TWN Info Service on WTO and Trade Issues (Oct08/01)
6 October 2008
Third World Network

Climate: New G77-China proposal to UNFCCC on technology mechanism
Published in SUNS #6557 dated 29 September 2008

Geneva, 26 Sep (Matthew Stilwell) -- A new and comprehensive proposal on technology transfer for climate change has been submitted by the G77 and China to the UN Framework Convention on Climate Change (UNFCCC).

The proposal was recently uploaded on the UNFCCC website. According to G77 sources, the proposal was finalized by members of the group on the final day of UNFCCC's meeting in Accra at the end of August. It was submitted to the Chair of the Ad Hoc Working Group on Long-term Cooperative Action (AWG-LCA) after the meeting.

The group proposed the establishment of a new technology mechanism under the UNFCCC to accelerate the development and transfer of technology and to support the effective implementation of the UNFCCC's provisions relating to technology and finance.

It builds on statements and proposals made by the Group in previous climate meetings, and seeks to address the shortfall in implementation by developed countries of their obligations to provide technology and associated finance and capacity building to developing countries to enable them to implement the Convention. The proposal also seeks to advance the work of the Bali Action Plan, which calls for "enhanced action on technology development and transfer."

A background to the proposal was given by Bernarditas Muller of the Philippines on behalf of the G77 and China at the last day of the Accra meeting, at a contact group on technology and finance. She said it sets out the rationale, criteria and institutional arrangements for a new technology mechanism, which include a new subsidiary body to the Convention (the Executive Body on Technology) as well as a Multilateral Climate Technology Fund, which, along with other funds would operate as part of an enhanced financial mechanism under the Conference of Parties.

She said the proposal also describes a Technology Action Plan as well as the eligible activities that would be covered by the mechanism. These elements build on previous proposal under the Convention by the G77 and China.

The full proposal, describes the rationale for a new technology mechanism under the Convention. It notes that enhanced mitigation and adaptation under the Convention requires an acceleration of the development, deployment, adoption, diffusion and transfer of environmentally sound technologies from developed to developing countries.

This will help avoid the lock-in effects of environmentally unsound technologies and promote a shift to sustainable development paths. There is, in particular, an urgent need to provide access to technologies for adaptation at regional and national levels. This should be enabled by capacity building and by new and additional funding.

The proposal notes that access to financing for technology is currently limited and should be enhanced. Barriers to transfer also inhibit the adoption of technologies in developing countries. Consequently, access must be urgently provided to these technologies while balancing rewards for innovators with the common good of humankind, including through jointly developed technology and intellectual property rights (IPR) sharing.

The proposal says that delivery of technology to developing countries also requires an effort by developed countries to enhance enabling environments, to facilitate access to technology, and to provide finance that leverages private sector financial resources. Current institutional arrangements are not sufficient to deliver technology.

The proposal describes the objective of the technology mechanism as addressing all aspects of cooperation on technology research, development, diffusion and transfer in accordance with Articles 4.1( c), 4.3, 4.5, and other relevant articles of the Convention (such as Articles 4.8 and 4.9) in order to enable mitigation and adaptation under the relevant paragraphs of the Bali Action Plan.

Article 4.5 of the Convention obliges developed countries to "take all practicable steps to promote, facilitate and finance, as appropriate, the transfer of, or access to, environmentally sound technologies and know-how to other Parties, particularly developing country Parties, to enable them to implement the provisions of the Convention." It states that, in this process, the developed countries "shall support the development and enhancement of endogenous capacities and technologies of developing country Parties".

The need to finance technology development and transfer is identified in Article 4.3, which says that developed countries shall provide "such financial resources including for the transfer of technology, needed by developing country Parties to meet the agreed full incremental costs of implementing measures" covered by Article 4.1 (which refers to technology transfer in Article 4.1( c)). It states that developed countries shall "take into account the need for adequacy and predictability in the flow of funds and the importance of appropriate burden sharing among the developed country Parties".

The nature and scope of technologies covered by the Convention is indicated by Article 4.1( c), which says that all Parties shall "promote and cooperate in the development, application and diffusion, including transfer, of technologies, practices and processes that control, reduce or prevent anthropogenic emissions of greenhouse gases... in all relevant sectors, including the energy, transport, industry, agriculture, forestry and waste management sectors".

