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Technology TransferTechnology Transfer

TETRIS Work Package 2TETRIS Work Package 2

Rob Youngman / Dirk Forrister, Natsource

Amsterdam, June 21, 2006

Some new thinking from Natsource.More growth. Less pollution.

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Overview of PresentationOverview of Presentation

Case studies

Literature review

Quantitative analysis of potential for technology transfer

For each:

Status of work

Next steps

Timetable and milestones

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WP2 Objectives and ComponentsWP2 Objectives and Components

Objectives– to learn how project-based emissions trading affects

or facilitates technology transfer– to examine and describe real technology transfers

associated with GHG trading– to determine the scope for technology transfer in large

potential CDM host countries, and from EU technology-exporting countries

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Case Studies - OverviewCase Studies - Overview Three case studies of CDM and JI projects implemented or

planned under early greenhouse gas (GHG) trading initiatives

Describe and analyze:

– the background of the project (sponsor, host country partners, history, geographic location and social conditions, etc.);

– the technology that have been transferred;

– the current availability of this technology in the host country;

– social and environmental benefits for the host country;

– critical factors related to financial viability of the project (crediting period, baseline standardisation)

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Case Studies – Status, Next StepsCase Studies – Status, Next Steps Circulated 1st draft case study of wind project in Philippines at Bern

meeting

Prepared 2nd draft case study of photovoltaic (PV) kits for rural households in Morocco

Open issues

– Seeking input on draft case study

– Selection of other final case studies: Any particular type of project to round out the 3 case studies? Perhaps a non-CO2 gas project, given results of quantitative analysis of TT.

Next steps, timetable and milestones

– Incorporate input on draft case study

– Select and draft final case study

– Complete case studies and circulate by end July for comments

– Finalize case studies in time for inclusion in Sept deliverable

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Case Study 2 - SummaryCase Study 2 - Summary

Photovoltaic kits for rural households in Morocco

Selection criteria: CDM in Africa, registered project, technology transfer involved

Participants: Office National de l’Electricity (ONE), Morocco, private companies, governments of France and Germany

Total capacity of 7.7 MW avoids 395,400 tonnes CO2e (from diesel generators off-grid) over the 10-year crediting period beginning in 2007

Demonstration of TT

– Key TT effect is in maintaining large numbers of small, decentralized power sources

– PC modules imported from South Africa; production of the modules “will induce technological development in Africa”

– 85% of 300-400 jobs to be created will be local technicians trained for installation and after-sales services for the equipment

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Case Study 1 – Summary (cont’d)Case Study 1 – Summary (cont’d)

Role of carbon value

– Carbon revenue critical to implementation

– Cost of PV kit is EUR 900, vs. 400 to share diesel generator with neighboring households

– CER revenue can reduce cost by 22%

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Literature Review / WP2 Paper - OverviewLiterature Review / WP2 Paper - Overview

Analyze how CDM and JI can initiate or facilitate technology transfer for developing countries and/or economies in transition

Review existing literature on technology transfer, including literature by:

– Private-sector firms

– Government agencies

– Multi-national organizations

Identify key determinants of technology transfer and effectiveness of CDM and JI in facilitating technology transfer

Analyze the potential and distribution of technology types which have been or will be most attractive for JI or CDM projects

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Literature Review – Overview (cont’d)Literature Review – Overview (cont’d) WP2 report incorporates literature review and other segments of WP2. The

report will include:

– Definition of TT, based on review of literature (UNFCCC, KP, related efforts, other sources) and the agreed criteria for quantifying TT for this project

– Review of technologies in CDM and JI transactions and pipeline, and in World Bank and Netherlands purchasing programs

– Quantification of TT in CDM and JI jurisdictions, and coming from EU, with discussion of methodology and findings

– Implications of TT findings for EU as seller and developer of technologies

– Consideration of how project-based emissions trading affects technology transfer in light of CDM/JI review, TT quantification

Role of carbon value in transactions – overcomes financing hurdles

Market pursues economically viable projects using existing technologies, given prevailing GHG prices

Barriers to transfer of clean energy technologies include the closing window for CDM projects, carbon revenue too small to push past hurdle rate, various risks, more mature, cheaper alternatives

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Literature Review – Overview (cont’d)Literature Review – Overview (cont’d)– Literature review

Provide broader context for the challenges of facilitating TT in CDM and JI by briefly describing other discussions on challenges and issues relating to TT

– Competitive stance of clean energy technologies – intermittency, costs, competition

from fossil sources

– Host country issues – technical capacity and know-how, investment environment, IPR

enforcement and open trade policies to attract technology

– Technology sellers’ concerns and issues (e.g. IPR, profit from innovation)

– Deploy technology in developing countries to bring costs down? New or mature

technologies? Or develop and deploy technology in industrialized countries for energy

security, industrial development, employment, environmental objectives?

