Climate change technology transfer to developing countries: evidence analysis and policy recommendations

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(1)Departamento de Ingeniería Química Industrial y Medio Ambiente Escuela Técnica Superior de Ingenieros Industriales. Climate change technology transfer to developing countries: evidence analysis and policy recommendations TESIS DOCTORAL. Ana Pueyo Velasco Licenciada en Administración y Dirección de Empresas MSc Analysis, Design and Management of Information Systems. Madrid 2012 Codirectores Julio Lumbreras Martín. Pedro Linares. Doctor Ingeniero Industrial. Doctor Ingeniero Agrónomo. Ingeniero Industrial. Ingeniero Agrónomo. i.

(2) Tribunal nombrado por el Magnifico y Excelentísimo Sr. Rector de la Universidad Politécnica de Madrid, el día 31 de enero de 2012. Presidente: Dra. Encarnación Rodríguez Hurtado Secretario: Dra. Mª Jesús Sánchez Naranjo Vocal: Dr. José Ignacio Pérez Arriaga Vocal: Dr. Jim Watson Vocal: Dr. Xabier Labandeira Suplente: Dr. Walter Leal Suplente: Dr. Pablo Martínez de Anguita. Realizado el acto de defensa y lectura de la tesis el día 5 de marzo de 2012 en la E.T.S. Ingenieros Industriales. Calificación: __________________________________________. EL PRESIDENTE. LOS VOCALES. EL SECRETARIO. ii.

(3) Agradecimientos Desde los primeros pasos en la elaboración de mi tesis hasta la meta final han sido muchas las personas que me han apoyado y desde muchos lugares, a las que recuerdo por orden cronológico. Mi interés por la transferencia de tecnología para la mitigación del cambio climático comenzó durante mis años como consultora en Garrigues Medio Ambiente. Durante esos años compaginé mi trabajo con los cursos de Doctorado y la elaboración de la DEA. Agradezco a mis compañeros de Garrigues la primera inspiración para emprender mi investigación y la flexibilidad para compaginar largas horas de trabajo con mi labor académica. Asimismo, mi investigación no habría podido comenzar sin el apoyo de Pablo Martínez de Anguita, de la Universidad Rey Juan Carlos, mi Director durante la fase de la DEA. Gracias Pablo por tu gran generosidad durante los primeros años de Doctorado. Tras varios años de trabajo en Londres, la segunda y más dura fase de elaboración de la tesis doctoral no habría sido posible sin mis dos directores Julio Lumbreras y Pedro Linares. Gracias a Julio por su apoyo durante el proceso. Dados los largos horarios del trabajo en consultoría y lo absorbentes que pueden llegar a ser los proyectos, esta tesis no habría visto la luz si Julio no me hubiera ofrecido la oportunidad de aparcar mi trabajo durante una temporada para dedicarme casi por entero al Doctorado. Pedro me ha proporcionado la orientación que necesitaba para enfocar mi investigación, mejorar la calidad de su metodología y abordar la gran complejidad del estudio de la transferencia tecnológica. Con la lucidez de sus comentarios y su incansable perfeccionismo Pedro me ha ayudado a ser una mejor investigadora. Me gustaría también dar las gracias a Mª Jesús Sánchez Naranjo, por su dirección al comienzo de la tesis, su gran ayuda para mejorar mis conocimientos de técnicas de análisis cuantitativo, su entusiasmo y buenos consejos si alguna vez caía en el desánimo. Otra influencia crucial durante mi tesis ha sido María Mendiluce. María ha revisado minuciosamente muchos de mis textos y ha aportado a mi trabajo la conexión con la realidad empresarial. Durante los últimos años de Doctorado hemos comenzado una fructífera colaboración académica, profesional y personal que espero que continúe durante mucho tiempo. Para el trabajo de campo en Chile ha sido inestimable la ayuda de Rodrigo García Palma, excompañero de Ecofys y Gerente Técnico del CER en Chile. Rodrigo ha compartido conmigo su gran sabiduría sobre los desafíos de la transferencia de tecnologías de energía renovable a países en desarrollo y me ha abierto las puertas a las experiencias reales de transferencia que constituyen los casos de estudio de mi tesis. Gracias Rodrigo por esas maravillosas semanas en Chile y por los piscos compartidos para alegrar nuestras discusiones. Gracias también a Darío Morales, de CORFO, por compartir sus amplios conocimientos, por nuestra colaboración y los buenos momentos pasados en Chile. Agradezco también a todos los profesionales chilenos que aceptaron participar en mi investigación, no nombrados aquí, pero sí como parte de la tesis. Quisiera también agradecer el apoyo de Walter Leal y Erik Haites. Walter Leal ha dado visibilidad a mi investigación mediante su proyecto JELARE y me ha mostrado las enormes posibilidades que existen para mejorar los niveles de transferencia tecnológica a Latinoamérica. Erik Haites ha revisado mis artículos y contribuido a su mejora con su crítica constructiva. Erik Haites y Steve Seres también han compartido con generosidad sus datos del estudio de transferencia de tecnología en el CDM. Gracias también a mi amiga de toda la vida y Doctora ya desde hace tiempo Beatriz Alonso, por su gran interés en mi tesis y sus sabios consejos. En el camino recorrido he hecho nuevos amigos, comenzando por Maruxa en la Universidad Rey Juan Carlos y Luz en la Politécnica. Una mención especial a Amandine Ody por su ayuda con los aspectos econométricos y el software. iii.

(4) de análisis cuantitativo, así como por sus recomendaciones en la búsqueda de trabajo académico. También gracias a Penélope Woods, por los agradables días de estudio y las comidas en la Biblioteca Nacional de Londres. Finalmente, sin duda quienes merecen mi mayor agradecimiento son mi familia. Gracias Chris por aguantar estoicamente todos estos años de investigación desde que nos conocimos y te dije que me quedaban “unos meses” para terminar la tesis. Gracias por tu paciencia, por aceptar que muchos fines de semana no podíamos hacer planes porque los pasaría en la biblioteca, por leer y corregir muchos capítulos y por los continuos ánimos. Gracias también a mis padres por su apoyo e ilusión con mi proyecto y un especial agradecimiento a mi padre por inculcarme su amor por el trabajo y el estudio.. iv.

(5) Abstract Developing countries are experiencing unprecedented levels of economic growth. As a result, they will be responsible for most of the future growth in energy demand and greenhouse gas (GHG) emissions. Curbing GHG emissions in developing countries has become one of the cornerstones of a future international agreement under the United Nations Framework Convention for Climate Change (UNFCCC). However, setting caps for developing countries’ GHG emissions has encountered strong resistance in the current round of negotiations. Continued economic growth that allows poverty eradication is still the main priority for most developing countries, and caps are perceived as a constraint to future growth prospects. The development, transfer and use of low-carbon technologies have more positive connotations, and are seen as the potential path towards low-carbon development. So far, the success of the UNFCCC process in improving the levels of technology transfer (TT) to developing countries has been limited. This thesis analyses the causes for such limited success and seeks to improve on the understanding about what constitutes TT in the field of climate change, establish the factors that enable them in developing countries and determine which policies could be implemented to reinforce these factors. Despite the wide recognition of the importance of technology and knowledge transfer to developing countries in the climate change mitigation policy agenda, this issue has not received sufficient attention in academic research. Current definitions of climate change TT barely take into account the perspective of actors involved in actual climate change TT activities, while respective measurements do not bear in mind the diversity of channels through which these happen and the outputs and effects that they convey. Furthermore, the enabling factors for TT in non-BRIC (Brazil, Russia, India, China) developing countries have been seldom investigated, and policy recommendations to improve the level and quality of TTs to developing countries have not been adapted to the specific needs of highly heterogeneous countries, commonly denominated as “developing countries”. This thesis contributes to enriching the climate change TT debate from the perspective of a smaller emerging economy (Chile) and by undertaking a quantitative analysis of enabling factors for TT in a large sample of developing countries. Two methodological approaches are used to study climate change TT: comparative case study analysis and quantitative analysis. Comparative case studies analyse TT processes in ten cases based in Chile, all of which share the same economic, technological and policy frameworks, thus enabling us to draw conclusions on the enabling factors and obstacles operating in TT processes. The quantitative analysis uses three methodologies – principal component analysis, multiple regression analysis and cluster analysis – to assess the performance of developing countries in a number of enabling factors and the relationship between these factors and indicators of TT, as well as to create groups of developing countries with similar performances. The findings of this thesis are structured to provide responses to four main research questions: What constitutes technology transfer and how does it happen? Is it possible to measure technology transfer, and what are the main challenges in doing so? Which factors enable climate change technology transfer to developing countries? And how do different developing countries perform in these enabling factors, and how can differentiated policy priorities be defined accordingly?. v.

