Methodological and Technological Issues in Technology Transfer

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9.4.2 Programmes and Policies for Technology Transfer

In this section we will follow the steps in the transfer process, using experiences reported in the literature, as well as case studies (see Table 9.3). The steps we follow are assessment, agreement, implementation, evaluation and adaptation, and repetition. Various programmes try to lower the barriers simultaneously in some steps. A wide array of policies to increase the implementation rate of new technologies has been used and tested in the industrial sector in industrialised countries (Worrell et al., 1997), with varying success rates. We will not discuss general programmes and policies (e.g. taxation, subsidies, integrated resource planning, regulation and guidelines, voluntary programmes and information programmes; see Chapter 4), but rather concentrate on specific examples in the industrial sector, with an emphasis on developing countries' experiences. With respect to technology diffusion policies there is no single instrument to reduce barriers; instead, an integrated policy accounting for the characteristics of technologies, stakeholders and countries addressed is needed. Technology diffusion is also influenced by many parameters, including capital costs, resources, productivity and resource efficiency.

Selection of technology is a crucial step in any technology transfer. Information programmes are designed to assist energy consumers in understanding and employing technologies and practices to use energy more efficiently. These programmes aim to increase consumers' awareness, acceptance, and use of particular technologies or utility energy conservation programmes. Examples of information programmes include educational brochures, hotlines, videos, audits, and design?assistance, energy use feedback and labelling programmes. Information needs are strongly determined by the situation of the actor. Therefore, successful programmes should be tailored to meet these needs. Surveys in Germany (Gruber and Brand, 1991) and the Netherlands (Velthuijsen, 1995) showed that trade literature, personal information from equipment manufacturers and exchange between colleagues are important information sources. In the United Kingdom, the "Best Practice" programme aims to improve information on energy efficient technologies, by demonstration projects, demonstrating technologies in various industrial environments and conditions, information dissemination and benchmarking (see Section 5.6 in Chapter 5 on information dissemination through intermediaries). The programme has been effective in achieving cost-effective energy savings, and is now replicated in various countries (Collingwood and Goult, 1998). In developing countries and CEITs technology information is more difficult to obtain. The case studies in India (TERI,1997; Van Berkel,1998a), see Table 9.3, show various efforts to organise technology users and to collect and distribute data. These efforts seem to be successful, and have even lead to the establishment of visions on technology development (TERI, 1997). In China, visions on technology needs have also been developed.


Information and methods to identify and assess opportunities for greenhouse gas emission abatement and energy efficiency are essential steps in the successful implementation of these practices and technologies. Energy audits for industries have been used as a tool to bridge this information gap. In India, energy audits for industry had a bad history, as historically these were often subsidised and provided at almost no cost. Often the quality of the audits was very low. Consequently, recommendations were seldom implemented by the recipient. The cooperation between Tata Energy Research Institute (TERI, New Delhi), India, and the German organisation for Technical Cooperation (GTZ) aims to strengthen the capabilities of the TERI Bangalore Centre, to provide energy audits for industry and to strengthen the capabilities to offer high quality advise to industry. The Indo-German project provided various forms of training, established an energy information centre, provided improved measuring instruments for energy audits, helped to re-organise the institution by building specialized teams for the various industrial sectors, and helped to establish South-South cooperation. The energy audit centre in Bangalore has established itself, now has nine years of experience in providing energy audits to industry in India, and has expanded from having eight to more than 25 energy experts. This has provided the critical mass for the success of the project. It is planned to replicate this process in other parts of India and other countries. Currently the Jordan-German Rational Use of Energy Project is an attempt to replicate the positive experiences from India, by twinning the Jordan RSS Institute with TERI (Menke, 1998).

Energy audit programmes are a more targeted type of information transaction than simple advertising. Industrial customers that received audits reduced their electricity use by an average of 2 to 8%, with the higher savings rates achieved when utilities followed up their initial recommendations with strong marketing, repeated follow?up visits, and financial incentives to implement the recommended measures (Nadel, 1990; Nadel, 1991; Oshima, 1998). Energy audit programmes exist in numerous developing countries, and an evaluation of programmes in 11 different countries found that on average 56% of the recommended measures were implemented by audit recipients (Nadel et al., 1991). The Indo-German energy audit project (see Box 9.1) in Indian industries (Menke, 1998) confirms that 50-60% of the recommendations were implemented, resulting in energy savings of 5-15%. Moreover, energy auditing proved to be a viable self-sustaining business opportunity, as the Indian partner was well equipped and motivated.

