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The Global Environment Facility, the operating entity of the UNFCCC Financial Mechanism, is a key multilateral institution for transfers of ESTs. The GEF aims to promote energy efficiency and renewable energy technologies by reducing barriers, implementation costs, and long-term technology costs. A significant aim of these programmes is to catalyse sustainable markets and enable the private sector to transfer technologies. GEF projects are testing and demonstrating a variety of financing and institutional models for promoting technology diffusion and several GEF projects are designed to directly mobilise private-sector finance. Capacity building is a central feature of most GEF projects and is resulting in indirect impacts on host countries' abilities to understand, absorb and diffuse technologies. Projects build the human resources and institutional capacities that are widely recognised as important conditions for technology adoption and diffusion. Next tot the programmes on renewable energy and energy efficiency, additional operational programmes for energy-efficient transport and carbon sequestration are now being developed.
From 1991 to 1998 the GEF approved grants totalling $610 million for 61 energy efficiency and renewable energy projects in 38 countries. The total cost of these projects is $4.8 billion, as the GEF has leveraged financing through loans and other resources from governments, other donor agencies, the private sector, and the three GEF project-implementing agencies (UN Development Programme, UN Environment Programme and World Bank Group). An additional $180 million in grants for enabling activities and short-term response measures have been approved for climate change. Compared to the magnitude of the technology transfer challenge, these efforts are of modest scale even when added to the contributions from bilateral development assistance For instance, ODA in 1997 totalled $40-50 billion and private-sector transfers from FDI reached $240-250 billion. Achieved energy savings and renewable-energy capacity installed through GEF-supported projects are small but not insignificant relative to world markets. This is especially significant for renewable energy technologies such as wind, solar thermal, solar PV home systems and geothermal.
Installed capacity or direct energy savings is only part of the GEF impact. GEF projects have attracted considerable attention among policy-makers and industry in host countries and among the international community. Through policy changes, stakeholder dialogues, and project design activities and studies, GEF projects have provided an important stimulus for technology transfer beyond direct project impacts.
Continued effectiveness of GEF project funding for technology transfer may depend on factors such as:
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