Methodological and Technological issues in Technology Transfer

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5.1 Introduction

Finance is a critical aspect of technology transfer. This chapter reviews various funding sources and financial mechanisms for conducting EST transfers, and the types of partnerships and stakeholder relationships that can support technology transfers. The chapter looks at the practical issues involved and explores a range of mechanisms and approaches. As discussed in Chapter 4, greater emphasis is being placed on more participatory models of technology transfer and creation of "social infrastructure." This chapter continues this discussion with a review of different forms of public-private partnerships.

Introduction of a new technology into a country usually requires investment, as does the diffusion of existing technologies within a country. Technology adaptation may also require substantial investments in design and/or production. Financing is also often required (and particularly difficult to obtain) in the early (developmental) phases of a technology transfer project or business. Without financing, very little technology investment or transfer takes place. The provision of financing depends upon those who have financial resources--whether governments or the private sector--being convinced that projects and the businesses that run them will justify the financial support or investment. And investment in ESTs and businesses will depend upon governments and private investors being convinced that these will justify--by whichever criteria they apply--the expenditure. This is the financial reality that underpins all technology investment and transfer processes. However, financing perspectives may differ enormously not only according to the project, technology and business, but according to the investor. Thus governments may offer a range of financing possibilities that differ radically from the private sector--and each contains enormous diversity itself.

Table 5.1 summarises the policy tools available related to financing and partnerships, and the barriers these are designed to overcome. The chapter begins by considering the role and scope of participatory techniques to help promote stakeholder dialogues and partnership. The chapter then considers the investment decisions made by private firms that bear on climate-change mitigation and technology transfer for private-sector-driven pathways. Public-sector finance and investment, which is of key significance for many forms of transfer, is considered in terms of direct government finance, official development assistance, and multilateral development bank lending. The section on private-sector finance and investment, which is becoming increasingly important in both the national and international diffusion of technology, discusses a broad range of financial mechanisms and modalities for finance within the private sector. Because the relationship between the public and private sectors has already changed markedly in recent years in many countries, public-private partnerships are discussed. Public-private partnerships can combine the positive attributes of both sectors and provide increasingly important opportunities to promote technology transfer. Finally, technology intermediaries are discussed as important mechanisms to overcome barriers associated with information, management, technology, and financing.

Table 5.1. Policy Tools for Financing and Participation (Source: Mansley et al., 1997a, b)
POLICY TOOL BARRIERS ADDRESSED RELEVANCE
PUBLIC-SECTOR FINANCE AND INVESTMENT (5.2)
  • Provide direct finance
  • Provide official development assistance
  • Provide multilateral development bank finance
  • Lack of confidence in "unproven" technology
  • Lack of access to capital
  • User acceptability
  • Costs of developing new public infrastructure
  • Lack of policy harmonisation
  • Uncertain future energy prices

Government-driven and community-driven pathways

All sectors

All stages

PRIVATE-SECTOR FINANCE AND INVESTMENT (5.3)
  • Support, through a variety of policy tools, private-sector financing mechanisms such as microcredit, leasing, venture capital, project finance, "green" finance, and a range of other private-sector financing initiatives.
  • Reduce perceived risks through consistent policies and transparent regulatory frameworks (see Ch. 4)
  • Lack of access to capital
  • High transaction costs
  • High front-end capital costs
  • High user discount rates
  • Inadequate financial strength of smaller firms
  • Lack of information
  • Lack of confidence in "unproven" technology

Private-sector-driven pathways

All sectors

Agreement and implementation stages

PRIVATE-FIRM INVESTMENTS (5.4)
  • Create incentives for firms to make environmentally sound investments, such as energy taxes, investment tax credits, and emissions fees (see Ch. 4)
  • Engage firms in public-private partnerships, as discussed in 5.6, particularly to overcome managerial misincentives
  • Managerial misincentives
  • Competing purchase decision criteria
  • Sunk investments in existing equipment and infrastructure
  • Energy-supply-side financing bias
  • Lowest-cost equipment favoured

Private-sector-driven pathways

Buildings, transport, industry, and energy sectors

All stages

PUBLIC-PRIVATE PARTNERSHIPS (5.5)
  • Enter into voluntary agreements with the private-sector
  • Develop technical partnership programmes
  • Conduct informational initiatives
  • Provide tax incentives, guarantees, and trade finance
  • Promote new financial initiatives

Barriers are similar to those for public-sector and private-sector financing and investment, plus the following:

  • Uncertain markets for technologies
  • Import duties
  • Utility acceptance of renewable energy technologies
  • Permit risk
  • Environmental externalities
  • Shortage of trained personnel

All pathways

All sectors

All stages

TECHNOLOGY INTERMEDIARIES (5.6)
  • Create information networks, advisory centres, specialist libraries, databases, liaison services
  • Create and support technology intermediaries like energy service companies and national-level institutions
  • High transactions costs
  • Lack of available information about technology costs and benefits among potential purchasers and partners
  • Missing connections between potential partners and credible information about partners
  • Disaggregated opportunities that do not provide sufficient benefits for individual firms to capture on their own
  • Lack of capacity to contract and conduct technology transfers

Private-sector driven pathways

Buildings, industry, and energy sectors

Primarily assessment and agreement stages




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