METHODOLOGICAL AND TECHNOLOGICAL ISSUES IN TECHNOLOGY...

Effective global response to climate change requires the development and transfer of environmentally sound technologies betweenand within countries, both for adapting to climate change as well as for mitigating the effects of greenhouse gas emissions. This SpecialReport of the Intergovernmental Panel on Climate Change (IPCC) provides a state-of-the-art overview of how to achieve and enhancethis transfer. 185 eminent experts from around the world provide accurate, unbiased, policy-relevant information on technology trans-fer, such as capacity building, the promotion of an enabling environment, and mechanisms for technology transfer from developedto developing countries. The transfer of both hardware as well as software (knowledge) is discussed, and the importance of the involve-ment of various stakeholders is emphasised. The report was written in response to the request of the Subsidiary Body on Scientificand Technological Advice (SBSTA) of the United Nations Framework Convention on Climate Change.

This IPCC Special Report is the most comprehensive assessment available on technology transfer, and provides information to serveindustry, policy-makers, environmental organisations, and researchers in global change, technology, engineering and economics.

Bert Metz is Co-Chair of IPCC Working Group III and Head of the Global and European Environmental Assessment Division ofthe National Institute of Public Health and Environment, Bilthoven, The Netherlands.

Ogunlade R. Davidson is Co-Chair of IPCC Working Group III and Dean of the Faculty of Engineering and Professor ofMechanical Engineering at the University of Sierra Leone.

Jan-Willem Martens is a member of the IPCC Working Group III Technical Support Unit and works as an energy economist at theNetherlands Energy Research Foundation, Petten/Amsterdam, The Netherlands.

Sascha N. M. van Rooijen is a member of the IPCC Working Group III Technical Support Unit and works as an environmental econ-omist at the Netherlands Energy Research Foundation, Petten/Amsterdam, The Netherlands.

Laura Van Wie McGrory was a member of the IPCC Working Group II Technical Support Unit and currently works as a scien-tific engineering associate at the Lawrence Berkeley National Laboratory in Washington, DC, USA.

METHODOLOGICAL AND TECHNOLOGICAL ISSUES IN TECHNOLOGY TRANSFER

Methodological andTechnological Issues inTechnology Transfer

A Special Report of IPCC Working Group III

Published for the Intergovernmental Panel on Climate Change

Edited by

Bert Metz

Ogunlade R. Davidson

Jan-Willem Martens

Sascha N.M. van Rooijen

Laura Van Wie McGrory

This report is dedicated to

John Turkson, GhanaLead Author, Chapter 4 and 5

Dr John Turkson died at the age of 46 years on a plane crash while he was en route to establish a CDM Pilot project in Uganda.He was a Senior Energy Economist at the UNEP Collaborating Centre for Energy and Environment at RISØ National Laboratoryin Denmark. Before joining RISØ, he was a lecturer at the University of Science and Technology, Kumasi, Ghana. John was oneof the few well-known energy economists on the African continent who published extensively in international journals, confer-ence proceedings and books in the international fora on energy economics and climate change. He has initiated several regionalprojects in energy and climate change in Africa because of his belief that the climate change debate provides an opportunity fortransforming African economies to more sustainable development paths.

His keen sense of duty earned him respect of colleagues he had worked with and helped him to build a network of eminent ener-gy specialists and economists not only from Ghana, but from all over Africa and beyond. He was married to Gifty who no doubthad to bear the intensity with which John normally took his work. He will be missed, but his contribution to IPCC will always beremembered by his colleagues and friends.

PUBLISHED BY THE PRESS SYNDICATE OF THE UNIVERSITY OF CAMBRIDGEThe Pitt Building, Trumpington Street, Cambridge, United Kingdom

CAMBRIDGE UNIVERSITY PRESSThe Edinburgh Building, Cambridge CB2 2RU, UK www.cup.cam.ac.uk40 West 20th Street, New York, NY 10011-4211, USA www.cup.org10 Stamford Road, Oakleigh, Melbourne 3166, AustraliaRuiz de Alarcón 13, 28014 Madrid, Spain

©Intergovernmental Panel on Climate Change 2000

This book is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements,no reproduction of any part may take place withoutthe written permission of Cambridge University Press.

First published 2000

Printed in the United States of America

A catalog record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data available

ISBN 0 521 80082 X hardback ISBN 0 521 80494 9 paperback

Contents

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ix

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xi

Summary for Policymakers: Methodological and Technological Issues in Technology Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Technical Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Section I: Framework for Analysis: Technology Transfer to address Climate Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45

1. Managing Technological Change in Support of the Climate Change Convention: A Framework for Decision-making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

2. Trends in Technology Transfer: Financial Resource Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .673. International Agreements and Legal Structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .834. Enabling Environments for Technology Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1055. Financing and Partnerships for Technology Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .143

Section II: Technology Transfer: Sectoral Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .175

6. Introduction to Section II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1777. Residential, Commercial, and Institutional Buildings Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1838. Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2019. Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21910. Energy Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24111. Agricultural Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26912. Forestry Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29113. Solid Waste Management and Wastewater Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31314. Human Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32915, Coastal Adaptation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .349

Section III: Case Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .373

16. Case Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .375

Annexes:A. Section Coordinators, Coordinating Lead Authors, Lead Authors, Contributing Authors,

Review Editors and Expert Reviewers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .445B. Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .455C. Acronyms and Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .461D. List of Major IPCC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .465

ForewordThe Intergovernmental Panel on Climate Change (IPCC) wasjointly established by the World Meteorological Organization(WMO) and the United Nations Environment Programme(UNEP) to asses available information on the science, impactsand the economics of climate change and of mitigation optionsto address it. It provides also, on request, scientific/technical/socio-economic advice to the Conference of the Parties (COP) tothe United Nations Framework Convention on Climate Change(UNFCCC). Since its inception the IPCC has produced a seriesof Assessment Reports, Special Reports, Technical Papers,methodologies and other products which have become standardworks of reference, widely used by policymakers, scientists andother experts.

This Special Report has been prepared by IPCC Working GroupIII in response to a request by the Subsidiary Body for Scientificand Technological Advice (SBSTA) to the UNFCC. Innovationand enhanced efforts to transfer environmentally sound tech-nology to limit greenhouse gas emissions and to adapt to climatechange will be required to meet the objective of the ClimateConvention and to reduce vulnerability to climate change impacts.The report addresses the technology transfer problem in the con-text of climate change while emphasizing the sustainable devel-opment perspective. Technology transfer is defined as the broadset of processes covering the flows of know-how, experience andequipment and is the result of many day-to-day decisions of thedifferent stakeholders involved. A number of social, economic,political, legal, and technological factors influence the flow andquality of technology transfer. Essential elements of successfultransfers include consumer and business awareness, access toinformation, availability of a wide range of technical, business,management and regulatory skills locally, and sound economicpolicy and regulatory frameworks. Technology transfers thatmeet local needs and priorities are more likely to be successful.But there is no pre-set answer to enhancing technology transfer.Interactions and barriers vary according to sector, type of tech-nology and country, and recent trends in international financialflows that drive technology transfer are altering the relativecapacities and roles of different stakeholders. Policy actions

therefore need to be tailored to the specific context and interests.The report elaborates on what governments can do to facilitateand enhance the transfer of Environmentally Sound Technologies,but it also aims at reaching decision makers in the private sector,lending institutions, multilateral agencies, non-governmentalorganizations, and the interested public.

As usual in the IPCC, success in producing this report has depend-ed first and foremost on the enthusiasm and cooperation of sci-entists and other experts worldwide. These individuals havedevoted enormous time and effort to producing this report and weare extremely grateful for their commitment to the IPCC process.

We would like to express our sincere thanks to:• Robert T. Watson, the Chairman of the IPCC; • The Co-chairs of Working Group III Bert Metz and

Ogunlade Davidson;• The Section Coordinators Kilaparti Ramakrishna, Jayant

Sathaye, Youba Sokona, William Chandler, Stephen O.Andersen and Ajay Mathur;

• The staff of the Working Group III and II TechnicalSupport Units, including Rob Swart, Ms Sascha vanRooijen, Jan-Willem Martens, Ms Laura VanWieMcGrory, Ms Flo Ormond and Marlies Kamp;

• N. Sundararaman, Secretary of the IPCC, Renate Christ,Deputy Secretary of the IPCC and the staff of the IPCCSecretariat Rudie Bourgeois, Chantal Ettori and AnnieCourtin.

