Methodological and Technological Issues in Technology Transfer

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1.5 Barriers to the transfer of Environmentally Sound Technologies

The spread of proven ESTs that would diffuse through commercial transactions may be limited because of existing barriers. Barriers to the transfer of ESTs arise at each stage of the process. Thesevary according to the specific context, for example from sector to sector and can manifest themselves differently in developed countries, developing countries and countries with economies in transition. . The Report provides an extensive overview of the most important barriers in developed, developing and transition economies that could impede the transfer of ESTs to mitigate and adapt to climate change (see Table TS 3 and TS 4 for further reference). Governments can promote technology transfer by reducing the barriers that are associated with each of these elements of an enabling environment.

  • Lack of full-cost pricing, which internalises environmental and social costs;
  • Poor macroeconomic conditions, which could include underdeveloped financial sector, high import duties, high or uncertain inflation or interest rates, uncertain stability of tax and tariff policies, investment risk;
  • Low private sector involvement because of lack of access to capital, in particular inadequate financial strength of smaller firms;
  • Lack of financial institutions or systems to ensure initial investments for the utilisation and extended use of transferred technologies;
  • Low, often subsidised conventional energy prices resulting in negative incentives to adopt energy saving measures and renewable energy technologies;
  • Lack of markets for ESTs because of lack of confidence in economic, commercial or technical viability, lack of manufacturers, lack of consumer awareness and acceptance of technologies;
  • Lack of supporting legal institutions and frameworks, including codes and standards for the evaluation and implementation of environmentally sound technologies;
  • Lack of understanding of the role of developed and developing countries and international institutions in the failures and successes of past technology cooperation.;
  • General lack of support for an open and transparent international banking and trading system;
  • Institutional corruption in both developed and developing countries;
  • Reluctance to identify and make available ESTs that are in 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 projects 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 of effective relationships which could enhance the spread of ESTs.

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


Table TS3 Policy Tools for Creating an Enabling Environment for Technology Transfer
  • Build firms' capabilities for innovation
  • Develop scientific and technical educational institutions
  • Facilitate technological innovation by modifying the form or operation of technology networks, including finance, marketing, organisation, training, and relationships between customers and suppliers
  • Lack of technology development and adaptation centres
  • Lack of educational and skills development institutions
  • Lack of science, engineering and technical knowledge available to private industry
  • Lack of research and test facilities
  • Lack of information relevant for strategic planning and market development
  • Lack of forums for joint industry-government planning and collaboration
  • Increase the capacity of social organisations and NGOs to facilitate appropriate technology selection
  • Create new private-sector-focused social organisations and NGOs with the technical skills to support replication of technology transfers
  • Devise mechanisms and adopt processes to harness the networks, skills and knowledge of NGO movements
  • Technology selection inappropriate to development priorities
  • Historical legacy of technology transfer in development
  • Problems of scaling cultural and language gaps and fostering long-term relationships
  • Build capacities of firms, non-governmental organisations, regulatory agencies, financial institutions, and consumers
  • Inability to assess, select, import, develop and adapt appropriate technologies
  • Lack of information
  • Lack of management experience
  • Problems of scaling cultural and language gaps and fostering long-term relationships
  • Limited impact of technology because no long term capacity built to maintain innovation
  • Lack of joint venture capabilities for learning and integrating
  • Provide direct financial support like grants, subsidies, provision of equipment or services, loans and loan guarantees.
  • Provide indirect financial support, like investment tax credits
  • Raise energy tariffs to cover full long-run economic costs
  • Alter trade and foreign investment policies like trade agreements, tariffs, currency regulations, and joint venture regulations
  • Alter financial sector regulation
    (See also Chapter 5 for further discussion of policy tools for financing technology transfer)
  • Lack of access to capital
  • Lack of available long-term capital
  • Subsidised or average-cost (rather than marginal-cost) prices for energy
  • High import duties
  • High or uncertain inflation or interest rates
  • Uncertain stability of tax and tariff policies
  • Investment risk
  • Excessive banking regulation or inadequate banking supervision
  • Incentives for banks that are distorted against risk taking
  • Banks that are poorly capitalised
  • Risk of expropriation
  • Conduct market transformation programmes that focus on both technology supply and demand simultaneous.
  • Develop capacity for technology adaptation by small- and medium-scale enterprises (SMEs)
  • Conduct consumer education and outreach campaigns
  • Targeted purchasing and demonstrations by public sector
  • High transaction costs
  • Inadequate strength of smaller firms
  • Uncertainty of markets for technologies prevents manufacturers from producing them
  • Lack of consumer awareness and acceptance of technologies
  • Lack of confidence in the economic, commercial, or technical viability of a technology
  • Strengthen national frameworks for intellectual property protection
  • Strengthen administrative and law processes to assure transparency, participation in regulatory policy-making, and independent review
  • Strengthen legal institutions to reduce risks
  • Lack of intellectual property protection
  • Contract risk, property risk, and regulatory risk
  • Corruption
  • Develop codes and standards and the institutional framework to enforce them.
  • Develop certification procedures, and institutions, including test and measurement facilities.
  • High user discount rates do not necessarily result in most efficient technologies
  • Lack of information about technology or producer quality and characteristics
  • Lack of government agency capability to regulate or promote technologies
  • Lack of technical standards and institutions for supporting the standards
  • Devise analytical tools and provide training for social impact assessment.
  • Require social impact assessments before technology is selected
  • Create compensatory mechanisms for "losers"
  • Social impacts not adequately considered
  • Some stakeholders may be made worse off by technology transfer
  • Investigate impacts of technology on property rights, test through participatory approaches, devise compensatory mechanisms for losers.
  • Inadequately protected resource rights
  • Develop science and educational infrastructure by building public research laboratories, providing targeted research grants, and strengthening technical education system
  • Directly invest in research and development
  • Insufficient investment in R&D
  • Inadequate science and educational infrastructure


