Methodological and Technological Issues in Technology Transfer

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10.4.1 Barriers to Technology Transfer

Many opportunities to reduce carbon emissions in the energy supply sector are well documented. A series of barriers precludes actions which can be undertaken to use already available technologies. A detailed list of barriers limiting energy efficiency diffusion and more intensive use of renewables is provided in Chapters 4 and 5. Instead of listing all of them we prefer to discuss a few, particularly the ones important for conventional energy sources.

More efficient conversion of fossil fuels can be obtained through identification of the necessary technology and its utilisation to improve oil refineries processing efficiency, coal mining processing, power generation and the widespread use of cogeneration, to name the most important ones.

Efficiency improvements in oil refineries are limited mainly by the lack of competitive financial conditions. Due to the low price of oil, capital investments in refinery upgrades often would not provide an economical return. The same is true for coal processing upgrades. Low price of fossil fuels are consequences of many traditional policies like direct and indirect subsidies (SAR II, 1996), non-inclusion of external costs (Harou et al., 1998) associated with their production and use (environmental and social costs), large scale of consumption and long time presence in the market which allowed the creation of an optimised production, transportation and commercialisation structure.

Opportunity to reduce emissions while reducing economic costs exists in the FSU, where the efficiency of long-distance, high-pressure natural gas transmission pumping is only 28-30 per cent in the compressor turbines. As far as technology transfer is concerned, Ukraine and Russia have developed 35 per cent efficient systems, but they cannot implement them due to the financial crises.

Efficiency improvements in power generation are already demonstrated and there is significant potential to increase present world average thermal efficiency from 30% to 60% (IPCC TP 1, 1996; Willians and Zeh,1995). Diffusion of thermal plants with 60% energy efficiency is limited in industrialised countries to the small growth in electricity demand and by the long lifetime of existing conventional power plants. In developing countries, where opportunities for supply expansion are frequent, diffusion of the most efficient plants is occurring but limited by the availability of natural gas and capital constraints for the construction of gas pipelines. As result, efficient coal plants are being built but constrained by capital availability.

Cogeneration or sequential production of power and heat is a much more efficient process than the production of each one of these energies alone. Major obstacles are shortage of capital and lack of regulatory policies to allow commercialisation of the excess electricity produced through access to the existing grid systems.

Energy efficiency improvements in power generation and cogeneration also face barriers due to:

  • Lack of incentive of the major utilities: Many electric utilities sell electricity through a regulatory review process that allows the utility to recover all operating expenses, including taxes and a fair return for its investments. This could give insufficient incentive to improve efficiency (US DOE, 1996).
  • Deregulation creating uncertainties in the power generation business. Deregulation may not necessarily lead to the most environmentally friendly outcome unless the proper institutional policies are in place.
  • Lack of human qualification in developing countries. Without investment in capacity building the existing electricity service is of lower quality compared with industrialised countries, information gathering is not a priority, and new technologies, which may be less costly or more environmental friendly, are seldom taken into account.

Switching to low carbon fuels is an important way of abating GHG emissions. In particular, replacement of coal and oil by natural gas as the primary energy source in power generation is an excellent solution. Conversion to natural gas is constrained by the long lifetime of the existing coal and oil power plants in operation in industrialised countries and by the costs associated with installation of pipelines and other infrastructure in the developing countries. The trend to power deregulation could inhibit fuel switching in the absence of complementary policies due to the existence of cheaper alternatives such as coal.

Lack of a consistent and comprehensive framework for the evaluation of energy costs from different energy sources is another serious barrier to technology transfer. For such an evaluation it is necessary to include the complete energy cycle analysis. In the case for biomass the amount of land needed, cost of collection and competition with farming to produce food must be considered. For nuclear energy costs for security, for handling and storing radioactive wastes and for disassembling the plant after its operational life are barriers to private sector involvement.

Uncertainties in the economic systems discourage long term investments, including sustainable energy. Most multilateral and international lending institutions are technologically risk averse. As a result, governments may be reluctant to invest in high-tech projects that entail high capital costs (ECOSOC, 1994). Unfortunately, most ESTs are characterised by large up-front investments. In effect, the pollution abatement advantage is paid in advance. This is also a serious obstacle for nuclear energy. Reduction in nuclear unit scale may be a way of widening its market, but must be initially tested commercially in industrialised countries to attract further economic interests.

Another concern is the lack of continuous energy supply from some renewable sources. Energy supply intermittence may require another energy source in a hybrid system or a storage mechanism to guarantee continuous supply. This adds cost or limits the maximum share of intermittent renewables in an integrated electric system (Ishitani et al., 1996).

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