G.O.P. Obasi

Secretary-GeneralWorld Meteorological Organisation

K. Töpfer

Executive DirectorUnited Nations EnviromentProgrammeand Director-GeneralUnited Nations Office in Nairobi

PrefaceThe Intergovernmental Panel on Climate Change (IPCC) wasestablished jointly by the World Meteorological Organisation(WMO) and the United Nations Environment Programme(UNEP) to assess periodically the science, impacts and socioe-conomics of climate change and of adaptation and mitigationoptions. The IPCC provides, on request, scientific and technicaladvice to the Conference of Parties (CoP) to the United NationsFramework Convention on Climate Change (UNFCCC) and itssubsidiary bodies. The CoP at its first session in Berlin 1995requested the IPCC to include in its assessments an elaborationof the terms under which transfer of environmentally sound tech-nologies and know-how could take place.

As a further elaboration of the COP-1 request, IPCC was request-ed by the Subsidiary Body for Scientific and TechnologicalAdvice (SBSTA) to prepare a Technical Paper on methodologi-cal and technological aspects of technology transfer (seeFCCC/SBSTA/ 1996/8, Annex III). The objective of the paperwould be to synthesise information from the Second AssessmentReport on experiences with:

(i) types of transfer, technology evaluation, and options;(ii) sectors targeted;(iii) role of participants (for example governments, private

sector, IG0s, NG0s);(iv) approaches to promote co-operation;(v) issues related to capacity building.

According to IPCC procedures, Technical Papers should bebased on material already present in the IPCC reports. However,the Second Assessment Report did not contain sufficient infor-mation to prepare a Technical Paper that would address the ques-tions raised. Therefore, the IPCC decided at its Twelfth PlenarySession in Mexico City to prepare a Special Report onMethodological and Technological Issues in Technology Transfer.

In order to provide structure in the wide variety of subjects, thewriting team chose to divide the Report in three sections:

Section I provides a framework for analysis of the complex andmulti-facetted nature of the technology transfer process, empha-sising the sustainable development perspective. It examinesbroad trends of technology transfer in recent years, explores theinternational political context, discusses policy tools for over-coming key barriers and creating enabling environments andprovides an overview of financing and partnerships.

Section II provides a sectoral perspective on the transfer of adap-tation and mitigation technologies. Every chapter discusses theprevalent climate mitigation and adaptation technologies, themagnitude of current and future transfers, technology transferissues within and between countries and the lessons learned in thatparticular sector.

Section III includes a wide variety of case studies to illustrate theissues discussed in section I and II and demonstrates the dis-tinctive problems and special opportunities that stakeholders arelikely to encounter in dealing with technology transfer.

In accordance with the wide scope of technology transfer, theteam of authors put together to prepare the report represented amultitude of disciplines and a broad geographical distribution.The writing team consisted of 8 Section Coordinators, 24Coordinating Lead Authors, 120 Lead Authors and 53Contributing Authors. In accordance with the revised IPCCProcedures, 20 Review Editors were appointed to oversee thereview process.

Over 180 Expert and Government Reviewers submitted valuablesuggestions for improvement during the review process. All thecomments have been afforded appropriate consideration by thewriting team and genuine scientific controversies have beenreflected adequately in the text of the report as confirmed in theReview Editors report. The revised document was submitted tothe Working Group III Plenary in Kathmandu, Nepal, that tookplace from 8 to 10 March, 2000. There, the Summary forPolicymakers was approved in detail and the underlying reportaccepted. The IPCC Plenary finally accepted the report and theSummary for Policy makers during its Sixteenth Session that tookplace in Montreal, Canada, from 1-8 May 2000.

We wish to commend all Section Coordinators, CoordinatingLead Authors, Lead Authors, Contributing Authors and allReview Editors for all the effort they put into the compilation ofthis Report and deeply appreciate the commitment they haveshown.

It is with profound sadness and regret that we have to convey themessage that three of our dear colleagues and team memberspassed away during the writing process of this Report: KatsuoSeiki (August 1998), David Hall (August 1999) and John Turkson(January 2000). They were highly appreciated members of theteam, John Turkson as Lead Author of Chapter 4 and 5 andDavid Hall as review editor of Chapter 12. Katsuo Seiki wasenvisaged CLA of then Chapter 18 and showed as a Vice-Chairof IPCC much interest in the issue of technology transfer. We willremember their excellent work and enjoyable personalities.

We are grateful to:• The Tata Energy Research Institute in New Delhi, India,

and in particular Dr. Pachauri, the Director and vice chairof IPCC for hosting the first Lead Authors meeting;

• The United Kingdom Climate Impact Programme of theEnvironmental Change Unit at the University of Oxford,United Kingdom, for hosting the second Lead Authorsmeeting with the support of the United KingdomDepartment of Environment, Transport and the Regions;

• The Department of Hydrology and Meteorology of the

Government of Nepal, for hosting the Fifth Plenary of theIPCC Working Group III from 8 to 10 March, 2000,where the Summary for Policymakers was approved lineby line and the underlying Report accepted.

We would finally like to express our gratitude to the three suc-cessive Report Co-ordinators at the Technical Support Units:Laura van Wie-McGrory (TSU WG II), and Sascha van Rooijenand Jan-Willem Martens (TSU WG III) for their never endingdedication to get the report in its current shape. We thank FloOrmond of the Technical Support Unit of Working Group II andMarlies Kamp of the Technical Support Unit of Working GroupIII for their invaluable support throughout the preparation of theReport. Also other members of the Technical Support Units ofWorking Group II and III have provided much appreciated assis-tance, including Rob Swart, Anita Meier, Jiahua Pan, RemkoYbema and Dave Dokken. Dr. N. Sundararaman, Secretary of theIPCC, and the staff of the IPCC Secretariat in Geneva ensured theessential services of providing government liaison and travel ofexperts from the developing and transitional economy countriesas well as making the arrangements with the Government ofNepal. We are also grateful to Renate Christ, Deputy Secretary ofthe IPCC, for her substantive inputs on various occasions duringthe preparation of the Report.

We would like to encourage the readers, which include policy-makers, scientists, managers, professionals and academics, toevaluate the contents of this work, adjust it to their own conditionsand ensure a rapid and widespread replication of its lessonsacross the world. We sincerely hope that this Report will thus con-tribute to the widespread use of environmentally sound tech-nologies and assist in achieving the objectives of the ClimateConvention.

Ogunlade Davidson, Co-chair of Working Group IIIBert Metz, Co-chair of Working Group III

SUMMARY FOR POLICYMAKERS

METHODOLOGICAL AND TECHNOLOGICAL ISSUES INTECHNOLOGY TRANSFER

A Special Report of Working Group IIIof the Intergovernmental Panel on Climate Change

Based on a draft prepared by:

Stephen O. Andersen (USA), William Chandler (USA), Renate Christ (Austria), Ogunlade Davidson (Sierra Leone),Sukumar Devotta (India), Michael Grubb (UK), Joyeeta Gupta (The Netherlands), Thomas C. Heller (USA) Maithili Iyer (India), Daniel M. Kammen (USA), Richard J.T. Klein (The Netherlands/Germany), Dina Kruger (USA), Ritu Kumar (India), Mark Levine (USA), Lin Erda (China), Patricia Iturregui (Peru), Merylyn McKenzie Hedger (UK),Anthony McMichael (UK), Mark Mansley (UK), Jan-Willem Martens (The Netherlands), Eric Martinot (USA), Ajay Mathur (India), Bert Metz (The Netherlands), John Millhone (USA), Jose Roberto Moreira (Brazil), Tongroj Onchan (Thailand), Mark Radka (USA), Kilaparti Ramakrishna (India), N.H. Ravindranath (India), Sascha van Rooijen (The Netherlands), Jayant Sathaye (USA), Youba Sokona (Mali), Sergio C. Trindade (Brazil), David Wallace (UK), Ernst Worrell (The Netherlands)

1. Introduction

BackgroundArticle 4.5 of the United Nations Framework Convention onClimate Change (UNFCCC) states that developed country Partiesand other developed Parties included in Annex II “shall take allpracticable steps to promote, facilitate and finance, as appropri-ate, the transfer of, or access to, environmentally sound tech-nologies and know-how to other Parties, particularly developingcountry Parties, to enable them to implement the provisions of theConvention.” The Subsidiary Body for Scientific andTechnological Advice (SBSTA) identified at its first session a listof areas in which it could draw upon the assistance of the IPCC.This Special Report was prepared in response to this request. Itaddresses the technology transfer problem in the context of all rel-evant UNFCCC provisions, including decisions of the Conferenceof Parties (CoP), and Chapter 34 in Agenda 21. It attempts torespond to recent development in the UNFCCC debate on tech-nology transfer, by providing available scientific and technicalinformation to enable Parties to address issues and questionsidentified in Decision 4/CP.4 adopted by CoP4.

