The UNFCCC and its relationship to the WTO is a special case of the broader relationship between trade and the environment. Generally, this has been addressed from the viewpoint of the trading system and the extent to which the trading system needs to adjust to accommodate environmental needs. In the climate negotiations, a lot of emphasis has been placed on the UNFCCC and any agreement not interfering with trade issues, or not addressing trade rules. This has been extended to the issue of intellectual property, a relative latecomer to the range of trade rules. Thus, the argument goes, intellectual property is a trade issue which the UNFCCC and subsequent protocols should not address, as they properly should be addressed in trade venues. I don’t intend to reiterate the arguments counter to this proposition. (For that see Chapter 7 of my book.) I just want to address the specific issue of whether there are rules in the UNFCCC itself that prevent countries from addressing IP in the UNFCCC or in the pursuit of implementing their obligations under the UNFCCC.
Looking at technology in the Paris Agreement its difficult to avoid a deep sense of déjà vu, all over again. As in Cancun, Durban, all the way back to the Buenos Aires Plan of Action, the technology text and decision seems doomed to be reduced to more tinkering with the design of technology institutions rather than substantive commitments on technology support, policies and measures. In the Paris negotiating text, all substantive commitments, including on intellectual property, that had been included in the Geneva text have all but disappeared, reduced to generally vague mentions in optional paragraphs 7.4 and 7.5. The proposed decision text focuses primarily on the never-ending saga of technology needs assessments and only in paragraph 50 provides for specific commitments by developed countries on intellectual property (IPRs), and financial support. However, the largest amount of technology text and energy is aimed at the establishment of a new technology framework which is to be developed by the new Intergovernmental Preparatory Committee (IPC) and adopted by the CMA at its first session. The details of what this framework will entail remain unclear but are likely to be drawn from the 4CP/7 framework on technology needs assessment; technology information; enabling environments; capacity building; mechanisms for technology transfer. History shows that the only elements of that framework that led to implementation were the TNAs. Technology Information remained largely a failure under TT:CLEAR and enabling environments in developed countries were never addressed and remained a subject of contention. Mechanisms for technology transfer were reduced to the Expert group on technology Transfer (EGTT) talk shop, and the less said about capacity building the better. Any new framework must not only improve on this less than stellar record but must provide for specificity on activities to be taken by key stakeholders: the developing countries; the developing countries; and the technology institutions – the CTCN and the TEC.
Like China, India is heavily dependent on fossil fuels for electricity production, as well as heating and transport. Its fuel mix is dominated by oil and coal with significant shares from natural gas and nuclear power. India has also seen a rapid increase in its energy demand, although not on the scale or speed of China. India’s emissions need to peak by 2030, (under a 2 degree scenario), largely through rapid deployment of renewables, nuclear and biofuels. Also crucial will be deployment of best available technologies to enable greater energy use efficiency in industry. As with China, the IEA Energy technology Perspectives note that peaking in 2030 may not be achievable without widespread adoption of CCS in power generation and industry.
India has also taken advantage of opportunities to become a significant player in clean technologies. Indian companies have acquired technology through licensing, through joint ventures, as well as some direct acquisitions. Between 2005 and 2008, Indian exports of renewable technology increased 464% while imports increased by 172%.
India is also the home base of one of the most successful global wind technology manufacturers, Suzlon Energy Ltd. Lewis notes that Suzlon has focused on acquisition of technology by strategically acquiring whole companies, rather than licensing. In part this circumvents the established firms, but relies on significant in-house absorptive capacity. Suzlon’s export oriented approach also made acquisition of advanced technology and access to markets crucial. This meant that Suzlon could not follow an imitation model, as its products would have been blocked from access to developed country markets where the technologies were protected. Neither could it rely solely on a licensing model since the terms of licenses from any of the established firms would contain limitations such as geographic restrictions. This also necessitated creating significant in-house R&D capacity to further develop the technology acquired from smaller second tier firms (Lewis).
India is a major hub for pharmaceutical and agrochemicals production and has in recent years begun to move from generic industries into major originator R&D. Building on its high export performance, especially to developing countries, Indian firms have been using that capital to cooperate in R&D, acquire firms, and create joint ventures, in order to participate in the lucrative developed country markets for new chemical entities and biological medicines. This role for India as a crucial supplier of affordable medicines has been a large part of the structural debate about how TRIPS might limit access to medicines by forcing Indian firms to provide domestic protection for pharmaceuticals thus limiting their capacity to produce generics for export to meet the need for products in developing countries.
