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U N I T E D N A T I O N S C O N F E R E N C E O N T R A D E A N D D E V E L O P M E N T

Powering Developmentwith Renewable

Energy Technologies

TECHNOLOGY

AND INNOVATION

REPORT 2011

EMBARGO

The contents of this Report must not be

quoted or summarized in the print,

broadcast or electronic media before29 November 2011, 17:00 hours GMT

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U N I T E D N A T I O N S C O N F E R E N C E O N T R A D E A N D D E V E L O P M E N T

Powering Developmentwith Renewable

Energy Technologies

TECHNOLOGYAND INNOVATION

REPORT 2011

New York and Geneva, 2011

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ii TECHNOLOGY AND INNOVATION REPORT 2011

NOTE

The terms country/economy as used in this Report also reer, as appropriate, to territories or areas; the designationsemployed and the presentation o the material do not imply the expression o any opinion whatsoever on the part othe Secretariat o the United Nations concerning the legal status o any country, territory, city or area or o its authori-ties, or concerning the delimitation o its rontiers or boundaries. In addition, the designations o country groups areintended solely or statistical or analytical convenience and do not necessarily express a judgment about the stage odevelopment reached by a particular country or area in the development process. The major country groupings usedin this Report ollow the classifcation o the United Nations Statistical Ofce. These are:

Developed countries: the member countries o the OECD (other than Chile, Mexico, the Republic o Korea and Tur-key), plus the new European Union member countries which are not OECD members (Bulgaria, Cyprus, Latvia, Lithu-ania, Malta and Romania), plus Andorra, Bermuda, Liechtenstein, Monaco and San Marino.

Transition economies: South-East Europe and the Commonwealth o Independent States.

Developing economies: in general all economies not specifed above. For statistical purposes, the data or Chinado not include those or Hong Kong Special Administrative Region (Hong Kong SAR), Macao Special AdministrativeRegion (Macao SAR) and Taiwan Province o China.

Least developed countries: These reer to a group o 48 countries that have been identifed as least developedin terms o their low GDP per capita, their weak human assets and their high degree o economic vulnerability.

The boundaries and names shown and designations used on the maps presented in this publication do not implyofcial endorsement or acceptance by the United Nations.

Symbols which may have been used in the tables denote the ollowing:Two dots (..) indicate that data are not available or are not separately reported. Rows in tables are omitted in those

cases where no data are available or any o the elements in the row.

A dash () indicates that the item is equal to zero or its value is negligible.A blank in a table indicates that the item is not applicable, unless otherwise indicated.A slash (/) between dates representing years (e.g., 1994/95) indicates a fnancial year.Use o a dash () between dates representing years (e.g. 19941995) signifes the ull period involved, including the

beginning and end years.Reerence to dollars ($) means United States dollars, unless otherwise indicated.Details and percentages in tables do not necessarily add to totals because o rounding.

The material contained in this study may be reely quoted with appropriate acknowledgement.

UNITED NATIONS PUBLICATION

UNCTAD/TIR/2011

Sales No. E.11.II.D.20

ISSN 2076-2917

ISBN 978-92-1-112840-6

Copyright United Nations, 2011

All rights reserved. Printed in Switzerland

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iiiPREFACE

PREFACE

As the evidence and impact o climate change increase, so does the urgency to develop new, clean ways o gener-ating and using energy. And as global demand or energy increases, this quest will become even more urgent. Thisyear the population o the planet reached 7 billion. By 050 it may top 9 billion. All will need access to modern andaordable energy services.

The UNCTAD Technology and Innovation Report 2011 ocuses on the important role o renewable energy technolo-gies in responding to the dual challenge o reducing energy poverty while mitigating climate change. This is particularlytimely as the global community prepares or the Rio+0 Conerence next year. The Report identifes key capacityissues or developing countries and proposes concrete recommendations or the wider use o renewable energytechnologies to promote sustainable development and poverty reduction.

My high-level Advisory Group on Energy and Climate Change stressed that there is an urgent need to mobilize re-sources and accelerate eorts to ensure universal access to energy. Creating an enabling environment or the pro-motion and use o renewable energy technologies is a critical part o this eort, as recognized by the United NationsGeneral Assembly when it declared next year as the International Year or Sustainable Energy or All.

It is also at the heart o my recent launch o the Sustainable Energy or All initiative to help ensure universal accessto modern energy services; double the rate o improvement in energy efciency; and double the share o renewableenergy in the global energy mix, all by the year 030.

We can tackle both energy poverty and climate change by acilitating investment, enhancing access to technologies,and doing more to help developing countries make a transition to a greener path o economic growth. The Technology

and Innovation Report 2011 helps point the way orward.

BAN Ki-moon

Secretary-General

United Nations

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iv TECHNOLOGY AND INNOVATION REPORT 2011

ACKNOWLEDGEMENTS

The Technology and Innovation Report 011 was prepared under the overall direction o Anne Miroux, Directoro UNCTADs Division on Technology and Logistics, and the direct supervision o Mongi Hamdi, Head, Science,

Technology and ICT Branch.

The report was written by a team comprising Padmashree Gehl Sampath (team leader), Michael Lim andCarlos Razo. Inputs were provided by Dol Gielen (Executive Director, IRENA Technology and InnovationCenter, Bonn), Proessor Mark Jaccard, Simon Fraser University, Proessor Robert Ayres (INSEAD), Aaron Cosbey(IISD), Mathew Savage (IISD), Angel Gonzalez-Sanz (UNCTAD), Oliver Johnson (UNCTAD) and Kiyoshi Adachi (UNC-

TAD).

An ad hoc expert group meeting was organized in Geneva to peer review the report in its drat orm. UNC-TAD wishes to acknowledge the comments and suggestions provided by the ollowing experts at the meeting:Amit Kumar (The Energy and Resources Institute), Elisa Lanzi (OECD), Pedro Roe (ICTSD), Ahmed Abdel Lati(ICTSD), Vincent Yu (South Centre), Taere Tesachew (UNCTAD), Torbjorn Fredriksson (UNCTAD) and Zeljka Kozul-Wright (UNCTAD). UNCTAD also acknowledges comments by the ollowing experts: Manuel Montes (UN/DESA),Francis Yamba (Centre or Energy Environment and Engineering, Zambia), Aiming Zhou (Asian DevelopmentBank), Yousse Araoui (Arican Development Bank), Mahesh Sugathan (ICTSD), Jean Acquatella (ECLAC) and

Alredo Saad-Filho (UNCTAD).

The report was edited by Praveen Bhalla and research assistance was provided by Fernanda Vilela Ferreira andHector Dip. Nathalie Loriot was responsible or ormatting and Sophie Combette designed the layout.