The role of technology transfer in addressing climate changeAchieving the ultimate objective of the UNFCCC, as formulat-ed in Article 21, will require technological innovation and the rapidand widespread transfer and implementation of technologies,including know-how for mitigation of greenhouse gas emis-sions. Transfer of technology for adaptation to climate change isalso an important element of reducing vulnerability to climatechange.

This technological innovation must occur fast enough and con-tinue over a period of time to allow greenhouse gas concentrationsto stabilise and reduce vulnerability to climate change.Technology for mitigating and adapting to climate change shouldbe environmentally sound technology (EST) and should sup-port sustainable development.

Sustainable development on a global scale will require radicaltechnological and related changes in both developed and devel-oping countries. Economic development is most rapid in devel-oping countries, but it will not be sustainable if these countries fol-low the historic greenhouse gas emission trends of developedcountries. Development with modern knowledge offers manyopportunities to avoid past unsustainable practices and movemore rapidly towards better technologies, techniques and asso-

ciated institutions. The literature indicates that to achieve thisdeveloping countries require assistance with developing humancapacity (knowledge, techniques and management skills), devel-oping appropriate institutions and networks, and with acquiringand adapting specific hardware. Technology transfer, in particu-lar from developed countries to developing countries, must there-fore operate on a broad front covering these software and hard-ware challenges, and ideally within a framework of helping to findnew sustainable paths for economies as a whole. There is, how-ever, no simple definition of a “sustainable development agenda”for developing countries. Sustainable development is a contextdriven concept and each society may define it differently, basedon Agenda 21. Technologies that may be suitable in each of suchcontexts may differ considerably. This makes it important toensure that transferred technologies meet local needs and prior-ities, thus increasing the likelihood that they will be successful,and that there is an appropriate enabling environment for pro-moting environmentally sound technologies (ESTs).

The Report analyses the special challenges of transferring ESTsto address climate change in the context of sustainable develop-ment. The literature provides ample evidence of the many prob-lems in current processes of technology transfer which makes itvery unlikely to meet this challenge without additional actions forthe transfer of mitigation and adaptation technologies.

What do we mean by technology transfer?The Report defines the term “technology transfer” as a broad setof processes covering the flows of know-how, experience andequipment for mitigating and adapting to climate change amongstdifferent stakeholders such as governments, private sector enti-ties, financial institutions, NGOs and research/education insti-tutions. Therefore, the treatment of technology transfer in thisReport is much broader than that in the UNFCCC or of any par-ticular Article of that Convention. The broad and inclusive term“transfer” encompasses diffusion of technologies and technolo-gy cooperation across and within countries. It covers technolo-gy transfer processes between developed countries, developingcountries and countries with economies in transition, amongstdeveloped countries, amongst developing countries and amongstcountries with economies in transition. It comprises the processof learning to understand, utilise and replicate2 the technology,including the capacity to choose it and adapt it to local conditionsand integrate it with indigenous technologies.

The Report generally makes a distinction between developed anddeveloping countries. Although economies in transition areincluded as developed countries under the UNFCCC, they mayhave characteristics in common with both developed and devel-oping countries.

3Summary for Policymakers

2. The final stage of the five basic stages of technology transfer(assessment, agreement, implementation, evaluation and adjustment,replication) as defined in the Report as a combination of actions thatlead to the deployment of a given technology, once transferred, tomeet a new demand elsewhere.

1. "The ultimate objective of this Convention and any related legalinstruments that the Conference of Parties may adopt is to achieve, inaccordance with the relevant provisions of the Convention, stabilisa-tion of greenhouse gas concentrations in the atmosphere at such alevel that would prevent dangerous interference with the climate sys-tem. Such a level should be achieved within a timeframe sufficient toallow ecosystems to adapt naturally to climate change, to ensure thatfood production is not threatened and to enable economic develop-ment to proceed in a sustainable manner."

adapt to new circumstances and to acquire new skills. Thisapplies both for mitigation and adaptation technologies.Comparatively little consideration has been given in a systematicway to what capacity building is required for adaptation to climatechange.

Human capacityAdequate human capacity is essential at every stage of everytransfer process. The transfer of many ESTs demands a widerange of technical, business, management and regulatory skills.The availability of these skills locally can enhance the flow ofinternational capital, helping to promote technology transfer.

Developed country governments, in particular, can ensure thattraining and capacity building programmes they sponsor considerthe full range of information, financial, legal, and business consultingand engineering services that technology transfer requires, as wellas the local conditions under which these may be provided. Thisrequires cooperation with local governments, institutions and stake-holders, commercial organisations and consumers/ users.

Developing country governments can build local capacities togear them for technology transfer. Training and human resourcedevelopment have been popular development assistance activi-ties. Future approaches can be more effective by better stressingthe integration of a total package of technology transfer, focus-ing less exclusively on developing technical skills and more oncreating improved and accessible competence in associated ser-vices, organisational know-how, and regulatory management.

Organisational capacityIt is important to recognise the need for participatory approach-es and to strengthen the networks in which diverse organisa-tions contribute to technology transfer. In technology intensiveeconomies, technology increasingly flows through private net-works of information and assessment services, management con-sultants, financial firms, lawyers and accountants, and technicalspecialist groups. Local government agencies, consumer groups,industry associations and NGOs may ensure that technologymeets local needs and demand. This organisational infrastructurecan help reduce but will not eliminate risks arising from defi-ciencies in legal systems. Although many actions that facilitatethe growth of such networks are already underway, initiatives ofparticular importance to EST transfer include:

• Expansion of opportunities to develop firms for man-agement consulting, accounting, energy service, law,investment and product rating, trade, publishing and pro-vision for communication, access to and transfer of infor-mation, such as Internet services;

• Encouragement of industry associations, professionalassociations and user/consumer organisations;

• Participatory approaches to enable private actors, publicagencies, NGOs and grassroots organisations to engageat all levels of environmental policy-making and projectformulation;

• Where appropriate, decentralisation of governmentaldecision-making and authority, in relation to technologytransfer, to effectively meet community needs.

Information assessment and monitoring capacityInformation access and assessment are essential to technologytransfer. However, focussing too narrowly on information bar-riers while ignoring the later stages of the transfer process can beless productive. The roles of governments and private actors intechnology assessment are changing. Private information net-works are proliferating through specialised consulting and eval-uation services and over the Internet. Increasing FDI alsodemonstrates that many ESTs can diffuse rapidly without directgovernment action. Governments in developing countries, devel-oped countries, and countries with economies in transition maywish to consider:

• Developing improved indicators and collecting data onavailability, quality and flows of ESTs to improve mon-itoring of implementation;

• Developing technology performance benchmarks forESTs to indicate the potential for technological improve-ments;

• Improving information systems and linking them to inter-national or regional networks, through well-defined clear-ing houses (such as energy efficiency and renewableenergy centres), information speciality firms, trade pub-lications, electronic media, or NGOs and communitygroups.

Enabling environment and extra effort to enhance technol-ogy transferGovernments, through inter alia sound economic policy and reg-ulatory frameworks, transparency and political stability, can cre-ate an enabling environment for private and public sector tech-nology transfers. Although many ESTs are in common use andcould be diffused through commercial channels, their spread ishampered by risks such as those arising from weak legal protec-tion and inadequate regulation in developed countries, develop-ing countries and countries with economies in transition. Butmany technologies that can mitigate emissions or contribute toadaptation to climate change are not as yet commercially viable.Beyond an enabling environment, it will take extra efforts todevelop and enhance the transfer of those potentially viableESTs. The following actions could increase the flow of ESTs andimprove its quality.

All governments may therefore wish to consider:• Enacting measures, including well-enforced regulations,

taxes, codes, standards and removal of subsidies, to inter-nalise the externalities to capture the environmental andsocial costs, and assist the replication of ESTs;

• Reforming legal systems. Uncertain, slow and expen-sive enforcement of contracts by national courts or inter-national arbitration and insecure property rights can dis-courage investment. Reforming administrative law to


Trends of technology transferIt is difficult to quantify how much climate-relevant hardware issuccessfully transferred annually. When software elements suchas education, training and other capacity building activities areincluded, the task of quantification is further complicated.Financial flows, often used as proxies, allow only a limited com-parison of technology transfer trends over time. The 1990s haveseen broad changes in the types and magnitudes of the interna-tional financial flows that drive technology transfer.