(6) Resumen Los países en desarrollo están experimentando niveles de crecimiento económico sin precedentes. Como consecuencia, se espera que sean responsables de la mayor parte del futuro crecimiento global en demanda energética y emisiones de Gases de Efecto de Invernadero (GEI). Reducir las emisiones de GEI en los países en desarrollo es por tanto uno de los pilares de un futuro acuerdo internacional en el marco de la Convención Marco de las Naciones Unidas para el Cambio Climático (UNFCCC). La posibilidad de compromisos vinculantes de reducción de emisiones de GEI ha sido rechazada por los países en desarrollo, que perciben estos límites como frenos a su desarrollo económico y a su prioridad principal de erradicación de la pobreza. El desarrollo, transferencia y uso de tecnologías bajas en carbono tiene connotaciones más positivas y se percibe como la vía hacia un crecimiento bajo en carbono. Hasta el momento, la UNFCCC ha tenido un éxito limitado en la promoción de transferencias de tecnología (TT) a países en desarrollo. Esta tesis analiza las causas de este resultado y busca mejorar la comprensión sobre qué constituye transferencia de tecnología en el área de cambio climático, cuales son los factores que la facilitan en países en desarrollo y qué políticas podrían implementarse para reforzar dichos factores. A pesar del extendido reconocimiento sobre la importancia de la transferencia de tecnología a países en desarrollo en la agenda política de cambio climático, esta cuestión no ha sido suficientemente atendida por la investigación existente. Las definiciones actuales de transferencia de tecnología relacionada con la mitigación del cambio climático no tienen en cuenta la diversidad de canales por las que se manifiestan o los efectos que consiguen. Los factores facilitadores de TT en países en desarrollo no BRIC (Brasil, Rusia, India y China) apenas han sido investigados, y las recomendaciones políticas para aumentar el nivel y la calidad de la TT no se han adaptado a las necesidades específicas de países muy heterogéneos aglutinados bajo el denominado grupo de "países en desarrollo". Esta tesis contribuye a enriquecer el debate sobre la TT de cambio climático con la perspectiva de una economía emergente de pequeño tamaño (Chile) y el análisis cuantitativo de factores que facilitan la TT en una amplia muestra de países en desarrollo. Se utilizan dos metodologías para el estudio de la TT a países en desarrollo: análisis comparativo de casos de estudio y análisis cuantitativo basado en métodos multivariantes. Los casos de estudio analizan procesos de TT en diez casos basados en Chile, para derivar conclusiones sobre los factores que facilitan u obstaculizan el proceso de transferencia. El análisis cuantitativo multivariante utiliza tres metodologías: regresión múltiple, análisis de componentes principales y análisis cluster. Con dichas metodologías se busca analizar el posicionamiento de diversos países en cuanto a factores que facilitan la TT; las relaciones entre dichos factores e indicadores de transferencia tecnológica; y crear grupos de países con características similares que podrían beneficiarse de políticas similares para la promoción de la transferencia de tecnología. Los resultados de la tesis se estructuran en torno a cuatro preguntas de investigación: ¿Que es la transferencia de tecnología y cómo ocurre?; ¿Es posible medir la transferencia de tecnologías de bajo carbono?; ¿Qué factores facilitan la transferencia de tecnologías de bajo carbono a países en desarrollo? y ¿Cómo se puede agrupar a los países en desarrollo en función de sus necesidades políticas para la promoción de la transferencia de tecnologías de bajo carbono?. vi.

(7) Contents 1. INTRODUCTION ............................................................................................................................ 1 1.1 1.2 1.3 1.4. 2. LITERATURE ON CLIMATE CHANGE TECHNOLOGY TRANSFER TO DEVELOPING COUNTRIES ....... 15 2.1 2.2 2.3 2.4 2.5. 3. CONCEPTUALISING TECHNOLOGY TRANSFER ........................................................................................... 16 CHANNELS OF TECHNOLOGY TRANSFER.................................................................................................. 17 MEASURING TECHNOLOGY TRANSFER ................................................................................................... 18 ENABLING FRAMEWORKS FOR CLIMATE CHANGE TECHNOLOGY TRANSFER..................................................... 31 CONCLUSIONS.................................................................................................................................. 43. CHILE’S ENABLING ENVIRONMENT FOR CLIMATE CHANGE TECHNOLOGY TRANSFER................. 46 3.1 3.2 3.3 3.4 3.5 3.6 3.7. 4. INTRODUCTION .................................................................................................................................. 2 INTERNATIONAL POLICY CONTEXT: TECHNOLOGY TRANSFER IN THE UNFCCC .................................................. 3 OBJECTIVES AND RESEARCH QUESTIONS ................................................................................................ 11 STRUCTURE ..................................................................................................................................... 13. INTRODUCTION ................................................................................................................................ 47 OVERVIEW OF CHILEAN ENERGY SYSTEM AND GHG EMISSIONS.................................................................. 47 ECONOMIC AND INSTITUTIONAL FRAMEWORK ........................................................................................ 60 TECHNOLOGY DEMAND FACTORS AND POLICIES....................................................................................... 62 TECHNOLOGY SUPPLY FACTORS AND POLICIES ......................................................................................... 71 INDUSTRIAL DEVELOPMENT FACTORS .................................................................................................... 79 CONCLUSIONS.................................................................................................................................. 84. CASE STUDIES ON CLIMATE CHANGE TECHNOLOGY TRANSFER TO CHILE ................................... 87 4.1 4.2 4.3 4.4 4.5. INTRODUCTION ................................................................................................................................ 88 METHODOLOGY ............................................................................................................................... 89 CASE STUDIES .................................................................................................................................. 97 DISCUSSION................................................................................................................................... 143 CONCLUSIONS................................................................................................................................ 170. 5 QUANTITATIVE ANALYSIS TO ASSESS DEVELOPING COUNTRIES’ POLICY NEEDS FOR CLEAN ENERGY TECHNOLOGY TRANSFER ..................................................................................................... 171 5.1 5.2 5.3 5.4. INTRODUCTION .............................................................................................................................. 172 DATA AVAILABILITY ......................................................................................................................... 176 EXPLORING INDICATORS OF ENABLING FRAMEWORKS FOR TECHNOLOGY TRANSFER ...................................... 190 ANALYSING THE RELATIONSHIP BETWEEN ENABLING FRAMEWORKS AND INDICATORS OF CLEAN ENERGY TECHNOLOGY TRANSFER ............................................................................................................................ 203 5.5 DEFINING GROUPS OF DEVELOPING COUNTRIES PER TECHNOLOGY TRANSFER POLICY PRIORITY ........................ 214 5.6 DISCUSSION AND CONCLUSIONS......................................................................................................... 242. 6. SUMMARY AND CONCLUSIONS................................................................................................ 248 6.1 6.2 6.3 6.4. INTRODUCTION .............................................................................................................................. 249 MAIN FINDINGS ............................................................................................................................. 250 CONTRIBUTIONS AND IMPLICATIONS ................................................................................................... 264 LIMITATIONS AND FUTURE RESEARCH .................................................................................................. 267. 7. REFERENCES ............................................................................................................................. 269. 8. ANNEXES .................................................................................................................................. 282 8.1 8.1 8.2 8.3. CHAPTER 2: TABLES ........................................................................................................................ 283 CHAPTER 3: TABLES ........................................................................................................................ 289 CHAPTER 4. ................................................................................................................................... 290 CHAPTER 5 .................................................................................................................................... 314. vii.

