Executive summaryTechnology Transfer is a pivotal element of the ongoing climate change negotiations and poses a multi-dimensional and complex challenge. Significant progress was made at the Cancun climate change conference in 2010 with the establishment of a new Technology Mechanism comprising the Technology Executive Committee (TEC) and the Climate Technology Centre and Network (CTCN). However, outstanding issues remain, including intellectual property rights (IPR), financing of technologies, measurement, reporting and verification (MRV) and the governance and linkages of the TEC and CTCN. Pakistan could gain from affordable and easy access to appropriate technologies for climate mitigation and adaptation and, therefore, needs to engage actively in technology transfer negotiations.

Technology Transfer

Author

Malik Amin Aslam KhanClimate Change Expert

November 2011

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Policy Brief November 2011

Why technology transfer?

Progress within negotiations

role of technology transfer, as shown in a plethora of related provisions. The Intergovernmental Panel on However, actual implementation and Climate Change (IPCC) defines delivery on technology transfer has technology transfer as a “broad set of been slow and entangled in a number processes covering the flows of know of issues. This lethargic progress fuels how, experience and equipment for lingering mistrust between developed mitigating and adapting to climate and developing countries.c h a n g e a m o n g s t d i f f e r e n t

stakeholders” (IPCC, 2000). Obviously, Article 4 of the 1994 UNFCCC sets out it spans climate change mitigation and provisions accepting the importance adaptation, as a process involving not of technology transfer. Moreover, just technology, but a framework that since 1994, at each session of the enables technology diffusion and Conference of the Parties (COP), adoption.Parties have continued to treat this as a main agenda item and it continues as a Alongside appropriate capacity standing agenda item of both the building, developing countries have Subsidiary Body for Implementation made consistent demands for (SBI) and the Subsidiary Body for technology transfer and the provision Scientific and Technological Advice of supportive finance. They view this (SBSTA). as an essential pre-requisite to forge a

global response on climate change The issue has evolved over four main based on adapting to climate impacts periods, (Figure 1): initial mandating at and moving future growth along a low Berlin (COPs 1-4), followed by a carbon trajectory.consultative process (COPs 4-7), the establishment of the “framework” at Marrakesh (COPs7 -12) and its

Since its inception, the UN Framework strengthening under the Bali Road Convention on Climate Change Map (COP 12-16) and emergence as (UNFCCC) has recognized the central the “Technology Mechanism” at

Cancun (COP 16). result, the EGTT delayed hard but necessary decisions and could not serve the needs of developing countries

It took debate across seven COPs before technology effectively (CIEL, 2008). transfer began to be translated into concrete action through the enactment of the technology transfer framework under the Marrakesh Accords.

The contentious issue of Intellectual Property Rights was conspicuous by its absence in Cancun. The Cancun At Marrakesh (COP 7), the Expert Group on Technology Agreements, which did not mention it, reflect only the Transfer (EGTT), consisting of 19 experts from different achievable consensus on Technology Transfer. regions, was mandated to facilitate the implementation

of the framework. Its role was augmented in Bali (COP 13) Cancun saw progress as Parties finally agreed on a by adding the theme of innovative financing for Technology Mechanism (TM) under the guidance of, and technology development to the EGTT and acknowledging accountable to, the COP. The TM is expected to facilitate technology transfer as one of the four pillars of the BAP for enhanced action on technology development and consideration under the Ad Hoc Working Group on Long-transfer.term Cooperative Action (AWG-LCA) negotiations track.

This Mechanism consists of a Technology Executive Intended to advance implementation of the technology Committee (TEC) and a Climate Technology Centre and transfer framework, the EGTT has produced useful studies Network (CTCN). The AWG-LCA was also mandated in and research papers, but its overall performance is 2011 to elaborate architecture/design issues to prepare questionable. It critics point to its weak positioning, for a decision at COP 17 in Durban to make the TM fully initially under the Subsidiary Body on Scientific and operational in 2012. Although the TM was announced at Technical Advice (SBSTA), which kept technology transfer Cancun, and the first meeting of the TEC took place in issues embroiled in paper-shuffling exercises, with key 2011, a number of design issues remain unresolved and technical issues relegated to an under-resourced under AWG-LCA negotiation.secretariat and external consultants. Only when the EGTT

was brought under the Subsidiary Body for Implementation (SBI) did it generate some timely and useful outputs, such as performance indicators. As a

Technology transfer at Cancun and beyond

Remaining issues

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Figure-1: The progress of the Technology Transfer debate under UNFCCC (UNFCCC Document TEC/2011/1/2)

Architectural/design issues

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Technology transfer through NAMAs

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Intellectual property rights (IPR)

Finance for technology transfer

public domain, patent-free.