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vCONTENTS

CONTENTS

Note ............................................................................................................................................................. ii

Preface ......................................................................................................................................................... iii

Acknowledgements .................................................................................................................................... iv

Contents ........................................................................................................................................................ v

List of abbreviations ...................................................................................................................................... x

Key messages ............................................................................................................................................. xii

Overview .................................................................................................................................................... xv

CHAPTER I. RENEWABLE ENERGY TECHNOLOGIES, ENERGY POVERTY AND CLIMATE

CHANGE: AN INTRODUCTION ...................................................................... 1

A. Background ........................................................................................................................................3

B. A new urgency or renewable energies............................................................................................41. An energy perspective ...............................................................................................................................4. A climate change perspective ....................................................................................................................63. A developmental perspective .....................................................................................................................64. An equity and inclusiveness perspective ....................................................................................................7

C. Energy poverty and a greener catch-up: The role o science, technology and innovation

policies ................................................................................................................................................8

1. Towards technological leaprogging ...........................................................................................................9. The crucial role o technology and innovation policies ..............................................................................103. Defnitions o key terms

a. Energy poverty ....................................................................................................................................1b. Renewable energy technologies ..........................................................................................................1

D. Organization o the Report ..............................................................................................................13

CHAPTER II. RENEWABLE ENERGY TECHNOLOGIES AND THEIR GROWING ROLE

IN ENERGY SYSTEMS ............................................................................... 19

A. Introduction ......................................................................................................................................21

B. Defning alternative, clean and renewable energies .....................................................................22

1. The growing role o RETs in energy systems ............................................................................................3. Limits o RET applicability ........................................................................................................................63. Established and emerging RETs ...............................................................................................................8

a. Hydropower technologies....................................................................................................................8b. Biomass energy technologies ..............................................................................................................9

(i) Traditional biomass ......................................................................................................................9(ii) Modern biomass or electric power ..............................................................................................30(iii) First and second generation biouels ............................................................................................30

c. Wind energy technologies ...................................................................................................................31d. Solar energy technologies ...................................................................................................................33

(i) Concentrating solar power systems ............................................................................................33(ii) Solar thermal systems .................................................................................................................33(iii) Solar photovoltaic technology ......................................................................................................34

e. Geothermal energy technology ............................................................................................................35. Ocean energy technologies.................................................................................................................36g. Energy storage technologies ...............................................................................................................37

4. Scenarios on the uture role o RETs in energy systems ...........................................................................38

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C. Trends in global investments and costs o RETs ........................................................................... 39

1. Private and public sector investments in RETs .........................................................................................39. Costs o renewable energy and other energy sources compared .............................................................41

a. Problems with making direct cost comparisons ...................................................................................4(i) Fiscal support by governments ..................................................................................................4(ii) Factoring in costs specifc to conventional energy: Subsidies and environmental externalities ......4(iii) Factoring in costs specifc to RETs ...............................................................................................4

b. Incorporating costs into the market price o energy options .................................................................433. The evidence on renewable energy costs ................................................................................................44

D. Summary ...........................................................................................................................................48

CHAPTER III. STIMULATING TECHNICAL CHANGE AND INNOVATION IN AND

THROUGH RENEWABLE ENERGY TECHNOLOGIES ........................................ 53

A. Introduction ......................................................................................................................................55

B. Technology and innovation capabilities or RETs development: The context

1. Key networks and interlinkages or RETs..................................................................................................57

a. Public science through public research institutions and centres o excellence ......................................59

b. Private sector enterprises ....................................................................................................................60

c. End-users (households, communities and commercial enterprises) ....................................................6. Linkages between RETs and other sectors o the economy ......................................................................63

C. Promoting a virtuous integration o RETs and STI capacity.........................................................64

1. Addressing systemic ailures in RETs .......................................................................................................65. Tipping the balance in avour o RETs ......................................................................................................66

a. Government agencies and the general policy environment ..................................................................67

b. Facilitation o technology acquisition in the public and private sector ...................................................69c. Promotion o specifc renewable energy programmes and policies ......................................................69

d. Attainment o grid parity and subsidy issues ........................................................................................69

e. Promoting greater investment and fnancing options............................................................................70

. Monetizing the costs o energy storage and supply .............................................................................703. Job creation and poverty reduction through RETs ....................................................................................71

D. Summary ...........................................................................................................................................72

CHAPTER IV. INTERNATIONAL POLICY CHALLENGES FOR ACQUISITION, USE AND

DEVELOPMENT OF RENEWABLE ENERGY TECHNOLOGIES ............................ 79

A. Introduction .......................................................................................................................................81

B. International resource mobilization and public fnancing o RETs ..............................................82

1. Financing within the climate change ramework.........................................................................................8. Other sources o fnance ...........................................................................................................................853. International support or fnancing o RETs: Outstanding issues .................................................................87

C. Technology transer, intellectual property and access to technologies ......................................88

1. Technology transer issues within the climate change ramework ..............................................................90. Intellectual property rights and RETs..........................................................................................................91

a. The barrier versus incentive arguments ................................................................................................9

b. Preliminary trends in patented RETs .....................................................................................................953. Outstanding issues in the debate on intellectual property and technology transer .....................................95

a. Beyond technology transer to technology assimilation ........................................................................97

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viiCONTENTS

b. Assessing the quality and not the quantity o technology transer ...................................................97

c. Exploring exibilities and other options within and outside the TRIPS ramework ..................................98

D. The green economy and the Rio+20 ramework ...........................................................................981. Emerging standards: Carbon ootprints and border carbon adjustments ...................................................58. Preventing misuse o the green economy concept................................................................................100

E. Framing key issues rom a climate change-energy poverty perspective ..................................101

1. Supporting innovation and enabling technological leaprogging ...............................................................101

a. An international innovation network or LDCs, with a RETs ocus .......................................................10

b. Global and regional research unds or RETs deployment and demonstration.....................................103

c. An international technology transer und or RETs .............................................................................103d. An international training platorm or RETs ..........................................................................................104

. Coordinating international support or alleviating energy poverty and mitigating climate change .............1043. Exploring the potential or South-South collaboration .............................................................................105

F. Summary ..........................................................................................................................................106

CHAPTER V. NATIONAL POLICY FRAMEWORKS FOR RENEWABLE ENERGY

TECHNOLOGIES ...................................................................................... 111

A. Introduction .....................................................................................................................................113

B. Enacting policies with RET components and targets .................................................................114

C. Specifc policy incentives or production and innovation o RETs .............................................117

1. Incentives or innovation o RETs ............................................................................................................118

a. Public research grants .......................................................................................................................119

b. Grants and incentives or innovation o RETs .....................................................................................119

c. Collaborative technology development and public-private partnerships .............................................11d. Green technology clusters and special economic zones or low-carbon technologies .......................11

. Innovation and production incentives and regulatory instruments in energy policies ...............................13

a. Quota obligations/renewable portolio standards ................................................................................13

b. Feed-in taris .....................................................................................................................................143. Flexibilities in the intellectual property rights regime ................................................................................164. Applicability o policy incentives to developing countries..........................................................................17

D. Adoption and use o new RETs: Policy options and challenges ................................................128

1. Supporting the development o technological absorptive capacity .........................................................19

a. Establishing training centres or RETs .................................................................................................19

b. Development o adaptation capabilities ..............................................................................................130

c. Education, awareness and outreach ..................................................................................................130. Elimination o subsidies or conventional energy sources .......................................................................131

a. Removal o subsidies or carbon-intensive uels. ................................................................................131

b. Carbon and energy taxes ..................................................................................................................13

c. Public procurement o renewable energy ...........................................................................................133. Applicability o policy incentives to developing countries ........................................................................133

E. Mobilizing domestic resources and investment in RETs ............................................................134

1. Grants and concessional loans ..............................................................................................................134. Tendering systems .................................................................................................................................1353. Fiscal measures .....................................................................................................................................1354. Facilitating oreign direct investment in RETs ..........................................................................................135

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F. National policies on South-South collaboration and regional integration o RETs..................137

1. Best practices in trade and investment ..................................................................................................138. Best practices in technology cooperation ..............................................................................................139

G. Summary .........................................................................................................................................140

CHAPTER VI. CONCLUSION ......................................................................................... 147

List o boxes

Box 1.1: Energy demand and the role o RETs....................................................................................................5Box 1.: Aricas energy challenge ......................................................................................................................5Box .1: Defnition o renewable energy ............................................................................................................3

Box .. Developing smart grids to better integrate RE sources into energy systems .....................................7Box .3: Energy efciency and conventional measures o thermodynamic efciency .........................................8Box .4: Prices, production and capacity o PV systems ..................................................................................35Box .5. Geothermal energy: technical aspects ................................................................................................35Box .6: Ocean energy technologies: technical aspects ...................................................................................36Box .7: Energy scenarios and the uture role o RETs ......................................................................................38Box .8: Declining costs o RETs: Summary o fndings o the IPCC .................................................................46Box 3.1: Policy-relevant insights into technology and innovation .......................................................................57Box 3.: The role o public science in building technological and innovative capacity ........................................59Box 3.3: Examples o private frms in wind and solar energy: China and India ...................................................6Box 3.4: Constraints on technology and innovation in developing countries .....................................................68

