10.4.2 Programmes and Policies for Technology Transfer
Assessment of the most efficient technology to abate GHG emissions while requiring
the minimum amount of investment is an important aspect of the technology transfer
Traditionally government participation in the innovation process has occurred
as a main promoter of R&D and buyer of new technologies. It is important
to note that government's role is also important in the area of information,
regulation, and in the definition of market-based initiatives (see Chapter
4 on the role of enabling environments for technology transfer).
Information and education programmes can be conceived as efforts for increasing
public awareness regarding the availability of climate-friendly investments
and also directed to reeducate experts who are trained in conventional technologies
and procedures. Programmes directed to both of these purposes can be very effective.
In Brazil hydroelectricity has been almost the only source of electricity generation
for many decades, and most of the population were not aware of other alternatives
which could bring many advantages (low initial cost, short implantation time,
few social issues, etc.), as well as many difficulties (GHG emissions, electricity
cost dependence on oil prices, etc.). Information and education programmes were
mostly carried out with knowledge acquired abroad through non-financial technology
transfer services (intelligence gathering and dissemination, technical assistance,
independent validation and testing, and brokering activities performed by economic
development agencies, and non-governmental organisations), and diffused later
on through the same mechanism.
The fact that some ESTs are in the public domain5
provides opportunities for the countries which want to develop them locally
(Korea, 1998). Hence, the priority task is to maximise the diffusion of information
on these technologies. Increasing the use of computers and all their presently
available associated software for communication (the Internet) can provide a
very good opportunity for most countries. Better education is seen as an opportunity
for developing countries to have the required trained human resources for developing
and utilising these technologies, as well as to absorb and take advantage of
the ones available from IC by any possible transfer mechanism (Davidson et al.,
Regulation, such as setting minimum efficiency requirements for the energy supply
sector, could be important for inducing use of more efficient technology.
Agreement and Implementation
Once assessment of the technology is completed it is important to examine how
the technology transfer can evolve to its next step, which is the agreement
between parties and project implementation.
Market availability is a very important condition for the success of a new technology
(OTA, 1995a; Rothwell, 1974; Langrish et al., 1972). Market pull is important
since private entrepreneurs with short-term interests will be resistant to investments
in new technologies unless a market exists and uncertainties are low. Usually
this market is initiated by pilot projects, government investments or acquisitions,
importation of products and services from abroad (FCCC, 1998), or consumers
willing to pay a premium price. As they gain acceptance rising public interest,
private investors from the country or abroad will understand that a potential
market is available, and through actions on maintenance services and on better
prices it can be enlarged. The creation of a market has been a responsibility
assumed quite often by the government through procurement of new technologies
for public missions like energy production and distribution, and provision of
incentives for its development, including grants, low interest loans, import
duty exemption, income tax exemption, and competitively determined subsidies.
Grants are a very common incentive used to stimulate adoption of a new technology
in industrialised countries (e.g. The Clean Coal Program in US - see the Compendium
on Clean Coal - http://www.lanl.gov/projects/cctc/;
The Salix Consortium - Biomass for Rural Development (http://www.eren.doe.gov/biopower/newyork.html)
and in developing countries (see Box 10-1, and Case Study
6, Chapter 16). An example of the use of income tax
exemption is discussed for The Netherlands (see below). Competitively determined
subsidies have been employed in industrialised countries - the Non-Fossil-Fuel
Obligation (NFFO) in the UK, and the electricity feed law (EFL) in Europe (Grubb
and Vigotti, 1997; Brower et al., 1997; Mitchell, 1995).
|BOX 10.1 WIND POWER TECHNOLOGY IN INDIA
|India has a history of policy driven technology promotion for emerging
technologies. Prior to the economic reforms initiated early this decade,
the new and renewable energy technologies were promoted in the initial stages
through the target-oriented-supply-push approach. Government agencies identified
the investors as well as suppliers and fixed the technology price. Financial
support was limited to target capacity without any price signal since market
had no role.
Policies in the post-economic reform have allowed a greater role for
the market. Project promoters accessed the financial incentives in addition
to their own investments. The government provides tax concession through
accelerated depreciation of capital equipment. Under the market dynamics,
the technology transfer occurred via the market, as companies competed
to provide the technology. The success of this pathway is evident in the
rising deployment of wind power in India in past five years (Ramana and
Market-based incentives set up by the government are useful approaches that
are helping renewables to be commercialised in small niches. Three examples
of this approach - the Government of India's effort to promote wind power technology
(see Box 10.1), fiscal support for renewables in the
Netherlands and the carbon tax in Norway (see below) are presented.