Various issues and options were discussed during the Pakistan has been active in this debate, and submitted a 2011 intercessional negotiations:detailed proposal on IPR in 2008 advocating compulsory licensing for climate friendly technologies, and joint The most contentious is the linkages between the technological or patent pools maintained by developing TEC and the CTCN and their governance. Views countries to provide and transfer technologies at low cost. range from a fully-empowered governance role It also proposed time-limited patents on climate friendly (the G77 position) to the TEC providing only technologies, and incentives for technology owners to guidance, while the CTCN is self-governing (EU): differentiate their prices. some other models of 'soft governance' fall

between these two viewpoints.Pakistan could propose that the World Trade Organization The role of the CTCN as a network hub, facilitator, (WTO) regime adopts the IPR issue and applies its stimulator, broker, advisor, 'matchmaker', flexibilities to climate technology. Guidance can be catalyst and/or a knowledge centre needs attained from the Trade-Related Aspects of Intellectual clarification.Property Rights (TRIPS) agreement under the WTO, which Options outlining the criteria for selecting a CTCN allows certain technologies, usually in environmental or 'host' are also on the table, based on selection public health sectors, flexible exclusion or relaxation from indicators such as demonstrated capability, patents or enforces compulsory licensing for patented potential for fund raising, engagement with technologies. This has made essential medicines private sector and academia and connectivity to affordable in the developing world, encouraging developing countries. The criteria for selecting developing countries to argue for a similar approach to projects by the CTCN, once established, are also climate change technology transfer. This could open an under discussion.effective operational path to liberate technology transfer As technology transfer permeates across the from the maze of IPR negotiations. climate regime, the issue arises of establishing

linkages with the other instruments on mitigation, finance and adaptation before the TM is operationalized. Nationally Appropriate Mitigation Actions (NAMAs) were Amongst the additional functions of the TM, one conceived at COP 13 in Bali as a way for developing key issue is whether to mandate the TEC to carry countries to demonstrate their commitment to climate out MRV of future technology support and change mitigation while avoiding binding emission evaluate the performance of the TM in actual reduction targets. Recent NAMA submissions testify to delivery and dissemination of technology the diverse opportunities for technology deployment, transfer. including renewable energy technologies, reducing

deforestation and setting energy efficiency standards. NAMAs have a two-way linkage with technology development, transfer, and deployment. Driven by the This is one of the thorniest issues in the negotiations. overriding objective to catalyze low carbon development, Scant progress was made in Cancun, where IPR was not NAMAs depend on access to the latest technologies and mention in the Agreements. Ensuing debate about can act as a catalyst for their development and whether IPR protection is a 'facilitator or barrier' to deployment in developing countries. Ongoing NAMA technology transfer remains inconclusive.debate will have a direct bearing upon the transfer of appropriate technologies in developing countries.Developing countries maintain that appropriate climate technologies are essential for low-carbon development Pakistan has not yet submitted a NAMA and needs to and adaptation to climate change. Easy and cheap access prepare to do so. The preparation of the second National to such technologies is essential for them, but stringent Communication and a Technology Needs Assessment IPR protection raises the cost of access and an (TNA) for both mitigation and adaptation should be unnecessary barrier to deployment of green prioritized to give Pakistan a sound basis for its NAMA technologies. Solutions under discussion include keeping declarations. Ironically, the delay in the preparation of the relevant technologies outside the IPR system, compulsory national TNA means that this can now be synchronized licensing, an international agreement similar to the Doha with NAMA development.Declaration on Public Health (with patents relaxed for life-

saving drugs), and placing publicly-financed technology innovation and/or all climate-related technologies in the

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The provision of adequate and stable financial support is required to sustain the operation of the TM and for the availability and dissemination of technologies at Pakistan is a developing country bracing itself for affordable prices to developing countries in the long term. significant economic growth and development. It is

poised to shift towards greater reliance upon its The Cancun Agreements provide for scaled-up funding for indigenous coal reserves to fuel its development. developing countries, including $30 billion in fast-track

