Who will pay for a global climate-technology revolution?
President Bush is proposing a multi-billion-dollar clean-technology fund to help developing nations reduce greenhouse gas emissions—but on familiar U.S. terms.
In his recent State of the Union address, President Bush called for a worldwide fund to jump-start clean-energy projects in fast-growing economies like China and India. The U.S. would chip in $2 billion over the next 3 years and seek additional funds from other nations. But some experts say this proposal is just the latest example of misguided thinking about what countries should do to make sure China and India develop on a low-carbon diet.
The U.S. and other industrial nations pumped out most of the greenhouse gases now in the atmosphere, but new emissions will be coming mostly from developing countries by 2030, according to the International Energy Agency. China is building two new coal-fired power plants every week and has ramped up its CO2 emissions by 80% since 1990—a grim prospect when many scientists say global emissions need to drop 80% over the next 40 years.
"We won't make it if we don't have a technology revolution equivalent to the space program," said Richard Benedick at a recent conference held by the National Council for Science and the Environment, of which Benedick is president. To start this new clean-tech race, the world should double R&D spending to $20 billion a year, said Reid Detchon at the same meeting. Detchon directs climate and energy programs at the UN Foundation, a public charity that supports UN efforts.
Bush's proposed clean-technology fund would pay for low-carbon technologies like renewable energy and emissions controls in emerging economies such as China and India. "The idea of the fund is to bridge the gap between the technology that is currently being deployed in many of these countries, which is often not state-of-the-art, and the cleanest technology," says David McCormick, undersecretary of the U.S. Department of the Treasury, who first announced the plan in January. That funding gap is at least $30 billion per year, the World Bank estimates. The fund would finance only technologies that are commercially available, McCormick says, and is not intended to help bring new products or technologies, such as carbon capture and storage (CCS), to market. Its total size, contributors, and management remain to be negotiated.
The proposal "is a major landmark in addressing global warming," said Philip E. Clapp of the Pew Environment Group. "Still, $2 billion is a very small amount of money given the scale of the problem. China alone is investing more than $100 billion a year through its state-owned enterprises in new energy projects and resources, mostly in oil and coal-fired electricity. The president's proposed fund must be accompanied by a strong new climate treaty to direct global business investment into clean-energy technologies."
"You need to think big," adds Christian Egenhofer, a senior research fellow at the Centre for European Policy Studies. "To meet a 2 °C target, fossil fuel consumption needs to peak by about 2020, so there's very little time." Cutting 1 billion tons of CO2 per year, he notes, requires installing about 150 times the current wind power capacity or replacing 1 billion gas-powered cars with hydrogen-powered ones. And to keep the global temperature rise below 3 °C (too high, many say) means cutting 22 times that much CO2 per year compared with a business-as-usual approach.
Yet the whole idea that rich nations need to transfer technology to poor nations is "obsolete and completely misleading" when it comes to climate change, says Egenhofer. "With the Montreal Protocol [for ozone], we had a limited number of technologies—you just needed to ship them and finance the transfer, and the job was done. For climate change, there is no single technology," he says. Instead, a range of cooperative agreements is needed to foster a proliferation of clean tech.
Arguing over who owes what
In the past, the U.S. has been a roadblock to international deals that would spread clean technology to developing countries, arguing that intellectual property rights are at stake. The new fund bypasses the ongoing UN negotiations by going through Bush's Major Economies Meetings, which aim for voluntary emissions cuts.
At the recent UN climate meeting in Bali, China's delegation pushed for industrialized nations to share more clean technology, calling progress so far "puny". China proposed a fund that industrialized nations would pay into and developing nations would draw from to buy patent rights or start clean-energy projects. Developed nations have an ethical obligation to help poorer nations follow a cleaner path, said leaders such as UN secretary-general Ban Ki-moon at the Bali meeting.
In response, the U.S. said flat-out that it would not give away technology. "The idea that governments are going to pay countries for intellectual property is not something that we would support. Nor do I think many developed countries would support that," said senior negotiator Harlan Watson when asked at the Bali conference about a technology fund.
