Climate-Policy Induced Technology Exports

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Climate-Policy Induced Technology Exports
Potential and Risk

• Technology Transfer and Investment Risk in
  International Emissions Trading
• Summary and policy recommendations
• Brussels, 30 November 2006
• Dr. Urs Springer, Ecoplan (Switzerland)

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Linkage
Summary and policy recommendations

• Norway and Switzerland Linkage likely and
  feasible
• Great challenges for linkage to schemes in North
  America and Japan
• ? No global uniform carbon market in the near
  future. Better prospects in the long term
• ? Development of emissions trading schemes
• Coordinate development and harmonize key elements
• Limit number of policy instruments

3
CDM and technology transfer
Summary and policy recommendations

• Kyoto mechanisms encourage technology transfer to
  developing countries
• Europe is a major supplier of key technologies
  for a low-carbon future
• Improve institutional framework for the flexible
  mechanisms (CDM EB, sectoral baselines, etc.)
• Provide investment certainty beyond 2012

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Permit supply from JI/CDM and investment risks
Summary and policy recommendations

• Joint Implementation
• Actual potential overstated by bottom-up studies
• Best conditions New Zealand, Scandinavia.
• Eastern Europe Large potential, but higher risks
• Clean Development Mechanism
• Best conditions Asia and South America (India
  and China in Top 5)
• Large potential (64 in China and India),
  negative cost options
• Investments in GHG abatement follow different
  pattern than FDI
• ? Substantial transaction costs and other
  investment barriers
• ? Capacity building worth while even in countries
  with relatively bad general investment conditions

5
Global GHG market
Summary and policy recommendations

• Low carbon price based on technological potential
  of JI CDM
• Higher price with strict additionality (no
  negative cost options)
• Transaction costs and risk do not reduce
  investment substantially, but alter flow of
  investment and project mix
• ? Restrictions on hot air required for
  functioning carbon market
• Kyoto mechanisms foster technology transfer and
  reduce compliance costs
• Limit (and harmonize?) ceilings on use of
  flexible mechanisms

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