Why “releasing” technology is not the answer

The trouble with Indian Prime Minister Manmohan Singh's recent call for developed countries to “release” low-carbon technologies free of charge to less developed countries is that governments and countries do not normally own technologies, businesses do.

Businesses they put years of hard work, massive amounts of money and intellectual capacity into developing technologies. It is not for governments to give them away, and it is unhelpful for Mr Singh to suggest they should, especially in the run-up to the climate talks in Copenhagen.

Does Mr Singh really not see that “releasing” technologies, as he proposes, would halt investment and stifle the very kinds of innovation the world is relying on to meet its climate challenge?

Many of the technologies needed for climate solutions will be in the energy sector and it is here that the often-quoted AIDS drugs analogy simply does not work. In pharmaceuticals, a new drug may be the result of a single innovation, a single discovery, or a single process. For such a drug, the patent royalty could be more than 90 per cent of the development cost.

But energy technologies are huge and complex, and could involve a range of patents. The royalty costs for energy patents often represent just a small part of the cost of low-carbon technologies, because for these the big costs lie in the non-patentable aspects, such as supporting infrastructure or operational and maintenance costs.

Indeed, many low-emission technologies are not patented in developing countries. Of the 215,000 patents registered for such technologies between 1998 and 2008, only 10% were registered in emerging countries and just 0.1% in least developed countries. Clearly, technology deployment in developing countries is not being hindered by the use of registered patents. It is being held back by such things as a lack of infrastructure, a lack of capacity to absorb the technology, and a lack of a policy framework that fosters investment. Governments could help increase the spread of technologies by working on these.

Patent registration is, in fact, growing fast in developing countries, particularly in China and India. Emerging economies today account for 20% of total patents worldwide, compared to less than 5% in 1998. Last year, China registered more patents than in the previous 30 years altogether, and more than 90% of new patent applications were locally owned.

Countries that feel they have a problem with patents are able to seek redress under existing mechanisms, like those available at the World Intellectual Property Organization. Relief is also embedded in the UN Framework Convention on Climate Change and the Kyoto Protocol, which allow problems with intellectual property rights to be brought before the Compliance Committee. Tellingly, this avenue has never been used.

Business already provides 85%of investment flows into developing countries, and there is no doubt that much more will be needed. By some estimates there is a shortfall of about 50% in the amount of funding needed to provide energy to the 1.6 billion people currently without it. Financial initiatives, public-private partnerships and a global carbon market would assist here.

It is true that developing countries will need help to fund these clean technologies, and help to develop the infrastructure and skills to use them. Business is ready to play its part, but it defies reality to suggest that it should give away its expertise and products for free.

Comments

[Sam Ooko]

Did PM Singh insinuate that governments in developed countries can help this technological transfer process? Probably.

Raw materials required for these technologies are most often than not sourced from the developing world, who could benefit tremendously if some value-added mechanisms were made mandatory as part of these "exports"? Just a thought about a win-win situation...