Now, a technology fund is back on the table—but on the Bush Administration's terms. The proposed fund is not an about-face on the U.S. position in Bali, says Undersecretary McCormick, because it would not transfer, or share, any intellectual property "in ways that would allow others to use that technology to develop their own industry and build it themselves." For example, China could tap the fund to pay for the difference between the cheapest possible coal plant and an upgraded plant, perhaps by paying a U.S. company to install better emissions controls. But they would not gain the know-how, or the right, to build cleaner plants themselves using that technology. In the past, the U.S. has balked at sending technology to China because of its reputation for reverse-engineering technologies—figuring out how they work and manufacturing knockoffs, which can render the intellectual property worthless.
The Bush proposal was praised as a "Marshall Plan" on climate change by Yvo de Boer, head of the UN Framework Convention on Climate Change, referring to the massive effort to rebuild Europe after World War II. But others are more skeptical that the fund will materialize, in a waning administration, or do what it promises. "It's very cumbersome and not a very efficient approach" to set up complex funds, says economist John Reilly of the Massachusetts Institute of Technology, who develops models of future emissions-cuts scenarios. China and India have large, fast-growing economies, he says, and could potentially invest in their own clean technology. To be most effective, he suggests, the fund should be presented as an incentive for developing countries that agree to binding emissions targets, which would stimulate investment.
Some environmental and development groups are also wary of U.S. motives. The Bush Administration is trying to shift technology funds and "anything of substance" out of the UN process and into its own voluntary Major Economies Meetings, says Meena Raman of Friends of the Earth International. "The rich countries are using their existing obligations as bargaining chips to push developing countries to discuss future emissions cuts," she said in Bali. "This is outrageous. Wealthy nations—which have benefited most from pollution—must take the lead by first fulfilling their responsibilities."
Also, what any fund can achieve alone is limited. "There are barriers that are not financial," says Walter Vergara, a World Bank expert on climate change in Latin America. In developing countries in that region, he says, "there is a significant need to fill in terms of information" on the impacts of climate change and what approaches would work best. "And in addition to institutional and regulatory barriers, there's inertia in [energy] sectors—the power sector is used to using oil or natural gas," he adds, not wind or solar.
Some developing and emerging economies also have their own national interests that can get in the way of clean technologies. Brazil, for one, fought hard in Bali against efforts to advance CCS technology by granting carbon credits to CCS under the UN's Clean Development Mechanism. Such a move could cut into Brazil's market for ethanol credits.
Just a few days before the start of the Bali meeting, the U.S. joined the EU in proposing to drop all tariffs on climate-friendly goods within the World Trade Organization to promote their spread. The deal would include 43 products, such as wind turbines and solar panels, but Brazil strongly opposes lifting these tariffs unless its ethanol is included on the list. The U.S. corn lobby, however, has pushed hard to continue cane-ethanol tariffs.
Taking matters into their own hands
In the end, negotiators in Bali agreed in principle to kick-start technology cooperation without laying out many details. An expert group on technology transfer will be reconstituted for another 5 years, and more meetings and workshops will be scheduled.
But while developed countries negotiate, private industry and developing countries seem to be charging ahead on their own. Four technology companies and the World Business Council for Sustainable Development announced in January the Eco-Patent Commons, which will offer the rights to environment-friendly technologies for free. So far, major companies, such as IBM, have donated 31 patents to the public domain.
"The fact is, developing countries are also important sources of new climate-friendly technologies," says Thomas Brewer, a business professor at Georgetown University. "They are sometimes at the leading edge and have world-class R&D and manufacturing processes," he adds. "China makes a very good and cheap compact fluorescent lightbulb. Brazil makes very cost-effective ethanol. Mexico makes solar hot-water heaters. Those are technologies that could be transferred to developing or developed countries."
As for China and India, on the same day the Bush fund was proposed, they announced their own plans to battle climate change with a new technology agreement—with each other.
