Report of Centad’s Side Event at UNFCCC, SB 28

Affordability, Cooperation and Finance - The key to Technology Transfer
7 June 2008, Bonn

On the sidelines of the 28^th Session of the Subsidiary Bodies of the UNFCCC, Centad organised a panel discussion on Technology Transfer Climate Change and Development: Challenges for Developing Countries on 7 June 2008 in Bonn.

The session began with a brief overview of the various stages involved in technology transfer. It was pointed out that technology transfer does not merely imply making use of the technology being transferred. Developing countries undergo three progressive stages for an effective diffusion of Transfer of technology: initiation stage, which means importing of technology; internalisation stage ie, adaptation of technology to suit the local conditions; and generation stage which includes conceptualisation of the technology and innovation through research and development (R&D). It was noted that developing countries face barriers in the way intellectual property rights (IPR) hampers effective transfer and adoption of climate friendly technologies. Thus, there is a necessity to think of the framework within UNFCCC to look at technologies and to have an action plan. Foremost principle for this framework should be to make technologies available to developing countries at affordable costs. The second should be to build capacity of these countries in order for them to develop new technologies suiting their local conditions. It is important to work on phasing in of climate friendly technologies and phasing out of climate unfriendly technologies at cheap cost as it will result in faster mitigation of climate change.

Within UNFCCC framework technologies can be divided into three categories: technology in public domain, patented technology and emerging technologies. Few proposals were submitted to tackle these three categories. For technologies in public domain, a need assessment should be done for developing countries and then look for ways for quick diffusion as per the requirement by means of grants and differential pricing. In case of patented technologies, developing countries should be given exemption in case of using environment friendly technologies. Another suggestion could be to have a global system of compulsory licensing and develop a joint patent pool. Companies should be regulated under UNFCCC to provide voluntary licensing through standard and simple process. In addition to this, a system can be developed to have deliberate differential pricing for transfer of technologies to developing countries and LDCs. These proposals can provide easier and cheaper means of technology diffusion without changing the patent system. In case of the third category of emerging technologies, a joint public fund for R&D can be proposed within the UNFCCC. Since the fund for inventing such technologies would come from public source, its cost would be regulated by the public sector and not the inventor thereby making it available to needy countries at affordable cost. This model is being successfully implemented in the public sector for R&D of neglected diseases.

Evolution of India’s Consultation on the Technology Transfer

In a discussion mapping out the discourse of technology transfer at the UNFCCC and at the country level in India, it was observed that various technology related provisions explicates that the importance were on information, needs, and financing. India’s submission to the UNFCCC has been related to developments on diffusion of information for needs assessment, and to integrate the local systems to those already existing internationally. The initiatives for developing adequate technologies require a holistic approach involving industry, academia, and the government. The possible arrangements include use of venture capital, incentivisation for sustained development of technologies, and undertaking an exhaustive mapping exercise on the technology available. There should be proper arrangements for the SMEs to exploit the CDM mechanism for developing clean technologies as they form a substantial section of the manufacturing industry. Also, there is a need for developing alternative incentive based policies wherein current IPR related barriers can be minimised or removed.

Options for Long-Term Policy Making

Exploring the options of long-term policymaking on transfer of technology for climate change, it was pointed out that the first essential step for technology transfer is the development of technology for mitigation of climate change. However, technology for clean energy generation and other climate friendly technologies are yet to be developed. It was pointed out in this context that markets in themselves will fail to incentivise development of climate friendly technology unless they are complimented by adequate legal and policy framework to support technology development, innovation and deployment for mitigation of climate change. These complimentary mechanisms include fiscal policies, funding for research and development, regulation of intellectual property rights and financing for innovation expenditures. Governments can help in this regard through technological demonstration, technical assistance, financial support and standardisation and procurement. The extent of transfer of the technology so developed must be assessed by developing and applying performance review indicators. The lack of adequate finance for facilitating technology transfer was pointed out to be a major barrier for the same. While many funding mechanisms exist, much of those are outside the framework of the UNFCCC, and are inherently donor driven voluntary funds and not in furtherance of the obligatory funding responsibilities of developed countries under the UNFCCC. Thus, it was argued that financial resources for climate change, including technology transfer financing for mitigation and adaptation should be provided within the framework of the UNFCCC. Moreover, the existence of parallel financing structures may tend to create parallel or conflicting governance policies outside the multilateral process. Thus, it was pointed out that efforts should be made for developing a genuinely multilateral fund for climate change policies under the auspices of the UNFCCC. This would give developing countries due representation and voice within the governance structure and ensure that the resources set aside for climate change are used in accordance with internationally agreed principles and meet the objectives of the multilateral climate change regime. Such a fund can be inspired by the Multilateral Fund (MLF) for Implementation of the Montreal Protocol.