(8) Tables TABLE 1- EFFECTIVENESS OF UNFCCC MECHANISMS IN PROMOTING TECHNOLOGY TRANSFERS ............. 6 TABLE 2- SUMMARY OF REVIEWED APPROACHES FOR MEASURING TECHNOLOGY TRANSFER ............... 29 TABLE 3- OVERVIEW OF PRODUCTIVITY MEASURES ................................................................................. 38 TABLE 4- SUMMARY OF ENABLING FACTORS FOR CLIMATE CHANGE TECHNOLOGY TRANSFER.............. 41 TABLE 5- DETAILS OF INTERVIEWS WITH CHILEAN EXPERTS ..................................................................... 47 TABLE 6- TOTAL INSTALLED CAPACITY IN THE SIC, 2010 ........................................................................... 58 TABLE 7- TOTAL INSTALLED CAPACITY IN THE SING, 2010 ........................................................................ 58 TABLE 8- NCRE PROJECTS APPROVED IN THE SEIA AT JUNE 2010 ............................................................. 59 TABLE 9- NCRE POTENTIALS IN THE SIC IN 2025 ........................................................................................ 59 TABLE 10- AVERAGE ELECTRICITY CONSUMPTION AND TPEC GROWTH BETWEEN 1990-2008 AND 20002008 IN A SAMPLE OF LATIN AMERICAN AND WORLD COUNTRIES ................................................ 64 TABLE 11- SELECTION OF CASE STUDIES .................................................................................................... 94 TABLE 12- INTERVIEW DETAILS .................................................................................................................. 96 TABLE 13- APPROACHES TO MEASURE CLIMATE CHANGE TECHNOLOGY TRANSFER BASED ON CASE STUDY ANALYSIS ............................................................................................................................. 151 TABLE 14- INDUSTRIAL POLICY MEASURES INFLUENCING LINKAGES AND LOCAL INNOVATION ............ 163 TABLE 15- ENABLING FACTORS FOR CLIMATE CHANGE TECHNOLOGY TRANSFER ................................. 168 TABLE 16- MEASUREMENTS OF CLIMATE CHANGE TECHNOLOGY TRANSFER SUGGESTED BY THE LITERATURE REVIEW AND CASE STUDY ANALYSIS ......................................................................... 173 TABLE 17- ENABLING FACTORS SUGGESTED BY THE LITERATURE REVIEW AND THE CASE STUDY ANALYSIS ........................................................................................................................................................ 174 TABLE 18-COMTRADE CLEAN ENERGY TECHNOLOGY IMPORT AND EXPORT DATA CODE DESCRIPTION 176 TABLE 19- DESCRITIVE STATISTICS FOR RENEWABLE ENERGY TECHNOLOGY IMPORT VARIABLES ......... 177 TABLE 20- DESCRIPTIVE STATISTICS FOR RENEWABLE ENERGY TECHNOLOGY EXPORTS ........................ 178 TABLE 21-CORRELATIONS BETWEEN RE CAPACITY, RE ELECTRICITY GENERATION, CDM RE PROJECTS AND CDM RE PROJECTS CO2 EMISSION REDUCTIONS. .......................................................................... 179 TABLE 22- EXTREME VALUES OF CLAIMS OF TECHNOLOGY TRANSFER IN RENEWABLE ENERGY AND NONHYDRO RENEWABLE ENERGY CDM PROJECTS ............................................................................... 179 TABLE 23- DESCRIPTIVE STATISTICS OF RENEWABLE ENERGY CAPACITY INVOLVING TECHNOLOGY TRANSFER ....................................................................................................................................... 180 TABLE 24- SELECTED TECHNOLOGY TRANSFER VARIABLES ..................................................................... 181 TABLE 25- TECHNOLOGY TRANSFER VARIABLES THAT COULD NOT BE INCLUDED ................................. 181 TABLE 26- CORRELATIONS OF CLEAN ENERGY TECHNOLOGY TRANSFER VARIABLES ............................. 183 TABLE 27-FINAL SET OF ENABLING FACTORS .......................................................................................... 187 TABLE 28-FINAL SET OF EXPLANATORY VARIABLES ................................................................................. 190 TABLE 29- SUITABILITY OF PCA THROUGH THE ANALYSIS OF SAMPLE SIZE AND CORRELATIONS AMONG VARIABLES ...................................................................................................................................... 193 TABLE 30- CORRELATIONS OF VARIABLES EXPRESSED IN VALUES PER GDP ........................................... 200 TABLE 31- NUMBER OF VALID CASES FOR DEPENDENT VARIABLES ........................................................ 204 TABLE 32- SUMMARY OF REGRESSION ANALYSIS ................................................................................... 212 TABLE 33- AGGLOMERATION SCHEDULE IN WARD’S CLUSTERING METHOD ......................................... 216 TABLE 34- CLUSTER STRUCTURE’S WARDS METHOD WITH LOGS ........................................................... 219 TABLE 35- ANOVA .................................................................................................................................... 220 TABLE 36-CLUSTER CHARACTERISATION ................................................................................................. 221 TABLE 37- NUMBER OF CASES IN EACH CLUSTER .................................................................................... 223 TABLE 38- ANOVA .................................................................................................................................... 223 TABLE 39-CLUSTER FORMATION WITH K-MEANS.................................................................................... 224 TABLE 40-MEMBERS OF CLUSTER 3 IN THE FIRST ITERATIONS OF WARD’S AND K-MEANS CLUSTERING METHODS ....................................................................................................................................... 228 TABLE 41- MEMBERS OF CLUSTER 2 IN THE FIRST ITERATIONS OF WARD’S AND K-MEANS CLUSTERING METHODS ....................................................................................................................................... 228 TABLE 42- MEMBERS OF CLUSTER 1 IN THE FIRST ITERATIONS OF WARD’S AND K-MEANS CLUSTERING METHODS ....................................................................................................................................... 229 TABLE 43- MEMBERS OF CLUSTER 4 IN THE FIRST ITERATIONS OF WARD’S AND K-MEANS CLUSTERING METHODS ....................................................................................................................................... 230. viii.