Box 4.1: Kyoto Protocol, emissions control and burden sharing .......................................................................83Box 4.: Technology transer and Article 66. o the WTO Agreement on Trade-Related Aspects o IntellectualProperty Rights ..................................................................................................................................89

Box 4.3: The Clean Development Mechanism and technology transer .............................................................91Box 4.4: Patents in clean energy: Findings o the UNEP, EPO, ICTSD study .....................................................9Box 4.5: The International Renewable Energy Agency ....................................................................................105Box 5.1: Demystiying solar energy in poor communities: The Bareoot College in action ................................116Box 5.: Lighting a billion Lives: A success story o rural electrifcation in India ...............................................117Box 5.3: Increasing energy security through wind power in Chile ....................................................................118Box 5.4: Public support or RETs in the United States o America and China ..................................................119Box 5.5: Examples o grant schemes in industrialized countries .....................................................................10Box 5.6: The Renewable Energy and Adaptation to Climate Technologies Programme o the Arica Enterprise

Challenge Fund (AECF REACT) ........................................................................................................10Box 5.7: Lighting Arica ..................................................................................................................................11Box 5.8: Examples o public-private partnerships ...........................................................................................1Box 5.9: Renewable portolio standards in the Philippines ..............................................................................14Box 5.10: Feed-in taris or biogas and solar PV, Kenya ...................................................................................16Box 5.11: Promoting integrated approaches or increased production and use o RETs....................................18Box 5.1: Importance o training or RETs: Experiences o Botswana and Bangladesh .....................................19Box 5.13: Renewable energy technologies in Asia: Regional research and dissemination programme ..............130Box 5.14: Tradable emissions permits ..............................................................................................................133Box 5.15: FDI in the global market or solar, wind and biomass ........................................................................136Box 5.16: The Turkana Wind Power Project, Kenya ..........................................................................................139

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ix

List o fgures

Figure .1: Renewable electric power capacity (excluding hydro), end 010 ........................................................4Figure .: Global electricity supply by energy source, 010 ................................................................................4Figure .3. Levelized costs o some renewable energy technologies compared, 008 and 009 ($/MWh) ...........45Figure 4.1: Funding arrangements o the UNFCCC ..............................................................................................85Figure 4.: Sustainable energy fnancing along the innovation chain .....................................................................86Figure 4.3: Number o patent applications or fve renewable energy sources, 1979003 ...................................93Figure 4.4: Total number o patent applications or energy-generating technologies using renewable

and non-ossil sources, 1999008 ...................................................................................................93Figure 4.5: Market shares held by the frst, top fve and top ten patent applicants in select technologiesFigure 4.6: Countries shares o patents in solar thermal and solar photovoltaics, ...............................................94

1988007 (per cent) .........................................................................................................................94Figure 4.7: Patent ows in solar PV technologies rom Annex I to non-Annex I countries, 1978007..................96

Figure 4.8: Patent ows in wind power technologies rom Annex I to non-Annex I countries, 1988007 ............96Figure 4.9: Patent ows in biouel technologies rom Annex I to non-Annex I countries, 1988007.....................96

List o tables

Table .1: Global investment in renewable energy and related technologies, 004010 ($ billion) .....................39 Table .: RETs characteristics and energy costs ...............................................................................................47Table 3.1: Relative specializations and potential entry points or frms in wind and solar energies........................61Table 3.: Access to electricity and urban and rural electrifcation rates, by region, 009 ....................................64Table 3.3: Annual investments in global innovation in various energy sources, 010 ($ billion) .............................66Table 4.1: Estimates o RETs investments needed or climate change adaptation and mitigation ........................83

Table 4.: Multilateral and bilateral unding or low-carbon technologies .............................................................84Table 4.3: Companies using the United Kingdoms Carbon Reduction Label (by April 011) ...............................99 Table 5.1: Renewable energy targets o selected developing economies ..........................................................115 Table 5.: Countries/states/provinces with RPS policies ...................................................................................13 Table 5.3: Countries/states/provinces with eed-in tari policies ........................................................................15

CONTENTS

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LIST OF ABBREVIATIONS

ACRE Australian Centre or Renewable Energy ADB Asian Development Bank AECF REACT The Renewable Energy and Adaptation to Climate Technologies programme o the Arica

Enterprise Challenge Fund AGECC Advisory Group on Energy and Climate Change (o the United Nations) ARPA-E Advanced Research Project Agency-EnergyBCA border carbon adjustmentBSE bareoot solar engineersBtu British thermal unitCCGT combined cycle gas turbineCCL climate change levyCCMT climate change mitigation technologies

CCS carbon capture and storageCDIP Committee on Development and Intellectual PropertyCDM Clean Development MechanismCET clean energy technologyCHP combined heat and powerCIS Commonwealth o Independent StatesCO carbon dioxideCOP Conerence o the PartiesCSIR Council or Scientifc and Industrial ResearchCSP concentrating solar powerCTF Clean Technology FundEC European Commission

EGS engineered thermal systemEJ exajouleEPO European Patent OfceESMAP Energy Sector Management Assistance ProgrammeEST environmentally sound technologyETI Energy Technologies InstituteEU European UnionEU ETS European Union's Emission Trading SystemEU-7 7 member countries o the European UnionFDI oreign direct investmentFIT eed-in tariGDP gross domestic productGEF Global Environment FacilityGHG greenhouse gasGW gigawattGWEC Global Wind Energy CouncilG-0 group o 0ICT inormation and communication technologiesIEA International Energy AgencyIFC International Finance CorporationIGCC integrated gasifcation combined cycleIITC IRENA Innovation and Technology CentreIPCC Intergovernmental Panel on Climate ChangeIPR intellectual property rightIRENA International Renewable Energy Agency

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xiLIST OF ABBREVIATIONS

JPOI Johannesburg Plan o Implementationkgoe kilogram o oil equivalentkm kilometer

KMTC Knowledge Management and Technology CooperationkW kilowattkWh kilowatt-hourkWp kilowatt-peakLaBL Lighting a billion LivesLCOE levelized cost o electricityLDC least developed countryLDCF Least Developed Country FundMDG Millennium Development GoalMW megawattMWh megawatt-hourMWp megawatt power

NGO non-governmental organizationNRI national research institutionOECD Organization or Economic Co-operation and DevelopmentOTEC ocean thermal energy conversionPCT Patent Cooperation TreatyPPA power purchase agreementPPM particles per millionPPP public private partnershipPV photovoltaicR&D research and developmentRE renewable energyREDP Renewable Energy Demonstration ProgramRET renewable energy technology

ROC renewables obligation certifcateRPS renewable portolio standardSCCF Strategic Climate Change FundSEZ special economic zoneSHS solar home systemsSIDA Swedish International Development AgencySME small and medium-sized enterpriseSTI science, technology and innovation

TERI The Energy and Resources InstituteTIR Technology and Innovation Report TRIPS Trade-related Aspects o Intellectual Property Rights (WTO Agreement) TWh terawatt-hour (a terawatt is equivalent to a million megawatts)

UNCSD United Nations Conerence on Sustainable DevelopmentUNCTAD United Nations Conerence on Trade and DevelopmentUN/DESA United Nations Department o Economic and Social AairsUNDP United Nations Development ProgrammeUNEP United Nations Environment ProgrammeUNFCCC United Nations Framework Convention on Climate ChangeUNIDO United Nations Industrial Development OrganizationUSAID United States Agency or International Development

VAT value-added taxW wattWIPO World Intellectual Property OrganizationWSSD World Summit on Sustainable DevelopmentWTO World Trade Organization

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xii TECHNOLOGY AND INNOVATION REPORT 2011

KEY MESSAGES

On technology and innovation capacity or RETs:

1. A mutually compatible response to the dual challenge o reducing energy poverty and mitigating climate changerequires a new energy paradigm. Such a paradigm would have RETs complementing (and eventually substituting)conventional energy sources in promoting universal access to energy.