- In the Netherlands the government actively supports renewable energy through
various financial measures. Fiscal policies allow accelerated depreciation
and investment cost allowances for companies investing in renewables. The
generated income of private investors in so-called Green Funds are tax-exempt.
In addition, the distributing utilities are allowed to retain the standard
regulatory energy tax to support renewable energy producers and may also sell
Green Electricity at a premium price to environmentally conscious customers.
In a pilot market scheme for Green Certificates, a trading mechanism (spot
and forward market) has been established for renewably generated electricity,
which makes it feasible to efficiently reach quantified targets for renewable
- Natural gas industry investments in most of the industrialised countries
are essentially done by the private sector. But the presence of the government
is important to create an enabling environment for private-sector driven technology.
CO2 extracted from natural gas wells and injected
into a shallow acquifer (see 10.2.2) has turned economically
feasible in Norway due the existence of a carbon tax. The factors that make
this development different from the already practical injection of CO2
for improved oil recovery is the shallow depth and low injection pressure,
the wet CO2, and the need for the system to
dispose of available CO2 at any time. By publishing
the results of this development, the technology is made available to anyone
who wishes to sequester CO2 in an aquifer under
similar geological and operating conditions.
A mix of policy instruments appears effective in many countries in promoting
renewables. In Germany, for example, the success in promoting renewable energy
in the last few years is attributed to a large extent to the Electricity Feed
Law, which requires utilities to buy electricity from renewable sources at premium
rate, and to direct subsidies for renewables, which amounted to DM 55 (approx.
million in 1995/1996. The most remarkable aspect is the success of wind energy
in Germany, whose capacity increased from 61 MW in 1990 to about 1,545 MW at
the end of 1996. The process has been supplemented by an aggressive information
campaign, which helps to disseminate information on current application and
the most recent research available on renewable energy (IEA, 1997).
Technology implementation is facilitated if it fits in with country capital-labour
mix. Under this vision, the GHG abatement option of increasing the use of renewable
energy is welcome, because of the large number of permanent jobs created. Considering
this measure, biomass-based electricity combined with heat production is the
most favourable option, followed by PV. Hydro and mini-hydro plants also create
a large number of jobs; yet only during the construction period (Moreira and
Poole, 1993). The Brazilian Alcohol Program has survived during the first half
of the 1990s with arguments based strongly on the large number of permanent
jobs created, and the synergism between the low qualification requirement of
the cane harvester and the large number of low-literacy workers. This particular
match was an important factor for the rapid diffusion of ethanol production
in Brazil (Moreira and Goldemberg, 1999). A similar situation is occurring in
the United States where the creation of numerous work opportunities for corn
farmers are used as an important argument for the promotion of this liquid fuel
Another way to guarantee the implementation of technologies is the use of the
legal structure. The Brazilian Alcohol Program was introduced in such way. A
law was passed to strengthen the national sugar industry, thereby reducing hard
currency expenditures on oil imports. Thus, the Program was motivated by potential
economic benefits and not to meet GHG abatement targets. Another opportunity
for energy technology transfer is the recognition by decision makers that availability
of power, even in small amounts, provides a significant improvement in the quality
of life (see Case Study 3, Chapter 16).
This is pushing the market for small PV units. International experience has
shown a positive correlation between access to energy and electricity services
and educational attainment and literacy among both the rural and urban poor.
Families lacking adequate energy supplies will tend to limit children's time
spent on schoolwork and reading; in extreme cases, families may withdraw children
from the school systems to spend time on firewood and dung collection. Worldwide,
female children are disproportionately affected.
In stand-alone applications, remote from the electrical grid (for lighting,
water pumping and refrigeration), PV has been competitive for several years
(IPCC, 1996). In such applications, PV systems are often competitive with presently
used kerosene, candles and dry-cell batteries (assuming that low cost money
is available), but typically there is no infrastructures to provide people with
access to this technology (see Case Study 5, Chapter
Evaluation & Adjustment
Even considering that the energy industry is quite homogeneous throughout the
world, several opportunities for evaluation and adjustment of technologies exist
in particular countries or regions. The operation efficiency of the electricity
generating equipment in developing countries - with some notable exceptions
- is often substantially below that achieved in the industrialised countries,
despite the fact that the basic technology is the same (Maya and Churie, 1996).