Technology Transfer and Sustainable Development

On the issue of technology transfer and sustainable development in the long term, the central issue is how to close the development divide between nations while still limiting emissions. It was noted that preventing dangerous interference with the climate system means technology deployment, diffusion and delivery has to happen in the immediate future. Many types of technology are available in the market from diverse sources like wind, solar and thermal energy, biomass, biogas, etc. Some of these technologies have led to a cost reduction of almost 20 per cent. In spite of these developments, all these technologies urgently need radical transformation to become smarter, more efficient, people oriented, community based, networked, adaptable and flexible. Thus, all parties should cooperate in building a truly decarbonised distributed energy system (DDES). The logical conclusion of the Articles 4.1c and 4.5 of the UNFCCC is that developed countries must support the participation of less-developed countries in building a truly global DDES and in developing locally appropriate technology species. Some ideas for implementation of technology transfer aspects of the Bali Action Plan will centre on supporting of knowhow and financing of access to environmentally sound technologies (ESTs). In addition this will involve supporting the development and enhancement of endogenous capacities and technologies of developing country Parties.

India’s Perspective

It is estimated that from 2001 to 2036, for a GHG reduction of 9.7 per cent, India will require cumulative incremental investment of $2.53 trillion with a net cumulative economic loss of about $180 billion. Thus, from an Indian perspective the cost of accessing technology for mitigation of climate change is substantially huge. It was observed that even the conclusions of the Stern report pointed towards inequity in cost sharing arrangements. While the developing countries will still have to shell out huge sums of money, the developed world will actually gain out of mechanisms like the CDM. The following possible approaches to the issue of technology transfer were suggested – first, collaborative R&D by institutions in developed and developing countries on technologies for mitigation and adaptation; second, a new IPR regime to enable innovators to be rewarded by regulated, not monopoly royalties.

Need for a Climate Resilient Development Model

The discussion also focussed upon the requirement of proper technology for building up a climate resilient development model. It was pointed out that the developing countries need technology to address the unavoidable sectoral impacts of climate change, variability and extreme events on human settlement, agriculture, biodiversity and water resources. For instance, Bangladesh faces multiple threats from climate change. It faces the bleak prospect of a drought situation, salinity and extreme flooding in various parts of the country. To address this situation, adequate policy-driven technology and knowhow transfer are necessary. The stress has been on both mitigation and adaptation based policies. The mitigation based policies must ensure that the recipients access the best available technology and not the sub-optimal one. The adaptive technologies should be based on vulnerability of different sectors, countries, and the adaptive capacity of the country. Substantial weightage should be given on modifying and scaling up of technologies that are already available in various countries. The prioritisation of technology based on requirement is an important factor for sustainable technological development in meeting development goals.

Floor discussions

During the floor discussions it was pointed out in response to a query that in spite of the availability of technology and various proposals for enabling their transfer, nothing is really happening on the ground because there is a lack of political will among governments to force the private sector which possesses the technology to do more to facilitate transfer of technology for mitigation of climate change. Noting that a recent paper suggests the creation of a public fund for mitigation in the south, the panel observed that such a fund to which developed countries should contribute substantially more will be a desirable option because it is estimated that the developed countries can contribute over $185 billion a year to such a fund. Responding to a query whether there options of carbon capture and storage should be explored for the southern countries as well, the panel observed that CCS is not as much of a solution as adequately financed early renewable and the benefits of CCS for sustainable development are not convincing.

Conclusions and Suggestions

The panel discussion brought forward the following conclusions:

1. IPRs tend to hamper the transfer of technology necessary for climate change mitigation and adaptation.

2. Technology transfer should be made affordable to be effective.

3. There is a need for deeper coordination among governments, industries, academia as well as SMEs for enabling an environment for facilitating technology transfer.

4. A legal and policy regime for incentivising development of technology for mitigation of climate change is necessary.

5. There should be a single financial mechanism for facilitating technology transfer within the framework of the UNFCCC.

6. Existing alternative technology should be made more efficient.

7. There is need for an equitable cost sharing arrangement for facilitating developing countries to shift to technology required for mitigating climate change without sacrificing developmental goals.