The industrial sector is extremely diverse and involves a wide range of activities including the extraction of natural resources, conversion into raw materials, and manufacture of finished products. Due to the wide variety in activities, energy demand and GHG emissions vary widely. Hence, the aggregate energy use and emissions depend on the structure (or specific set of activities) of industry, and the energy and carbon intensity of each of the activities. The structure of industry may depend on the phase of the economy, as well as many other factors like resource availability and historical factors. Industrial production and GHG emissions are still dominated by industrialised countries, but the role of developing countries in world industrial production, especially Southeast Asia, is increasing. Cost-effective potentials and opportunities for GHG emission abatement exist in all regions and industrial sectors. A wide variety of practices and technologies to reduce GHG emissions are available (see Table 9.2), often with high paybacks.

In industry, energy efficiency is often the result of investments in modern equipment, stressing the attention to sound and environmentally benign investment policies. Investments in technology (including hardware and software) in the industrial sector are dominated by the private sector. Recent trends in globalisation of industry seem to affect the international transfer of investments and technology. Foreign direct investment (FDI) is rapidly increasing, although concentrated on a small number of rapidly industrialising countries. These countries may have an impact on regional industrial development patterns, as seen in Asia. Private investment in other developing regions is still limited, although increasing. FDI is dominated by transnational companies, while SMEs in industrialised, developing countries and CEITs have less access to (international) financial markets and technologies. Although difficult to measure, domestic investments in developing countries are still larger than FDI. Official development assistance, although earmarked for low to medium income countries, is also concentrated on a few countries. Public funding (in industrialised, developing countries and CEITs) for technology development and transfer, although still important, is decreasing. Funding for science and technology development is important to support industrial development, especially in developing countries. Public funding in the industrial sector, although small in comparison to private funding, remains important but its future role may be changing. Regular evaluation of the goals of public funding is needed for industrial development with respect to the role of cleaner technologies and with respect to the role of private funds.

Barriers limit the uptake of more efficient technologies. These barriers may include the (un)willingness to invest in (new) technologies, the level of information and transaction costs, the lack of effective financing (e.g. lack of sufficient funds, high interest), the lack of skilled personnel and a variety of other barriers, e.g. the "invisibility" of energy and CO2 emission savings and the lack of inclusion of external costs. Developing countries and CEITs suffer from all of these factors that inhibit market acceptance of technologies plus a multitude of other market problems. Consumers often have no knowledge of energy efficiency (technologies) or cannot afford increases in equipment costs, due to a limited ability to pay increased initial costs, limited foreign currency and high inflation rates. A well developed banking system and existence of appropriate financing mechanisms are essential for the uptake of efficient and cleaner technologies in industry.

Traditionally, technology transfer is seen as a private transaction between two enterprises. However, innovation and technology transfer is an interactive and iterative process, involving many different parties. An effective process for technology transfer will require interactivity between various users, producers and adaptors of technology. The variety of stakeholders makes it necessary to have a clear policy framework as part of an industrial policy for technology transfer and cooperation, both for a technology donor and recipient or user. Such a framework may include environmental, energy, (international) trade, taxation and patent legislation, as well as a variety of well-aimed incentives. The framework may help to give the right signals to all parties, as well as help to develop innovative concepts for technology assessment, financing, procurement, adaptation, repetition and development. Policymakers are responsible for developing such a comprehensive framework. The interactive and dynamic character of technology transfer stresses the need for innovative and flexible approaches, through (long-term) partnerships between various stakeholders, including public-private partnerships.

The case studies and the literature demonstrate clearly that there is a strong need to develop the capacity to assess and select technologies. Stakeholders (policymakers, private investors, financing institutions) in developing countries and CEITs have even more difficult access to technology information, stressing the need for a clearinghouse for information on climate abatement technology. Various innovative policy concepts, including networking and joint research and information organisations, were found to be successful. To increase the likelihood of success, long term support for capacity building is essential, stressing the need for public support for capacity building and cooperation of technology suppliers and users.

Adaptation of technology to local conditions is essential, but practices vary widely. Countries that spend on average more on adaptation seem to be more successful in technology transfer. As countries industrialise the technological capabilities increase rapidly, accelerating the speed of technology diffusion and development. This demonstrates that successful technology transfer includes transfer of technological capabilities, which may be beneficial to both the supplier and user. Technology users, suppliers as well as financial institutions and governments could give attention to adaptation as an essential and integral part of technology procurement.

The introduction and diffusion of clean or low-GHG technologies in the industrial sector needs a sound environmental and economic policy, stressing the need for long term goals and commitment by policymakers. This also means that technology transfer needs to be incorporated in R&D strategies, as many (public) environmental sound technologies "remain on the shelves" and are not brought into the market as rapidly as may be expected. Several countries and equipment suppliers envisage that environmentally sound product development can enhance the future competitive position of domestic suppliers, making technology transfer (through strengthening local capacity and demonstration of technology) a way to open new export markets. Subsequently, policies to support the development of new technologies and markets could be used in these countries as part of economic and trade policies.

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