The proposal establishes a range of guiding criteria for the technology mechanism. It would operate under the authority and guidance of the Conference of Parties, ensuring that it is fully accountable to the Parties to the Convention. It would aim to ensure that the technologies required by developing countries are accessible, affordable, appropriate and adaptable. It would achieve the provision of financial support in accordance with Article 4.3. And it would also seek to ensure the adequacy and predictability of funds for technology transfer, as well as the removal of barriers to technology development and transfer. Generally, it would implement the relevant decisions adopted on technology transfer by the Parties.

The technology mechanism will comprise a set of institutional arrangements, including a new subsidiary body of the Convention (established under Article 7.2(I)) to enable implementation of the Convention's technology-related obligations and a new Multilateral Climate Technology Fund to finance efforts relating to technology development and transfer.

The subsidiary body would comprise an Executive Body of government representatives who are elected by the Conference of Parties and are experts on matters related to technology transfer. The body will reflect a balance of representation from different geographic regions and be open to input from other experts.

The Executive Body would be supported by a Strategic Planning Committee (comprising a subset of the Executive Body) which would be responsible for developing strategies, providing guidance on technology transfer activities, assessing and elaborating on technology-related matters, evaluating progress and regularly updating a Technology Action Plan (described below).

Within the subsidiary body, technical input would be provided Technical Panels designed to generate and compile current expert information on topics such as capacity building; policies and measures; intellectual property cooperation; cooperation on a sectoral, cross-sectoral or cross-cutting basis; assessment, monitoring and compliance, and other topics.

Under the proposal, the Executive Body could establish additional technical expert committees, panels, working groups or other bodies to provide scientific, technical and operational expertise. Building on the experience of other bodies (such as the Technical Options Committees and Technology and Economic Assessment Panel of the Montreal Protocol), the proposal states that these technical panels and other bodies would consolidate and provide advice to the Executive Body and Conference of Parties, in order to assist them perform their functions.

To ensure that financial and technological contributions made to the mechanism are "measurable, reportable, verifiable" as required by the Bali Action Plan, the subsidiary body would also include a Verification Group designed to review the actions of Parties.

These various activities would be supported and facilitated by a Secretariat, which would be responsible to the Executive Body. The Secretariat would compile and prepare a final report on financial and technological contributions made and reported by Parties to the technology mechanism, in accordance with the overall "measurable, reportable, verifiable" requirement the Bali Action Plan.

In addition to these institutional arrangements, a second key aspect of the G77 and China's proposed technology mechanism is a Multilateral Climate Technology Fund, which would finance enhanced action on technology development and transfer in accordance with technology-related financial requirements as determined by the Executive Body.

This fund will operate under the Conference of Parties as part of the enhanced multilateral financial mechanism for the UNFCCC, which was described by the G77 and China in a separate proposal. The enhanced financial mechanism would operate under the Conference of Parties and be managed by a Board, which would oversee a series of specialized funds and funding windows designed to address mitigation, adaptation, technology, capacity building and related topics, including the Multilateral Climate Technology Fund.

In this respect, the G77 and China's technology proposal dovetails with its finance proposal, by providing additional information about how the Multilateral Climate Technology Fund would operate within the context of the broader UNFCCC financial architecture, proposed by the G77 and China. It states that the fund shall be financed through assessed contributions from developed countries. These contributions shall be additional to other financial transfers to developing countries and shall meet the costs incurred by them.

The proposal provides that an agreed proportion of contributions by developed countries to bilateral and regional co-operation may be considered as contributions to the fund (as is the case with the Montreal Protocol's Multilateral Fund), provided that such co-operation is consistent with the policies and scope of the mechanism.

The proposal also states that financial transfers to the fund shall be counted as measurable, reportable and verifiable commitments under paragraph 1(b)(ii) of the Bali Action Plan. Any funding not under the authority and guidance of the UNFCCC shall not be regarded as fulfillment by developed countries of their commitments under Article 4.3 of the Convention or the Bali Action Plan.

The fund will cover, among other things, the eligible costs of activities approved by the Executive Body (see below), as well as the administrative costs of the Executive Body, Secretariat, and Trustee or Trustees, and costs associated with other specific decisions of the Conference of the Parties.