Official Development Assistance (ODA) experienced a down-ward trend in the period of 1993 to 1997, both in absolute termsand as a percentage of funding for projects with significantimpact on technology flows to developing countries. However,in 1998 there was an increase in ODA funding. ODA is stillimportant for those parts of the world and sectors where privatesector flows are comparatively low, like agriculture, forestry,human health and coastal zone management. Moreover, it cansupport the creation of enabling conditions, which may leveragelarger flows of private finance into ESTs in the context of over-all sustainable development goals in the recipient countries.

Levels of foreign direct investment (FDI), commercial lending,and equity investment all increased greatly in recent years. Theseare the dominant means by which the private sector makes tech-nology-based investments in developing countries and economiesin transition, often in the industry, energy supply and trans-portation sectors. However, private sector investment in the formof FDI in developing countries has favoured East and SouthEast Asia, and Latin America.

These trends are altering the relative capacities and roles of dif-ferent stakeholders. The importance of the private sector hasincreased substantially. However, there is a definite role for gov-ernments both in providing an enabling environment for thetechnology transfer process as well as participating directly in it.Many NGOs support technology transfer activities.

Stakeholders, pathways, stages and barriers Technology transfer results from actions taken by various stake-holders. Key stakeholders include developers; owners; suppliers,buyers, recipients and users of technology (such as private firms,state enterprises, and individual consumers); financiers anddonors; governments; international institutions; NGOs and com-munity groups. Some technology is transferred directly betweengovernment agencies or wholly within vertically integrated firms,but increasingly technology flows depend also on the coordina-tion of multiple organisations such as networks of information ser-vice providers, business consultants and financial firms. Althoughstakeholders play different roles, there is a need for partnershipsamong stakeholders to create successful transfers. Governmentscan facilitate such partnerships.

There is a large number of pathways through which stakeholderscan interact to transfer technologies. They vary depending on sec-tors, country circumstances and type of technology. Pathways

may be different for “close to market” technologies and for tech-nology innovations still in the development phase. Commonpathways include government assistance programmes, directpurchases, licensing, foreign direct investment, joint ventures,cooperative research arrangements and co-production agree-ments, education and training, and government direct invest-ment.

While technology transfer processes can be complex and inter-twined, certain stages can be identified. These may include theidentification of needs, choice of technology, assessment of con-ditions of transfer, agreement and implementation. Evaluation andadjustment to local conditions, and replication2 are other impor-tant stages.

Barriers to the transfer of ESTs may arise at each stage of theprocess. These vary according to the specific context, for examplefrom sector to sector, and can manifest themselves differently indeveloped countries, developing countries and countries witheconomies in transition. These barriers range from lack of infor-mation; insufficient human capabilities; political and economic bar-riers such as lack of capital, high transaction costs, lack of full costpricing, and trade and policy barriers; lack of understanding of localneeds; business limitations, such as risk aversion in financial insti-tutions; and institutional limitations such as insufficient legal pro-tection, and inadequate environmental codes and standards.3

There is no pre-set answer to enhancing technology transfer.The identification, analysis and prioritisation of barriers shouldbe country based. It is important to tailor action to the specific bar-riers, interests and influences of different stakeholders in order todevelop effective policy tools.

2. Increase the Flow; Improve the Quality

Government actions can transform the conditions under whichtechnology transfer takes place. The spread of proven ESTs thatwould diffuse through commercial transactions may be limitedbecause of the barriers listed above.

The three major dimensions of making technology transfer moreeffective are capacity building, an enabling environment andmechanisms for technology transfer, all of which are discussedin more detail in the subsections below.

Building capacity Capacity building is required at all stages in the process of tech-nology transfer. Social structures and personal values evolvewith a society’s physical infrastructure, institutions, and the tech-nologies embodied within them. New technological trajectoriesfor an economy therefore imply new social challenges. Thisrequires a capacity of people and organisations to continuously

Summary for Policymakers4

3. See Technical Summary and Chapters 3, 4 and 5 of the main report.

• Market intermediary organisations such as Energy ServiceCompanies.

Official Development Assistance (ODA)Official Development Assistance (ODA) is still significant fordeveloping countries and successful transfers of ESTs. ODAcan also assist the improvement of policy frameworks and takeon long-term capacity building. There is increasing recognitionthat ODA can best be focused on mobilising and multiplying addi-tional financial resources.

Global Environment FacilityThe Global Environment Facility, an operating entity of theUNFCCC Financial Mechanism, is a key multilateral institu-tion for transfers of ESTs. Compared to the magnitude of the tech-nology transfer challenge, these efforts are of modest scale, evenwhen added to the contributions from bilateral developmentassistance. The GEF currently targets incremental, one-timeinvestments in mitigation projects that test and demonstrate a vari-ety of financing and institutional models for promoting tech-nology diffusion, thus contributing to a host country’s ability tounderstand, absorb and diffuse technologies. GEF also supportscapacity building projects for adaptation consistent with limita-tions currently imposed by Convention guidance. Continuedeffectiveness of GEF project funding for technology transfermay depend on factors such as:

• Sustainability of market development and policy impactsachieved through GEF projects;

• Duplication of successful technology transfer models;• Enhanced links with multilateral-bank and other financ-

ing of ESTs;• Funding for development and licensing of ESTs;• Coordination with other activities that support national

systems of innovation and international technology part-nerships;

• Attention to technology transfer among developing countries.

Multilateral Development BanksGovernments may use their leverage to direct the activities ofmultilateral development banks (MDBs) through their respectiveBoards and Councils in order to:

• Strengthen MDB programmes to account for the envi-ronmental consequences of their lending;

• Develop programmatic approaches to lending that removeinstitutional barriers and create enabling environments forprivate technology transfers;

• Encourage MDBs to participate in NSI partnerships.

The Kyoto Protocol Mechanisms and the UNFCCCThe analysis of the literature on the Kyoto Protocol Mechanisms,based on the preliminary stage of development of the rules forthese, suggests that if they are implemented, the Mechanisms mayhave potential to affect the transfer of ESTs.

The extent to which Article 4.5 of the UNFCCC has been imple-mented is being reviewed by the UNFCCC. Given this evolvingprocess, the IPCC has not been able to assess this matter.

3. Sectoral Actions

The key actions for the transfer of mitigation and adaptation technolo-gies vary across sectors. Governments, private actors and communityorganisations are all involved in technology transfer in each sector,although their roles and the extent of their involvement differ within andacross sectors. It is important to note the special characteristics ofadaptation technologies. Adaptation in anticipation of future climatechange is faced with uncertainty about location, rate and magnitude ofclimate change impacts. Adaptation technologies often address site-spe-cific issues and their benefits are primarily local, which could hamperlarge scale replication. On the other hand, they could reduce vulnera-bility not only to anticipated impacts of climate change but also to con-temporary hazards associated with climate variability.

Central lessons learned through the sectoral studies are: (1) net-working among stakeholders is essential for effective technologytransfer, and (2) most effective technology transfers focus on productsand techniques with multiple benefits. Actions that have been effec-tive in technology transfer in the sectors evaluated in the Report, are:

Buildings World-wide, the mix of relevant ESTs will vary, depending upon theclimate; rural-urban distribution, and historical context. The effec-tive actions for the transfer of ESTs may include, (1) governmentfinancing for incentives for the construction of more energy efficientand environmentally-friendly homes, (2) building codes and guide-lines, and equipment standards developed in consultation withindustry to minimise adverse impacts on manufacturers; (3) ener-gy and environmental performance labels on consumer products; (4)government programmes for more energy efficient and environ-mentally-friendly buildings, office appliances and other equip-ment, (5) demand-side management programmes to promote ener-gy-efficient lighting and equipment, and (6) R&D to developproducts in the building sector that meet community priorities.

TransportTechnological options - improved technology design and main-tenance, alternative or improved fuels, vehicle use change, andmodal shifts - as well as non-technical options, transport demandreduction, and improved management systems can reduce GHGemissions significantly. There are also non-transport optionssuch as urban planning and transport demand substitution, suchas telematics and improved telecommunications. Resource avail-ability, technical know-how, and institutional capacity are amongthe factors that affect the cost and transfer of these options.