Agreement and Implementation
Actual implementation of technologies and practices depends on the motivation of management and personnel, external driving forces, e.g. legislation and standard setting, economics (i.e. profitability), availability of financial and human resources, and other external driving forces (e.g. voluntary agreements). Environmental legislation can be a driving force in the adoption of new technologies, as evidenced by the case studies for India (TERI, 1997) and the process for uptake of environmental technologies in the U.S. (Clark, 1997). Energy prices often do not reflect the full costs of energy production. Higher energy prices can increase the implementation rate of efficient practices, as evidenced by the Russian case study (Avdiushin et al., 1997). Market deregulation can lead to higher energy prices in developing countries and CEITs (Worrell et al., 1997), although efficiency gains may lead to lower prices for some consumers. Small energy or carbon taxes have been implemented for small energy users (incl. industry) in Denmark and the Netherlands, but it is too early to evaluate the effect on GHG emissions. Energy intensive industries operating in export-oriented markets are often exempted from such taxation schemes. The Czech case study shows a scheme, somewhat similar to a "feebate", where funds from pollution fines are used to finance pollution prevention projects (Marousek et al., 1998).

Direct subsidies and tax credits or other favourable tax treatments (to raise end-use energy efficiency) have been a traditional approach for promoting activities that are thought to be socially desirable. Incentive programmes need to be carefully justified to assure that social benefits exceed cost. Direct subsidies might also suffer from the "free rider" problem, where subsidies are used for investments that would be made anyway. Estimates of the share of "free riders" in Europe range from 50 to 80% (Farla and Blok, 1995), although evaluation is often difficult. An example of a financial incentive programme that has had a very large impact on energy efficiency is the energy conservation loan programme that China instituted in 1980.

This loan programme is the largest energy efficiency investment programme ever undertaken by any developing country, and currently commits 7% to 8% of total energy investment to efficiency, primarily in heavy industry. The programme not only funded projects that on average had a cost of conserved energy well below the cost of new supply, it also stimulated widespread adoption of efficient technologies beyond the relatively small pool of project fund recipients (Levine and Liu, 1990; Liu et al., 1994). The programme contributed to the remarkable decline in the energy intensity of China's economy. Since 1980 energy consumption has grown at an average rate of 4.8% per year (compared to 7.5% in the 1970s) while GDP has grown twice as fast (9.5% per year), mainly due to falling industrial sector energy intensity. Of the apparent intensity drop in industry in the 1980s, about 10% can be attributed directly to the efficiency investment programme (Sinton and Levine, 1994), and a larger amount from unsubsidised efficiency investments, efficiency improvements incidental to other investments, and housekeeping measures. Economic reforms in many countries opened China's economy, which has favoured growth of light industries over heavy industries. The industrial structure has thus changed remarkably, in favour of less energy intensive sectors (World Bank, 1997b).

New approaches to industrial energy efficiency improvement in industrialised countries include voluntary agreements (VA). A VA generally is a contract between the government (or another regulating agency) and a private company, association of companies, or other institution (VA and other forms of public-private partnerships are also discussed in Section 5.5 of Chapter 5). The content of the agreement may vary. The private partners may promise to attain a certain degree of energy efficiency improvement, emission reduction target, or at least try to do so. The government partner may promise to financially support this endeavour, or promise to refrain from other regulating activities. Various countries have adopted VAs directed at energy efficiency improvement (IEA, 1997). No thorough evaluations of VA schemes have been published yet. Experiences with early environmental VAs varied strongly - from successful actions to very limited impacts (Worrell et al., 1997). In some cases the result of a voluntary agreement may come close to those of regulation. Voluntary agreements can have some apparent advantages above regulation, in that they may be easier and faster to implement, and may lead to more cost-effective solutions. Some NICs, e.g. Korea, also consider the use of VAs (Kim, 1998), while the Global Semiconductor Partnership is an example of an international voluntary agreement by TNCs to reduce PFC emissions, to avoid regulation (Andersen, 1998a).