. Established RETs, such as solar PV technologies and onshore wind, are experiencing rapid ongoing technologicalprogress and reductions in energy generation costs.

3. RETs are already being deployed on a signifcant scale in some countries, though this varies by region.

4. Much progress can be achieved in alleviating energy poverty by ocusing on rural, o grid applications alongsideeorts to establish more technologically and fnancially intensive grid-based RET applications.

5. In the absence o technological capabilities, national strategies or sustainable economic development are likelyto be constantly undermined.

6. Strengthening technological absorptive capacities is essential not only to build R&D capabilities or RETs in theshort and mid term, but also to promote adaptation and dissemination o RETs.

7. RETs use should be integrated within broader goals or poverty reduction and job creation or the more economi-cally vulnerable groups in developing country economies.

On the international policy challenges or RETs:

1. There is an urgent need to reposition the debate within the international agenda on climate change so that obliga-tions o countries to mitigate climate change is ramed in terms o creating development opportunities or all in anenvironmentally sustainable manner.

. Such a repositioning also implies ocusing on issues o fnance, technology transer and technology disseminationor developing countries in the context o RETs.

3. The current international fnance and technology transer architecture is ragmented. It needs to be strengthenedwith the aim o reducing energy poverty while mitigating climate change.

4. International support needs to work hand in hand with national rameworks on RETs, complementing eorts inthree critical areas: increasing fnancial resources or RETs, promoting greater access to technology and enablinggreater technological learning within the green economy and the Rio-plus-twenty ramework.

5. The diusion o RETs in developing countries involves much more than transerring technology hardware romone location to another. This Report, noting the complexity o technological change in dierent contexts, callsor targeted international support to oster RETs-related learning. Such support could include the ollowingelements:

(i) an international innovation network or LDCs, with a RET ocus, that seeks to acilitate knowledge accumula-tion and innovation in LDCs.

(ii) global and regional research unds or RETs deployment and demonstration, that ocus attention onmaking resources available to adaptation and incremental innovations in RETs or use in a wide variety ocontexts.

(iii) an international RETs technology transer und that is dedicated to acilitating private-private and private-publictranser o technology or RETs.

(iv) an international RETs training platorm that promotes capacity building and skills accumulation in developingcountries.

6. More support could take the orm o augmenting and urther strengthening the recently proposed technologymechanism within the UNFCCC, particularly by increasing its ocus on RETs.

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xiiiKEY MESSAGES

On national policy rameworks or RETs:

1. National governments in developing countries can play a pivotal role in combining conventional sources o energy

with RETs in ways that will not only help reduce energy poverty, but also simultaneously promote climate-riendlysolutions to development.

. This Report proposes that developing countries adopt a national integrated innovation policy ramework to createpolicy incentives in national innovation policies and national energy policies or the greater use, diusion, produc-tion and innovation o RETs.

3. Such a policy ramework would have fve key unctions:

(i) Defning policy strategies and goals;

(ii) Providing policy incentives or R&D, innovation and production o RETs;

(iii) Providing policy incentives or developing greater technological absorptive capacity, which is needed oradaptation and use o available RETs;

(iv) Promoting domestic resource mobilization or RETs in national contexts; and,

(v) Exploring newer means o improving innovation capacity in RETs, including South-South collaboration.4. Not all o the policy options proposed in the Report are available or applicable to all developing countries and

LDCs.

5. Incentives or RETs production and innovation can be entrenched into the wider innovation policy ramework andenergy policies o countries through a variety o policy measures.

6. For the poorer countries, the ability to undertake large-scale R&D or establish signifcant manuacturing capac-ity will be constrained by the relatively small size o their domestic markets, lack o access to fnance and weakinstitutional capacity. In such cases, countries should consider incentives to build greater absorption capacity inRETs and revisit their energy subsidy policies.

7. Incentive structures can start small, on low-scale projects, designed to encourage private sector solutions torenewable energy technology development and deployment challenges in rural settings.

8. Developing countries will ace dierent problems in RETs promotion, production and innovation, depending ontheir respective starting points. Nevertheless, or all developing countries, RETs present real opportunities orreducing energy poverty, and the right policies could inuence the extent o benefts that could be derived romRETs use, adaptation and dissemination.

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xvOVERVIEW

OVERVIEW

RENEWABLE ENERGY TECHNOLOGIES,ENERGY POVERTY AND CLIMATE CHANGE

Sustained economic growth o the kind that leads tocontinuous improvement in the living standards o allpeople through poverty reduction rests on assuringaccess to energy or all. Such a global energy accessagenda requires a greater ocus on energy generationand use rom existing resources while minimizing waste.However, the use o conventional energy sources (pri-marily ossil uels) are believed to have led to a rise in

greenhouse gas (GHG) emissions and to a resulting in-crease in global average temperatures since the mid-twentieth century. The undamental conclusions o themost recent assessment report o the IPCC are thatclimate change is the result o human activity, that theongoing rate o climate change will have devastating e-ects i let unchecked, and that the costs o action ormitigation and adaptation would be signifcantly lowerthan the costs o inaction.1 Thereore rom a climatechange perspective, there is a need or all countriesworldwide to embark upon low-carbon, high growthtrajectories. It also requires promoting the use o oth-

er, newer or more cost-eective energy sources in allcountries, which could complement the conventionalenergy supplies predominantly in use today. Renewableenergy (RE) sources oer one such distinct possibility,and established renewable energy technologies (RETs)can complement more traditional sources o energy,thereby providing countries with varied energy optionswithin their national energy matrices to suit their specifcneeds and conditions. Given their enormous potential,there is growing interest in the current and uture roleo RETs in national energy supply systems worldwide.

This, however, is not an easy task or all developing and

least developed countries (LDCs), since the greater useo RETs or energy supply and industrial development isdependent on building technological capabilities. Againstthis broad background, the Technology and InnovationReport (TIR) 2011 analyses the important role o technol-ogy and innovation policies in expanding the applicationand wider acceptance o RETs, particularly in the con-text o developing countries. Technology and innovationpolicies can promote and acilitate the development, ac-quisition, adaptation and deployment o RETs to supportsustainable development and poverty reduction in devel-oping countries and LDCs.

Four current trends lend a new urgency to the need toexplore how ar and how easily RETs could serve en-ergy needs worldwide. First, ensuring universal accessto conventional energy sources using grids entails highcosts, which means that developing countries are un-likely to be able to aord the costs o linking additionalhouseholds, especially those in rural areas, to existinggrids. Second, the climate change debate has injected agreater sense o urgency into searching or newer energyoptions, as a result o both ongoing policy negotiationsand the greater incidence o environmental catastrophesworldwide. Third, rom a development perspective, therecent fnancial and environmental crises have causedmajor setbacks in a large number o developing coun-tries and LDCs, resulting in their urther marginalizationrom the global economy. The LDCs and many develop-ing countries suer rom severe structural vulnerabilitiesthat are a result o their patterns o integration into theglobal economy. The international community needs topromote low-carbon, climate-riendly development whileostering inclusive economic growth in these economiesas a matter o urgency. Lastly, there are extreme inequali-ties within developing countries themselves, and lack oaccess to energy aects the poorest o the poor world-wide, impeding their ability to enjoy the basic amenities omodern lie that are available to others at the same levelo development.

Within the United Nations Framework Convention onClimate Change (UNFCCC), polarized positions on whoshould shoulder responsibility or the current state oemissions and share the fnancial burden or mitigat-ing climate change are based on the erroneous belie inthe incompatibility o the dual challenges o promotingindustrial development and mitigating climate change.

