the OECD to strengthen the contribution of science, technology and innovation to sustainable economic growth and a cleaner environment, among other areas. Part of this work will include improving the availability of information in order to enhance international co-operation and better address shared research challenges, including climate change.Immediately following COP21, the OECD held the fourth annual Green Growth and Sustainable Development (GGSD) Forum on the topic of “ INNOVATION WILL BE PARTICULARLY IMPORTANT FOR A SUCCESSFUL LOW-CARBON TRANSITION ”