Government policies can promote cooperative technology agree-ments among companies of different countries, joint R&D, jointinformation networks, improved technical and managementskills, and specialized training programmes. Adoption of appro-priate standards and regulations can stimulate and facilitate tech-nology transfer within and among countries. Partnership betweengovernment and the private sector and among countries can alsohelp promote technology transfer within and among countries.


reduce regulatory risk and ensuring that public regulationis accessible to stakeholders and subject to independentreview;

• Protecting intellectual property rights and licenses insuch a way that innovation is fostered, while avoidingmisapplication, which may impede diffusion of ESTs;

• Encouraging financial reforms, competitive and opennational capital markets, and international capital flowsthat support foreign direct investment. Governments canexpand financial lending for ESTs through regulationthat allows the design of specialised credit instruments,capital pools, and energy service companies;

• Simplifying and making transparent programme and pro-ject approval procedures and public procurement require-ments;

• Promoting competitive and open markets for ESTs;• Stimulating national markets for ESTs to facilitate econ-

omy of scale and other cost reducing practices;• Encouraging multinational companies to show leadership

and use the same standards for environmental perfor-mance wherever they operate;

• Creating awareness about products, processes and ser-vices that use ESTs through means such as eco-labelling,product standards, industry codes, and community edu-cation;

• Using legislation, enhancing transparency, and increasingparticipation by civil society to reduce corruption in con-formity with international conventions.

Governments of developed countries and countries witheconomies in transitions may wish to consider:

• Stimulating fair competition in EST markets by discour-aging restrictive business practices;

• Reforming export credit, political risk insurance andother subsidies for the export of products or productionprocesses to encourage foreign direct investment in ESTs;

• Developing environmental guidelines for export creditagencies to avoid a bias against, and promote the trans-fer of ESTs, and discourage the transfer of obsolete tech-nologies;

• Reducing the use, as trade policy measures applied toESTs, of tied aid;

• Developing modalities and/or policies to improve thetransfer of ESTs that are in the public domain;

• Increasing public funding for R&D in cleaner technolo-gies to reflect the high rate of social return, and wherev-er possible, enhancing the flows of ESTs arising fromtheir publicly funded R&D programmes by entering intocooperation with developing countries in R&D partner-ships and international research institutions;

• Increasing flows of national and multilateral assistance,including funding, especially in programmes targeted toenvironmental technologies, including patent licensing ofESTs where appropriate. Attention should also be paid tosupporting pathways for transfer of ESTs among devel-oping countries.

Governments of developing countries may wish to consider:• Ensuring assessment of local technology needs and social

impact of technologies so that transfer of and investmentin ESTs meet local demands;

• Expanding R&D programmes, aiming at the develop-ment of ESTs particularly appropriate in developingcountries and adjustment to local conditions; promotingcomplementary policies for ESTs;

• Improving pathways for technology transfer amongdeveloping countries through information regarding theperformance of ESTs in developing countries, joint R&D,demonstration programmes, and opening markets forESTs;

• Developing physical and communications infrastructure tosupport private investments in ESTs and the operations ofintermediary organisations providing information services;

• Improving the identification of specific barriers, needs andsteps towards introduction of ESTs by consulting with pri-ority stakeholders;

• Continuing to improve macro-economic stability to facil-itate ESTs to be transferred.

Mechanisms for technology transferNational Systems of InnovationThe literature shows that National Systems of Innovation (NSIs)which integrate the elements of capacity building, access toinformation and an enabling environment into comprehensiveapproaches to EST transfer add up to more than the individualcomponents and support the creation of an innovation culture.Subsystems and the quality of interconnections within them cansuccessfully influence technology transfer. The concept of NSIscan be enhanced through partnerships with international consortia.Partnerships would be system oriented, encompass all stages ofthe transfer process, and ensure the participation of private andpublic stakeholders, including business, legal, financial and otherservice providers from developed and developing countries.

NSI activities may include:• Targeted capacity building, information access, and train-

ing for public and private stakeholders and support forproject preparation;

• Strengthening scientific and technical educational insti-tutions in the context of technology needs;

• Collection and assessment of specific technical, com-mercial, financial and legal information;

• Identification and development of solutions to techni-cal, financial, legal, policy and other barriers to widedeployment of ESTs;

• Technology assessment, promotion of prototypes, demon-stration projects and extension services through linkagesbetween manufacturers, producers and end users;

• Innovative financial mechanisms such as public/privatesector partnerships and specialised credit facilities;

• Local and regional partnerships between different stake-holders for the transfer, evaluation and adjustment tolocal conditions of ESTs;


is driven by governments. Fragmented organisational and insti-tutional relationships, and lack of access to financial means aremajor barriers to the transfer of coastal adaptation technologies.Coastal adaptation programmes, based on strong partnershipbetween existing institutions, can provide an effective response.


Industry New processes, efficient energy and resource use, substitution ofmaterials, changes in design and manufacture of products result-ing in less material use, and increased recycling, can substantiallyreduce GHG emissions. Environmental legislation, regulation andvoluntary agreements between government and industry canstimulate the development of efficient technologies and can leadto increased use of ESTs. Public technology assessment capa-bilities are important to provide information and capabilities tosuccessfully transfer ESTs. Wel-defined clearinghouses can beuseful in disseminating information to improve energy efficien-cy, especially with respect to small and medium-sized enterpris-es that often do not have the resources to assess technologies.Long term support for capacity building is essential, stressing theneed for the cooperation of equipment and software suppliers andusers. Experience has shown that investment in developing localcapability to undertake adjustment to indigenous conditions is cru-cial to the success of industrial EST transfer.

Energy Supply In general, the private sector plays a strong role in the transfer ofenergy supply technologies based in oil and gas sources andtechnology transfer mechanisms have been established for sometime. Restructuring of the electricity sector world-wide is rapid-ly changing the direction of investments in the power sectorwith growing participation of the private sector. At the sametime, the transfer of energy supply technologies for some otherconventional and renewable sources, which often depend on thegovernment to preserve or increase their presence in the market,is restricted due to institutional and socio-economic barriers.Nevertheless, the role of the government and multilateral banksare important in every sector to foster and ensure conditions forinternational financing, establishing appropriate regulatory frame-works and create conditions to couple new energy investments,environmentally sound projects and sustainable development.Enabling actions by governments to promote energy options,including renewable resources, that are assisting to mitigate cli-mate change, can be crucial to mobilise private capital for ESTsand raise increased attention to energy efficiency.

AgricultureDevelopment of appropriate information bases on inter aliaimproved crop species and varieties, irrigation facilities, differenttillage and crop management systems, and livestock manure treat-ment, including biogas recovery systems, can facilitate and promotethe transfer of adaptation and mitigation technologies within andacross countries and integration with indigenous solutions.Governments can create incentives for the transfer of ESTs byimproving national agricultural information systems to disseminateinformation on ESTs, and expanding credit and savings schemesto assist farmers to manage the increased variability in their envi-ronment. The existing Consultative Group on InternationalAgricultural Research (CGIAR) system may be one possiblemodel for an R&D network among countries to build such aninformation base. Capacities to deal with climate change tech-

nologies and national agricultural research systems including thosethat investigate carbon storage, and early warning systems, areimportant elements. Efforts by developed countries and multilat-eral agencies can be improved to enhance this R&D system.

ForestryGovernment, community, and international organisations, includ-ing conservation organisations, have dominated technology trans-fer in the forestry sector. More recently, private establishmentshave been making inroads. Transfer of practices such as sus-tainable forest management (including reduced-impact logging,certification techniques and silvicultural practices), recycling, bio-energy technologies and agroforestry can contribute to the mit-igation of carbon dioxide emissions. Establishing clear proper-ty rights, participatory forest management, use of financialincentives and disincentives, optimal use of regulations, andstrengthening of monitoring and evaluating institutions are gov-ernment actions that can promote their transfer.

Waste ManagementMitigation technologies are available and can be readily deployed.Roles of governments, private sector, and other organisations arechanging. National governments can act as facilitators of munic-ipal, private sector, and community-based initiatives. The privatesector plays an increasing role, because meeting future waste man-agement needs depends on expanded private investment. Theinvolvement of community organisations is also increasing as thelink between community support and project sustainability hasbecome clear. It is important that projects emphasise the deploy-ment of locally-appropriate technologies, and minimise the devel-opment of conventional large, integrated waste management sys-tems in situations where lower cost, simpler alternatives can be usedwithout compromising public health and environmental standards.

