The UNFCCC announced in a press conference last week that private investment was vital in driving forward a low carbon economy. “86% of all investment comes through the private sector” said Yvo de Boer. He called for "intelligent financial engineering”, whereby countries create the right policy framework to drive private investment in clean energy.
A little way down the road from the conference, the banks needed to drive that investment discussed how to drive forward clean energy investment in Asia at an event held by the Asian Development Bank.
Asia is home to the fastest growing greenhouse gas emissions on the planet. According to Josh Commody from the Asian Development Bank, a multilateral development finance institution, Asia’s share of emissions was 9% in 1973 and by 2030 its share is predicted to grow to 42%; “and there are still a billion people in Asia without access to electricity” Commody reminded the audience.
“The largest share of investment into renewables needs to be directed towards developing countries were the most cost effective opportunities lie” he said.
Whereas households drive 25% of private investment, 60% of investment is made by corporations said Cammody. The pressure is on corporate investors to drive the new low carbon economy Asia needs.
Adam Kirkman, programme manager for energy and climate at the World Business Council for Sustainable Development, and Odin Knudsen, managing director of environmental products at investment bank JPMorgan, agreed that investors would need lower risk and bigger paybacks before they invested large sums in renewable energy in Asia.
Knudsen said that the payback from renewables projects under the Clean Development Mechanism (CDM) was too little and that banks were wary of project financing in “dicey emerging markets".
He raised concerns about the future of the CDM in Asia. The payback for cleaning up hydrofluorocarbons (HFCs) was massively more than for investing in renewable energy, Knudsen said. “HFCs have disappeared from the market, they were sucked up straight away”. Now the question is whether investors will take on the less fruitful challenge of renewables energy projects.
Carmody accepted that, aside from investing in CDM projects, there was little incentive for banks to invest heavily in renewable energy in Asia, as long as Asian countries continued to refuse to accept a price on carbon.
He added that national government targets for renewables, such as China's 20% renewables target for 2020, were providing other incentives to invest, "though not on the scale needed to tackle climate change".
Kirkman explained that unless the risk in renewable energy investment was reduced, mainstream investors would remain skeptical. Whilst private equity is willing to invest in riskier ventures, he said, big institutional investors are far more risk averse. He produced a graph displaying investment rising exponentially as risk declined.
What needs to happen to reduce the investment risk?
“Clear and strong expectations of a carbon price”, according to Kirkman, as well as “predictable future demand for key technologies”.
The problem is not creating the technology, it's developing it to a commercial scale. “A number of technologies have been developed that could offer low carbon solutions”, he said. Unfortunately, investors are most likely to step in once a technology has reached the “near commercial stage” explained Kirkman. In short, this leaves low carbon technologies languishing at the high cost, low volume stage with no one willing to invest in their development.
Knudson suggested that national funds should be set up dedicated to clean technology development, whilst Kirkson suggested public private financing in the early stages of R&D might provide the solution.
Carmody said we should be encouraged by the simple fact that banks were at the Bali conference, taking the issue seriously, “In the COPs we’ve attended previously, the question was where are the banks? Well they’re here now” he said.
But maybe they should be somewhere else - not at the side events, but with the UNFCCC advising governments on what types of "intelligent financial engineering” will actually work. “The conversation going on between banks and governments definitely isn’t loud enough”, said Carmody, in conclusion. "We risk spending ten years setting up something that doesn’t work, and spending the next ten years trying to undo the mess.”
Monday, 10 December 2007
Walmart turns to competitive generation to purchase green energy
I caught up briefly with Angela Beehler, senior director of energy regulation at Walmart, at a UNFCCC side event to find out more about the company’s commitments on green energy.
US superstore Walmart has, like UK’s Tesco, committed to reduce its carbon footprint. Unlike Tesco which has pledged reductions relative to its growth, Walmart has committed to reduce its overall greenhouse gas emissions by 20 percent over the next eight years.
The store has started to make efforts to green customer behaviour by selling low cost energy efficient light bulbs. Walmart claims to have sold 100 million so far.
On green energy, Walmart has been moving slower. The company faced criticism at the conference for only installing solar panels on 22 of its 'super centres', representing only 1% of the total number of super centres statewide.
Walmart has resisted buying green energy from the grid, unwilling to pay the added costs. “Walmart is a very frugal company” says Beehler, “and buying renewable energy from the grid is significantly more expensive”.