The fund would be managed by a Trustee or Trustees in the context of the enhanced multilateral financial mechanism proposed by the G77 and China. The Trustee/s would be selected through a process of open bidding and would have the fiduciary responsibility and administrative competence to manage the fund.

A third key aspect of the G77 and China's technology proposal is the creation of a Technology Action Plan. It will support concrete actions by defining policies, actions and funding requirements for all relevant classes of technologies and in all phases of the technology cycle.

In relation to research phase of the technology cycle, the Plan would accelerate research and invention by supporting scientific and technical cooperation at all levels, including cooperation among scientists and among relevant institutions. In relation to technology development, it would accelerate the rate at which technologies are brought into effect. In relation to technology transfer and diffusion, it would ensure the availability of financing for technology transfer through all available means to ensure that technologies, and related products and services, are affordable to developing countries.

The Plan will also define specific policies, actions and funding requirements for all relevant technologies, under the following classifications.

(1) In relation to public domain technologies, it will establish a system for international cooperation to ensure that the needs of developing countries are met through the lowest-cost technology options, and to transfer know-how about how to use and maintain technologies and adapt them to local conditions, thereby contributing to the development of endogenous technologies.

(2) In relation to patented technologies, the Technology Action Plan will ensure that privately owned technologies are available on an affordable basis including through measures to resolve barriers posed by intellectual property rights, and through compulsory licensing of patented technologies. Technologies with shared ownership (government and private) will be made available on an affordable basis by facilitating transfer of the government proportion on a reduced or no-cost basis. Technologies that are government owned will be made available on an affordable basis by facilitating transfer on a reduced or no-cost basis.

(3) In relation to future technologies the Plan will support the establishment of national and regional technology excellence centers and will reinforce north-south, south-south and triangular cooperation, including in the area of joint research and development.

The proposal states that the Plan would serve as a starting point for the work of the Executive Body. It would include clear actions and dates for the first three years, and would be updated for successive three-year periods.

The proposal concludes by identifying the eligible activities and costs that would be covered by the technology mechanism. It notes that the mechanism will cover technologies in all relevant sectors and endeavor to remove technology barriers.

The proposal offers an indicative list of activities and costs that would be eligible for support. This list includes:

* Promotion, facilitation and implementation of activities along the entire technology cycle to accelerate the rate at which environmentally sound technologies are adopted.

* Support for research, development, manufacture, commercialization, deployment and diffusion of technologies for adaptation and mitigation.

* Adaptation technologies to address the adverse effects of climate change and finance the removal of barriers to the large-scale transfer of technologies for adaptation.

* Technologies to address the adverse impact of response measures, and finance the removal of barriers to the large-scale transfer of technologies for reducing the adverse impact of response measures.

* Capacity-building to manage and generate technological change, enhance absorptive capacity, and create enabling conditions in developing countries.

* Commercialization of new and emerging technologies. This would include venture capital, with public investment leveraging private capital markets for emerging technologies; research, development, and demonstration of new technologies, financed by venture capital and other sources; and joint technology development.

* Creation of manufacturing facilities for environmentally sound technologies, including low-GHG (greenhouse gas) emission technologies. This would include the costs of compulsory licensing and cost associated with patents, designs, and royalties; conversion of existing manufacturing facilities or of establishing new facilities; research and development activities, including joint research, development, design, and demonstration; technology adaptation; retraining and dissemination of know-how; operation (of facilities/technologies); and monitoring and verification.

* Procurement of low-greenhouse gas emission technologies, including software and hardware. This would include cost of premature modification or of replacement of existing equipment, as well as the cost of new equipment; cost of retraining and dissemination of know-how; cost of technical assistance for the design, installation and stable operation of the technology; cost of fuel and other operational costs; cost of technologies for fuel switching; and cost of monitoring and verification.

As emphasized by many countries, technology and finance are key elements in the negotiations. Delivering a substantial outcome on technology and finance is thus a central objective for any deal in Copenhagen at the end of 2009.

This topic, and the G77 and China's proposal, will likely be picked up again for discussion at Fourth Session of the AWG-LCA, which will take place in the context of the 14th UNFCCC Conference of Parties Meeting scheduled for 1-12 December 2008 in Poznan, Poland. +