Human HealthAn effective health system can help to address the adverse healthimpacts of climate change. Transfer of existing health technolo-gies within and across countries can assist in achieving thisobjective. Raising public awareness of likely health impacts,close monitoring of health outcomes and training of health pro-fessionals are suitable actions. Thus, in terms of technologytransfer there is a need to ensure that technologies are availableat national and local levels for coping with any changes in the bur-den of disease that might be associated with climate change.

Coastal Adaptation Technology transfer should focus on proven technologies forcoastal adaptation, including indigenous solutions. Wetlandrestoration and preservation are examples of such proven adap-tation technologies. Effective transfers of adaptation technologiesare part of integrated coastal-management plans or programmes,that utilises local expertise. Because coastal management is pre-dominantly a public activity, technology transfer in coastal zones


TECHNICAL SUMMARY

Authors:

Stephen O. Andersen (USA), Earle N. Buckley (USA), William Chandler (USA), Renate Christ (Austria), Ogunlade Davidson (Sierra Leone), Sukumar Devotta (India), Michael Grubb (UK), Joyeeta Gupta (The Netherlands),Thomas C. Heller (USA), Maithili Iyer (India), Daniel M. Kammen (USA), Richard J.T. Klein (The Netherlands/Germany), Dina Kruger (USA), Ritu Kumar (India), Mark Levine (USA), Lin Erda (China), Patricia Iterregui (Peru), Merylyn McKenzie Hedger (UK), Anthony McMichael (UK), Mark Mansley (UK), Jan-Willem Martens (The Netherlands), Eric Martinot (USA), Ajay Mathur (India), Bert Metz (The Netherlands), John Millhone (USA), Jose Roberto Moreira (Brazil), Tongroj Onchan (Thailand), Mark Radka (USA), Kilaparti Ramakrishna (India), N.H. Ravindranath (India), Jayant Sathaye (USA), Youba Sokona (Mali), Sergio C. Trindade (Brazil), David Wallace (UK), Ernst Worrell (The Netherlands)

1. Background 151.1 The role of technology transfer in addressing

climate change 151.2 What do we mean by technology transfer? 151.3 Stakeholders, pathways and stages 161.4 Trends in technology transfer 171.5 Barriers to the transfer of Environmentally

Sound Technologies 19

2. Increase the flow, improve the quality 192.1 Building capacity 212.2 Enabling environment and extra efforts

to enhance technology transfer 222.2.1 Actions for all governments 232.2.2 Actions for developed countries and coun-

tries with economies in transition 252.2.3 Developing countries actions 27

2.3 Mechanisms for technology transfer 272.3.1 National systems of innovation 272.3.2 ODA 282.3.3 GEF 282.3.4 Multilateral Development Banks 292.3.5 Kyoto Protocol mechanisms 30

3. Technology Transfer: A Sectoral Analysis 313.1 Residential, Commercial, and Institutional

Buildings Sector 323.2 Transport 333.3 Industry 343.4 Energy Supply 343.5 Agriculture 363.6 Forestry Sector 373.7 Solid Waste Management and Wastewater

Treatment 393.8 Human Health 403.9 Coastal Adaptation 41

CONTENTS

This introductory Chapter sets out the landscape for the discus-sion, throughout the Special Report, of the multitude of facets ofmanaging technological change in support of the Climate ChangeConvention and its Protocols. The framework proposed for deci-sion-making by government policymakers, and other relevantstakeholders, emphasises the sustainable development perspec-tive, while exploring the national and international political set-tings, trends in finance and trade, the organisational and institu-tional context, and the meanings of technology transfer and of theinnovation system. A model of the latter and of pathways intechnology transfer is presented to help understand the nature,motivations, barriers to the process, and possible options to pro-mote sustainable development in the face of the climate changechallenge.

EXECUTIVE SUMMARY

1. Background

Article 4.5 of the United Nations Framework Convention onClimate Change (UNFCCC) states that developed country Partiesand other developed Parties included in Annex II to take "all prac-ticable steps to promote, facilitate and finance, as appropriate, thetransfer of, or access to, environmentally sound technologiesand know-how to other Parties, particularly developing countryParties", and to "support the development and enhancement ofendogenous capacities and technologies of developing countryParties", and calls on other Parties and organisations to assist infacilitating the transfer of such technologies.

The Subsidiary Body for Scientific Technological Advice(SBSTA) identified at its first session a list of areas in which itcould draw upon the assistance of the IPCC. "Development andassessment of methodological and technological aspects of trans-fer of technology" was included in this list as an important ele-ment of the Third Assessment Report and an issue that may beappropriate for an interim or special report.

This Special Report was prepared in response to this request. Itaddresses the "technology transfer" problem in the context of allrelevant UNFCCC provisions, including decisions of theConference of Parties (CoP), and Chapter 34 in Agenda 21. Itattempts to respond to recent developments in the UNFCCCdebate on technology transfer, by providing available scientificand technical information to enable Parties to address issues andquestions identified in Decision 4/CP.4 adopted by COP-4 (seeBox TS 1). The focus of the Report is on the technology transferprocess rather than on the assessment of technologies, whichhave been addressed in earlier IPCC Technical Papers andReports.

1.1 The role of technology transfer in addressing cli-mate change

Global economic growth is currently leading to increased con-sumption of raw materials, loss of natural habitats, energy use andproduction of waste. Achieving the ultimate objective of theUNFCCC, as formulated in Article 21, will require technologicalinnovation and the rapid and widespread transfer and imple-mentation of technologies and know-how for mitigation of green-house gas emissions. Transfer of technology for adaptation to cli-mate change is also an important element of reducingvulnerability to climate change.

1.“The ultimate objective of this Convention and any related legalinstruments that the Conference of Parties may adopt to achieve, inaccordance with the relevant provisions of the Convention, stabilisa-tion of greenhouse gas concentrations in the atmosphere at such alevel that would prevent dangerous interference with the climate sys-tem. Such a level should be achieved within a timeframe sufficient toallow ecosystems to adopt naturally to climate change, to ensure thatfood production is not threatened and to enable economic develop-ment to proceed in a sustainable manner”

Technology transfer has successfully contributed to the solutionof a variety of local and global environmental problems. Casestudies included in the Report document this experience andprovide valuable lessons for climate protection. These case stud-ies include, to varying degrees, essential elements of successfultechnology transfer including consumer and business aware-ness, access to information, capacity building, investment financ-ing, relaxation of trade barriers, and a strong regulatory frame-work.

This technological innovation must occur fast enough and continueover a period of time to allow greenhouse gas concentrations to sta-bilise and reduce vulnerability to climate change. Technologyfor mitigating and adapting to climate change should be environ-mentally sound technology and should support sustainable devel-opment. Sustainable development on a global scale will requireradical technological and related changes in both developed anddeveloping countries. Economic development is most rapid indeveloping countries, but it will not be sustainable if these coun-tries simply follow the historic greenhouse gas emission trends ofdeveloped countries. Development with modern knowledge offersmany opportunities to avoid past unsustainable practices andmove more rapidly towards better technologies, techniques andassociated institutions. The literature indicates that to achievethis, developing countries require assistance with developinghuman capacity (knowledge, techniques and management skills),developing appropriate institutions and networks, and with acquir-ing and adapting specific hardware. Technology transfer, in par-ticular from developed to developing countries, must thereforeoperate on a broad front covering these software and hardwarechallenges, and ideally within a framework of helping to findnew sustainable paths for economies as a whole.

There is, however, no simple definition of a "sustainable devel-opment agenda" for developing countries. Sustainable develop-ment is a context driven concept and each society may define itdifferently, based on Agenda 21. Technologies that may be suit-able in each of such contexts may differ considerably. This makesit important to ensure that transferred technologies meet localneeds and priorities, thus increasing the likelihood that they willbe successful, and that there is an appropriate enabling environ-ment for promoting Environmentally Sound Technologies (ESTs).

The Report analyses the special challenges of transferring ESTsto address climate change in the context of sustainable develop-ment. The literature provides ample evidence of the many prob-lems in current processes of technology transfer which makes itvery unlikely to meet this challenge without additional actions forthe transfer of mitigation and adaptation technologies.

1.2 What do we mean by technology transfer?

The Report defines the term "technology transfer" as a broad setof processes covering the flows of know-how, experience andequipment for mitigating and adapting to climate change amongst

15Technical Summary

different stakeholders such as governments, private sector enti-ties, financial institutions, NGOs and research/education insti-tutions. Therefore, the treatment of technology transfer in thisReport is much broader than that in the UNFCCC or of any par-ticular Article of that Convention. The broad and inclusive term"transfer" encompasses diffusion of technologies and technolo-gy cooperation across and within countries. It covers technolo-gy transfer processes between developed countries, developingcountries and countries with economies in transition, amongstdeveloped countries, amongst developing countries and amongstcountries with economies in transition. It comprises the processof learning to understand, utilise and replicate the technology,including the capacity to choose and adapt to local conditions andintegrate it with indigenous technologies.