What does this imply?
One of the major issues that is key to thinking about IP, technology and climate change is that there is a geographic structure to the technology need. The majority of developing countries are where the need for existing technologies for energy access and thus low emissions technologies is most evident, and in terms of adaptation where the most severe impacts of technology are held. This means that the flows and access to technology reflects the broader imbalance of technology access in the development framework. However, the emerging economies, especially India and China have an important and special role to play in the generation and dissemination of climate technologies.
The past two decades have seen increasing growth in the role that middle income countries, especially upper middle income countries such as Brazil, India, and China play in international technology flows. Data from 2001 shows that upper middle income countries presented the highest growth arena for high technology exports from the OECD.
Emerging economies are increasingly major players in renewable energy technology investments with Brazil, India and China comprising over 90% of the 72 billion invested in developing countries (just a shade more than that invested in the OECD. See UNEP, Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication, 2011).
The picture of the role of the emerging economies in the new climate technology structure is fundamental to assessing how intellectual property may be a barrier to technology transfer. If these countries are to engage in large scale replication and distribution of the relevant technologies to other developing countries, then we have to be concerned about anything that places a restriction on their ability to:
- Function as research and development and production centers for climate technologies
- Function as export and distribution centers for climate technologies
In the next couple of posts I look at the role of China and India as research and development centers
Joint research and development (R&D) is seen as a major element and panacea for rebuilding trust between countries in the UNFCCC regarding intellectual property and for addressing the difficult issues between emerging economies (read: China) and other developed economies. The issue is especially fraught between the US and China and yet US-China bilateral cooperation on climate mitigation technology is deep and ongoing, especially through the Clean Energy Research Centre (CERC).
The projects under the CERC are run under national consortia collaborating across borders, so that benefits may be shared across all national actors. Funding for research is purely nationally based (each funds own participants and contributes own funds to joint research), so there is no cross-subsidization unless otherwise agreed. The CERC agreement very clearly outlines the intellectual property framework for managing the research produced under the projects and work plan (See http://www.us-china-cerc.org/Intellectual_Property.html). This is controlled by the CERC protocol and the attached IP Annex. (See http://www.us-china-cerc.org/pdfs/protocol.pdf).
One of the key questions in technology transfer and climate change is whether intellectual property presents a barrier to technology transfer to address climate change. In some minds the issue has already been settled by studies showing that patenting of the relevant climate technologies is low or non-existent in low-income developing countries, or that where patents do exist, there appear to be few or no reports of patents being a problem. (see chapter 3 of my PhD in the first post on this blog). The problem is that viewing the issue as primarily an empirical one ignores the underlying nature of the problem of technology transfer in terms of scale, timing, and targets. I argue that you cannot empirically assess the nature or extent to which IP may be a barrier until you properly define the goal of technology transfer: getting the right technologies to the right countries at the right time.
As a starting point we should be clear that we mean international technology transfer, as in the flow of technological goods and knowledge across borders. Despite there being broad agreement as to the positive impact technology transfer can have, there is no universally recognized or legally enforceable definition as to what technology transfer is or what form it must take.
Within the realm of trade agreements, the closest definition was the United Nations Conference on Trade and Development (UNCTAD) Draft International Code of Conduct on the Transfer of Technology which defined it as “the transfer of systematic knowledge for the manufacture of a product, for the application of a process or for the rendering of a service and does not extend to the transactions involving the mere sale or mere lease of goods.” (Article 1.2,UNCTAD Draft International Code of Conduct on the Transfer of Technology) The full definition also includes:
(a) The assignment, sale and licensing of all forms of industrial property, except for trademarks, service marks and trade names when they are not part of transfer of technology transactions;
(b) The provision of know-how and technical expertise in the form of feasibility studies, plans, diagrams, models, instructions, guides, formulae, basic or detailed engineering designs, specifications and equipment for training, services involving technical advisory and managerial personnel, and personnel training;
(c) The provision of technological knowledge necessary for the installation, operation and functioning of plant and equipment, and turnkey projects;
(d) The provision of technological knowledge necessary to acquire, install and use machinery, equipment, intermediate goods and/or raw materials which have been acquired by purchase, lease or other means;
(e) The provision of technological contents of industrial and technical cooperation arrangements.
The draft code was never adopted but the definition of technology transfer that it generated remains one of the first and most influential iterations at a multinational level of what technology transfer means.