Beehler says Walmart is hoping to get around the problem via the US’s competitive generation system, whereby companies can arrange to buy energy directly from a power generation plant and rent the grid to transport the electricity.
The US Energy Policy Act of 1992 permits all electricity consumers, regardless of size, to purchase electricity from any utility or independent generator on the grid.
There are a total of three energy grids in the US, an East, West and a Texas grid, each with its own rules for competitive generation.
According to Beehler, Walmart is looking into investing in power plants, such as biomass plants, and buying the energy direct.
“If we can participate in renewable energy provision we stand to get the energy at a more competitive price” Beehler says.
see the US Electric Power Supply Association paper explaining competitive generation
US superstore Walmart has, like UK’s Tesco, committed to reduce its carbon footprint. Unlike Tesco which has pledged reductions relative to its growth, Walmart has committed to reduce its overall greenhouse gas emissions by 20 percent over the next eight years.
The store has started to make efforts to green customer behaviour by selling low cost energy efficient light bulbs. Walmart claims to have sold 100 million so far.
On green energy, Walmart has been moving slower. The company faced criticism at the conference for only installing solar panels on 22 of its 'super centres', representing only 1% of the total number of super centres statewide.
Walmart has resisted buying green energy from the grid, unwilling to pay the added costs. “Walmart is a very frugal company” says Beehler, “and buying renewable energy from the grid is significantly more expensive”.
Beehler says Walmart is hoping to get around the problem via the US’s competitive generation system, whereby companies can arrange to buy energy directly from a power generation plant and rent the grid to transport the electricity.
The US Energy Policy Act of 1992 permits all electricity consumers, regardless of size, to purchase electricity from any utility or independent generator on the grid.
There are a total of three energy grids in the US, an East, West and a Texas grid, each with its own rules for competitive generation.
According to Beehler, Walmart is looking into investing in power plants, such as biomass plants, and buying the energy direct.
“If we can participate in renewable energy provision we stand to get the energy at a more competitive price” Beehler says.
see the US Electric Power Supply Association paper explaining competitive generation
Sunday, 9 December 2007
New Zealand emissions trading scheme: the “All sectors and all gases” approach
New Zealand is about to embark on the most comprehensive emissions reduction programme in the world, affecting all sources of its domestic greenhouse gas emissions.
Instead of, like the European trading scheme, capping the emissions of heavy industry, New Zealand will take an upstream approach. From Jan 2009 oil companies, and from Jan 2010 gas and coal companies will be required to buy carbon credits from the CDM and the domestic market to offset all the greenhouse gas emissions released from their products.
“We have learnt valuable lessons from the European scheme – namely that energy providers automatically pass the costs of carbon allowances to consumers”, says Mark Storey, from the New Zealand government treasury.
The New Zealand approach to emissions trading will work on the principle that higher brown energy prices will drive energy efficiency and clean technology in all sectors of the nation's economy.
Heavy industry will be allocated free carbon credits, or New Zealand units (NZUs) to sell on the domestic carbon market, until Jan 2010 in order to soften the blow of passed on energy costs. However, New Zealand plans to gradually phase out these free credits altogether by 2025.
Meanwhile New Zealand’s domestic fuel users will be expected to take on all of the passed on costs, meaning higher petrol prices. Electricity prices will not suffer as much, as New Zealand already generates 70% of its electricity from hydropower.
Five sectors of the New Zealand economy will feel the impact of the new trading scheme. These include industries usually associated with the burning of fossil fuels: the transport sector, heavy industry, and domestic / business energy users; as well as two less usual additions: agriculture and forestry.
Whilst New Zealand's forests, planted after 1990, will help to absorb carbon dioxide in the first Kyoto period until 2012, they are due to release carbon dioxide between 2020 and 2033, when the matured trees are scheduled to be felled.
Participation in the emissions trading scheme will be voluntary for foresters, starting Jan 2008, whereby they will receive credits for the trees they plant or that remain unfelled, and pay for credits for trees they cut down.
Largely due to the potent greenhouse gas effect of the methane released by farm animals, New Zealand’s agricultural sector emits more greenhouse gases than all of the nation's fossil fuel emissions combined.
Agriculture is due to be included on a mandatory level into the emissions trading scheme, in 2013. Farmers will recieve free NZUs to sell on the domestic market to compensate them for 90% of their 2005 emissions.