The Report generally makes a distinction between developed anddeveloping countries. Although economies in transition areincluded as developed countries in the UNFCCC, they may havecharacteristics in common with both developed and developingcountries.

1.3 Stakeholders, pathways and stages

Technology transfer results from actions taken by various stake-holders. Key stakeholders include developers, owners, suppliers,buyers, recipients and users of technology such as private firms,state enterprises, and individual consumers, financiers and donors,governments, international institutions, NGOs and community groups.Some technology is transferred directly between government agen-cies or wholly within vertically integrated firms, but increasingly tech-nology flows depend also on the co-ordination of multiple organisa-tions such as networks of information service providers, businessconsultants and financial firms. Although stakeholders play differentroles there is a need for partnerships among stakeholders to create suc-cessful transfers. Governments can facilitate such partnerships. Therate of technology transfer is affected both by motivations that inducemore rapid adoption of new techniques and by barriers that impedesuch transfers. Both types of factors can be influenced by policy(see Table TS 1).

The theme of technology transfer is highly interdisciplinary and hasbeen approached from a variety of perspectives, including business,law, finance, microeconomics, international trade, international polit-ical economy, environment, geography, anthropology, education,

Technical Summary16

1. How should Parties promote theremoval of barriers to technology trans-fer? Which barriers are a priority andwhat practical steps should be taken?

2. How should Annex II Parties promote thetransfer of publicly-owned technologies?

3. What additional bilateral and multilater-al efforts to promote technology co-operation to facilitate technology trans-fer should be initiated? What should bethe priority?

4. Are existing multilateral mechanismssufficient? Are new mechanisms neededfor technology transfer? If so, what areappropriate mechanisms for the transferof technologies among Parties in pur-suance of article 4.5 of the Convention?

5. What should be the objective of collab-oration with relevant multilateral institu-tions to promote technology transferand what practical steps should betaken?

6. What additional guidance should begiven to the financial mechanism?

7. What sort of information is needed andhow can this best be done?

8. How could access to emerging tech-nologies be facilitated?

9. What role is the private sector playing intechnology transfer? What additional rolecan the private sector play? What barri-ers prevent their greater participation?

10. What technical advice on technologytransfer is needed?

11. What areas should be the focus of capac-ity building and how should it be undertak-en, e.g. what kind of activities, pro-grammes and institutional arrangements?

12. How, to whom and in what formatshould developing country Parties maketheir requests for assistance to assessrequired technologies?

13. What technical, legal and economicinformation is needed? What practicalsteps should be taken to promote andenhance access to such information bynational and regional centres?

14. What type of process is needed todevelop a consensus on practical nextsteps to improve existing technologycentres and networks in order to accel-erate the diffusion of clean technolo-gies in non-Annex I Party markets.What type of arrangement is needed tomonitor progress?

15. What measures, programmes and

activities can best help to create anappropriate enabling environment forprivate sector investment?

16. How should the Convention oversee theexchange of information among Partiesand other interested organisations orinnovative technology cooperationapproaches, and the assessment andsynthesis of such information?

17. How should information be compiledand synthesised on innovative technol-ogy cooperation approaches? Whenshould recommendations on suchapproaches be forwarded to theConference of Parties?

18. How and when should information on pro-jects and programmes of technology co-operation which Parties believe can serveas models for improving the diffusion andimplementation of clean technologiesinternationally under the Convention beprovided to the secretariat?

19. Can specific technology transfer goals be set?20. Can we develop indicators and

accounting systems to track progresson technology transfer?

21. Are particular institutional arrange-ments needed to monitor progress?

BOX TS1 QUESTIONS INCLUDED IN ANNEX TO DECISION 4/CP.4 OF THE CONFERENCE OF THE PARTIES TO THE UNFCCC THAT ARETO BE CONSIDERED IN THE CONSULTATIVE PROCESS SET UP BY THIS DECISION.

communication, and labour studies. Although there are numerousframeworks and models put forth to cover different aspects of tech-nology transfer, there are no corresponding overarching theories.However, the literature reveals a large number of pathways throughwhich stakeholders can interact to transfer technologies. They varydepending on sectors, country circumstances and type of technology.Pathways may be different for "close to market" technologies and fortechnology innovations still in the development phase. The role ofstakeholders is dependent on the pathway followed. Common path-ways include government assistance programmes, direct purchases,trade, licensing, foreign direct investment, joint ventures, cooperativeresearch arrangements and co-production agreements, education andtraining, and government direct investment.

While technology transfer processes can be complex and intertwinedcertain stages can be identified. These may include the identificationof needs, choice of technology, assessment of conditions of transfer,agreement and implementation. Evaluation and adjustment to localconditions, and replication are other important stages. In order to eval-uate whether technology transfer can be considered effective, differentcriteria can be applied. The criteria can be grouped into four categories,namely, (i) greenhouse gas (GHG) and environmentally related; (ii)economic and socially related; (iii) administrative, institutional andpolitically related; and (iv) process-related.

1.4 Trends in technology transfer

Little is known about how much climate-relevant hardware is suc-cessfully "transferred" annually. When software elements such aseducation, training and other capacity building activities areincluded, the task of quantification is further complicated.Financial flows, often used as proxies, allow only a limited com-parison of technology transfer trends over time.

The 1990s have seen broad changes in the types and magni-tudes of the international financial flows that drive technologytransfer, at least that occurring between countries (see Figure TS1). Official Development Assistance (ODA) experienced a down-ward trend in the period of 1993 to 1997, both in absolute termsand as a percentage of funding for projects with a significantimpact on technology flows to developing countries. However,in 1998 there was an increase in ODA funding. ODA has becomerelatively less important to many developing countries giventhe dramatic increase in opportunities for obtaining private sec-tor financing for technology acquisition.

Sources and amounts of development finance, some portion ofwhich goes for technology transfer, vary widely from region toregion. Countries in Sub-Saharan Africa received in 1997 anaverage of some US$27 per capita of foreign aid and US$3 percapita of foreign direct investment. By contrast, countries inLatin America and the Caribbean received US$13 per capita ofaid and US$62 per capita of foreign direct investment. Recent ini-tiatives to spur development progress in Africa aim to respond tothese disparities.

Levels of foreign direct investment (FDI), commercial lending,and equity investment all increased dramatically during the1990s. As a result, by 1997 private flows supplied more than threefourths of the total net resource flows from OECD membercountries to developing countries compared to one third in 1990.Probable causes for this shift, and what it means for govern-ments and the private sector, are described in detail in the Report.FDI, loans, and equity are the dominant means by which the pri-vate sector makes technology-based investments in developingcountries and economies in transition, often in the industry, ener-gy supply and transportation sectors. Private sector investment inthe form of FDI in developing countries has favoured East andSouth East Asia, and Latin America.

Total private flows to developing countries peaked in the first halfof 1997 and then fell significantly in the wake of the globalfinancial crisis that started in Asia during the middle of that year.Most of the decline was due to reduced bank lending by the pri-vate sector, although this remained robust to Latin America.Foreign direct investment in developing countries is estimated tohave increased slightly during 1998 and 1999.