Developing countries, in particular, ace the challenge opromoting industrial development a undamental pre-requisite or poverty reduction and equality in their so-cieties while reducing their reliance on conventionalenergy sources that have played a central role in globaleconomic growth until recently. Most o these countriesalso remain ar more vulnerable to most o the environ-mental threats arising rom climate change.3

However, the advantages o using RETs will not accrueautomatically in developing countries. Although many othe RETs needed or meeting a larger share o the globalenergy demand already exist, or are on the verge o com-

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mercialization, the knowledge and technological capabili-ties required or their transer to developing countries andLDCs are not easily accessible. Developing countrieswill need to strengthen their innovation systems,4 policyrameworks and linkages to enable wider RET dissemi-nation and to promote a greener catch-up process. Pro-moting greater access to RETs and support or use andadaptation o these technologies through all means pos-sible will be important to enable developing countries tosustainably integrate these processes into eorts aimedat capital ormation and transormation o their produc-tive structures.

There is a need not only or strong domestic technologyand innovation policies, but also or greater international

eorts to make the international trade and intellectualproperty rights (IPRs) regime more supportive o the tech-nological needs o developing countries and LDCs. Inter-national support to developing countries through variouschannels should also include fnancial support and NorthSouth, SouthSouth and triangular cooperation, as well aseective technology transer mechanisms. All o these willbe necessary complements to the development o localcapacities or RETs.

This TIR identifes fve distinct issues that stand out in thedebate on technology and innovation o RETs, which areo particular relevance or all developing countries and

LDCs. First, structural transormation that supports theeconomic development o countries relies strongly onthe growth o national technological capabilities. At pres-ent, inadequate energy supply is a constraint that appliesnot only to the manuacturing sector, but also to othersectors that are potentially important to the process oindustrialization and development, such as services,tourism and agricultural processing, which depend on re-liable, high-quality power supply. It is thereore importantto recognize the virtuous relationship between energysecurity and technological capabilities: energy security isa key aspect o the physical inrastructure required or

growth, and technological capabilities are a undamentalprerequisite or greater adaptation and use o RETs withindomestic economies.

Second, incoherent, and oten conicting, policy devel-opments at the multilateral level tend to adversely aectnational aspirations or technological empowerment indeveloping countries. Although climate change will aectall countries and communities worldwide, developingcountries (especially LDCs) will shoulder a disproportion-ate burden rom the allout resulting rom climate change,including increasing climatic variations, extreme weatherevents and natural disasters. The ongoing debates on

climate change reect the diverse positions o countrieson how the burden should be shared.

Third, the issue o greater transer o climate-riendly tech-nologies that has been a key element in the global de-bate on climate change is intricately linked to technologyand innovation inrastructures in countries. In the renew-able energy (RE) sector, recent evidence shows that basicapproaches to solving technological problems have longbeen o-patent, and thereore can be adapted and dis-seminated in developing countries provided that sometechnological prerequisites are met. This points to theneed or greater attention to strengthening the technol-ogy absorptive capacity o countries through coordinatedpolicy support, in addition to making existing technologies

available and assisting in their greater diusion.Fourth, RETs will remain a distant goal as long as they areprohibitively expensive. Innovation in RETs is moving at aast pace globally, but let on its own, or let to the mar-ket, it is unclear to what extent this pace will continueglobally and to what extent it will lower the prices o thesetechnologies or use at the individual household and frmlevel in the medium term.

Finally, RETs orm part o the wider debate on emergingpatterns o investment and technology that all under theumbrella o the green economy. At a undamental level,

the concept o the green economy itsel has been high-ly contested. Some argue that calling or large-scale in-vestments in developing countries to acilitate the transi-tion to a green economy imposes uneven costs, therebycreating an additional burden on already disadvantagedgroups o people. The challenge is to ensure that thegreen economy concept, which will also be the ocus othe Rio+0 ramework, is structured in a way that it doesnot adversely aect ongoing productive activities in de-veloping countries while helping their transition to greenmodes o development. Numerous issues will need tobe addressed in this context, including patterns o trade,

technological upgrading and specialization.Analysing these fve issues at length, the TIR 2011 ar-gues that RETs can bring numerous benefts to devel-oping countries. The potential impacts o RETs in termso reducing energy poverty, generating employment andcreating new production and innovative activity add totheir environmental advantages. Several establishedRETs have signifcant potential to contribute to a broadrange o development goals. It is beyond the scope othis Report to address the whole range o policy impli-cations o all RETs in the very dierent contexts o thevarious categories o developing countries. It thereore

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ocuses on those that are (i) already mature enough tomake practical contributions to policy objectives in theshort term, but are sufciently recent in their commer-cialization to present challenges with which policymakersmay be less amiliar; and (ii) particularly appropriate to theobjective o reducing and eventually eliminating energypoverty in developing countries as complements (andeventually substitutes) to conventional energy sources.

THE EXPANDING ROLEOF RENEWABLE ENERGY TECHNOLOGIES

Several RETs are well established

RETs are a diverse group o technologies that are currentlyat dierent levels o maturity. Those based on wind, geo-

thermal, solar thermal and hydro are mature technologiesand are already being deployed widely. Others, includingsecond-generation biouels and ocean energy, remain atvarying stages o pre-commercial development. Althoughthere are problems o intermittency associated with someo them (or example, in the provision o solar energy, wherethe sun is available or only a limited number o hours perday), they are very versatile in that they can be deployed invarious confgurations, either alone or, oten, in combina-tion with conventional energy technologies. Thereore theyoer the potential to contribute signifcantly to alleviatingenergy poverty in diverse situations.

The TIR ocuses primarily on RETs based on wind, solarand modern biomass sources or electricity generation,either in centralized or decentralized acilities. These areamong the most important and astest growing RETs indeveloping countries. There are also non-electric appli-cations o REs, such as biouels that are used or trans-portation, space heating, hot water and cooking (e.g. bysolar cookers).

The role o RETs in alleviating energy povertyis growing

On a global scale, although the various advantages o

RETs are increasingly being recognized, established ossiluel sources still dominate energy supply at present, pro-viding up to 89 per cent o all global energy. In 008, REsources (including large hydro installations) accounted or1.9 per cent o global primary energy supply, whereasthe bulk was supplied by ossil uels (including oil, gas andcoal). However, a large proportion o the global populationcannot aord these conventional energy supplies. Accord-ing to estimates o the International Energy Agency (IEA),over 0 per cent o the global population (1.4 billion peopleapproximately) lacked access to electricity in 010. South

Asia has the largest absolute numbers o people without

such access (4 per cent o the world total), in spite orecent rapid progress. Taking the entire population o thissubregion, 38 per cent have no access to electricity, andwithin this fgure, 49 per cent o people living in rural areaslack access. In relative terms, sub-Saharan Arica is themost underserved region, with 69.5 per cent o the popu-lation having no access to electricity, and only a meagre14 per cent o the rural population having access.

Eliminating energy poverty and promoting greater ac-cess to energy to promote economic developmentthereore requires serious consideration o how RETscould complement and/or even substitute convention-al energy sources. Will such a new energy paradigmthat envisages a greater role or RETs be able to create

greater employment? Could those RETs be deployed inremote rural areas that are hard to connect to the con-ventional energy grid? Will such RETs be applicable andeasy to use by individual users, but at the same timehave the potential or scale-up within enterprises, frmsand sectors? Would they alleviate, at least partially, thedifculties aced by vulnerable social groups aectedby poverty (e.g. rural populations, women, children andindigenous groups) so that they can devote more timeand attention to income-generating and other activities?

