Technology Transfer Opportunities in Developing Countries

Technology transfer is traditionally perceived as an agreement between two

countries, which is in some ways beneficial to both of them. The area of transfer of environmentally sound technologies offers the unique opportunity for the process to be beneficial for the entire global population.

There have already been examples when governments of East Asian countries, such as South Korea, Taiwan and Singapore have managed the transfer of technologies to achieve long-term capacity building in these countries (Lall, 1996). The national development plan of Thailand has in the past included significant budget allocations for adequate technology transfer (UNFCCC, 1998b), including promotion of

renewable energy (IVAM, 1999). This has allowed these countries to achieve a significant level of economic development and bridge the technological gap.

The CDM potentially offers similar opportunities to the much poorer regions of the world. These countries, however, will also be faced with a myriad of difficulties, such as information gap, lack of in-country capacity, inadequate policies and appropriateness of the transferred technology. Also, these will have in addition to juggle national with global climate change priorities. The assistance mechanisms under CDM and related institutional structures have the potential to become only an economic tool leveraging developing countries to handle social and environmental problems. The only way CDM can be fully beneficial is if it provides the tools of achieving all aspects of sustainability (namely, social, economic environmental and technological) simultaneously.

Agenda 21 provides a list of activities that can create opportunities to promote the transfer of technology, these include: a) government policies creating favourable conditions for both public-sector and private-sector transfers; b) institutional support and training for assessing, developing, and managing new technologies; c)

information networks and clearinghouses that disseminate information and provide advice and training; d) collaborative networks of technology research and

demonstration centers; e) international programs for cooperation and assistance in research and development and capacity building; f) technology-assessment

capabilities among international organisations; and g) long-term collaborative arrangements between private businesses for foreign direct investment and joint ventures (United Nations, 1993).

Many governments are undertaking such actions by developing legal instruments, tax regimes that reward technology upgrading, targeted lending programs from public and private banks, public/private partnerships to support the import/export of ESTs, tax refunds or subsidies for the import and implementation of ESTs, subsidized infrastructure, tariff protection, and providing clear information about government programs and actions. Some governments are also using economic instruments together with traditional command and control regulations (for example, emission standards) to achieve environmental goals and to encourage the transfer of

technologies. No single policy instrument is likely to be sufficient to address environmental problems, and that; therefore, a combination of instruments is likely to be needed. To be effective, economic instruments also need strong institutions, the

active support of economic, financial and industrial authorities, and few bureaucratic restrictions (IPCC, 2000).

For example, the developers of technology provided awareness building programs, demonstrations, initial training, and financial support to introduce solar photovoltaic (PV) systems (which is eligible for CDM project) in Kenya with the help of local companies (IPCC, 2000). In case of Zimbabwean ethanol program, substantial cost savings, materials substitution, and enhancing local capability was achieved by the involvement of local staff during the development cycle, and for process and product improvements. Technical after-sales services and maintenance facilities help the performance and dissemination of technology with low interest rate loans and other subsidies for new technologies (IPCC, 2000). Small-scale pilot demonstration programs that aim to disseminate information and reduce high initial costs through rebates and promotions can encourage electrical energy conservation. Information clearing houses can play a role in promoting renewable energy by disseminating information on solar, wind, biomass and small hydro technologies. The Brazilian renewable program case study draws attention to the successful use of reference centres (IPCC, 2000).

Government strategy that addresses institutional, financial, education and training issues is effective to overcome long-term barriers. Governments can play a key role by funding the “startup” of R & D institutions, such as the Republic of Korea which has established such institutions along with education and training programs in formal and vocational schools, in an effort to enhance the development of human capital (IPCC, 2000). Hence the well-coordinated partnerships among government, private sector and foreign companies are important to the success of technology transfer.

The CDM is a market driven tool, it is a form of trade. On the one hand it is a cost saving opportunity as well as a chance to capitalize a new commodity, which is still not valued. It also provides incentives for environmental neutrality to the geographic location for emission reductions. With this flexibility idea CDM provides the

developing countries an opportunity to earn revenues by capitalizing these carbon reductions. This is leverage for developing countries to control the resource flows

through the CDM projects by ensuring that the most appropriate technologies are transferred for their national sustainable development.

According to Article 12 of the Kyoto Protocol private and public both entities are going to participate in the CDM process. Private sector participation will bring a large sum of foreign direct investment to the developing countries driven by the national regulatory obligations and seeking the most cost-effective credible carbon reductions. It also helps to choose the deployment of locally appropriate technologies for long term project sustainability by ensuring the effective and optimal utilization of technology over the project life time.

The CDM project needs host country government approval that could ensure the developing countries to attain the technologies that are most suitable and sustainable within their local environment and community. It could be a checkpoint to control the dumping of unwanted and inappropriate technologies to buy the low-hanging fruit. The host country needs strong knowledge based capacity and to set up the sustainable development priorities with CDM objectives.

CDM is a tool to reduce greenhouse gas emission mainly related to energy, agriculture and forestry sector technologies. Among these the energy sector is the pioneer. Power generation sector is a high growth area for developing countries for their economic growth. Bernstein et al. (1999) assert that it is possible to reduce greenhouse gas emissions by as much as 25% through transferring efficient and less polluting technologies in the new generation activities without compromising economic growth. Hence CDM could be a vehicle for financing the technological leapfrogging through capitalization of carbon savings benefit. The technological capabilities are required to adapt the ESTs.

On the basis of the above discussion we can hope that the technology transfer under CDM could be appropriate as well as sustainable from the developing countries context provided they are capable to understand fully the whole process of technology transfer as well as CDM.