An introduction to technology-oriented agreements

Heleen de Coninck (ECN/IVM)ECN side-event COP13 – December 7th, 2007

Background: status post-2012Agreement to agree. But on what?

EU continues on cap-and-trade track United States: might not sign up to an international carbon cap

– US Congress difficulty to agree on meaningful climate act– US Senate not favourable to cap-and-trade (filibustering)

Emerging economies: no strict commitmentsA post-2012 treaty a la Kyoto with broad Annex-I participation unlikelyComplex patchwork of treaties more conducive, including cap-and-trade,

sectoral and technology agreementsQuestion:

What can we expect from sectoral and technology agreements?

Alternative or complement to cap-and-trade?Disinterest in cap-and-trade can be explained for countries with low

climate change impacts and high mitigation costs Provision of a global public good; free-rider incentives

Sectoral agreements (IEA, Pew Center) and TOAs might provide participation incentives Predictable costs Innovation market failure Potentially smaller number of parties (club good) Interests of current technology leaders (first-mover

advantage) and large developing countries (targeted and more effective

technology transfer)

Context and forms of TOAs“International agreements that are aimed at advancing

specific technologies”Four types:1. Knowledge sharing and coordination2. Research, development and demonstration3. Technology transfer4. Technology mandates, standards and incentives

Context and forms of TOAsType 1: Knowledge sharing and coordination

1.Carbon Sequestration Leadership Forum (CSLF) and the International Platform on the Hydrogen Economy (IPHE)2.Methane to Markets Partnership (M2M)3.Task sharing within IEA Implementing Agreements (IEA-IA)4.Asia-Pacific Partnership on Clean Development and Climate (APP)5.Energy Star bilateral agreements

Type 2: RD&D

1.European Organization for Nuclear Research (CERN)2.ITER fusion reactor3.Cost sharing within IEA Implementing Agreements (IEA-IA)4.The Solvent Refined Coal II Demonstration Project (SRC-II)

Type 3: Technology transfer

1.Multilateral Fund under the Montreal Protocol2.Global Environment Facility (GEF)

Type 4: Technology incentives, mandates, standards

1.International Convention for the Prevention of Pollution from Ships (MARPOL)2.European Union Renewables Directive

Context and forms of TOAs - conclusions

Knowledge sharing and coordination, and RD&D (Types 1 and 2) not environmentally effective on their own, but can be useful for low-cost or underdeveloped technologies

Technology transfer agreements (Type 3) can be effective if substantial funds committed, but unlikely to be sufficient in scope on their own

Technology incentives, mandates and standards (Type 4) can be environmentally effective on their own, although in most cases less cost-effective than cap-and-trade approaches

Context and forms of TOAs - conclusions

Type-4 agreements may be more effective for: Sectors with significant ancillary benefits Highly trade-sensitive sectors Sectors not covered by cap-and-trade systems Sectors that might benefit from international

coordination

ConclusionsTechnology-oriented agreements can take many forms and can be

appealing for different reasons, e.g. more manageable number of actors, greater cost predictability, innovation benefits, large emission reductions

It makes sense to explore TOAs, as they may offer political advantages

However, global cost-effectiveness and simplicity of one global cap-and-trade are sacrificed

In order to be environmentally effective, TOAs should primarily be aimed at technological implementation (Type-4)

It is possible to pursue such agreements without straying from the cap-and-trade track

Thank you

More information and report copies:Heleen de Coninck

Energy research Centre of the NetherlandsUnit Policy Studies

Radarport 60/P.O.Box 568901040 AW Amsterdam

deconinck@ecn.nlTel. +31-224-564316