(9) TABLE 44-VALUE OF TECHNOLOGY TRANSFER VARIABLES FOR MEMBERS OF WARD’S CLUSTERS WITH LOGS ............................................................................................................................................... 235 TABLE 45-VALUE OF TT VARIABLES FOR MEMBERS OF K-MEANS CLUSTERS WITH LOGS ....................... 238 TABLE 46- MEASUREMENTS OF CLIMATE CHANGE TECHNOLOGY TRANSFER SUGGESTED BY THE LITERATURE REVIEW AND CASE STUDY ANALYSIS ......................................................................... 253 TABLE 47- APPROACHES TO MEASURE PROJECT-LEVEL CLIMATE CHANGE TECHNOLOGY TRANSFER BASED ON CASE STUDY ANALYSIS .................................................................................................. 254 TABLE 48- ENABLING FACTORS SUGGESTED BY THE LITERATURE REVIEW AND THE CASE STUDY ANALYSIS ........................................................................................................................................................ 256 TABLE 49- CHANNELS FOR PRIVATE SECTOR CLIMATE CHANGE TECHNOLOGY TRANSFER .................... 283 TABLE 50- KNOWLEDGE TRANSFER METRICS IN HOI ET AL. (2008)......................................................... 284 TABLE 51- KNOWLEDGE TRANSFER METRICS IN JENSEN ET AL (2009) .................................................... 285 TABLE 52-UNFCCC PERFORMANCE INDICATORS ON TECHNOLOGY TRANSFER ...................................... 286 TABLE 53- UNCTAD INNOVATION CAPABILITY INDEX .............................................................................. 289 TABLE 54- COST OF ELECTRICITY PRODUCTION WITH DIFFERENT TECHNOLOGIES ................................ 300 TABLE 55- LITHIUM-ION BATTERY COST BREAKDOWN ........................................................................... 301 FIGURE 72- WIND POWER CAPACITY, TOP 10 COUNTRIES ...................................................................... 302 FIGURE 73- SOLAR PV EXISTING CAPACITY, TOP SIX COUNTRIES, 2009 .................................................. 304 FIGURE 75- PV SUPPLY CHAIN.................................................................................................................. 307 FIGURE 77- BASIC STRUCTURE OF THE CSP CORE VALUE CHAIN............................................................. 308 FIGURE 79- GLOBAL LITHIUM-ION BATTERY MARKET SHARE, BY COUNTRY AND FIRM ......................... 310 FIGURE 80- PATENTING GROWTH RATES FOR SELECTED CLEAN ENERGY TECHNOLOGIES..................... 311 FIGURE 82- PATENTS AND RESEARCH PAPERS RELATED TO LITHIUM-ION BATTERIES 1998-2007, BY COUNTRY ........................................................................................................................................ 312 TABLE 56- ESTIMATED GLOBAL GAPS IN PUBLIC RD&D SPENDING AND MAIN PRIORITIES FOR TECHNOLOGIES COVERED IN CASE STUDIES .................................................................................. 313 TABLE 57- MODEL RESULTS: EXPORTS OF RENEWABLE ENERGY TECHNOLOGIES PER CAPITA ............... 335 TABLE 58- MODEL RESULTS: IMPORTS OF RENEWABLE ENERGY TECHNOLOGIES PER CAPITA .............. 336 TABLE 59- MODEL RESULTS: RENEWABLE GENERATION CAPACITY WITH TT PER CAPITA ..................... 337 TABLE 60- AGGLOMERATION SCHEDULE ................................................................................................. 338 TABLE 61- CLUSTER STRUCTURE SECOND ITERATION ............................................................................. 341 TABLE 62- ANOVA .................................................................................................................................... 342 FIGURE 86- MEANS PLOT ......................................................................................................................... 343 TABLE 63- CLUSTER CHARACTERISATION ................................................................................................ 343 TABLE 64-CLUSTERS FORMATION IN HIERARCHICAL CLUSTER ANALYSIS ............................................... 345 TABLE 65- NUMBER OF CASES IN EACH CLUSTER .................................................................................... 347 TABLE 66- ANOVA .................................................................................................................................... 347 TABLE 67-CLUSTER FORMATION WITH K-MEANS.................................................................................... 347 TABLE 68- CLUSTERS FORMATION IN NON-HIERARCHICAL, K-MEANS CLUSTER ANALYSIS .................... 350 FIGURE 88- NON-HIERARCHICAL (K-MEANS) CLUSTERING MEANS PLOT FOR SECOND ITERATION WITH NO LOGS ......................................................................................................................................... 352 TABLE 69-MEMBERS OF CLUSTER 1 IN THE SECOND ITERATIONS OF WARDS AND K-MEANS CLUSTERING METHODS ....................................................................................................................................... 353 TABLE 70-MEMBERS OF CLUSTER 2 IN THE SECOND ITERATIONS OF WARDS AND K-MEANS CLUSTERING METHODS ....................................................................................................................................... 353 TABLE 71-MEMBERS OF CLUSTER 3 IN THE SECOND ITERATIONS OF WARDS AND K-MEANS CLUSTERING METHODS ....................................................................................................................................... 354 TABLE 72-MEMBERS OF CLUSTER 4 IN THE SECOND ITERATIONS OF WARDS AND K-MEANS CLUSTERING METHODS ....................................................................................................................................... 354 TABLE 73- CLUSTER DESCRIPTIVES- HIERARCHICAL CLUSTER ANALYSIS FIRST ITERATION ..................... 355 TABLE 74- TUKEY POST-HOC TEST, HIERARCHICAL ANALYSIS, FIRST ITERATION..................................... 356 TABLE 75-CLUSTER DESCRIPTIVES WITH ANOVA, NON-HIERARCHICAL CLUSTER ANALYSIS, FIRST ITERATION ...................................................................................................................................... 358 TABLE 76- POST-HOC TUKEY TEST, NON HIERARCHICAL CLUSTER, FIRST ITERATION ............................. 359. Figures ix.

(10) FIGURE 1- CO2 EMISSIONS FROM ENERGY CONSUMPTION PER COUNTRY .............................................. 48 FIGURE 2 - EVOLUTION OF CHILEAN CARBON INTENSITY ......................................................................... 48 FIGURE 3 - CHILEAN CARBON INTENSITY COMPARED TO CHINA, INDIA, BRAZIL AND SOUTH AFRICA ..... 49 FIGURE 4- CHILE’S PRIMARY ENERGY CONSUMPTION (TERACAL) ............................................................ 49 FIGURE 5- EVOLUTION OF PRIMARY ENERGY CONSUMPTION IN CHILE 2000-2008 ................................. 50 FIGURE 6- SOURCES OF FINAL ENERGY CONSUMPTION IN CHILE 2008 .................................................... 51 FIGURE 7- ENERGY CONSUMPTION PER SECTOR IN CHILE 2008 ............................................................... 51 FIGURE 8- SOURCE OF ENERGY CONSUMPTION PER SECTOR IN CHILE 2008............................................ 52 FIGURE 9- ENERGY CONSUMPTION IN CHILEAN INDUSTRY AND MINING SECTORS 2008 ........................ 53 FIGURE 10- EVOLUTION OF ELECTRICITY GENERATION IN CHILE 1998-2010 ............................................ 53 FIGURE 11- FINAL CONSUMPTION OF ELECTRICITY IN CHILE, 2010 .......................................................... 54 FIGURE 12- FINAL CONSUMPTION OF ELECTRICITY IN CHILE BY MINING AND INDUSTRY SECTORS, 201054 FIGURE 13- ELECTRICITY GENERATION MARKET SHARES IN THE SIC, 2008 .............................................. 55 FIGURE 14- REMUNERATION IN THE CHILEAN ELECTRICITY MARKET ....................................................... 57 FIGURE 15- ECONOMY AND POPULATION SIZES OF A SAMPLE OF LATIN AMERICAN AND WORLD COUNTRIES IN 2008.......................................................................................................................... 62 FIGURE 16- TPES AND ELECTRICITY CONSUMPTION FOR A SAMPLE OF WORLD AND LATIN AMERICAN COUNTRIES IN 2008.......................................................................................................................... 63 FIGURE 17- 2008 TPES PER CAPITA AND PER GDP FOR A SAMPLE OF WORLD AND LATIN AMERICAN COUNTRIES ....................................................................................................................................... 63 FIGURE 18- 2008 ELECTRICITY CONSUMPTION FOR A SAMPLE OF WORLD AND LATIN AMERICAN COUNTRIES ....................................................................................................................................... 64 FIGURE 19- NODAL PRICE 1982-2010 IN CHILE .......................................................................................... 65 FIGURE 20- ELECTRICITY PRICES FOR INDUSTRY IN THE OECD AND A SAMPLE OF DEVELOPING COUNTRIES, 2008 AND 2009 ............................................................................................................ 66 FIGURE 21- ELECTRICITY PRICES FOR HOUSEHOLDS IN THE OECD AND A SAMPLE OF DEVELOPING COUNTRIES, 2008 AND 2009 ............................................................................................................ 66 FIGURE 22- DISTRIBUTION OF CHILEAN CDM PROJECTS AND GHG EMISSION REDUCTIONS PER TECHNOLOGY ................................................................................................................................... 69 FIGURE 23- POPULATION AGED 25-34 AND 55-64 THAT HAS ATTAINED UPPER SECONDARY AND TERTIARY EDUCATION, 2007 (PERCENTAGE) ................................................................................... 71 FIGURE 24 - PISA SCIENCE MEAN SCORE ................................................................................................... 71 FIGURE 25- GROSS EXPENDITURE ON R&D AS A PERCENTAGE OF GDP, 2008 .......................................... 72 FIGURE 26- RESEARCHERS PER THOUSAND EMPLOYED ............................................................................ 73 FIGURE 27- TRIADIC PATENT FAMILIES PER MILLION INHABITANTS IN EMERGING COUNTRIES 2007 ..... 73 FIGURE 28- SCIENCE AND INNOVATION PROFILE OF CHILE....................................................................... 74 FIGURE 29- SCIENCE AND INNOVATION PROFILES OF BRAZIL, CHINA, INDIA AND SOUTH AFRICA .......... 75 FIGURE 30- CHILE´S EXPORT COMPOSITION IN 2006 ................................................................................ 80 FIGURE 31- INDUSTRIAL DEVELOPMENT POSITIONING OF UPPER-MIDDLE INCOME ECONOMIES, 1993 82 FIGURE 32- INDUSTRIAL DEVELOPMENT POSITIONING OF UPPER-MIDDLE INCOME ECONOMIES, 1998 82 FIGURE 33- INDUSTRIAL DEVELOPMENT POSITIONING OF UPPER-MIDDLE INCOME ECONOMIES, 2003 83 FIGURE 34- STEPS IN CASE STUDY RESEARCH ............................................................................................ 90 FIGURE 35- CASE STUDY CHARACTERISTICS .............................................................................................. 95 FIGURE 36- FRAMEWORK OF ANALYSIS FOR CASE STUDIES OF TECHNOLOGY TRANSFER ....................... 97 FIGURE 37- FIBROVENT´S TECHNOLOGY TRANSFER PROCESS .................................................................. 99 FIGURE 38 – FIBROVENT´S WIND BLADE PRODUCTION PLANT PROJECT ................................................ 103 FIGURE 39 - MOLTEN SALTS PROCESSING SYSTEM ................................................................................. 105 FIGURE 40- SQM TECHNOLOGY TRANSFER PROCESS .............................................................................. 105 FIGURE 41- -THE LITHIUM INNOVATION CENTER TECHNOLOGY TRANSFER PROCESS............................ 110 FIGURE 42- MICRO-HYDRO PLUG & PLAY TECHNOLOGY TRANSFER PROCESS ........................................ 116 FIGURE 43- MICRO-HYDRO PLUG & PLAY TURBINE CONCEPT ................................................................ 118 FIGURE 44- KDM TECHNOLOGY TRANSFER PROCESS .............................................................................. 121 FIGURE 45- GENERATORS AT LOMA LOS COLORADOS I POWER PLANT ................................................. 123 FIGURE 46- ENERGÍA DEL SUR TECHNOLOGY TRANSFER PROCESS ......................................................... 125 FIGURE 47- KWB AND BINDER BIOMASS BOILERS DISTRIBUTED BY ENERGIAS DEL SUR ........................ 127 FIGURE 48- THE TECHNOLOGY TRANSFER PROCESS IN ELECTRICA NUEVA ENERGÍA ............................. 129 FIGURE 49- BIOMASA CHILE TECHNOLOGY TRANSFER PROCESS ............................................................ 131. x.

