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In business technology transfer occurs in different ways. Sometimes it is related to the product localization as a global business strategy. Business as commercial activities depends on the market behavior. If there is market there is business and it can be possible to attract investment for technology transfer and cooperation through the CDM. Technology transfer is an international cooperation among developed and developing countries, but through CDM project it will be one-way path only from developed country to developing country. Most of the developed countries’ economic growth is at mature phase. Hence, their market potential is low and the climate change issues are showing it down. By contrast, the developing and least developed countries have enormous economic growth potential compared to that of a developed country. Technology as the vehicle of economic development has a great market potential in the developing and least developed countries.

Technology transfer is not isolated from other socio-economic issues. The barriers to technology transfer are numerous such as financial, economic, institutional, cultural, and human oriented (UNFCCC, 1998b). The market itself is also an element of those barriers. To create a market for a new technology is a social and economic process that needs government cooperation by introducing policy strategy instruments. As the CDM is a commercially based investment tool, the government can play a vital role to create such a market potential.

The level of technological capability varies. In cases where the receptor’s

technological capability is sufficient but it lacks financial and economic policies, the multilateral cooperation through a financial donor or technology provider can play active role to transfer the technology. If the receptor’s technological capability is insufficient a capability building process must proceed.

In the climate change mitigation process market potential is necessary for technology transfer. As the local economic necessity and the global needs are not the same the governments of developed countries could be better mediators to initiate the

development phase of the local market. Bilateral government cooperation among the developed and developing countries can be a good practice for technology transfer.

The actors in technology transfer are technology buyer, technology seller and financer who have been discussed earlier. To make technology transfer happen, all interested parties must have their own interests satisfied. Often this is difficult to meet without an agreement and bilateral governmental cooperation can help achieve it.

The barriers to the adoption and dissemination of ESTs are very much country specific. However, there are some common similarities among developing countries and below are some examples of major barriers experienced in developing countries.

Technological: Technological barriers are lack of infrastructure, lack of technical standards and institutions for supporting the standards, low level of technical capabilities of firms and lack of a technology knowledge base. An effective and sustainable technology transfer includes the integration of both soft and hard technologies. Technology transfer efforts concentrate solely on installing hard

technologies and hence do not provide sufficient soft technological capacity for these technologies to be successfully and widely adopted in the recipient countries

(Ramanathan, 1995). Besides, there lack of adequately trained experts and engineers for renewable energy technologies. Hence, technological capability enhancement is required for developing nations.

Lack of local capacity results in transferred technology seldom reaching the designed operational efficiency and often deteriorating significantly over the life of the

equipment (Ramanathan, 1995). Local capacity building to effectively manage the technological change could be facilitated by policies, which insist that foreign

technology/investments inflows should be accompanied by adequate training of local staff.

Institutional: Institutional barriers are lack of legal and regulatory frameworks, limited institutional capacity and excessive bureaucratic procedures. Inappropriate or restrictive business practices such as transfer of outdated technology from developed to developing countries are a barrier to the transfer of environmentally sound

technologies to some developing countries. Involving both developed and developing countries to discourage such practices could overcome it.

Poor level of national coordination of technology transfer activities within

developing countries is another barrier that can be overcome by establishing focal points for activities related to the development and transfer of ESTs in those

developing countries. Involvement of local experts, institutions and local community participation can enhance successful technology transfer.

Economic: Economic barriers include instability, inflation, poor macroeconomic conditions and disturbed and/or non-transparent markets. Generally poor

macroeconomic conditions, political corruption, and in some cases generally immature enabling environments are key economic barriers. Developing countries generally have small markets for climate technologies, which tend to attract less attention from donors and the private sector. The small market size for commercial renewable energy technologies in many individual countries limits bulk procurement of renewable energy technologies and services, effectively making these

technologies economically unviable. To overcome economic barriers it includes encouragement of legal, institutional and policy reforms to facilitate technology transfer.

Political: Political barriers include instability, interventions in domestic markets (for example, subsidies), corruption and lack of civil society. Sustainable development goals, including the development and transfer of environmentally sound technologies and know-how, are part of national goals and priorities which depend on policy makers’ good will.

Technological development and innovation are associated with economic

development that facilitates national policy strategies. These priorities need to be understood properly by policy makers for effective technology transfer that meets the climate change and development goals simultaneously. Hence, technology transfer strategies need to be associated with national development plans.

Information: Information barriers are lack of technical and financial information and of a demonstrated track record for many ESTs. The lack of information throughout the technology transfer process is a key barrier. These information gaps are

frequently at the root of other significant barriers (e.g. lack of political support and awareness among all stakeholders, including the private sector and the public).

One of the essential elements of the process of technology transfer is the provision of support services to user enterprises to facilitate the evaluation of technological options in the context of their own requirements (TERI, 1997). Many developing countries do not have the necessary infrastructure for studying and evaluating the diversity of available technological options that might suit their needs. There is an urgent need to develop an effective information support system and institutional infrastructure to facilitate selection of appropriate technologies.

Financial: Financial barriers are lack of investment capital and financing instruments. Financial reforms are widely needed to improve availability and

accessibility of financing and allow for innovative financing schemes for ESTs. The Korean experience with climate-relevant technology transfer has highlighted the non-availability of financial means as a main barrier to the technology transfer (IVAM - country fact sheets, 1999). UNFCCC (1998b) points out that financial crises in late 90’s in last century of the East Asian economies, e.g. Republic of Korea, Thailand, and Indonesia, is a major barrier to the transfer of ESTs for some time, especially owing to their lack of foreign exchange for purchase of ESTs from abroad. The situation in the less developed countries is even worse.

Cultural: Cultural barriers are related to the behavior of individuals both as private matter and in their social role, having to do with attitudes, preferences, habits, social standards or guidelines, tradition, customs or inertia for the adoption of new behavior patterns. It could be overcome by introducing comprehensive awareness program before hand.

General: Example of these are intellectual property protection, and unclear arbitration procedures. Companies either as proprietary information or as formal intellectual property rights (IPRs) generally hold technologies, particularly commercial technologies. Holders of the patents to these technologies, usually transnational companies, can refuse to grant permission to other companies even if the receivers are willing to pay market prices or else the technologies may be made

available at high prices (due to the monopoly enjoyed by the patent holders). Presently, specific legal and administrative restrictions are not a barrier to the

transfer of publicly held technologies (Chung, 1999). Inter-governmental agreements and various international negotiations (e.g. facilitated by the UNFCCC) under the wider WTO (World Trade Organisation) regime can play an important role to allow access to such ESTs. Weak IPR regimes in the host countries might discourage the foreign firms to invest in them. It is important for the countries to strengthen their IPR regimes in order to encourage transfer of ESTs of both public and private origins to attract CDM projects.