Methodological and Technological issues in Technology Transfer

Other reports in this collection

3.4 Energy Supply

Major objectives of the current energy supply sector are economic development and international competitiveness. Climate change objectives, particularly the reduction of CO2 emissions, do not play a significant role. Nevertheless, significant opportunities exist to reduce CO2 emissions (see Table TS5) as well as other GHG emissions.

Technology transfer in the energy sector is mainly driven by the private-sector in oil, natural gas and electricity supply. On the other hand, coal, nuclear and renewable sources are often dependent on government to preserve or increase their presence in the market. Technology transfer, as presently understood, is a relatively new process since historically it was used as an euphemism for large-scale power projects financed by multilateral banks or for limited knowledge transfer from the international oil and gas companies to national industries. The oil crises in the 1970's changed the contractual terms in the oil and gas sector when powerful national oil companies were able to negotiate technology transfer on more favourable terms. In the early 1990's, the process of market globalisation and the availability of private capital on a global scale triggered investments and hence technology transfer opportunities in the electric sector also. The private sector is now playing a bigger role in electric power generation in concert with a new set of regulations and standards.

In the energy supply sector, technology transfer comes with investment. One of the keys to the transfer of technology is to promote investment through an appropriate economic and institutional framework. For some, the high initial costs of clean energy supply technologies is a major barrier for their transfer. In general, economic and institutional barriers rather than technology availability are more apt to be the cause of failure to transfer technology. In all energy sectors, the role of government in facilitating technology transfer is critical. Annex II countries could develop more effective policies to stimulate and finance private investments in clean energy sources in developing countries and CEITs. Developing countries and CEIT governments should have policies in place for liberalising the energy supply market, fostering and ensuring conditions to allow international financing, promoting infrastructure development, eliminating unnecessary regulatory and trade barriers, educating and training local workforce, protecting intellectual property rights and strengthening local R&D and environmental management regimes

General barriers for technology transfer in the energy sector are:

It is expected that markets will respond to whatever regulatory policies are adopted to promote the reduction of GHG emissions. This will stimulate technology transfer as investments are made in response to the price signals when uncertainties on policies to secure environmental goals are settled. A number of generic strategies can promote and/or facilitate the implementation of some of the emission reduction options in the energy sector. These strategies could include (but are certainly not limited to):

Governments play a special role in the creation of markets for ESTs. This can be done by governments through procurement of new technologies for public missions like energy production and distribution, and provision of incentives for its development, including grants, low interest loans, import duty exemption, income tax exemption, tradable permits and competitively determined subsidies. Grants are a very common incentive used to stimulate adoption of a new technology in developed countries (e.g. The Clean Coal Program in US) An example of the use of income tax exemption is the Green Funds scheme in The Netherlands. Also in the Netherlands a pilot a trading mechanism for Green Certificates (including a spot and forward market) has been established for renewably generated electricity, which makes it feasible to reach quantified targets for renewable energy introduction efficiently. Competitively determined subsidies have been employed such as the Non-Fossil-Fuel Obligation (NFFO) in UK, and the electricity feed law (EFL) in other parts of Europe.

Fossil Fuel
Technology transfer in the fossil fuel sector is mature, and well-established mechanisms are in place. Technology is readily available from a wide variety of sources, such as the oil, gas, and coal industries, engineering contractors, equipment vendors, etc. Barriers to technology transfer are primarily economic and institutional. Specific measures and policies could include:

Technology transfer in the nuclear power sector for water-cooled and water moderated reactors is also mature and has well-established mechanisms. Because of the unique safety, ecological and proliferation risks involved, successful transfer of nuclear technology requires major government involvement and careful consideration of the costs and benefits involved. The large capital costs, lack of public acceptance, availability of cheap domestic fossil fuel and the resolution of safety and waste disposal provide significant barriers to the use of nuclear energy. In many cases, nuclear proliferation issues are also a major problem to be addressed by governments and other international institutions. Developing infrastructure and trained personnel is required to insure the highest possible level of nuclear safety.

In the renewable sector technology transfer has been constrained by the lack of investment and high costs. Investment has been generally limited to niche or protected markets, because of technical, institutional and economic barriers. Governments need to provide incentives for investment and to remove policies that hinder the application of renewable energy as described in the general policy measures above. They also need to promote the development of improved and more cost effective renewable technologies amongst others by:

Other reports in this collection