(11) FIGURE 50- BIOMASA CHILE´S WOOD CRUSHING EQUIPMENT .............................................................. 133 FIGURE 51- MNC-GEN TECHNOLOGY TRANSFER PROCESS...................................................................... 135 FIGURE 52- MAINSTREAM CHILE TECHNOLOGY TRANSFER PROCESS ..................................................... 140 FIGURE 53- NEW FINANCIAL SECTOR INVESTMENTS IN CLEAN ENERGY, 2009, US$ BILLION ................. 177 FIGURE 54- LOAD FACTORS OF PRINCIPAL COMPONENTS 1 AND 2 ........................................................ 197 FIGURE 55: LOAD FACTORS OF PRINCIPAL COMPONENTS 1 AND 3 ........................................................ 198 FIGURE 56 - COUNTRY PERFORMANCE PRINCIPAL COMPONENTS 1 AND 2 ........................................... 202 FIGURE 57 - COUNTRY PERFORMANCE PRINCIPAL COMPONENTS 1 AND 3 ........................................... 202 FIGURE 58- AGGLOMERATION COEFFICIENTS ......................................................................................... 217 FIGURE 59- HIERARCHICAL CLUSTERING MEANS PLOT ........................................................................... 221 FIGURE 60- NON-HIERARCHICAL CLUSTERING MEANS PLOT .................................................................. 224 FIGURE 61 HIERARCHICAL (WARD’S) CLUSTERING MEANS PLOT FOR FIRST ITERATION WITH LOGS ..... 227 FIGURE 62- NON-HIERARCHICAL (K-MEANS) CLUSTERING MEANS PLOT FOR FIRST ITERATION WITH LOGS ........................................................................................................................................................ 227 FIGURE 63- MEANS PLOT OF TT VARIABLES FOR WARD’S CLUSTERS WITH LOGS .................................. 233 FIGURE 64- MEDIANS PLOT OF TT VARIABLES FOR WARD’S CLUSTERS WITH LOGS ............................... 234 FIGURE 65- MEANS PLOT OF TT VARIABLES FOR K-MEANS CLUSTERS WITH LOGS ................................ 236 FIGURE 66- MEDIANS PLOT OF TT VARIABLES FOR K-MEANS CLUSTERS WITH LOGS ............................. 237 FIGURE 67- CLUSTER SELECTION FOR TECHNOLOGY TRANSFER RECIPIENT COUNTRIES ........................ 240 FIGURE 68- CLUSTER SELECTION FOR TECHNOLOGY TRANSFER RECIPIENT COUNTRIES ........................ 262 FIGURE 69- ELECTRICITY PRODUCTION COSTS IN 2007, 2020 AND 2030 ................................................ 299 FIGURE 70 - RENEWABLE ENERGY SHARE OF GLOBAL FINAL ENERGY CONSUMPTION, 2008 ................ 301 FIGURE 83- RESIDUALS VS PREDICTED VALUES PLOT OF THE SELECTED MODEL TO EXPLAIN REIMPPCLOG ........................................................................................................................................................ 336 FIGURE 84- RESIDUALS VS PREDICTED VALUES PLOT OF THE SELECTED MODEL TO EXPLAIN REIMPPCLOG ........................................................................................................................................................ 337 FIGURE 85- RESIDUALS VS PREDICTED VALUES PLOT OF THE SELECTED MODEL TO EXPLAIN RECAPTTPCLOG .............................................................................................................................. 338. xi.

(12) 1 Introduction1. 1.1. Introduction 1.2. International policy context 1.3. Objective and research questions 1.4. Thesis structure. 1. Part of this chapter is published in Climate Policy (in Press, available online: 29 Sep 2011). “How to increase technology transfers to developing countries: a synthesis of the evidence”. Authors: Ana Pueyo, Maria Mendiluce, Maria Jesus Sanchez Naranjo and Julio Lumbreras.. 1.

(13) 1.1 Introduction Developing countries are experiencing unprecedented levels of economic growth. As a result they will be responsible for most of the future growth in energy demand and greenhouse gas (GHG) emissions (IEA, 2010). The largest fast-growing countries, such as Brazil, China and India, will cover most of this growth. Therefore, curbing GHG emissions in developing countries has become one of the cornerstones of a future international climate change agreement under the United Nations Framework Convention for Climate Change (UNFCCC). However, setting caps for developing countries’ GHG emissions is facing strong resistance in the current round of negotiations. Continued economic growth that allows poverty eradication is still the main priority of most developing countries, and caps are perceived as a constraint to future growth prospects. The development, transfer and use of lowcarbon technologies have more positive connotations. Technology could guide the path towards achieving sustained growth without compromising the climate. Since its inception, the UNFCCC has recognised the importance of technology transfers (TTs) in achieving the stabilisation of global emissions. In the 13th Conference of the Parties (COP-13), held in 2007 in Bali, technology became one of the four pillars of an expected post-2012 climate change regime. More recently, at COP-16, held in December 2010, the Cancun Agreements decided to establish a technology mechanism (TM) that contains a technology executive committee (TEC) and a climate technology centre and network (CTCN). The objective of the TM is to enhance clean technology development and diffusion. The COP17, held in December 2011 in Durban achieved more concrete outcomes regarding the type of body that the TEC will be, with the adoption of its modalities and procedures. COP17 also adopted the terms of reference (ToR) for the CTCN and requested the CTCN to elaborate its modalities and procedures based in these ToR once it is operational. A decision by the COP on the modalities and procedures of the CTCN is not expected until 2013 in COP19. Besides, the relationship between the TEC and the CTCN and the essential linkage between the TM and the financial mechanism still need to be further elaborated. Other significant initiatives outside of the UNFCCC, such as the ongoing creation of climate innovation centres in developing countries, promoted by the World Bank, also call for research that informs the design of effective TT policies adapted to each country´s circumstances. Unfortunately, so far the success of the UNFCCC process in promoting technology transfer has been limited because the Convention has been entangled in long discussions that have delayed action, while the mechanisms it has created have either failed to materialise in actual TT or have led to progress on a project-by-project basis that has been unable to scale-up to the level required. Additionally, TTs are inherently difficult to define and measure (IPCC, 2000), which makes it difficult to assess the extent of the transfers and their effectiveness in achieving actual emissions reductions and contributing to the technological development of recipient countries. As a result, businesses and developing country policymakers often complain about the long distance between the bureaucratic UNFCCC processes and their actual and urgent needs.. 2.

