10.5.1 Barriers to Technology Transfer between Countries

Many barriers exist for technology transfer between countries:

• Access to capital is limited. The capital costs of ESTs are generally higher than those of conventional technologies. Also, owing to the risks perceived for new technologies, financing costs will tend to be higher. Moreover, the availability of FDI is limited and unevenly distributed around the world.
• Although many countries are revising their trade policies in order to liberalise markets, substantial tariff barriers remain in many cases for imports of foreign technologies including energy supply equipment. This limits exposure to energy efficiency improvement pressures from foreign competition on domestic suppliers and prevents early introduction of sustainable energy innovations from abroad. Where foreign exchange limitations and public revenue considerations make across-the-board tariff removal difficult, preferential treatment of ESTs could be a realistic option.
• National interest groups such as powerful extraction and construction companies can influence technology choices in favour of conventional technologies.
• Institutional and administrative difficulties exist to develop technology transfer contracts, which can be a necessity to qualify regional construction companies as potential partners of the entrepreneurship. There is a need for greater regional cooperation among developing countries, both in R&D work and in the international commercial contracting network.
• Developing countries have in general poor access to information. It is one thing to recognise that the information and technology desired are available, but is quite another issue to gain access to them. That will require that developing countries strengthen their linkages with the rest of the world by investing in the infrastructure needed to receive and transfer information. In this undertaking, partnerships are key: between research institution in developed and developing countries, between domestic and foreign firms, and between research institutions and the private sector. A modern information and communication infrastructure provides up-to-date technical information and publications, and allows instant communication among scientists around the world. Technical information services linked to worldwide information networks distribute knowledge quickly and cheaply to the producing sector. Thanks to satellites, the developing world can leapfrog immediately to advanced telecommunications capabilities, by passing the long road already travelled by the industrialised countries (Greene and Hallberg, 1995).
• A major requirement for successful agreement in technology transfer is the guarantee of intellectual property rights (IPR). Without an IPR law that is effectively enforced, there is little incentive for private companies to share their technology. The cost of IPR is usually quite small when compared to the capital investments and risks that are involved. In the energy sector, a well-developed mechanism exists for sharing IPR. It is the production-sharing contract. Under this agreement, private firms contract with local parties, usually state-owned companies or governments, to invest and share technology with them in return for a share of the products produced. This practice has proven very successful in the international oil and gas sectors, and could be a model for other energy supply areas (see Section 3.5 in Chapter 3 for an elaborative treatment of IPRs).
• Needs of the developing countries are quite different to those of the developed countries. Developing countries are generally still focused on large capacities of cheap, reliable power with low technical risk, and have new technologies as a lower priority. Industrialised countries have the infrastructure to assimilate riskier new technologies, whereas developing countries do not. However, this approach prevents developing countries from technological leapfrogging.
• Economic incentives for donors are weak mainly when energy demand is scarce and scattered. This barrier can be minimised by the additional potential value gained through JI/CDM schemes.

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