A recent UNFCCC study (NEEDS 2011) points out that funding for 2010 to 2012, and a developed country pledge while this will increase projected greenhouse gas (GHG) to mobilize $100 billion a year by 2020. The targeted areas emissions, numerous measures can be taken to shift for these “new and additional” funds include technology future development to a lower carbon and more climate transfer and development. friendly trajectory. However, Pakistan needs appropriate technologies and finance to support this shift. The precise allocation for technology transfer (and for all

other thematic areas) is unknown and subject to The NEEDS study added that the ensuing “additional” contentious negotiations. Recent research suggests that if mitigation financial needs to shift towards a low carbon all the funds pledged under the Copenhagen Accord went future range from $8 billion and $17 billion, to technology transfer, they would still be insufficient to corresponding to potential emissions reductions of 18% meet the needs (Macrellino et al., 2010) – specified at and 40% below a 'business as usual' scenario. It is believed between $262 and $670 billion per year for mitigation that:technologies and between $32.6 and $163.1 billion per

Green growth is possible with a deployment of year for adaptation (UNFCCC, 2007). cleaner technologies, aided by innovative CCS or CO capture, and storage and renewable energy 2The institutional features of the Green Climate Fund (GCF) (Table 1). Access to appropriate GHG reducing are still unclear, including its possible linkage with the TM. technologies and supportive financing is required Some countries propose a specific window of the GCF for if Pakistan is to shift its growth trajectory towards technology development and transfer, with this financing a low carbon pathway. used for capacity building, technological innovations and Pakistan needs to carry out a Technology Needs wide-scaled dissemination.Assessment to identify the best available

technologies to be used in the future. The 'financing gap' between 2012, when fast track Considering the lengthy gestation period for financing ends, and 2020, when GCF funding begins, energy sector investments, and given that today's matters for the financing of the TM. If the TM is investments will 'lock in' infrastructure, fuel and operationalized in 2012 and linked to the GCF, this issue technologies for decades, it is vital that Pakistan must be addressed.generate these additional finances to shift

The Standing Committee for Finance, proposed by towards a low a carbon future.Pakistan, could provide coordination between the Climate Fund and the technology mechanism. Pakistan faces immense associated challenges in coping

with the unavoidable impacts of climate change. The

NEEDS study highlighted the urgent need to treat

adaptation to climate change as a development priority,

focusing on climate proofing existing infrastructure and

ensuring a climate resilient future development pathway.

Access to appropriate and affordable technologies is a

pre-requisite for both. Technologies are needed for

greater water efficiency, disaster management and

sustainable agriculture practices to support enhanced

adaptation.

The study identified potential impacts and sector needs, with the associated costs of adaptation estimated using three modeling methodologies: GDP projections, per-capita figures and flood disaster modeling.

Technology transfer and Pakistan

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Table 1: Renewable energy potential in Pakistan (AEDB, 2011)

The resulting adaptation costs range from between $6 the key issues outlined earlier. It should also:billion to $14 billion/year that Pakistan needs to spend Highlight the country's technology and financial between 2010 and 2050 to cope with the effects of needs for adaptation and mitigation to position climate change, leaving aside the significant costs of Pakistan for active technology collaboration, 'residual damage' cause by climate change. particularly in the South-South context. As the

technology agenda spans the COP, SBSTA and SBI, Given the opportunities for mitigation and the economic it must be followed simultaneously in these urgency for climate adaptation, the country must, as a groups with pre-assigned responsibilities.first step, prepare a detailed account of its technology requirements for both adaptation and mitigation. Push for the operationalization of the Technology

Mechanism and finalization of the CTCN, supporting the G77 demand that the TEC has governance over the CTCN. The empowerment of the TEC should ensure a more equitable approach

Pakistan has taken steps towards the deployment of and, hopefully deliver the appropriate

renewable energy technologies.. Its Medium Term Policy technologies to developing countries. Pakistan

for Development of renewable energy, approved in 2011, should recognize that, while governance

is driven by a self-imposed voluntary target for low carbon mechanisms alone cannot transfer technology,

development of achieving at least 5% of grid-connected they can encourage a system that is demand-

installed capacity through alternative and renewable driven and responsive to developing country

energy by 2030.needs.

This target is supported by incentives to lower tariff and Pakistan needs to contribute to discourses on

non-tariff barriers to promotion renewable energy (AEDB, other issues:

2011):

On IPR, Pakistan has a detailed proposal Exempts all imported plant, machinery and

on which to build to ensure that decisions equipment for renewable energy power

on this issue reflect the country's generation projects (including wind energy) from

interests: affordable and easy access to income tax, customs duty and sales tax.

innovative technologies for both carbon Allows investors to obtain the full carbon credits

mitigation and adaptation.generated.

