10.3.3.2.2 Mechanisms for Technology Transfer

Technology intermediaries are needed to reduce barriers to technology transfer associated with information, management, technology, and financing. These operate between users and suppliers of technology and help to create links within networks and systems (through bridging between institutions), and encourage interaction between the system. They also assist with undertaking research, evaluation, and dissemination tasks. ODA programs mechanisms for technology transfer under the UNFCCC, and multilateral development banks (MDBs) can play a significant role in strengthening national institutional and organizational structures for technological development and innovation.

The 1990s have seen broad changes in the types and magnitude of international financial flows that drive technology transfer (IPCC, 2000a; French, 1998). ODA decreased and fell below the committed levels (OECD, 1999a). However, it plays an important role in technology transfer, especially for the sectors and areas that are commercially less attractive to FDI, such as forestry, public health, agriculture, and coastal zone management (OECD, 1997). Moreover, ODA is still critical for the poorest countries, particularly when it is aimed at development capacities to acquire, adapt, and use foreign technologies.

MDBs have become aware of the role they can play in helping to mobilize private capital to meet the needs of sustainable development and the environment, and of the potential to use financial innovation to encourage environmental projects and initiatives. The World Bank has developed a number of initiatives with potential support for environmental technology transfer. An important new initiative is the Carbon Investment Fund, which will provide additional finance for CO₂ mitigating projects in return for carbon offsets. Other MDBs, such as the regional development banks in Africa, Asia, Latin American, and the Caribbean region, can also play an important role in developing systematic approaches to create enabling environments for technology transfer, including South–South technology transfer.

The Global Environment Facility (GEF), the financial mechanisms of the UNFCCC, is a key multilateral institution for the transfer of ESTs (Anderson, 1997). Although this is of a modest scale in terms of total investment and mainstream investment flows, GEF-supported projects are especially significant for renewable energy technologies, such as wind, solar thermal, solar photovoltaic home systems, and geothermal²⁰.

The Kyoto Protocol mechanisms, in particular the project based Joint Implementation (JI) and Clean Development Mechanism (CDM), can increase technology transfer. CDM and JI can provide financial incentives for ESTs and influence technology choice. As voluntary mechanisms, they require co-operation among developed and between developed and developing country parties, as well as between governments, private sector entities, and community organizations. Project-based crediting can lead to tangible investments and to the development of local capacity to maintain the performance of these investments. These investments could incrementally assist developing countries to achieve multiple sustainable development objectives, such as economic development, improvement of local environmental quality, minimization of risk to human health by local pollutants, and reduction of GHGs. Much about the design and governance of the CDM, however, remains to be resolved. There is a need to design simple, unambiguous rules that ensure environmental performance in the context of sustainable development, while also favouring investment. The multilateral oversight and governance provisions of the CDM, and the project-basis transactions, will raise the transaction cost of investment in CDM projects as compared to the cost of mitigation through other means. Chapter 6 discusses these aspects in more detail.

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