By 2025, however, the government plans to reduce these credits to zero. Making farmers pay to offset their entire emissions has been one of the most controversial aspects of the trading scheme, according to Storey. He says its going to be one of the hardest parts of the scheme to push through.
Storey is not concerned that including farmers in the trading scheme will affect their competitiveness, however. “The dairy industry is doing very well… our farmers are extremely efficient”, he explains. So efficient he says, that the agricultural sector receives no government subsidies in New Zealand.
Farmers have a long and difficult road ahead, before achieving carbon neutral status in 2025. Currently no commercial technologies exist to reduce methane from farm animals. The agricultural industry has been granted five years to find and commercialise emissions reducing technologies that work, before it becomes part of the scheme.
New Zealand will be looking to alleviate concerns about food miles, raised by trade ministers at this weekend's UNFCCC meetings. Pioneering the technologies to reduce methane emissions from farm animals, one of the world's largest source of GHG emissions, will go a long way to securing New Zealand's future as a global supplier of agricultural goods. The country's new emissions trading scheme does not include international aviation or marine transport, however, the justification being that neither are part of the Kyoto agreement.
Some other NZ climate targets:
- to generate 90% of its electricity from renewable sources by 2025
- to halve GHG gases by 2040
- to pioneer mainstream use of electric cars
- to stimulate growth in the CDM market by requiring companies to purchase CDMs (between 7-17 euros per tonne carbon equivalent saved)
- possible linkage to a future Australian mandatory market
NZ ETS omissions:
- aviation / marine transport (although they may be hit by higher fuel prices)
- HFC refrigerant emissions, potent greenhouse gases from fridges and air conditioning. Alternative refrigerants exist. According to Brent Hoare from the Natural Refigerants Transition Board, a conference attendee: “HFCs aren’t low hanging fruit, they’re ankle hanging”.
See http://www.greenpeace.org/raw/content/china/en/reports/problem-factsheet.pdf for info on HFCs.
Instead of, like the European trading scheme, capping the emissions of heavy industry, New Zealand will take an upstream approach. From Jan 2009 oil companies, and from Jan 2010 gas and coal companies will be required to buy carbon credits from the CDM and the domestic market to offset all the greenhouse gas emissions released from their products.
“We have learnt valuable lessons from the European scheme – namely that energy providers automatically pass the costs of carbon allowances to consumers”, says Mark Storey, from the New Zealand government treasury.
The New Zealand approach to emissions trading will work on the principle that higher brown energy prices will drive energy efficiency and clean technology in all sectors of the nation's economy.
Heavy industry will be allocated free carbon credits, or New Zealand units (NZUs) to sell on the domestic carbon market, until Jan 2010 in order to soften the blow of passed on energy costs. However, New Zealand plans to gradually phase out these free credits altogether by 2025.
Meanwhile New Zealand’s domestic fuel users will be expected to take on all of the passed on costs, meaning higher petrol prices. Electricity prices will not suffer as much, as New Zealand already generates 70% of its electricity from hydropower.
Five sectors of the New Zealand economy will feel the impact of the new trading scheme. These include industries usually associated with the burning of fossil fuels: the transport sector, heavy industry, and domestic / business energy users; as well as two less usual additions: agriculture and forestry.
Whilst New Zealand's forests, planted after 1990, will help to absorb carbon dioxide in the first Kyoto period until 2012, they are due to release carbon dioxide between 2020 and 2033, when the matured trees are scheduled to be felled.
Participation in the emissions trading scheme will be voluntary for foresters, starting Jan 2008, whereby they will receive credits for the trees they plant or that remain unfelled, and pay for credits for trees they cut down.
Largely due to the potent greenhouse gas effect of the methane released by farm animals, New Zealand’s agricultural sector emits more greenhouse gases than all of the nation's fossil fuel emissions combined.
Agriculture is due to be included on a mandatory level into the emissions trading scheme, in 2013. Farmers will recieve free NZUs to sell on the domestic market to compensate them for 90% of their 2005 emissions.
By 2025, however, the government plans to reduce these credits to zero. Making farmers pay to offset their entire emissions has been one of the most controversial aspects of the trading scheme, according to Storey. He says its going to be one of the hardest parts of the scheme to push through.
Storey is not concerned that including farmers in the trading scheme will affect their competitiveness, however. “The dairy industry is doing very well… our farmers are extremely efficient”, he explains. So efficient he says, that the agricultural sector receives no government subsidies in New Zealand.
