Many developing countries condition their national climate change contributions submitted under the Paris Agreement on receiving funding, technology transfer and capacity building support from developed countries. However, the industrialized countries have so far failed to deliver to the extent promised. Public-private partnerships and other energy initiatives can only partially compensate for this shortcoming, according to a new study: while they successfully support the expansion of low-carbon energy systems, they contribute insufficiently to technology transfer to the Global South.
Developed countries have pledged to provide $100 billion per year from public and private sources for climate finance starting in 2020. Technology transfer is particularly important here: the developing and emerging countries not only need money to expand sustainable technologies, but also knowledge about low-carbon technologies.
This goal has not yet been achieved – and not only because climate financing is lacking. “Most patents for low-carbon technologies are owned by companies in industrialized countries. This gives them a big competitive advantage. They only share their knowledge when it is advantageous for them,” says co-author Andreas Goldthau (IASS/Uni Erfurt). China is the only emerging market that has successfully attracted technology transfer through foreign direct investment. In order to tap into the Chinese market, companies were willing to “transfer” their technologies, i.e. pass on knowledge.
China’s recipe for success is only transferable to a limited extent
China’s success in building a low-carbon technology sector is attributed to the high innovation capacity of Chinese industry as well as policy measures. “These include the promotion of joint ventures and knowledge transfer, but also a mandatory domestic content, meaning that foreign investors must use products or services manufactured in China. With its large and profitable market, China was able to push through such measures,” says first author Silvia Weko (IASS/University of Erfurt). In other developing and emerging countries, however, similar efforts have proven ineffective or even counterproductive.
There, foreign investment in low-carbon energy systems remains at too low a level. Countries are therefore using the predominantly fossil fuel technologies and financial resources at their disposal. The danger is that these countries will remain dependent on fossil energy in the long term.
Initiatives are committed to expanding the power grid, but too little to technology transfer
What can countries do that want to increase technology transfer but cannot get it through international markets or policy? Technology transfer initiatives, such as public-private partnerships or platforms like the United Nations Climate Technology Center and Network (CTCN), are seen as an opportunity for the energy transition in the Global South. Such initiatives were intended to fill the market gap, but their track record is mixed, according to the IASS researchers’ analysis.
Weko and Goldthau identified 71 international initiatives that include the transfer of low-carbon technologies among their goals. A particularly large number of these operate in countries where only a small proportion of the population has access to electricity. They are successfully improving the development of sustainable energy systems there. However, only 26 of the 71 initiatives studied actually take on the task of technology transfer.
In order to increase knowledge transfer to developing and emerging countries, the researchers believe it is essential that industrialized countries keep their funding promises and provide greater support to the United Nations Climate Technology Center and Network. The gap cannot be closed with the current patchwork of initiatives. The link with trade also offers opportunities: For example, technology-importing countries can negotiate better conditions if they bundle their demand.