An introduction to technology-oriented agreements

1. An introduction to technology-oriented agreements Heleen de Coninck (ECN/IVM) ECN side-event COP13 – December 7th, 2007

2. Background: status post-2012 • Agreement to agree. But on what? • EU continues on cap-and-trade track • United States: might not sign up to an international carbon cap • US Congress difficulty to agree on meaningful climate act • US Senate not favourable to cap-and-trade (filibustering) • Emerging economies: no strict commitments • A post-2012 treaty a la Kyoto with broad Annex-I participation unlikely • Complex patchwork of treaties more conducive, including cap-and-trade, sectoral and technology agreements • Question: • What can we expect from sectoral and technology agreements?

3. Alternative or complement to cap-and-trade? • Disinterest in cap-and-trade can be explained for countries with low climate change impacts and high mitigation costs • Provision of a global public good; free-rider incentives • Sectoral agreements (IEA, Pew Center) and TOAs might provide participation incentives • Predictable costs • Innovation market failure • Potentially smaller number of parties (club good) • Interests of current technology leaders (first-mover advantage) • and large developing countries (targeted and more effective technology transfer)

4. Context and forms of TOAs • “International agreements that are aimed at advancing specific technologies” • Four types: • Knowledge sharing and coordination • Research, development and demonstration • Technology transfer • Technology mandates, standards and incentives

5. Context and forms of TOAs

6. Context and forms of TOAs - conclusions • Knowledge sharing and coordination, and RD&D (Types 1 and 2) not environmentally effective on their own, but can be useful for low-cost or underdeveloped technologies • Technology transfer agreements (Type 3) can be effective if substantial funds committed, but unlikely to be sufficient in scope on their own • Technology incentives, mandates and standards (Type 4) can be environmentally effective on their own, although in most cases less cost-effective than cap-and-trade approaches

7. Context and forms of TOAs - conclusions • Type-4 agreements may be more effective for: • Sectors with significant ancillary benefits • Highly trade-sensitive sectors • Sectors not covered by cap-and-trade systems • Sectors that might benefit from international coordination

8. Conclusions • Technology-oriented agreements can take many forms and can be appealing for different reasons, e.g. more manageable number of actors, greater cost predictability, innovation benefits, large emission reductions • It makes sense to explore TOAs, as they may offer political advantages • However, global cost-effectiveness and simplicity of one global cap-and-trade are sacrificed • In order to be environmentally effective, TOAs should primarily be aimed at technological implementation (Type-4) • It is possible to pursue such agreements without straying from the cap-and-trade track

9. Thank you • More information and report copies: • Heleen de Coninck • Energy research Centre of the Netherlands • Unit Policy Studies • Radarport 60/P.O.Box 56890 • 1040 AW Amsterdam • deconinck@ecn.nl • Tel. +31-224-564316