Thermal efficiency and forced outage rate, which are important measures of maintenance
efficiency, should improve (OTA, 1992). Over the past two decades, the cost
effectiveness of generation system rehabilitation has become recognised in the
United States and Europe, where a great deal of attention has been placed on
what has become known as "life extension" or "life optimisation"
(OTA, 1992). Efforts of this type require hard and soft technologies, since
most of the technological barriers leading to such poor performance are credited
to inadequate training.
One of the adjustment processes is on-the-job training. Successful innovations
require that entrepreneurs assemble a team of well trained scientists, engineers,
technicians, managers and marketers who develop new technologies and incorporate
them into products; manufacture them in a way that is timely, cost effective,
and responsive to the market; and sell them. Training workers with these diverse
skills is the responsibility of different institutions, both public and private
(OTA, 1995a). In many universities, graduates often receive little training
in manufacturing processes, product design and teamwork. Nevertheless, workplace
education supplements formal education, as workers learn through experience
and formal training programmes. For emerging technologies in particular, many
of the skills needed for commercial success are not available in the formal
education systems, but are developed instead by companies engaged in proprietary
R&D programmes (OTA, 1995). Labour force skills are expanded through industry
conferences, technical committees, and trade publications and technical journals,
which provide an opportunity for industry participants to exchange ideas and
In the case of biomass technologies the issue of adjustment is magnified. Biomass
yields are sensitive to climate and soil characteristics, and any successful
project in one site has to be properly adapted to provide similar results in
. This is exemplified in the discussion of a Case Study 8, Chapter 16.
Even in the developed world R&D represent only a small fraction, 10 to 15%,
of the resources required to bring to market a new product that incorporates
substantially new technology. The other 85-90% is so-called downstream investment:
design, manufacturing, applications engineering, and human resource development
(OTA, 1995). Developing a highly qualified human infrastructure in the downstream
investment sector, will facilitate in dealing with one of the two faces of technology
development -- "problems in search of solutions" -- which is what
industry, society, and design engineers encounter in practice. Even with poor
investments in the second face of technology development -- "solutions
in search of problems" -- a country can reach a high level of technological
development (Greene and Hallberg, 1995).
Assuming R&D conducted at universities and research centres is sufficient,
it is very important to establish linkages between networks of research laboratories
and the private sector to facilitate the transfer of technologies to industry,
and for the users of technology to channel their feedback to the generators
of knowledge. In the USA, since the 1980s, Congress and the executive branch
began to supplement this approach within a series of programmatic efforts aimed
at helping specific industries. Some of these efforts encourage government and
private industry to (OTA,1995a;DOE, 1999):
- share the cost of strengthening the supplier base of some important industries
- share the cost of pre-competitive research projects, and,
- disseminate best-practices to manufacturing firms, many of which are unfamiliar
with the most advanced manufacturing technologies and practices.
The US Government is committed to ensuring the full implementation of technology
transfer policies and legislation in all federal agencies. For the DOE technology
transfer is a priority mission at all levels of department management. The EPA
and Department of Commerce also have made significant improvements in their
technology transfer programmes (National Energy Strategy, 1991). This attention
on technology transfer builds in a strong base of legislative and policy mandates.
In recent years, the US Congress and the Administration have cooperated on legislation
specifically directed towards increasing the transfer of federally developed
technology to US entities (National Energy Strategy, 1991). States have also
funded RD&D. California funds certain public interest RD&D projects
to "advance science or technology not adequately provided by competitive
or regulated markets". A surcharge on electric rates is the source of funds.
Focus areas include renewables, efficiency, advanced power generation, power
system reliability, and environmental research (Tanton, 1998; http://www.energy.ca.gov).
Clusters of research-production-marketing activities, such as applied research
parks or university-industry parks will facilitate the connection of research
to production and the marketing of the results. Rather than dispersing assets,
the parks offer a synergistic concentration of knowledge, workers, and facilities
(Greene and Hallberg, 1995).
Although there is a consensus among economists that over the long-run innovation
is the single most important source of long-term economic growth, and that returns
on investment in research and development are several time as high as the returns
on other forms of investment, private firms generally tend to underinvest in
research and development (Cohen and Nell, 1991). Overall, government support
for energy research and development in International Energy Agency member countries
fell by 1/3 in absolute terms and by half a percentage of GDP in the decade
ending in 1992 (see Table 5.1; Reddy et al., 1997).
Not only has overall energy research and development spending been declining,
but also only a modest fraction of R&D spending has been committed to the
sustainable energy technologies.