(14) This thesis is an effort to shed more light on the gaps of the current UNFCCC approach to TT, and to improve understanding of the concept and the measurement of TT, as well as the factors and policies that can enhance them. The thesis focuses on the international transfer of mitigation technologies and particularly on clean energy technologies. It avoids entering the debate about transfers from R&D to commercial stages. Central to this research is the understanding that developing countries are highly heterogeneous and international policies can only be effective if they target the specific needs of each country. 1.2 International policy context: technology transfer in the UNFCCC 1.2.1. Status of technology transfer in international climate change negotiations. TT is an important element of the UNFCCC, is included in several articles of the Convention text (mainly articles 4.1, 4.3, 4.5 and 4.7) and has been part of the agenda at every Conference of the Parties (COP). Since its adoption in 1992, the UNFCCC approach to TT has been based in two notions: •. •. Division of the world into developed and developing countries. The Convention assumes that developed countries have the capacity to undertake research, development, deployment and the transfer of technologies (Article 4.5), while developing country parties are seen as recipients of technologies, know-how and finance as a precondition for action (Article 4.7). Requirement of broad technological support from developed country parties to developing country parties. This includes the transfer of equipment and knowhow, and support for the development and enhancement of endogenous capacities and technologies in developing countries (article 4.5).. At COP 13, held in Bali, technology was identified as one of the four building blocks for a future climate change regime as outlined in the Bali Action Plan. COP 15, held at Copenhagen in 2009, failed to deliver the new binding and ambitious international climate agreement that had been outlined in Bali. Instead, it contributed to fracture static UNFCCC preconceptions about the developing world and to reveal new structures of power (Grubb, 2010), with China particularly, but also India and Brazil, playing a prominent role in drafting the non-binding Copenhagen Accord. COP 15 also portrayed the limitations of multilateral treaties for securing consensus on mitigation commitments, thus unleashing a renewed interest in bilateral agreements and small group agreements including the most powerful countries2. However, Copenhagen achieved some progress in the area of technology because the Copenhagen Accord proposed a technology mechanism (TM) as the basis for subsequent negotiations. Its aim was “to accelerate technology development and transfer in support of action on adaptation and mitigation that will be guided by a country-driven approach and be based on national circumstances and priorities”. This new institution was mainly brought forward by developing countries, specifically the G77 and China, while Annex I countries preferred using or modifying existing institutions (Staley and Freeman, 2009). Financial support was also mentioned in the 2. As declared by Nitin Desai, from the Indian delegation in ‘When Two's Company’, Times of India, 4 January 2010.. 3.

(15) Copenhagen Accord through $30 billion in fast-track funding from developed to developing countries for the period 2010-2012 and the creation of a green fund, mobilising $100 billion a year by 2020. However, it was not clear what part of these funds would be available for TT. The Cancun Agreements of COP 16 in December 2010 placed the Copenhagen Accord under the auspices of the UN, with the approval of the 193 countries working under the Convention. Much work still needs to be done to establish a comprehensive, longterm framework for controlling GHG emissions, particularly on the definitions of emission reduction targets and timetables. Nonetheless, significant outcomes were achieved, including the decision to establish a TM, including a TEC and a CTCN that should be fully operational by 2012. Provisions relating to the establishment of the TM are contained in Section IV B of Decision 1/CP.16 of COP 16 of the “Cancun Agreements” (UNFCCC, 2010a). Its objective is to “facilitate the implementation of actions” and “to accelerate action consistent with international obligations” at different stages of the technology cycle (UNFCCC, 2010a). Funding availability for the TM, as well as the institutional arrangements for allocating these funds, are still under discussion, and eligibility criteria for countries and technologies have not yet been addressed. COP 17 held in Durban in November-December 2011 achieved some progress by approving the modalities and procedures of the TEC and approving the ToR of the CTCN, encouraging the latter to elaborate its modalities and procedures. However, the issues of finance availability and relationships between different institutions still need to be resolved. After some divergences between developing and developed country views on the impact of intellectual property rights (IPRs) in TT, there was no mention about IPRs in the final text approved in Cancun, i.e. they were not central to any country’s proposals. However, developing and developed countries have offered passionate views on this matter in that developed countries consider IPRs as essential in promoting innovation, while in contrast some developing countries proclaim that IPRs deter TT and have proposed compulsory licensing of certain clean technologies (defended by China and India). Still, some of the emergent economies have softened their stance towards IPRs, as they have increased their ownership of climate change technologies (Staley and Freeman, 2009) Throughout the negotiations, the significant role of the private sector and the need of policy reforms in developing countries to encourage private investment have been stressed by developed countries. Developing country submissions to the UNFCCC negotiations have instead focused on requesting developed countries to meet their responsibility to provide finance and technology (WRI, 2009; Marcellino and Gerstetter, 2010). Annex IV of the Cancun Agreements mentions that the Technology Executive Committee should seek input from the private sector and civil society, which has moved the need to include the private sector from the main text of the Bali Action Plan to an Annex that suggests that it is not foreseen as a priority. 1.2.2. The Effectiveness of existing UNFCCC technology transfer catalysts. The UNFCCC has used three main types of catalysts of climate change TT to developing countries: •. Institutions, namely the Expert Group of Technology Transfer (EGTT); 4.

(16) •. •. The creation and diffusion of information through technology needs assessments (TNAs) and the technology transfer information clearing house TT:CLEAR; and Financial vehicles like the global environment facility (GEF) and the Clean Development Mechanism (CDM).. The EGTT was created in 2001 to report to the Subsidiary Body for Technological and Scientific Advice (SBSTA), with the objective of enhancing the implementation of Article 4.5 of the Convention, including, inter alia, analysing and identifying ways to facilitate and advance TT activities. In Bali, the EGTT was asked to also report to the Subsidiary Body for Implementation (SBI) and was given the task of preparing reports on performance indicators (FCCC/SB/2009/4), financial needs (FCCC/SB/2009/2) and future strategy (FCCC/SB/2009/3). At the request of the G77 and China (IISD, 2006), a new technology mechanism was considered in the Copenhagen Accord and decided in the Cancun Agreements to succeed the EGTT. TNA is a systematic approach used to “identify, evaluate, and prioritise technological means for achieving sustainable development in developing countries, increasing resilience to climate change, and avoiding dangerous anthropogenic climate change” (UNDP, 2009). TNAs are country-driven activities, undertaken within the UNFCCC framework and supported by the GEF, the United Nations Development Programme (UNDP) and the United Nations Environment Programme (UNEP) as funders and coordinators. The CDM was created by the Kyoto Protocol (1997) to reduce the cost of compliance for Annex I countries by taking advantage of cheaper emission reduction opportunities in non-Annex I parties and to support sustainable development in these host countries. The GEF is the financial arm of the UNFCCC, as well as other UN Conventions, and it provides grants to developing countries and nations with economies in transition for projects related to biodiversity, climate change, international waters, land degradation, ozone layer depletion and persistent organic pollutants. Neither the CDM nor the GEF were created with the aim of funding TT, but they have done so indirectly. The success of UNFCCC efforts to promote TT has been limited. The EGTT has been criticised for delaying hard but necessary decisions to enhance TT and for the lack of expertise of its political representatives (SC & CIEL, 2008). TNAs have identified potential projects but these have failed to materialise in implementation. The GEF has only a limited budget, which has resulted in a lower scale than the market-based CDM. A recent study shows that 40% of CDM projects accounting for 59% of estimated emission reductions (roughly 335 MtCO2/ year) claim to involve TT3 (Seres et al., 2010). The CDM has contributed to technology diffusion, reducing the payback period and improving the internal rate of return (IRR) of clean technology projects (Hansen, 2008; Ang, 2009). However, the CDM as a vehicle for technological change has been widely 3. Data in Seres et al. (2010) about TT in CDM projects rely on TT claims made by project participants in the Project Design Documents (PDDs) of 4,984 projects that were in the CDM pipeline as of 30 June 2010. Only the projects for which the PDD explictly states whether or not TT is expected or not are considered to calculate percentages. These claims are subject to uncertainty as they are not based on a common definition of TT and they have not gone through verification unless they belong to the additionality test. Also, they refer to projects often at the design stage, which may not be successfully implemented and hence may not deliver emission reductions.. 5.