Farmers have a long and difficult road ahead, before achieving carbon neutral status in 2025. Currently no commercial technologies exist to reduce methane from farm animals. The agricultural industry has been granted five years to find and commercialise emissions reducing technologies that work, before it becomes part of the scheme.
New Zealand will be looking to alleviate concerns about food miles, raised by trade ministers at this weekend's UNFCCC meetings. Pioneering the technologies to reduce methane emissions from farm animals, one of the world's largest source of GHG emissions, will go a long way to securing New Zealand's future as a global supplier of agricultural goods. The country's new emissions trading scheme does not include international aviation or marine transport, however, the justification being that neither are part of the Kyoto agreement.
Some other NZ climate targets:
- to generate 90% of its electricity from renewable sources by 2025
- to halve GHG gases by 2040
- to pioneer mainstream use of electric cars
- to stimulate growth in the CDM market by requiring companies to purchase CDMs (between 7-17 euros per tonne carbon equivalent saved)
- possible linkage to a future Australian mandatory market
NZ ETS omissions:
- aviation / marine transport (although they may be hit by higher fuel prices)
- HFC refrigerant emissions, potent greenhouse gases from fridges and air conditioning. Alternative refrigerants exist. According to Brent Hoare from the Natural Refigerants Transition Board, a conference attendee: “HFCs aren’t low hanging fruit, they’re ankle hanging”.
See http://www.greenpeace.org/raw/content/china/en/reports/problem-factsheet.pdf for info on HFCs.
Thursday, 6 December 2007
Bangladesh and adaptation funding: Interview
Featured: Rezaul Chowdhury, teaching survival strategies on the southern coast of Bangladesh
With extreme weather already claiming thousands of lives and creating millions of climate refugees in Bangladesh, the UNFCCC’s proposal of an Adaptation Fund seems like a step in the right direction. Bangladeshi flood disaster rescuer, Rezaul Karim Chowdhury, gives me his take on what needs to be done.
Rezaul Chowdhury is director of COAST, a Bangladeshi organisation dedicated to survival strategies for the coastal poor. He originates from an island called Kutubdia, half of which is already underwater due to a mixture of extreme weather and river erosion.
Experts say if sea levels rise by up to a metre this century due to climate change, as many as 30 million Bangladeshis could be left homeless.
“People are already moving to Dhaka, from flooded villages in the South. This is the fate of Bangladesh’s climate refugees", says Chowdhury. He believes the majority of the refugees will flock to major cities like Dhaka and Chittagong, adding to the already huge shanty towns and creating mass unemployment.
“There is nowhere else for them to go. They’ll either die, or go to the cities”. Bangladesh is already a highly populated country, with an average density of 1100 people per square km. “Now half of Kutubdia island is gone”, he says “the remaining population density has doubled to 2700 people per square km”.
Chowdhury says adaptation for Bangladesh means training rural villagers in the Southern coastal regions of Bangladesh skills for urban jobs, such as driving and fixing machines (ironically, these jobs will contribute far more to climate change than the refugees’ previously rural existence.)
Aside from improving their employability in Bangladesh, he worries that refugees crossing the border to India to find work will be refused entry on the grounds that they are unskilled.
He praises the multinationals’ garment industry in Bangladesh for bringing foreign currency to the country and remains confident that the garment factories, which are based mostly in the cities, are safe from the risks of climate change. However, competition for factory jobs will be so fierce, that Chowdhury fears factory owners will start to lower wages.
According to Chowdhury, food prices are rising at 12% inflation. The government of Bangladesh was forced to buy in 1.6 million tonnes of food from the international market last year, due to crop damage from flooding. “The food is there, but people cannot afford to buy it”, he says.
The decision came during the UNFCCC Bali talks to launch an adaptation fund for developing countries facing treats from rising sea levels and extreme weather conditions.
The adaptation fund will be established using a 2% levy taken from CDM projects. Currently, the fund stands at a modest $36 million, generated this year, and the UNFCCC estimated in a press conference yesterday that by 2012 a total of $1.5 billion would be raised.
When asked to estimate the cost of adaptation in developing countries a UNFCCC spokesperson answered that a conservative estimate would be “$40 billion per year”.
Any money for adaptation would be a plus, from Chowdhury’s point of view, but what he worries most about are the strings attached to the fund.