Table TS4 Policy Tools for Financing and Participation (Source: Mansley et al., 1997a, b)
  • Provide direct finance
  • Provide official development assistance
  • Provide multilateral development bank finance
  • Lack of confidence in "unproven" technology
  • Lack of access to capital
  • User acceptability
  • Costs of developing new public infrastructure
  • Lack of policy harmonisation
  • Uncertain future energy prices
  • Support, through a variety of policy tools, private-sector financing mechanisms such as microcredit, leasing, venture capital, project finance, "green" finance, and a range of other private-sector financing initiatives
  • Reduce perceived risks through consistent policies and transparent regulatory frameworks (see Chapter 4)
  • Lack of access to capital
  • High transaction costs
  • High front-end capital costs
  • High user discount rates
  • Inadequate financial strength of smaller firms
  • Lack of information
  • Lack of confidence in "unproven" technology
  • Create incentives for firms to make environmentally sound investments, such as energy taxes, investment tax credits, and emissions fees (see Chapter 4)
  • Engage firms in public-private partnerships, as discussed in Section 5.6, particularly to overcome managerial misincentives
  • Managerial misincentives
  • Competing purchase decision criteria
  • Sunk investments in existing equipment and infrastructure
  • Energy-supply-side financing bias
  • Lowest-cost equipment favoured
  • Enter into voluntary agreements with the private-sector
  • Develop technical partnership programmes
  • Conduct informational initiatives
  • Provide tax incentives, guarantees, and trade finance
  • Promote new financial initiatives

Barriers are similar to those for public-sector and private-sector financing and investment, plus the following:

  • Uncertain markets for technologies
  • Import duties
  • Utility acceptance of renewable energy technologies
  • Permit risk
  • Environmental externalities
  • Shortage of trained personnel
  • Create information networks, advisory centres, specialist libraries, databases, liaison services
  • Create and support technology intermediaries like energy service companies and national-level institutions
  • High transactions costs
  • Lack of available information about technology costs and benefits among potential purchasers and partners
  • Missing connections between potential partners and credible information about partners
  • Disaggregated opportunities that do not provide sufficient benefits for individual firms to capture on their own
  • Lack of capacity to contract and conduct technology transfers

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