Evaluation and Adaptation
Every industrial facility is unique in the process equipment used, lay-out, resources used, and organisation. Translation from a generic technology level into practical solutions within a country, sector or individual plant is needed. In UNIDO's National Cleaner Production Programme, it was found that investors only accepted the results of a technology demonstration if these are generated in a situation similar to theirs (Van Berkel, 1998b). Among other activities, the "Best Practice" programme in the UK (and replicated in China (Dadi et al., 1997), Brazil, Australia and New Zealand) demonstrates a technology in different industrial applications. Various countries have subsidy programmes under which new applications of technologies are eligible. Unless the capacity to adapt technology to the specific circumstances is developed, either in industry or technical assistance providers, investments in clean and energy efficient technology will not be successful.

Research and development can have various goals, depending on the barriers to be tackled to implement a technology. Blok et al. (1995) differentiate between technical development of a technology, improving the technology to reduce costs, and exploration and alleviation of barriers to the implementation of a technology. The challenge of climate change is to achieve substantial GHG emission reductions over time, which can only be reached by building (technological) capacity through sustained RD&D efforts. Large potential efficiency improvements do exist in the long term (Blok et al., 1995). A recent US study (DOE, 1995) quotes many successes of energy RD&D. There is consensus among economists that R&D has a payback that is higher than many other investments, and the success of R&D has been shown in fields like civilian aerospace, agriculture and electronics (Nelson, 1982). Still the private sector has a propensity to under invest in RD&D, because it cannot appropriate the full benefits of RD&D investments, due to "free riders" (Cohen and Noll, 1994). Companies will also under invest in RD&D that reduces costs not reflected in market prices (Williams and Goldemberg, 1995), such as air pollution damages and climate change. The example of the Waste Minimisation Cycles in India (Van Berkel, 1998a) demonstrates further development of technologies to improve performance, through a network of industries from the same industry sector to reduce some of the barriers. The Brazilian Alcohol programme is an example of indigenous technology development. Although seen as expensive due to lower oil prices since 1986 (Oliveira, 1991; Weiss, 1990), it is seen as a success in the field of technology development. Development has decreased the production costs of alcohol considerably (Goldemberg and Macedo, 1994; Macedo, 1998). Copersucar, a cooperative of sugar and alcohol producers, operates a (leading) joint research centre for agricultural and technology development (Macedo, 1998), as well as training. The centre also maintains a benchmarking programme to monitor and improve performance among members.

Table 9.3 Summary of case studies on technology diffusion programmes and policies within countries
Energy Management in Metal Manufacturing Plant Russia Monitoring & Control
  Avdiushin et al.,1997
Waste Heat Recovery & District Heating Czech Republic Waste Heat Recovery at Rolling Mill & Distribution
  Marousek et al.,1998
Energy Conservation Audit Programme for SMEs Japan Energy Auditing
  Oshima, 1998
Waste Minimisation Circles India Improved Operation, Maintenance and Management Practices
Van Berkel, 1998a.
Technology Information, Forecasting and Assessment Council India Information Collection, Assessment and Promotion on Technologies
      TERI, 1997

Table 9.4 Summary of case studies on technology diffusion programmes and policies between countries
National Cleaner Production Programme UNIDO & various host countries Training & Facilitation of Cleaner Production
Van Berkel, 1998b
Energy Efficiency for Large Industry as Business Germany India Energy Auditing & Training
Menke, 1998
COREX Smelt Reduction AustriaKorea Advanced Ironmaking Process Technology
    Joo, 1998a
Development of the FINEX Process AustriaKorea Joint Development of new Ironmaking Process
Joo, 1998b
Pulverised Coal Injection for Blast Furnaces USAKorea Coal Grinding and Injection Equipment
Joo, 1998c
Global Semiconductor Partnership Global Technology Development to Reduce PFC Emissions
Vietnam Leadership Initiative VietnamTNCs Technology Cooperation to Phase Out CFC Use
Mexico Solvent Partnership MexicoU.S. Phasing out CFC use in Mexican Industry
Dry Coke Quenching China, Japan Dry Coke Quenching  
    Hu et al.,1998

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