The Global Environment Facility, an organisation with close links with the World Bank, was chosen during yesterday’s talks, to distribute the adaptation money.
Chowdhury fears the World Bank will land Bangladesh into more debt through adaptation financing schemes. “The World Bank’s a money lender, not a development institution” he says, “it’ll only promote big business, like GM crops, which will end up bankrupting small farmers… forced to pay the agro-companies for seeds” he says.
He blames the World Bank for adding to the flooding problem in the first place by advising Bangladesh to cut down its mangrove forests – a natural flood barrier – in order to expand the country's shrimp farming industry.
“This year’s monsoon brought with it 11 cyclones – compared to the two or three a year the country was receiving 5 years ago. We desperately need barriers to be built against flooding in the South”, says Chowdhury.
The death toll from the most recent Cyclone Sidr was 3,500, mostly a result of the subsequent floods. Bangladesh last month pleaded for $1 billion in aid to rebuild the country after the cyclone.
CDMs to be expanded in Africa
Re. my previous blog post, the UNFCCC announced plans today to fund "capacity development" for more CDM projects in Africa. $1,5 million pledged so far. See the press release below from the UNFCCC:
"A year after then Secretary-General Kofi Annan launched the Nairobi Framework, aimed at spreading the benefits of CDM to more countries,several more projects have been launched in Africa. Still, projects in Africa account for just 2.6 per cent of all CDM projects.
The United Nations Development Programme (UNDP), United Nations Environment Programme (UNEP), the World Bank, African Development Bank and the United Nations Framework Convention on Climate Change (UNFCCC) secretariat have joined forces to implement the Nairobi Framework, and bring to life the expressed aspirations of Parties to scale up CDM in Africa. They have written a comprehensive project proposal for which they are seeking donor support.
“UNDP considers climate change to hit at the very heart of its development mission. Climate change threatens to seriously undermine efforts to eliminate poverty and reach the Millennium Development Goals, particularly in the least developed countries,” said Yannick Glemarec, Executive Coordinator of the UNDP—Global Environment Facility.
The first concrete UNDP project outcome under the Nairobi Framework is a six-country CDM capacity development project in sub-Saharan Africa initiated in September 2007. The project – managed by a UNDP Regional Project Coordinator based in Addis Ababa – covers Ethiopia, Kenya, Mauritius, Mozambique, Tanzania and Zambia, and was launched in October. The Governments of Spain, Sweden and Finland have contributed a total of
USD 1.5 million to the project."
"A year after then Secretary-General Kofi Annan launched the Nairobi Framework, aimed at spreading the benefits of CDM to more countries,several more projects have been launched in Africa. Still, projects in Africa account for just 2.6 per cent of all CDM projects.
The United Nations Development Programme (UNDP), United Nations Environment Programme (UNEP), the World Bank, African Development Bank and the United Nations Framework Convention on Climate Change (UNFCCC) secretariat have joined forces to implement the Nairobi Framework, and bring to life the expressed aspirations of Parties to scale up CDM in Africa. They have written a comprehensive project proposal for which they are seeking donor support.
“UNDP considers climate change to hit at the very heart of its development mission. Climate change threatens to seriously undermine efforts to eliminate poverty and reach the Millennium Development Goals, particularly in the least developed countries,” said Yannick Glemarec, Executive Coordinator of the UNDP—Global Environment Facility.
The first concrete UNDP project outcome under the Nairobi Framework is a six-country CDM capacity development project in sub-Saharan Africa initiated in September 2007. The project – managed by a UNDP Regional Project Coordinator based in Addis Ababa – covers Ethiopia, Kenya, Mauritius, Mozambique, Tanzania and Zambia, and was launched in October. The Governments of Spain, Sweden and Finland have contributed a total of
USD 1.5 million to the project."
Tuesday, 4 December 2007
Bali Blog #2 - tech transfer - when will Africa get a look in?
Lack of CDM projects is the reason behind the lack of low carbon technology transfer to Africa, said Yvo de Boer, exec secretary on the UNFCCC in a press conference today.
Whilst Kyoto's Clean Development Mechanism projects have been booming in China, India and Brazil, much less CDM financing has reached South Africa, which only has 12 CDM projects currently registered, and few have been set up in the rest of Africa.