– Need for/role of policies to support deployment of technologies, reduce barriers,

including lack of internalization of market externalities

Provide thoughts on potential approaches for improving on CDM/JI’s ability to

facilitate TT, in light of quantification results and literature review

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WP 2 Paper – Status and Next StepsWP 2 Paper – Status and Next Steps

Status

– Key components of paper are complete

Description and findings of TT quantitative analysis of CDM, JI

Definition of TT (from scoping paper submitted for Bern meeting)

Review of technologies in historic CDM/JI transactions and in pipeline (presented in Bern, and since updated – see annex)

2 of 3 case studies

– In process of putting paper together and writing the literature review sections

Next steps, timetable and milestones– Prepare full draft paper incorporating all components– Circulate for comments by end-July– Coordinate to submit to DG Competition– Finalize report in time for Sept. submission of deliverable

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Quantitative Analysis of Potential for Technology Quantitative Analysis of Potential for Technology Transfer – Overview, Status, Next StepsTransfer – Overview, Status, Next Steps

Analyse the potential for TT in several large potential CDM (ECN) host countries and JI (CCAP) host countries

Status and findings

– See presentations to follow

Next steps, timetable and milestones

– Apply lessons from the CDM/JI TT assessment to the

estimates of CDM and JI potential to evaluate TT potential

– Include findings in final draft of WP2 paper

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AnnexAnnex

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Data on Technologies in Historic CDM and JI Data on Technologies in Historic CDM and JI Transactions by VolumeTransactions by Volume

January 2005 – March 2006 World Bank, “State of the Carbon Market 2006,” based on WB, Natsource and Evolution

Markets data

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Data on Technology in Historic Transactions Data on Technology in Historic Transactions (cont’d)(cont’d)

HFC23 share of volume up dramatically, from 36% in 2004 to 58% in January 2005-March 2006

78% of traded reductions were non-CO2 gases, vs. 55% in 2004.

Next largest after HFC: landfill gas (9%), coal mine methane (6%)

Combined share of hydro, wind, biomass, other renewables and energy efficiency projects was 12%, down from 25% in 2004.

Geographical distribution

– China’s share jumped from 5% in 2004 to 66% in 2005-06 (high-volume HFC projects)

– India’s share down to 3% from 43% in 2004

– Asia accounted for 73% (vs. 54% in 2004)

– Latin America accounted for 17% (vs. 25% in 2004)

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Data on Technology % of CDM Volumes in PipelineData on Technology % of CDM Volumes in Pipeline

UNEP Riso database (May 3, 2006), CDM projects in pipeline (projects using methodologies that have been approved by the CDM EB)

Includes 744 projects, 978 Mt by 2012 Largest categories: HFCs (40%; avg size = 30 Mt)), N2O (12%; avg = 23 Mt)), LFG (12%), biomass

energy (7%), industrial energy efficiency (6%) Wind and hydro at 5% each, fossil fuel switch at 1%, solar at 0%

Hydro, 5%

Landfill gas, 12%

N2O, 12%

Biogas, 1%Biomass

energy, 7%

Cement, 2%

Fugitive, 4%

HFCs, 40%

Fossil fuel switch, 1%

EE industry, 6%

Geothermal, 1%

Wind, 5%Agriculture, 4%

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Data on Technology % of CDM Projects in PipelineData on Technology % of CDM Projects in Pipeline

Largest categories: biomass energy (23%), hydro (17%), wind (13%), industrial energy efficiency (12%), agriculture (10%), landfill gas (8%)

Small categories include HFC (2%), N2O (3%), solar (1%)

Biomass energy, 23%

Cement, 3%

Agriculture, 10%

Biogas, 4%

Landfill gas, 8%

Fossil fuel switch, 4%

Geothermal, 1%

HFCs, 2%

EE industry, 12%

Hydro, 17%

Fugitive, 1%

Solar, 1% Wind, 13%

N2O, 1%

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Data on Technology % of JI Volume in PipelineData on Technology % of JI Volume in Pipeline

UNEP Riso database (May 3, 2006), JI projects for which PDDs are available for public comment on the websites of DOEs

Includes 110 projects, 64 Mt by 2012 Largest categories: fossil fuel switch (19%), energy distribution (15%), N20 (14%), biomass energy (9%),

hydro (8%), fugitive (8%), industrial energy efficiency (5%) HFC at <1%, solar at <1%

Coal bed/mine methane, 1%

Energy distribution,

15%

Fossil fuel switch, 19%

Fugitive, 8%

Geothermal, 3%

HFCs, 0%

Hydro, 8%

Landfill gas, 6%

N2O, 14%

Solar, 0%

Wind, 9%

EE industry, 5%

EE households,

1%

Afforestation, 1%

Biomass energy, 9%Biogas, 2%

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Data on Technology % of JI Projects in PipelineData on Technology % of JI Projects in Pipeline

Largest categories: hydro (21%), wind (14%), LFG (13%), biomass energy (11%), fossil fuel switch (9%), industrial energy efficiency (8%)

HFC at <1%, N2O = 3%

Fugitive, 6%Hydro, 21%

Landfill gas, 13%

N2O, 3%

Solar, 0%

Coal bed/mine methane, 1%

Biomass energy, 11%

Energy distribution, 6%

EE households, 1%

Afforestation, 1%

Wind, 14% Biogas, 2%

Agriculture, 1%

EE industry, 8%

Geothermal, 4%HFCs, 0%

Fossil fuel switch, 9%

Some new thinking from Natsource.More growth. Less pollution.

www.natsource.com

Tel + 44 (0) 20 7827 2942dforrister@natsource.com

+ 1 202 496 1423 x227 ryoungman@natsource.co

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