The Kyoto Protocol (Art 2.1) to the United Nations Framework Convention on Climate Change (UNFCCC) expressly encourages parties to take measures to achieve energy efficiency enhancements and to develop and increase the proportion of new and renewable forms of energy. Beyond climate change objectives, the Johannesburg Plan of Implementation (JPOI) points to the enhancement of international and regional cooperation “to improve access to reliable, affordable, economically viable, socially acceptable and environmentally sound energy services, as an integral part of poverty reduction programmes”.

As the world steps up efforts to combat global warming, developing nations, especially the largest emitters among them, are likely to face increasing demands to take greater action to reduce their emissions of greenhouse gases, and particularly carbon dioxide (CO2). They may have to obtain or develop new technologies in order to do so. On numerous occasions, policy makers and stakeholders in developing countries have raised concerns about potential barriers that intellectual property policies may pose for access to clean energy technologies. Some have even suggested considering the need for intellectual property right (IPR) flexibilities in the context of clean energy technologies.

The intellectual property (IP) system provides the regulatory framework where most commercially valuable technologies work and get developed. The IP system and more specifically the World Trade Organization Agreement on Trade-Related Intellectual Property Rights (TRIPS) does not provide for any special treatment or flexibilities for access and dissemination of environmental sound technologies as occurs in the field of health or nutrition. In addition, the IP system has been associated with a series of limitations to access and dissemination of technologies in certain fields. The most important ones include: high transaction costs of obtaining information, negotiating and acquiring IP protected technologies and a lack of clarity in defining what is protected and what is not. Thus, these limitations enhance potential market failures related to asymmetric information.

To address these concerns and facilitate developing countries’ access to climate-friendly technologies, the UNFCCC (Article 4.5) calls on developed nations to assist developing nations through technology transfer. In addition, as part of the means of implementation of the JPOI adopted at the World Summit on Sustainable Development, the international community agreed to “support existing mechanisms and, where appropriate, establish new mechanisms for the development, transfer and diffusion of environmentally sound technologies to developing countries and economies in transition”.

This study seeks to contribute to the debate on asymmetry of information as it relates to the potential role of intellectual property in the development and diffusion of clean energy technologies. It explores whether or not there will be IP barriers to access clean technologies and know-how in developing countries. In order to assess IP implications for developing countries, the paper examines the technology and industrial structure of three clean energy sectors: solar photo-voltaic (PV), bio-mass for fuel and wind energy technologies. The paper concentrates on three technologically advanced developing countries including Brazil, China and India.

It must be noted that licensing the capability to produce products is one of several possible modes of technology transfer. Others include gaining access to products incorporating the technology, or the development of national capability to research and produce the products independent of a licensor (or at least in a relatively equal position with the licensor). In general, IP protection plays quite a different role in the renewable energy industries than it does in the pharmaceutical sector, the source of many developing nation perspectives on IP. In the pharmaceutical sector the patent holder of a drug that may not have any substitutes is in a very strong market position and may be able to charge a price well above production cost. In contrast, in the three renewable sectors considered here, there is competition between a number of patented products with the result that prices can be brought down to a point at which royalties and the price increases available with a monopoly are reduced. There is also competition among the sectors, as well as between clean sources of energy and other alternatives.

Conclusions regarding the impact of IP vary accordingly to the sector, but in general, it appears that in all three sectors, rather than basic technologies, what are usually patented are specific improvements or features. In the PV sector, the developing nations are facing a loose oligopoly with many entrants. Thus, developing countries have been able to enter the industry as demonstrated by firms such as Tata-BP Solar in India and Suntech in China. For biofuel technologies, IP does not appear to be barring developing countries for accessing the current generation technologies as shown by developments in many countries including Brazil, Malaysia and South Africa. The harder question is about future or second generation biofuel technologies where methods, or enzymes, or new microorganisms for breaking down lignin are likely to be patented. At present, the most significant obstacles relate to trade barriers and distortions. The wind sector appears to be the most concentrated of the three sectors examined. However, the industry is competitive enough for developing nations to be able to build wind farms with equipment from the global market without enormous IP costs. The challenge for developing countries here is to enter the global market for wind turbines. The existing industry leaders are strong and hesitant to share cutting-edge technology out of fear of creating new competitors. In spite of these barriers, two developing nations, China and India, have succeeded in building important firms over the last 10 years.

The paper examines other questions of importance to developing nations including the benefits of strengthening IP protection in order to make foreign investors more willing to transfer technology and asking whether or not local trade barriers are proving helpful or harmful in developing these industries. The author concludes with specific suggestions for developing countries themselves, lenders and donors, and international negotiations.

The development and diffusion of renewable energy technologies is only one part of the challenge of bringing down emissions from the energy sector. Much needs to be done to harvest the largest potential in energy efficiency improvements. Nevertheless, it is our hope that this study will contribute to informing policy processes and negotiations related to technological cooperation and intellectual property in the energy, climate change and trade arenas.

John H. Barton is Professor of Law, Emeritus at Stanford Law School where he began teaching in 1969. His teaching fields include international trade and high technology law. He has published extensively on the pharmaceutical development process, on patent-antitrust issues and on the transfer of technology to developing nations. He was a member of two working groups of the Commission on Macroeconomics and Health (the Sachs Commission), and the U.S. National Research Council study of the patent system. He chaired the 2001-2002 UK Commission on Intellectual Property Rights and he spent the 2004-05 academic year as a Visiting Scholar in the Department of Clinical Bioethics at the US National Institutes of Health. He is a graduate of Marquette University (1958) and Stanford Law School (1968).

This paper is part of ICTSD’s Trade and Sustainable Energy series, published under its programme on Trade, Climate Change and Sustainable Energy in collaboration with the programme on IPRs and Sustainable Development. ICTSD’s programme on Trade, Climate Change and Sustainable Energy aims to generate policy-oriented and solutions-focused knowledge on key issues at the interface between the multilateral trading system and various regimes and initiatives promoting the transition to a sustainable energy future.

As a contribution to a better understanding of the implications of intellectual property for Access to these technologies, ICTSD is pleased to convene this dialogue on Intellectual Property and Access to Clean Energy Technologies in Developing Countries - An Analysis of Solar Photovoltaic, Biofuel and Wind Technologies, to be held on 22 October 2007, at the World Meteorological Organization, in Geneva.

This event aims to review and discuss the results of a study that ICTSD has commissioned on the subject. The study by John H. Barton explores the question of whether there will be barriers, particularly IP barriers, for developing countries to access clean energy technologies. To do so, it examines the technology and industrial structure of three sectors - solar photo-voltaic (PV), bio-mass for fuel, and wind energy technologies in order to derive IPR implications for developing countries. The study concentrates on Brazil, China, and India.

Access to the study: Intellectual Property and Access to Clean Energy Technologies in Developing Countries, An Analysis of Solar Photovoltaic, Biofuel and Wind Technologies by John H. Barton, George E. Osborne, Professor of Law, Emeritus, Stanford Law School

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