A signifcant aspect o RE use is that they oer the possi-bility o devising semi-grid or o-grid rural installations that

promote greater access to energy in developing countriesthan that provided by conventional energy sources whichrely extensively on grid connections. O the 1.4 billion peo-ple not connected to electricity grids globally, approximate-ly 85 per cent live in rural areas. Because o their possibilityo use in non-grid or semi-grid applications, RETs can bean important means o energy supply in areas where otherenergy sources are not available, such as in isolated ruralcommunities. Such decentralized, o-grid applications oRETs are already in relatively wide use in developing coun-tries, where they provide cost-eective energy solutionsthat bring signifcant benefts to local communities.

RETs such as solar pumps, solar PV installations, smallwind, mini-hydro and biomass mini-grids oer higherpotential and cost advantages than traditional grid ex-tension. They can be a reasonable option or providingsome degree o access to energy, particularly in ruralareas in developing countries and LDCs where nationalenergy grids are unlikely to expand in the near uture.

Arguably, some o these applications are small in scaleand do not make much o an impact on energy provi-sion at the national/global level, but they can still play animportant role in reducing energy poverty at the local/rural level. In these cases, RETs oer a realistic option

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or eradication, or at least or alleviation, o energy pov-erty.

Technological progress and greaterinvestments and deployment are loweringcosts o established RETs

There has been rapid ongoing technological progress insome RETs, such as solar PV technologies and onshorewind energy, with accompanying reductions in energygeneration costs. The cost competitiveness o RETs rela-tive to conventional energy sources is also improving, andcan be expected to improve even urther with continuedtechnological progress and higher investment in their de-velopment, production and deployment. The prices o so-lar PV systems, or instance, have been alling extremely

rapidly. During the 18 months leading to June 010, priceso new solar panel modules ell by an estimated 50 percent. And in some o-grid and mini-grid applicationssome RETs were already competitive with conventionalenergy in 005, even with the relatively low oil prices pre-vailing at that time. It is reported that in Arica, Asia andLatin America, the demand or modern energy is drivingthe use o PV or mini-grid or o-grid solar systems, whichin many instances are already at price parity with ossil u-els. This implies that or precisely those applications whichmay be most suitable or isolated communities (i.e. de-centralized applications that do not require connection to

the national or regional energy grids) RETs may be at theirmost cost-competitive. Rising, and increasingly volatile,oil prices and growing investments in RETs may also becontributing to this trend. However, additional technologi-cal improvements that could help to better integrate REinto the existing energy inrastructure (including throughthe development o smart energy grids) and augment thestorage capacities o RETs will be valuable in promotingtheir cost competitiveness.

Despite the ongoing surge in the deployment o RETs, atpresent they account or only a small raction o globalenergy consumption. The TIR 2011 stresses that there

is still enormous technical potential or power generationrom RETs, and argues that such RETs are likely to playan increasingly important role in meeting global energydemand as continued technological progress, additionalinvestment and urther deployment lead to cost reduc-tions over the medium and long term globally. The analy-sis in the Report shows that RETs will continue to evolveas complements to existing energy sources globally, withthe eventual aim o replacing conventional energy in thelong term. For developing countries and LDCs, this is apositive trend. The actual speed and extent o deploy-ment o RETs and the role they will eventually play will de-

pend critically on the policy choices that are made todayand in the uture. The policy issues that need to be con-sidered within national rameworks or technology andinnovation and the ways and means o international sup-port will be critical or harnessing the potential o RETs orpoverty reduction and sustainable development.

STIMULATING TECHNICAL CHANGEAND INNOVATION IN AND THROUGHRENEWABLE ENERGY TECHNOLOGIES

Technology and innovation capacity and reliableenergy supply are intricately linked

Uninterrupted and reliable energy supply is an importantstimulant to innovative capacity and economic growth. In-

deed, a number o studies underline a direct causal rela-tionship between the low supply o electricity and stuntedeconomic growth. At the same time, technology and inno-vation capabilities are important or promoting R&D and in-novation to produce state-o-the-art RETs, and or creatinga critical base o knowledge that is essential or adaptingand disseminating RETs. A critical threshold o technologi-cal capability is also a prerequisite or making technical im-provements to RETs that enable signifcant cost reductionsso that they can be deployed on a larger scale in developingcountries. The success o RETs-related technology transerinitiatives also depends on the ability o actors in developing

countries to absorb and apply the technologies transerred.The absence o, or limitations in, technological and innova-tion capabilities is thereore likely to constantly underminenational strategies or sustainable development based onthe greater use o RETs. This virtuous relationship betweenRETs and technology and innovation capacity needs to berecognized and ostered actively.

Countries capacities or technological absorption needto be strengthened through coordinated policy support,but an additional priority will be to make existing tech-nologies available and assist in their greater diusion. Asnoted earlier, while innovation in RETs is moving at a ast

pace globally, ensuring this continues will require poli-cies that promote the wider adaptation and deploymento RETs. In the context o the current state o underde-veloped energy inrastructure in developing countriesand LDCs, RETs could not only help to reduce energypoverty in many novel ways; they could also help re-duce social inequalities through the creation o new jobsassociated with the application o RETs. Public policythereore has an important role to play in this regard, inaddition to tipping the balance towards energy mixesthat give prominence to RETs development in develop-ing countries.

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Innovation policy rameworks or RETs area undamental requirement

Innovation systems in developing countries are unda-mental to shaping the capacity or the technologicallearning needed or adaptation, use, production andR&D-based innovation o RETs. There are several eatureso technology and innovation unique to RETs comparedwith other sectors that have been the ocus o manypolicy studies. First, there is already a well-establishedenergy system globally, and RETs are technologies thatseek to provide alternative solutions to achieve the sameresults using natural and renewable resources o dierentkinds (such as sun, wind and water). Their unique sellingpoint is that they oer environmentally riendly solutions

to energy needs or the same service, namely the supplyo energy. This is dierent rom innovation in other sec-tors where competition is structured around the provisiono newer products and services at reasonable prices.

Second, the intermittency issues related to RETs necessitatea systemic approach to promoting innovation in the sector.Evidence shows that intermittency o dierent RE suppliescan be dealt with quite easily within electricity systems whensolutions are designed rom a systemic perspective.5 A sys-temic treatment o RETs is also important rom another per-spective, namely, the management o demand or energy.

The end-use dimension (i.e. how many people can access

a particular supply and how eectively it can be provided)will need to play a major role when considering RETs as ameans o alleviating energy poverty in developing countries.

Thus a systemic perspective should give due considerationto the demand dimension when designing on-grid, o-gridor semi-grid applications using RETs.

Third, it is oten assumed, incorrectly, that technologicalcapability is required primarily or R&D aimed at the cre-ation or development o newer RETs. As the TIR 2011shows, technology and innovative capability is also un-damental or other aspects, such as:

(i) Making minor technical improvements that couldenable signifcant cost reductions in productiontechniques, adaptation and use; and

(ii) Adaptation, dissemination, maintenance anduse o existing RETs within key sectors o theeconomy, which depend not only on the availabilityo materials, but also on diverse orms oknowledge.

Fourth, in developing countries, there is an urgent needto promote choices in innovation and industrial develop-ment based on RETs. These choices may be dierentdepending on the conditions in the country and the kind

o RE resource(s) available. The specifc characteristicso dierent RETs, varied project sizes and the possibilitiesor o-grid and decentralized supply, imply many newplayers, both in project development (new and existingfrms, households and communities) and in fnancing(existing lenders, new microcredit scheme, governmentinitiatives).

Thereore, strengthening national rameworks or tech-nology and innovation in developing countries is a nec-essary pre-condition or ensuring increased use and in-novation o RETs through: (a) the greater integration oRETs within socio-economic development strategies ocountries; (b) creation o capacity or increased technolo-gy absorption in general, and in RETs in particular; and (c)

express policy support aimed at signifcantly integratingRETs into the national energy mix by tipping the balancein avour o RETs development, production and use.