On finance, Pakistan is represented on Absorbs the wind generation risk within the tariff

the transit ional committee that structure.

formulated the draft design of the GCF Protects against changes in law, including tax and

for approval. Pakistan's proposal on the duty.

Standing Committee on finance is also on Indexes the tariff to cover exchange rate and

the table and needs to be followed up as inflation.

this could prioritize access to funds for Guarantees mandatory off-take of electricity

appropriate technologies and their from renewable sites at agreed rates.

diffusion in Pakistan. The country's Encourages the announcement of possible feed-

leadership position on this issue needs to in tariffs between renewable power producers

be maintained. and the national regulator.

On MRV, markers have been developed to track official development assistance

This should give Pakistan a favourable fiscal environment to developing countries for the three Rio to promote appropriate technologies in renewable conventions: UNFCCC, UN Convention to energy, but it requires effective support from a global Combat Diversif ication, and the technology transfer regime. Convention on Biological Diversity. These

n e e d e x p a n s i o n t o d e t e r m i n e technology-related contributions, using

COP 17 in Durban is expected to move the technology the performance indicators developed by transfer agenda forwards through operationalization of EGTT.the TM. Pakistan has been engaged actively in the debate from the outset and should continue its engagement on On links between the Technology and

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Current incentives for climate friendly technology transfer

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Moving the agenda forward

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This document is produced at the request of the Government of Pakistan as a specific output of a project to support capacity-building for negotiators in Pakistan. This project is funded by the Climate & Development Knowledge Network (CDKN). CDKN is funded by the UK Department for International Development (DFID) for the benefit of developing countries. The views expressed and information contained in this document are not necessarily those of or endorsed by CDKN or DFID, which can accept no responsibility for such views or information or for any reliance placed on them. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, the Climate and Development Knowledge Network's members, the UK Department for International Development (DFID), their advisors and the authors and distributors of this publication do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

Copyright © 2012, Climate and Development Knowledge Network. All rights reserved.

ReferencesAEDB (2006), Pakistan’s “Policy for development of renewable energy for power generation”. Islamabad: Alternative Energy Development Board AEDB (2011), “Alternative and Renewable Energy Policy”, Alternative Energy Board, Ministry of Water and Power, Government of Pakistan, Islamabad.Aslam, Malik Amin (2011), “National Economic and Environmental Development Study (NEEDS)” To be published by UNFCCC secretariat, Bonn, Germany. CIEL (2008), “Technology Transfer and Climate Change at the UNFCCC: the State of Play”. Washington DC: Center for International Environmental LawG77/China (2008), “A Technology Mechanism under the UNFCCC”, p. 6-9, in FCCC/AWGLCA/2008/MISC.5Intergovernmental Panel on Climate Change (2000), “IPCC Special Report: Methodological and Technological Issues in Technology Transfer –Summary for Policymakers”.Macrellino, Dominic & Gerstetter, Christiane (2010), “Technology Transfer in the International Climate Negotiations”, Eco-Logic publication, Washington DC.UNFCCC (2007), “Investment and Financial Flows to Address Climate Change”.UNFCCC (2011), Document FCCC/AWGLCA/2011/INF.2, “Report of Expert Workshop on the Technology Mechanism”, Bangkok 4-5th April.UNFCCC (2011), Document TEC/2011/1/2, “Briefing Note on the development and transfer of technologies under the UNFCCC process”, First Meeting of the TEC.UNFCCC (2010), Document EGTT/2010/13, “Preparing for the implementation of the proposed Technology Mechanism”, EGTT Working paper, Bonn-Germany.

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Financial mechanisms, Pakistan must try follow-up exercise through a bottom-to ensure that the GCF provides a up, demand-driven study.specific window for technology transfer, preferably with pre-determined thematic allocation.

Domestical ly, Pakistan needs to u n d e r ta ke i t s s e co n d N at i o n a l Communications and revive the stalled TNA, which could provide a technically justifiable basis for future NAMAs. The NEEDS study which identified financing needs and technology options for mitigation and adaptation requires a

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About the ProjectThis policy brief was originally produced as one of a project series to support the Government of Pakistan delegation to COP17 in Durban, South Africa, in November 2011. The purpose of the briefs was to provide up-to-date information about key negotiation topics in the run-up to the negotiations. Further progress was made at Durban however these policy briefs may still be useful as background information and context for the current position.

The project was funded by the Climate & Development Knowledge Network (CDKN). CDKN aims to help decision-makers in developing countries design and deliver climate compatible development. They do this by providing demand-led research and technical assistance, and channelling the best available knowledge on climate change and development to support policy processes at the country level.