"Private sector investment in CDMs are the main drivers behind technology transfer" Yvo de Boer explained. He saw three drivers behind investment in CDMs. "Investors are looking for returns on investment, the size of the market and the risks involved when they invest" he said.
Less developed countries and small island states are being marginalised from the CDM, as they are unable to compete with the returns on investment offered by the industrial scale CDM projects in the emerging economies.
The recent launch of the Voluntary Carbon Standard (VCS), a standard for non CDM credits, by the Climate Group and the International Emissions Trading Association may provide an opportunity to less developed countries hoping to gain from the carbon markets. The VCS is likely to be more accessible to smaller projects due to reduction of costs and red tape compared to the CDM.
But will small projects lead to technology transfer? When i talked to Cedric Philibert from the International Energy Agency yesterday, he said low carbon technology transfer to Africa would have to be coupled with training and infrastructure, which sounds like a far larger endeavour.
Whilst Kyoto's Clean Development Mechanism projects have been booming in China, India and Brazil, much less CDM financing has reached South Africa, which only has 12 CDM projects currently registered, and few have been set up in the rest of Africa.
"Private sector investment in CDMs are the main drivers behind technology transfer" Yvo de Boer explained. He saw three drivers behind investment in CDMs. "Investors are looking for returns on investment, the size of the market and the risks involved when they invest" he said.
Less developed countries and small island states are being marginalised from the CDM, as they are unable to compete with the returns on investment offered by the industrial scale CDM projects in the emerging economies.
The recent launch of the Voluntary Carbon Standard (VCS), a standard for non CDM credits, by the Climate Group and the International Emissions Trading Association may provide an opportunity to less developed countries hoping to gain from the carbon markets. The VCS is likely to be more accessible to smaller projects due to reduction of costs and red tape compared to the CDM.
But will small projects lead to technology transfer? When i talked to Cedric Philibert from the International Energy Agency yesterday, he said low carbon technology transfer to Africa would have to be coupled with training and infrastructure, which sounds like a far larger endeavour.
UNFCCC videos
go to http://youtube.com/climateconference to find videos from the conference
Here's a speech by Yvo de Boer, Executive Secretary, United Nations Climate Change Secretariat on expectations for the Bali conference
Here's a speech by Yvo de Boer, Executive Secretary, United Nations Climate Change Secretariat on expectations for the Bali conference
Bali blog no. 1: Technology transfer - what China wants
“This is a negotiation about a negotiation about a negotiation” - Cedric Philibert's take on Bali today. Philibert coordinates the Energy Efficiency and Environment Division at the International Energy Agency based in Paris.
Forget substance, he says, the negotiations today about technology transfer are discussions about the nature of future negotiations, not about the technologies themselves.
Political talks over tech transfer can be broken down as such: low carbon technology transfer is currently included in Kyoto as a voluntary initiative. Industrialised countries are encouraged, under the agreement, to give technological advice to less developed countries.
Today China is looking to move the tech transfer debate forwards. China suggests that post-2012 talks should include a debate about whether to make technology transfer a mandatory obligation for developed countries.
What's so important about transfering technology to developing countries? I ask this question to Sun Guoshun, a director at the ministry of Foreign Affairs in China. He says China needs clean coal technology and IGCC (Integrated Gasification Combined Cycle) a process which improves the energy efficiency of coal fired plants. In IGCC, the gasification process produces syngas and capturable heat from high-sulphur coal. Carbon dioxide emissions from IGCC plants are supposed to be easier to capture and store than emissions from regular coal plants.
According to Guoshun, the US won't pass on IGCC technology (which is still in its infantile stages of use in the US) because of fears that the technology could be used to produce missiles.
Despite a lot of talk in Europe and the US about transferring carbon capture and storage (CCS) technology to China, Guoshun says China isn't interested in CCS yet. He describes it as an "unproven technology" and says it's currently "too expensive". "Building a plant with carbon capture and storage would cost 30% more and the CCS process would take up 30% of the energy produced by the plant... it wouldn't be sustainable for China", he says.
When i ask him about the problems posed by intellectual property rights on new low carbon technologies, Guoshun says simply that all "comes down to money". Companies that develop new low carbon technologies are able to charge a high price for them, he says. If Chinese companies also knew how to create the product, then the price of carbon cutting technologies would be driven down.
Guoshun says that companies should sell the rights to produce their low carbon inventions at a fair rate: "If products are sold in large quantities then the developer can earn a lot of money from the royalties."