National governments need to tip thebalance in avour o RETs

There is an urgent need or government action aimedat substituting patterns o current energy use with reli-able, established RETs. While o-grid RETs (especiallymodern biomass-based ones) may be relatively easy todeploy, many still remain very expensive at the scalesrequired to make an impact in developing countries,

despite rapid technological advances. For example, astudy by the IEA (009) came to the conclusion that inthe United States, electricity rom new nuclear powerplants was 1530 per cent more expensive than romcoal-fred plants, and the cost o oshore wind powerwas more than double that o coal, while solar powercost fve times as much. Changing rom the currentglobal situation o no energy, or unreliable and otenundesirable sources o alternative energy (such as tra-ditional biomass), to one where industrial developmentbegins to pursue a cleaner growth trajectory is essentialor driving down the costs o RETs.

Each time investment is made in generating more en-ergy through RETs, there is not only a gradual shit inthe energy base; it also has a signifcant impact on thecapacity o RETs to supply energy more economically.For example, according to recent reports, every timethe amount o wind generation capacity doubles, theprice o electricity produced by wind turbines alls by917 per cent.6 This holds true or all RETs: with eachnew installation, there is learning attached as to how thetechnology can be made available more eectively andefciently in dierent contexts so as to lower costs overa period o time.

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Government action will need to ocus on two veryimportant areas o intervention: addressing systemicailures in RETs, and tipping the balance away roma ocus on conventional energy sources and towardsRETs. Systemic ailures in the RETs sector are variedand emerge rom sources other than just the market.

They can be caused by technological uncertainty, en-vironmental ailures or other systemic actors. There-ore, it will be important or government intervention toaddress these ailures.

Policy incentives, critical or inducing a shit towardsthe wider application o RETs in the energy mix ocountries, need to be designed and articulated at thenational and regional levels so that collective actions

can be ostered. Most importantly, energy productionshould cater to local needs and demand in countries,or which a systemic perspective is necessary. Policysupport needs to be directed at mobilizing greater do-mestic resources to oster RETs development and use,in addition to providing increased access to the mostadvanced, cost-cutting technological improvements toestablished RETs.

Governments can play a vital role in making RETs easibleat each level: use, adaptation, production and innova-tion. Government agencies and the policy rameworkshould aim at:

(i) Promoting the general innovation environmentor the development o science, technology andinnovation;

(ii) Making RETs viable; and(iii) Enabling enterprise development o and through

RETs.

This requires governments to adopt an agenda o pro-actively promoting access to energy services o the kindthat is conducive to development, while also ocusingon the important positive relationship between technol-ogy and innovation capacity and increased use o RETs.Greater international support or developing countries willbe critical on both these ronts.

INTERNATIONAL POLICY CHALLENGESFOR ACQUISITION, USE ANDDEVELOPMENT OF RENEWABLE ENERGYTECHNOLOGIES

The international discourse needs to be ramedmore positively, with a ocus on mitigating climatechange and alleviating energy poverty

Eorts at the national level aimed at harnessing the virtu-ous relationship between RETs-related technology and

innovation capacity or inclusive economic developmentand climate change mitigation need to be strengthenedthrough greater international support. At the interna-tional level, discussions and negotiations on climatechange and the green economy have gained momen-tum in recent years. A major ocus o those discussionsrelates to environmentally sustainable technologies, orlow-carbon, clean technologies,7 as a means o con-tributing to climate change mitigation and adaptationglobally.8 This is a very important global goal, which willserve the needs o developing countries in particular,given the evidence that climate change is having dis-proportionately damaging impacts on those countries.However, along with eorts to mitigate climate change,there needs to be an equally important ocus on elimi-

nating energy poverty in developing countries, not onlyto improve peoples living conditions but also to boosteconomic development.

The TIR 2011 stresses upon the need or reposition-ing issues within the international agenda, whereby theobligations o countries to mitigate climate change areramed in terms o creating development opportunitiesor all in an environmentally sustainable manner. Centralto this repositioning is the triangular relationship betweenequity, development and environment. From this per-spective, recognition o the right o all people worldwide

to access energy services is long overdue and needs tobe addressed. Developing countries, especially the leastdeveloped, have experienced a particularly large share onatural disasters, such as hurricanes, tornados, droughtsand ooding, as a result o changing climatic conditions.

According to recent estimates, 98 per cent o those se-riously aected by natural disasters between 000 and004 and 99 per cent o all casualties o natural disastersin 008 lived in developing countries, particularly in Aricaand South Asia where the worlds poorest people live.

Such a repositioning also implies a greater ocus on threekey challenges, namely international resource mobiliza-

tion or RETs fnancing; greater access to technologythrough technology transer and the creation o exibili-ties in the IPRs regime; and promoting wider use o RETsand technological learning in the push or a green econo-my and within the Rio+0 ramework. These issues havebeen and remain central to all debates and decisions othe UNFCCC and the Kyoto Protocol that ocus mainlyon environmentally sustainable or clean technologies,o which RETs orm a subset. In highlighting the need ora greater ocus on RETs in international discussions, theReport also identifes the main hurdles in all these threepolicy areas.

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International fnancial support or RETs needs to bestrengthened and targeted

A number o estimates have been produced that try toquantiy the challenge o adaptation and climate changemitigation. All o them consider slightly dierent catego-ries o investments that will be needed in the immediateor medium term. The International Energy Agency es-timate covers only electricity generation technologies,and thereore excludes investment in transport uelsand heating technologies. While all the estimates areindicative, the defnitions o technology and the broadgoals assumed in the IEA (000) are probably the mostrelevant to the issues under consideration in this TIR.9

The proposal to halve energy-related emissions by

050 corresponds roughly to the minimum mitigationlevels deemed necessary by the IPCC, and the defni-tion o low-carbon energy technologies covers RETs.

The IEAs estimates or the level o investments neededare lower than the other estimates in the medium term,at $300$400 billion per annum up to 00, but risethereater to reach $750 billion by 030.

This raises questions about the capacity o public f-nance to support the rapid and widespread deploy-ment o RETs as part o adaptation eorts and the roleo international support. There are a number o knownsources o fnance at the multilateral and regional levels

such as the World Banks Climate Investment Funds,the Clean Technology Fund and the newly announcedUNFCCC Green Climate Fund. However, several cave-ats apply when calculating the amount o fnances avail-able under all the unding fgures. Some o the unds aremultiyear commitments and oten cover mitigation andadaptation. Also, some o the unds are not yet avail-able. Taking all these caveats together, the total amounto annual unding or RETs rom public sources is likelyto be about $5 billion rom the known sources. This fg-ure is ar rom sufcient when compared to the globalneeds. The International Renewable Energy Agency es-

timates that just the Arican continent would need aninvestment o $40.6 billion per year to make energy ac-cess a reality in a sustainable way.

It is thereore that in the area o fnance, support orgreater investment in RETs and their use in developingcountries is critical today. In response to the global f-nancial and economic crisis, many countries initiatedstimulus packages that included unding or eorts tobuild capacity in those areas o the green economy thatdisplay the greatest growth potential. No doubt, the gen-eral trend is towards policies that simultaneously aim atsecuring environmental benefts through increased use

o RETs, development benefts through increased energyprovision, and economic benefts by increasing domesticcapacity in areas that show growth potential.

However, such ongoing eorts in developing countrieswould be better served i outstanding issues relatingto international fnancial support or RETs could be ur-gently resolved with the aim o promoting greater in-novation, production and use o such technologies.

At present, international fnancing o clean technolo-gies, which is largely multilateral, is highly ragmented,uncoordinated and lacks transparency. It is also woe-ully inadequate to meet total unding requirements orclimate change mitigation and adaptation. While suchfnancing may partly be targeted at RETs, additional

international unding or RETs is required as a priority.Coordination o unding sources with the aim o main-streaming RETs into national energy systems globallyshould be an important aspect o climate change miti-gation eorts. This would not only lead to the devel-opment o more efcient energy systems globally; itwould also ensure that the fnancing contributes togreater technological progress towards newer and/ormore cost-eective RETs.