(17) criticised in the literature. Firstly, it has not built to the scale required to meet the stabilisation challenge (UNFCCC, 2008; McKinsey & Company, 2009). Secondly, its project-based nature does not foster the large-scale deployment of mitigation technologies or the promotion of innovation in host countries (Staley and Freeman, 2009). Thirdly, many of the emission reductions achieved by the CDM are not “additional”, meaning that they would have happened anyway and should not be financially supported (Wara, 2009). Several studies of TT in Chinese, Indian, Brazilian and Malaysian CDM projects show that certified emissions reductions (CERs) income was rarely the primary reason why the projects were developed, because of the uncertainty of carbon income and long CDM registration time lags (Hansen, 2008; Wang, 2010; Lewis, 2007; Hultman et al., 2010; He and Morse, 2010). Finally, CDM projects have concentrated on the largest emerging economies, while African countries and other least developed countries (LCDs) have been largely ignored (Unep Risøe, 2010). Table 1 summarises the main achievements and pitfalls of these mechanisms in the promotion of TT. TABLE 1- EFFECTIVENESS OF UNFCCC MECHANISMS IN PROMOTING TECHNOLOGY TRANSFERS. Instrument EGTT. TNA. CDM. Achievements. Pitfalls. • Improvement in the understanding of financial and capability gaps to enhance TT through a number of reports and workshops • Enhanced dialogue with the private sector since 2009 • 68 TNAs prepared and more than 200 project proposals and ideas • Identification of in-country capacity gaps in developing countries • Attempt to turn proposals into specific projects through a recent call for proposals for TT pilot projects • 40% of CDM projects (1,516 projects), accounting for 59% of estimated emission reductions (roughly 335 MtCO2/ year) claim to involve TT (Seres et al., 2010). • The CDM has contributed to technology diffusion, reducing the payback period and improving the internal rate of return (IRR) of clean technology projects (Hansen, 2008; Ang, 2009). • Members are political appointees instead of experts in TT, IPR or clean technologies (South Centre and CIEL, 2008) • Considered by the G77 plus China (IISD, 2006) as a mere fact-finding mechanism that has delayed hard but necessary decisions to enhance TT • No projects or programmes from the TNAs have yet been implemented • Lack of coordination between the TNA process and national planning processes • Absence of a systematic approach for financing. • Data on funding and emission reductions of CDM projects involving TT are not systematically collected 4 • Quality of CDM TT is not systematically assessed • Finance flows channelled by the CDM account for a small share of the estimated funding needed to reduce emissions in developing countries (UNFCCC 2010) • The reductions achieved by the CDM are not always “additional”, meaning that they would have happened anyway and should not be financially supported (Wara, 2009) • The CDM usually contributes to diffuse low-risk technologies at the later stages of maturity. 4. TT quality can be defined as the degree to which it raises the recipient´s technological know-how and capacity to innovate (Popp, 2008; Schneider et al., 2008). 6.

(18) Instrument. Achievements. • A significant share of the budget is allocated to projects in least-developed countries and innovative technologies (Peterson, 2008).. GEF. 1.2.3. Pitfalls • CDM financing has not filled the gaps left by the private sector, concentrating on China, India and Brazil and in low risk technologies (UNEP Risø, 2010) • The project-based nature of the CDM does not foster the large-scale deployment of mitigation technologies or the promotion of innovation in host countries (Staley and Freeman, 2009) • Small budget (190 MUSD in 2009) compared to CDM financing and to other funds • Most emission reductions achieved in big projects in China, Brazil, India and Russia, therefore not filling the gaps left by the private sector (Peterson, 2008).. The Technology Mechanism. The Technology Mechanism is ultimately placed “under the guidance of the COP”. In general, the wording of the technology mechanism’s mandate appears rather intricate and convoluted compared to previous formulations in the negotiations. In the definition of the role of the TM, The COP has underlined “the importance of nationally determined technology needs, based on national circumstances and priorities, the setting of appropriate enabling environments to scale up the development and transfer of technologies in developing countries and the need to accelerate action at different stages of the technology cycle”5 The COP 16 decision lists a number of ‘priority areas’ to be considered under the Convention: •. • • • • • •. Development and enhancement of endogenous capacities and technologies of developing country parties, including cooperative research, development and demonstration programmes; Deployment and diffusion of environmentally sound technologies and knowhow in developing country parties; Increased public and private investment in technology development, deployment, diffusion and transfer; Deployment of soft and hard technologies for the implementation of adaptation and mitigation actions; Improved climate change observation systems and related information management; Strengthening of national systems of innovation and technology innovation centres; and Development and implementation of national technology plans for mitigation and adaptation. 5. Draft decision [-/CP.17] on the Outcome of the work of the Ad Hoc Working Group on Long-term Cooperative Action under the Convention. Durban, 2011.. 7.

(19) In order to operationalise the mechanism, the parties established the Technology Executive Committee (TEC) to oversee it, to facilitate between governments and the private sector and to recommend actions to address barriers to technology development and transfer. Furthermore, the parties established the Climate Technology Centre and Network (CTCN) to “facilitate a network of national, regional, sectoral and international technology networks, organisations and initiatives”. At COP 16 in Cancun, the parties decided that the TEC would comprise twenty experts elected by the COP, serving in their personal capacity and nominated by the parties. Nine of the twenty experts should come from Annex I countries, nine from non-Annex I countries, three per region (Africa; Asia and the Pacific; and Latin America and the Caribbean), one from a small island developing state and one from an LDC. The TEC would make decisions drawing upon outside expertise, including that provided by the CTCN and the private sector. Ahead of COP17 in December 2011, The Technology Executive Committee had its first meeting from 1st-3rd September 2011, in order to elect its members and elaborate on its modalities and procedures, which would be considered at COP 17 in Durban. A background paper on its modalities was published for this meeting (TEC, 2011). The modalities and procedures of the TEC were adopted by COP17 in Durban6. They establish the following six key elements of the modalities of the TEC: a. Analysis and synthesis; including mainly the elaboration of technology outlooks, technical papers on specific policies and technical issues and regular overview of existing technology development and transfer initiatives, activities and programmes. b. Policy recommendations; mainly to the COP as regards actions, policies and programmes to promote technology development and transfer. c. Facilitation and catalysing; through the promotion of collaborations with relevant organisations, organising forums and workshops to share knowledge. d. Linkage with other institutional arrangements; inside and outside the Convention. e. Engagement of stakeholders; through issue-based engagement channelled through work programmes. Stakeholders can be involved through their participation in TEC meetings as observers or expert advisors or through other models such as consultative groups or stakeholder forums. f. Information ad knowledge sharing; including the upgrade of TT:CLEAR with an expanded and more strategic focus. As defined in the adopted modalities and procedures of the TEC, it will mainly have an advisory role. Its functions are quite general and its mandate does not seem to go far beyond what has already been done by the existing EGTT, which was considered by developing countries as a “mere fact finding mechanism that has delayed hard but necessary decisions to enhance TT” (IISD, 2006). Besides, the relationships between the TEC and the CTCN, and the linkage between the technology mechanism and the financial mechanism, are still under negotiation.. 6. Draft decision -/CP.17- Technology Executive Committee – modalities and procedures. Advanced unedited version, Durban, December 2011.. 8.