Philibert warns that the issue of intellectual property rights for low carbon technology should not be confused with patent issues surrounding anti-retroviral drugs.
"A vast amount of money is ploughed into creating an effective drug and then once the drug is produced it is relatively cheap to manufacture", Philibert explains. "In the case of low carbon technology like power plants or even green consumer products, the costs of research and development are often less than 10% of overall costs - the manufacturing and infrastructure costs are much higher".
For this reason, Philibert echoes Guoshun, suggesting that companies would be better off allowing their technology to be produced by developing countries in exchange for royalties. He accepts, however, that intellectual property rights in developing coutries may need some work before thay are robust enough to honour this kind of agreement.
Under the Kyoto agreement, the Clean Development Mechanism is facilitating technology transfer now, he says, by sponsoring renewable energy projects in developing countries, but it is not happening at the rate it is needed.
The bottom line, Guoshan points out, is that developing countries are building power plants now that will be operating for years to come, and installing the latest clean coal technologies now will mean years of GHG emissions savings. "No country wants to curb its economic growth for the sake of the climate", says Guoshun. Introducing clean tech, to increase energy efficiency and renewable energy, is, he says, the only way for rapidly developing countries, like China, to cut their emissions.
Forget substance, he says, the negotiations today about technology transfer are discussions about the nature of future negotiations, not about the technologies themselves.
Political talks over tech transfer can be broken down as such: low carbon technology transfer is currently included in Kyoto as a voluntary initiative. Industrialised countries are encouraged, under the agreement, to give technological advice to less developed countries.
Today China is looking to move the tech transfer debate forwards. China suggests that post-2012 talks should include a debate about whether to make technology transfer a mandatory obligation for developed countries.
What's so important about transfering technology to developing countries? I ask this question to Sun Guoshun, a director at the ministry of Foreign Affairs in China. He says China needs clean coal technology and IGCC (Integrated Gasification Combined Cycle) a process which improves the energy efficiency of coal fired plants. In IGCC, the gasification process produces syngas and capturable heat from high-sulphur coal. Carbon dioxide emissions from IGCC plants are supposed to be easier to capture and store than emissions from regular coal plants.
According to Guoshun, the US won't pass on IGCC technology (which is still in its infantile stages of use in the US) because of fears that the technology could be used to produce missiles.
Despite a lot of talk in Europe and the US about transferring carbon capture and storage (CCS) technology to China, Guoshun says China isn't interested in CCS yet. He describes it as an "unproven technology" and says it's currently "too expensive". "Building a plant with carbon capture and storage would cost 30% more and the CCS process would take up 30% of the energy produced by the plant... it wouldn't be sustainable for China", he says.
When i ask him about the problems posed by intellectual property rights on new low carbon technologies, Guoshun says simply that all "comes down to money". Companies that develop new low carbon technologies are able to charge a high price for them, he says. If Chinese companies also knew how to create the product, then the price of carbon cutting technologies would be driven down.
Guoshun says that companies should sell the rights to produce their low carbon inventions at a fair rate: "If products are sold in large quantities then the developer can earn a lot of money from the royalties."
Philibert warns that the issue of intellectual property rights for low carbon technology should not be confused with patent issues surrounding anti-retroviral drugs.
"A vast amount of money is ploughed into creating an effective drug and then once the drug is produced it is relatively cheap to manufacture", Philibert explains. "In the case of low carbon technology like power plants or even green consumer products, the costs of research and development are often less than 10% of overall costs - the manufacturing and infrastructure costs are much higher".
For this reason, Philibert echoes Guoshun, suggesting that companies would be better off allowing their technology to be produced by developing countries in exchange for royalties. He accepts, however, that intellectual property rights in developing coutries may need some work before thay are robust enough to honour this kind of agreement.
Under the Kyoto agreement, the Clean Development Mechanism is facilitating technology transfer now, he says, by sponsoring renewable energy projects in developing countries, but it is not happening at the rate it is needed.
The bottom line, Guoshan points out, is that developing countries are building power plants now that will be operating for years to come, and installing the latest clean coal technologies now will mean years of GHG emissions savings. "No country wants to curb its economic growth for the sake of the climate", says Guoshun. Introducing clean tech, to increase energy efficiency and renewable energy, is, he says, the only way for rapidly developing countries, like China, to cut their emissions.
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