Access to RETs and related technology transerneed to be more clearly articulated

Currently, most o the clean technologies needed or de-veloping countries and LDCs are o-patent. Despite thisgeneral fnding, recent trends show that patenting activ-ity in RETs is on the rise. Following an analysis o thesetrends against the backdrop o the ongoing negotiationson the drat UNFCCC,10 the TIR 2011 suggests that dis-cussions on technology transer o RETs within the cli-mate change ramework should move beyond a narrowocus on the issue o technology transer to a broaderocus on enabling technology assimilation o RETs. In-deed, the recent Climate Change Conerence at Cancunin 010 proposed to strengthen the ocus on technol-

ogy transer, including the creation o a new technologymechanism to help enhance the technological capacityo countries to absorb and utilize RETs.

Accumulation o technological know-how and learningcapabilities is not an automatic process. Learning ac-companies the acquisition o production and industrialequipment, including learning how to use and adapt itto local conditions. In order to oster broader technologyassimilation, the technology transer exercise will need totake into account the specifc technological dimensionso RETs as well as the nature o actors and organizationsin developing countries. The quality o technology trans-

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er should be assessed by the extent to which the recipi-ents know-how o a product, process or routine activityis enhanced, and not just by the number o technologytranser projects undertaken. A greater articulation oexibilities under the global IPRs regime in the specifccontext o RETs is also required.

The green economy and the Rio+20 rameworkshould promote wider use and learning o RETs

In addition to providing critical inrastructure to supportthe emergence and shit in production structures in devel-oping countries, RETs can serve the goals o their indus-trial policy by helping those countries exporters becomemore competitive in the ace o increasingly stringentinternational environmental standards. However, simply

orcing developing countries to use RETs through mea-sures such as carbon labelling and border carbon adjust-ments may not be sufcient to enable the transition. In-deed, such measures may even have adverse eects onindustries in developing countries by acting as barriersto imports, since enterprises and organizations may nothave the means (fnancial and technological) to conormto the new requirements. To ensure that green require-ments do not place an additional burden on industries indeveloping countries and LDCs, global eorts aimed atclimate change mitigation need to be accompanied byinternational support in fnance and technology to help

these countries transition to RETs in a strategic and sus-tainable manner.

Targeted international mechanisms orRETs-related innovation and technologicalleaprogging are required

The obvious question or all developing countries andor the global community is whether the BRICS coun-tries (Brazil, the Russian Federation, India, China andSouth Arica) are special cases. To some extent they are:they have the prerequisites or competitive production omany RETs, such as a workorce with advanced technical

training, supporting industries and services in high-techareas, access to fnance, ample government assistanceand a large domestic market, all o which seem to avourthese larger emerging developing countries over smaller,poorer developing countries and LDCs.

Historically, promoting technological learning and innova-tion has remained a challenge or all developing coun-tries. The experiences o China, India and other emerg-ing economies show that public support, political will andconcerted policy coordination are key to promoting tech-nological capabilities over time. Greater support or educa-tion (especially at the tertiary level) and or the development

o small and medium-sized enterprises, as well as fnancialsupport or larger frms and public science are important.But in addition to such domestic policy support, greatersupport rom the international community is also needed.

The TIR 2011 proposes our mechanisms o internationalsupport. The frst o these, the STI Network, was approvedat the LDC IV Conerence in Istanbul in May 011.

NATIONAL POLICY FRAMEWORKS FORRENEWABLE ENERGY TECHNOLOGIES

Integrated innovation policy rameworksat the national level are critical

The TIR 2011 calls on national governments to adopta new energy paradigm involving the greater use o

RETs in collaboration with the private sector. Such aneort should be supported by a variety o stakehold-ers, including public research institutions, the privatesector, users and consumers on an economy-wide ba-sis. A policy ramework that can strike an appropriatebalance between economic considerations o energyefciency and the technological imperatives o deploy-ment o RETs in developing countries and LDCs will bethe cornerstone o such an agenda or change. Thiswill necessitate two separate but related agendas. Thefrst should ensure the integration o RETs into nation-al policies or climate change mitigation. The second

should be the steady promotion o national innovationcapabilities in the area o RETs. The latter entails ad-dressing issues that are not only generic to the innova-tion policy ramework, but also new issues, such ascreating standards or RETs, promoting grid creation,and creating a more stable legal and political environ-ment to encourage investments in RETs as an energyoption within countries.

The TIR 2011 proposes an integrated innovation policyramework or RETs use, adaptation, innovation and pro-duction in developing countries and LDCs. The concept

o such a ramework envisages linkages between twoimportant and complementary policy regimes: nationalinnovation systems that provide the necessary condi-tions or RETs development, on the one hand, and ener-gy policies that promote the gradual integration o RETsinto industrial development strategies on the other. TheReport suggests that such a ramework is essential orcreating a virtuous cycle o interaction between RETs andscience, technology and innovation.

Such a policy ramework would perorm fve importantunctions, namely:

(i) Defning policy strategies and goals;

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(ii) Enacting policy incentives or R&D, innovationand production o RETs;

(iii) Enacting policy incentives or developing greatertechnology absorptive capacity, which is neededor adaptation and use o available RETs;

(iv) Promoting domestic resource mobilization orRETs in national contexts; and

(v) Exploring newer means o improving innovationcapacity in RETs, including South-Southcollaboration.

Policy strategies and goals are importantsignals o political commitment

The use and adaptation o RETs in countries requires theestablishment o long-term pathways and national RE

targets. These targets, although not necessarily legallybinding in nature, would have to be supported by a rangeo policy incentives and regulatory rameworks. Defningtargets is an important signal o political commitmentand support, and the policy and regulatory rameworksaimed at enorcing the targets would provide legal andeconomic certainty or investments in RETs.

Dierent policy incentives or RETs innovation,production, adaptation and use are important

The successul development and deployment o anytechnologies, especially relatively new ones such as

RETs, needs the support o several dedicated institu-tions responsible or their dierent technical, economicand commercialization aspects. Such support can beorganizational (through dedicated RET organizations)or it can take the orm o incentives to induce the kindso behaviour required to meet the targets set or RETs.

The TIR 2011 lists various policy incentives or R&D,innovation and production o RETs and those that areaimed specifcally at promoting technology absorptivecapacity and learning related to RETs, which will be im-portant or their wider use in national contexts. ManyRETs-related policy incentives proposed have already

been used by most o the industrialized countries, al-though developing countries are also increasingly us-ing them or experimenting with their use. Clearly, de-veloping countries and LDCs will need to select policyincentives that are geared to their specifc situationsand requirements as much as possible.

The policy incentives discussed at length in the Reportpertain to two policy spheres: the innovation policyrameworks o countries and their energy policies. Thisis because energy policies oten contain measures thathave an impact on particular kinds o technologies. On-going reorms in the energy sectors o most developing

countries oer a good opportunity to establish regula-tory instruments and production obligations geared to-wards promoting investment in RETs and energy pro-duction based on these technologies. Policy incentiveso both kinds (i.e. innovation-related and energy-related)are important to induce risk-taking by the private sec-tor, to improve enterprise capacity to engage in learningactivities, and to promote basic and secondary researchin the public sector. Some o the policy incentives couldbe aimed specifcally at the private sector, such as greeneconomic clusters and special economic zones to boostenterprise activity, whereas others could be hybrid instru-ments granted to promote both public and private sectoractivity, such as collaborative public-private partnerships(PPPs). Yet others, such as public research grants, would

be oered primarily to the public sector.

Greater domestic resources needto be mobilized or RETs

Financial incentives o various kinds can promote invest-ment in RETs, and acilitate their quicker adaptation andutilization at the national level. These incenti