(20) The CTCN has not yet developed its modalities and procedures. COP 17 agreed the ToR of the CTCN and requested it to elaborate its modalities and procedures once it would be fully operational, presumably by 2012. According to the agreed text in Durban, the COP is not expected to make a decision on the modalities and procedures of the CTCN until COP19 to be held by the end of 2013. The main aim of the CTCN is to provide services to developing countries at their request, consistently with their respective capabilities and national circumstances and priorities. Some of the roles considered for the CTCN in the ToR approved in Durban are: a) Identifying currently available climate-friendly technologies for mitigation and adaptation that meet their key low-carbon and climate-resilient development needs; b) Facilitating the preparation of project proposals for the deployment, utilization and financing of existing technologies for mitigation and adaptation; c) Facilitating adaptation and the deployment of currently available technologies to meet local needs and circumstances; d) Facilitating research, development and demonstration of new climate-friendly technologies for mitigation and adaptation, which are required to meet the key objectives of sustainable development; e) Enhancing national and regional human and institutional capacity to manage the technology cycle; f) Helping to facilitate the financing of the previous activities through various sources including the financial mechanism of the Convention, bilateral, multilateral and private sector channels, philanthropic sources as well as financial and in-kind contributions from the host of organization and participants in the Network; g) The most original and challenging function of the CTCN is the facilitation of a network of national, regional, sectoral and international technology centres, networks, organisations and initiatives. However, there is ambiguity in the term “facilitate” in this and all the above functions, and it is not clear what the role of the CTCN will be in achieving such a network. Moreover, there are some overlaps between the activities of the CTCN and the TEC. . 1.2.4. The Prospects of UNFCCC instruments in promoting climate change TT to developing countries post-2012. Lack of clarity about the functions, institutional design and funding of the new TM decided in the Cancun Agreements may render it futile in enhancing TT beyond what the existing instruments of the UNFCCC have been able to achieve. The new TM could potentially achieve higher rates of TT to developing countries if some gaps in the current UNFCCC approach were addressed. First, the UNFCCC deals with TT as a government-to-government process, urging developed country parties to support technological development in developing countries (as Article 4.5 of the Convention insists) and providing guidelines to developing countries on how to prioritise technological means for achieving lowcarbon development paths (through the Technology Needs Assessment handbook). 9.

(21) Decisions in the EGTT were made by political appointees instead of experts with firsthand experience in the development and transfer of climate change technologies, and no significant efforts have been made to engage the private sector in the definition of an effective technology policy (UNCTAD, 2010; WBCSD 2010). This approach neglects the key role of the private sector as the owner of most of the climate change mitigation technology and responsible for most international TT through trade and foreign direct investment (FDI) (Stern, 2007; Brewer, 2009; WB, 2009). The new technology mechanism will seek expertise from external parties, including all kinds of observers, many of whom will be from the private sector. However, no specific position is given to the private sector in the institutional arrangements of the TM, which is therefore expected to provide ad hoc advice when required. The members of the TM will still be political appointees, as in the preceding EGTT, and its functions are vague and confusing. The UNFCCC process appears disconnected from the enabling frameworks that facilitate private investment, and until recently it has not attempted to understand strategic business decisions regarding TT. On the one hand, existing instruments used to promote TT (EGTT, TNA, CDM, GEF) are not integrated into national planning processes. When they materialise on specific TT, it is done on a project basis that does not permeate the rest of the economy. These mechanisms seem insufficient for removing existing barriers, leverage a great amount of private investment and promote endogenous technologies in developing countries. The updated TNA handbook recognises the need to step away from the project-based approach and considers TT in light of long-term visions (UNDP, 2009). In addition, the new TM does not directly support the development and implementation of national policies for technology development and adoption by developing countries themselves. Besides, the absence of globally binding emission reduction targets after the COPs in Copenhagen, Cancun and Durban, and the sluggishness and inefficiency of international climate change negotiations, have not provided the strong signals necessary to stimulate private sector investment in low-carbon technologies in developing countries. Second, the UNFCCC discourse is based on a north-south TT paradigm that divides the world into two blocks: technologically active and passive (Brewer, 2008; Cannady, 2009). Observation of actual technology flows shows that this simplistic paradigm no longer holds. In an increasingly interconnected world, a group of large and dynamic developing countries are actively absorbing foreign technologies and developing and transferring endogenous ones. FDI data compiled by the World Investment Report 2010 (UNCTAD, 2010) shows that over a quarter of greenfield investments in alternative/renewable power generation were placed in developing economies. Nearly 10 per cent of renewable power generation investment projects were made by trans-national companies (TNCs) from developing countries, the bulk of which were south-south oriented. More illustrative is the case of greenfield investments in the manufacturing of clean energy technology products such as wind turbines, solar panels or biodiesel plants. Developing economies attracted nearly half of the projects in this industry over 2003-2009 and have surpassed developed countries in the last two years (UNCTAD, 2010). Still, performance across developing countries is highly unequal, with most investment 10.

(22) concentrated in China, India and Brazil, three of the so-called BRIC economies7. The first two countries host nearly 20 per cent of the world’s wind power generation capacity (WB, 2009) and are world leaders in a variety of climate-friendly technologies. The diverse performance of the CDM across developing countries reflects a similar pattern to FDI. China has the largest amount of CDM projects, distantly followed by India and Brazil. These three countries held 72% of the CDM projects and 77% of the associated GHG emission reductions as of June 2010 (Unep Risøe, 2010), while African countries and LDCs were largely ignored. As regards TT facilitated by the CDM, a recent study shows that China, India and Brazil have a lower than average TT rate (Seres et al., 2010), and while BRIC countries use mostly local knowledge or equipment, the rest of the host countries are more dependent on foreign technology to implement CDM projects. The same study shows that non-Annex I countries supply technology to 15% of CDM projects involving TT. China is among the top five technology suppliers, ahead of many developed economies, while India and Brazil also hold a significant share (Seres et al., 2010). These figures show that the Convention mechanisms have not addressed the specific need of different developing countries to attract foreign climate change technologies; instead they have behaved similarly to international private investment flows. The decision creating the technology mechanism emphasises the need for countryspecific policies to promote technology transfer through multiple references to national needs, circumstances and country-driven approaches, and by declaring that “technology needs must be nationally determined, based on national circumstances and priorities”(UNFCCC, 2010), although its functions do not directly support national action. Additionally, there are no systematic measurements for the magnitude and effectiveness of climate change TT to developing countries. Clear measurements of technology transfer are necessary to assess the effectiveness with which different developing countries assimilate foreign technologies. They can also provide policymakers with valuable information about the most appropriate channels for lowcarbon technology transfer. In the current stage of the international climate change negotiations, where developed countries have committed funds to support low-carbon development in developing countries, the measurement of technology transfer will also be essential because it will enable the definition of eligibility criteria for technology funds, the assessment of their effectiveness and support policymakers to make informed decisions about where to allocate available finance. 1.3 Objectives and research questions The broad objective of this doctoral thesis is to improve current understanding about what constitutes TT in the field of climate change, what are the factors that enable TT in developing countries and which policies could be implemented to reinforce these factors. It also analyses different approaches to measuring TT and its enabling factors, assesses existing statistical sources and shows their limitations. This broad objective can be divided into a set of research questions: 7. The term “BRIC countries” was coined by Goldman Sachs to refer to Brazil, Russia, India and China as a group of large and fast-growing economies.. 11.