Overall, FDI still represents a relatively small share of totalinvestment in developing countries, both in absolute values andas a share of all developing country inflows. FDI exceeded 10 percent of gross fixed capital formation in only eight countries, and

17Technical Summary

Table TS1 Principal stakeholders and their decisions or policies in technology transfer

STAKEHOLDERS MOTIVATIONS DECISIONS OR POLICIES THAT INFLUENCE TECHNOLOGY TRANSFER

Governments Development goals Tax policies (including investment tax policy)• national/federal Environmental goals Import/export policies• regional/provincial Competitive advantage Innovation policies• local/municipal Energy security Education and capacity-building policies Regulations and institutional development Direct credit provisionPrivate-sector business Profits Technology R&D/commercialisation decisions• transnational Market share Marketing decisions• national Return on investment Capital investment decisions• local/microenterprise Skills/capabilities development policies Structure for acquiring outside information(including producers, users, Decision to transfer technologydistributors, and financiers Choice of technology transfer pathwayof technology) Lending/credit policies (producers, financiers)

Technology selection (distributors, users)Donors Development goals Project selection and design criteria• multilateral banks Environmental goals Investment decisions• GEF Return on investment Technical assistance design and delivery• bilateral aid agencies Procurement requirements Conditional reform requirementsInternational institutions Development goals Policy and technology focus• WTO Environmental goals Selection of participants in forums• UNCSD Policy formulation Choice of modes of information dissemination• OECD International dialogueResearch/extension Basic knowledge Research agenda• research centres/labs Applied research Technology R&D/commercialisation decisions• universities Teaching Decision to transfer technology• extension services Knowledge transfer Choice of pathway to transfer technology Perceived credibilityMedia/public groups Information distribution Acceptance of advertising• TV, radio, newspaper Education Promotion of selected technologies• Schools Collective decisions Educational curricula• Community groups Collective welfare• NGOs Lobbying for technology-related policiesIndividual consumers Welfare Purchase decisions• urban/core Utility Decision to learn more about a technology• rural/periphery Expense minimisation Selection of learning/information channels

Ratings of information credibility by source

in most it is much less than seven per cent of the total. Despite thesmall size of inflows, FDI is still important for many of theseeconomies. Foreign direct investors are often manufacturers thatoccupy a dominant position in the supply chain and that play amajor part in the industrial sectors in which they operate. In thebest circumstances they bring to the host country, and the firmswith whom they work, state-of-the-art technologies and highstandards for environment, health and safety, and quality assur-ance. International financial statistics, however, indicate onlythe quantity, and not the quality, of FDI. Table TS 2 shows theincrease in net private capital flows (of which FDI is a compo-nent) to low and middle income countries by country group andregion during the period 1990-1996. Notable is the low sharereceived by countries in Africa.

Grants by NGOs to developing countries have stayed fairly con-stant during the last decade, ranging between US$5 billion andUS$6 billion per year since 1990. Despite their relatively mod-est amounts, many of these are directed at least developed coun-tries and at capacity building efforts.

The general increase in the importance of private sector invest-ment in developing countries does not reduce the role of ODA.First and as noted above, private sector investment has beenvery selective (see Table TS 2 and also Figures TS 2 and TS 3 inthe Industry section). While almost all countries have benefitedto some degree, a handful of countries (East Asia and LatinAmerica) have received most of the attention. ODA is still crit-ical for the poorest countries, particularly when it is aimed atdeveloping basic capacities to acquire, adapt, and use foreigntechnologies. Second, ODA is still important for those sectorswhere private sector flows are comparatively low, like agriculture,forestry, human health and coastal zone management. Moreoverit can be essential for certain activities including the leveragingof funds for capacity building activities and supporting the cre-ation of enabling conditions which may leverage larger flows ofprivate sector finance into ESTs. Third, private investment, mostnotably foreign portfolio equity investment and commerciallending, is volatile. Many developing countries have found to theirdistress that private investment can quickly dry up if investors per-ceive more attractive––or less risky––opportunities elsewhere.

Technical Summary18

Other private flow

Total bond lending

Foreign DirectInvestment

Other official Development Finance

Official Development Assistance

International ban lending

Figure TS1. Total Net Resource Flows to Aid Recipient Countries; OECD, 1999c.

Table TS2 Net private capital flows to low and middle income countries by country group (US$ billion) (Source: World Bank.)

COUNTRY GROUPAll countries

Sub-Saharan AfricaEast Asia and the PacificSouth AsiaEurope and Central AsiaLatin America and CaribbeanMiddle East and North Africa

IncomegroupLow income countriesExcluding China and IndiaChina and IndiaMiddle income countries

199044.40.3

19.32.29.5

12.50.6

1.4

10.032.0

199156.60.8

20.81.97.9

22.92.2

3.0

9.144.0

199290.6-0.336.92.921.828.70.5

2.4

23.064.8

1993157.1-0.562.46.025.659.83.9

5.8

44.2107.1

1994161.3

5.271.08.517.253.65.8

6.3

50.8104.2

1995184.2

9.184.15.230.154.31.4

5.5

47.9130.7

1996243.811.8

108.710.731.274.376.9

7.1

60.0176.7

Measuring Technology Transfer of ESTBecause of the limited comparison of trends in technology trans-fer on the basis of financial flows, better indicators and data toquantify the level and flows of climate-relevant EST are neededto give governments better information on which to base their pol-icy. In addition, technology performance benchmarks for differ-ent sectors could be compiled to give an indication about the realdegree of implementation of EST and the potential for techno-logical improvements. It would be useful to have simple andagreed upon criteria for measuring the transfer of ESTs.

1.5 Barriers to the transfer of Environmentally SoundTechnologies

The spread of proven ESTs that would diffuse through com-mercial transactions may be limited because of existing barri-ers. Barriers to the transfer of ESTs arise at each stage of theprocess. Thesevary according to the specific context, for exam-ple from sector to sector, and can manifest themselves differ-ently in developed countries, developing countries and coun-tries with economies in transition. The Report provides anextensive overview of the most important barriers in developed,developing and transition economies that could impede thetransfer of ESTs to mitigate and adapt to climate change (seeTable TS 3 and TS 4 for further reference). Governments canpromote technology transfer by reducing the barriers that areassociated with each of these elements of an enabling envi-ronment.

• Lack of full-cost pricing, which internalises environ-mental and social costs;

• Poor macroeconomic conditions, which could includeunderdeveloped financial sector, high import duties, highor uncertain inflation or interest rates, uncertain stabili-ty of tax and tariff policies, investment risk;

• Low private sector involvement because of lack of accessto capital, in particular inadequate financial strength ofsmaller firms;

• Lack of financial institutions or systems to ensure initialinvestments for the utilisation and extended use of trans-ferred technologies;

• Low, often subsidised conventional energy prices result-ing in negative incentives to adopt energy saving mea-sures and renewable energy technologies;

• Lack of markets for ESTs because of lack of confidencein economic, commercial or technical viability, lack ofmanufacturers, lack of consumer awareness and accep-tance of technologies;

• Lack of supporting legal institutions and frameworks,including codes and standards for the evaluation andimplementation of environmentally sound technologies;

• Lack of understanding of the role of developed and devel-oping countries and international institutions in the fail-ures and successes of past technology cooperation.;

• General lack of support for an open and transparent inter-national banking and trading system;

• Institutional corruption in both developed and develop-ing countries;

• Reluctance to identify and make available ESTs that arein the public domain;

• Insufficient human and institutional capabilities;• Inadequate vision about and understanding of local needs

and demands;• Inability to assess, select, import, develop and adapt

appropriate technologies;• Lack of data, information, knowledge and awareness,

especially on "emerging" technologies; • Lack of confidence in unproven technologies;• Risk aversion and business practices that favour large pro-

jects in financial institutions including MDBs; • Lack of science, engineering and technical knowledge

available to private industry;• Insufficient R&D because of lack of investments in R&D

and inadequate science and educational infrastructure;• Inadequate resources for project implementation;• High transaction costs;• Lack of access to relevant and credible information on

potential partners to allow for the timely formation ofeffective relationships which could enhance the spread ofESTs.

There is no pre-set answer to enhancing technology transfer.The identification, analysis and prioritisation of barriers shouldbe country based. It is important to tailor action to the specific bar-riers, interests and influences of different stakeholders in order todevelop effective policy tools.

2. Increase the flow, improve the quality

The challenge of successfully transferring ESTs should be seenin the context of sustainable development. Sustainable develop-ment needs not restrict growth but can stimulate the emergenceof a vibrant. industrial economy, a process in which technologytransfer is likely to play a major role. Sustainable industrialisa-tion is especially a challenge for developing countries, becausetheir low initial level of development provides them with anopportunity to follow a technological trajectory which can becleaner and more efficient than the path OECD countries have fol-lowed.

To enhance the sustainability of the development process, gov-ernment actions can transform the conditions under which tech-nology transfer takes place. The spread of proven ESTs thatwould diffuse through commercial transactions may be limitedbecause of the barriers listed above. Governments can playimportant roles in facilitating the private transfer of ESTs byencouraging private sector trade and investment of environ-mentally sound technologies. Capacity building programmesand enabling environments that reduce the risks and restrictionsassociated with the transfer of ESTs will

METHODOLOGICAL AND TECHNOLOGICAL ISSUES IN TECHNOLOGY...

Documents

Transcript of METHODOLOGICAL AND TECHNOLOGICAL ISSUES IN TECHNOLOGY...