If the Obama administration hopes to coax China to take action on global warming — and if the administration wants to give the U.N. climate negotiations a chance of success — it will need to solve the thorny problem of technology transfer. If it does so, however, it may face a quarrel with the clean-tech industry, one of its closest allies in the business community.
In the U.N. climate talks last month in Poznan, Poland, technology transfer emerged as one of the key stumbling blocks. China demanded that the United States and Europe agree to a strategy of transferring to developing nations a wide variety of energy-saving and emissions-reducing technologies to developing nations.
Details of this proposal were not fleshed out, but much of the tech transfer discussion centered on China’s proposal for a multi-billion-dollar fund generated by wealthy nations’ contributions of at least 0.7% of their GDP. Such an outlay — which would amount to about $100 billion annually for the United States — would face tough political sledding in Congress in the best of times. But in the current recession, it’s virtually unthinkable. That’s too bad for clean-tech companies, which would stand to profit hugely from selling their patented solar cells, wind turbines, “clean coal” generators and myriad industrial software and equipment.
Less attention has been given to another element of China’s proposal — the demand for a system that would give developing nations low-cost or no-cost access to those patented technologies.
The concept is akin to the World Trade Organization’s 2003 agreement for “compulsory licensing” of AIDS and malaria drugs. Under this system, nations such as India and Brazil are allowed to break patents on life-saving drugs and produce them for domestic use and for export to smaller countries that have no pharmaceutical industries of their own. Such an arrangement had been fought tooth and nail for years by U.S. pharmaceutical corporations, which argued that strict protection for intellectual property rights was needed to incentivize the heavy investments needed for research and development of such medicines. But international health activists waged a highly effective publicity campaign that attacked the corporations for profiteering while millions died. Finally, Big Pharma and the Bush administration gave in.
Clean-tech industry groups have studiously avoided commenting on this topic, while the Bush administration and European nations have claimed the problem is being solved by the Clean Development Mechanism — the much-criticized program under the Kyoto Protocol that has sent billions of dollars to China and other nations for (purportedly) emissions-saving projects. And they have cited the World Bank’s Climate Investment Funds, which have received pledges of more than $6 billion from wealthy nations.
But China and the G77 group of developing nations say they need lots more money and concessions on patent protections. With tech transfer now one of the top items on the official agenda of the U.N. climate talks, a pressure campaign is in the works from groups like Third World Network, a Malaysia-based, international alliance of nonprofit groups that is highly influential with G77 diplomats. The first salvo came in a report issued last month that said in part:
Developed countries should not treat patents or IPRs as something sacred that has to be upheld at all costs. That would send a signal that climate change is not a serious threat, as commercial profits for a few are more important on the scale of values and priorities than are the human lives that are at stake due to global warming. Technology transfer to developing countries to enable them to combat climate change should be the far higher priority. Developed countries should not treat climate technology as a new source of monopoly profits, as this would damage the ability of developing countries to phase in existing or new climate-friendly technologies for both mitigation and adaptation. The post-Bali process should therefore adopt the principle that developing countries can exempt climate-friendly technologies from patents.
Eventually, the Obama administration’s climate team will have to drag the clean tech industry to the table to begin negotiating these issues. The clean-tech firms will not be happy, and they will probably use all their considerable influence on the Obama administration to push back against any concessions. The firms will be (legitimately) concerned that China might use any patent concessions to cheat — to create Chinese clean-tech export industries that would aggressively target global markets. The details of any deal would be devilishly complex to sort out, with trade treaties, patent law and high-tech finance clashing in unending volumes of fine print.
But until this long, hard work begins, there will be no new climate treaty.
– Robert Collier
[JR: The only thing I would add is that for the purposes of any major tech transfer deal, China should not be considered a developing country. After all, it is already a world leader in producing wind turbines, solar cells, advanced batteries, and heat pumps.]
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